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Credit, Debit and Prepaid Cards Industry Update: 2011 Study of Payment Trends and Member Preferences - Credit Union Webinar Slides

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What do the latest consumer card trends mean for your credit union? In this webinar we uncover the key findings from Discover’s second annual study on member card payment preferences and credit, debit …

What do the latest consumer card trends mean for your credit union? In this webinar we uncover the key findings from Discover’s second annual study on member card payment preferences and credit, debit and prepaid card market trends. Most importantly, we discuss how to use this valuable data to deliver well-executed programs, innovative tools and member-focused services that drive interest, adoption and usage within your member base. More info at http://www.nafcu.org/discover

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  • 1. Credit, Debit and Prepaid Cards Industry Update: A 2011 Study of Payment Trends and Member Preferences Kevin O’Donnell, Vice President Discover Financial Services 1 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 2. Who We Are • Comprehensive • Leading U.S. PIN- • Global brand known for payments solution based ATM/debit service, rewards, and including credit, debit network with 4,400+ cardholder benefits and prepaid participating financial • In over 185 • $103 billion in volume institutions countries/territories • 30+ Issuers • All top national PIN • Millions of premium debit retailers accept • Signed agreements with consumer and corporate PULSE 126+ merchant cardmembers acquirers representing • Over 780K ATMs and many who travel to U.S 98% of U.S. merchants cash access locations • $27 billion in volume worldwide • Enabled over 1 million • 50 franchises previous non-acceptors • $118 billion in volume 2Note: Volume based on the trailing four quarters ending 1Q11 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 3. How We Got HereNAFCU Services Preferred Partner – Expertise and innovation in credit, debit, and prepaid solutions – Collaborative, flexible approach – Known for customer service, rewards, and loyalty – Commitment to your brand and your members financial healthInvited to share our findings to help you understand the market andgrow your member base 3 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 4. High Gas Prices High Gas PricesAs of June 20, 2011, the national average for a gallon Impact Consumer Impact Consumerof gas is $3.65 – up more than $0.92 from last year.1 Spending // Spending Sentiment Sentiment Price Spike – Libyan rebellion stops 1.5 million Summer Blend daily exports of crude3 Increases Cost Gas prices could surpass Oil Speculators the 2008 record level of Push Up Price $4.11 per gallon.3 Unrest in Analysts estimate oil and gas prices Middle East won’t stabilize until summer.2 4 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 5. Consumer Confidence Versus Food, Gas and Unemployment145135125115105 95 85 75 Se N D Ja Fe M Ap M Ju Ju Au O Ja Fe M Ap ov ec ar ay ct ar p- n- n- l-1 n- b- b- r- g- r- -1 -1 -1 - - 10 10 - 10 11 11 10 11 11 10 10 10 0 10 0 0 0 CPI:Food Avg Regular $/Gal Consumer Confidence Unemployment 5Source: U.S. Bureau of Labor Statistics, U.S. Department of Energy and The Confidence Board ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 6. Today’s AgendaCredit Usage – Credit – Debit and Prepaid UsageConsumer and Member Interest – Mobile: Banking, Payments and Couponing – Merchant Funded RewardsSolutions for Credit Unions – Gen Y Targeting and OfferingsKey Takeaways 6 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 7. Credit Usage 7©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 8. How Members Use Their Cards Credit Union member year- I Have Used One or More of My Major over-year use Credit Cards in the Past Six Months is increasing 96% 95% 94% 93% 92% 91% 90% 89% 88% 87% 86% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 07 08 09 10 11 12 01 02 03 04 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period CU: Average Non-CU: Average CU Non-CU 8Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 9. How Members Use Their Cards Long term trend: CU Transactor -- Always/Almost Always members less Pay the Entire Balance likely to be transactors 58% 56% 54% 52% 50% 48% 46% 44% 42% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 07 08 09 10 11 12 01 02 03 04 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period CU: Average Non-CU: Average CU Non-CU 9Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 10. How Members Use Their Cards Revolver -- Usually Pay Less Than the Entire Balance 54% 52% 50% 48% 46% 44% 42% 40% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 07 08 09 10 11 12 01 02 03 04 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period CU: Average Non-CU: Average CU Non-CU 10Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 11. How Members Use Their Cards I am Currently Paying Down a Balance on One or More of My Major Credit Cards 58% 56% 54% 52% 50% 48% 46% 44% 42% 40% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 07 08 09 10 11 12 01 02 03 04 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period CU: Average Non-CU: Average CU Non-CU 11Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 12. Polling Question 12 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 13. How Members Use Their Cards Opened a New Credit Card Account Keep product in the Past 3 Months offerings current and competitive 14% 12% 10% 8% 6% 4% 2% 0% 11 12 01 02 07 08 10 09 02 03 04 05 06 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 1- 0- 0- 0- 1- 0- 0- 0- 0- 0- 0- 0- 02 10 01 03 04 12 05 09 11 04 06 07 08 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 1 0 1 0 0 1 1 0 0 0 0 0 0 3-Month Period CU: Average Non-CU: Average CU Non-CU 13Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 14. How Members Use Their Cards Credit Union I am Concerned About My Credit Card members fear Interest Rate Rising Over Time rising rates 56% 54% 52% 50% 48% 46% 44% 42% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 08 09 10 11 01 02 03 04 07 12 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 1 1 1 1 0 0 3-Month Period CU: Average Non-CU: Average CU Non-CU 14Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 15. How Members Use Their Cards Sell on your I Dont Trust Any Credit Card advantages but Company to Treat Me Fairly know your competition 35% 30% 25% 20% 15% 10% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0- 1- 1- 04 05 06 08 09 10 11 01 02 03 04 07 12 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 1 1 1 1 0 0 3-Month Period CU: Average Non-CU: Average CU Non-CU 15Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 16. How Members Use Their Cards Grocery Spend 60% 50% 40% 30% 20% 10% 0% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -0 -0 -0 -1 -0 -0 -0 -0 -1 -1 -0 -0 -0 9 0 1 1 4 5 8 2 6 7 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit Members continue to prefer debit for grocery by 50% to 30% 16Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 17. How Members Use Their Cards Gas Spend 46% 44% 42% 40% 38% 36% 34% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -0 -0 -0 -0 -1 -0 -0 -1 -1 -0 -0 -0 -0 9 5 0 4 8 6 7 1 2 1 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit No significant shifts in debit vs.. credit usage, even with higher gas prices 17Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 18. How Members Use Their Cards Dining Out Spend 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 02 03 04 05 06 07 08 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -0 -0 -0 -1 -0 -0 -0 -1 -1 -0 -0 -0 -0 4 5 8 9 0 6 7 1 2 1 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit Even split between debit vs.. credit 18Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 19. How Members Use Their Cards Routine Household Purchases 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 08 02 03 04 05 06 07 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -1 -0 -0 -0 -0 -0 -0 -0 -1 -1 -0 -0 -0 9 0 1 4 5 6 7 8 1 2 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit Members have slight preference for debit vs.. credit at 37% 19Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 20. How Members Use Their Cards Major Household Purchases 80% 70% 60% 50% 40% 30% 20% 10% 0% 02 03 04 08 11 05 06 07 09 10 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -0 -0 -1 -0 -0 -0 -0 -0 -1 -1 -0 -0 -0 5 9 0 1 2 1 4 6 7 8 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit Major household purchases have increased from 59% to 67% on credit 20Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 21. How Members Use Their Cards Major Home Improvement 60% 50% 40% 30% 20% 10% 0% 02 03 04 08 05 06 07 09 10 11 12 01 02 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 0 0 1 1 -0 -0 -1 -0 -0 -0 -0 -0 -1 -1 -0 -0 -0 5 9 0 1 2 1 4 6 7 8 2 3 4 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 /1 0 0 0 0 0 0 0 0 0 1 1 1 1 3-Month Period Debit Avg Credit Avg Debit Credit Home improvement expenses have gone from 45% to 51% on credit 21Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 22. Debit and Prepaid Usage 22©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 23. Debit Transaction Mix Consumer PIN and Signature Transaction Transaction growth decreased to 8% for Growth PIN debit and increased slightly to 10% for signature debit 24% Signature debit accounted for 68% of 20% total POS transactions in 2010 Transaction growth 16% Some regulated Financial Institutions 13% 13% (those with at least $10 billion assets) expressed a desire to reverse the 12% 10% 9% 9% signature/PIN mix due to impending 8% 8% regulation 4% 0% PIN Transactions Signature Transactions 2007-2008 2008-2009 2009-2010 23Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 24. Polling Question 24 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 25. Debit Card Usage Active cardholders perform an average of 16.3 POS transactions per Monthly POS Transactions per Active Consumer Card1 month. Do you know your Past participants2 FY 2010 number of average 20 transactions? 16.4 16.4 16.3 16 14.0 14.0 13.7 Transactions/card 11.7 12.3 12 8 6.2 5.2 5.5 5.3 4 0 Large Banks Credit Unions Community Banks Overall PIN Signature Total1. Active cards based on FIs active definition. PIN and signature transactions per card do not sum to total transactions per card due to the presence of dual- function cards. 2. Past participants are FIs that participated in both the 2010 and 2011 studies and that reported the same active rate definition for both years. 25Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 26. Debit Card Penetration and Activation Card penetration has remained flat since 2008, while active rates have declined Average Penetration and Active Rates Defined as “any signature 73% 73% 73% POS transaction within the last 30 days” 56% 55% 53% For active rates defined as “any transaction within the last 30 days,” the active rate is slightly higher at 60%, up from 54% in 2009. Penetration Active Rate 2008 2009 2010 26Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 27. Growth Expectations for 2011 Financial Institutions expect continued debit growth – with or without the Durbin Amendment Transaction Forecasts1 Projected 2011 Growth Rates 20% 35% 18% 30% 16% 14% 25% PIN txn growth (%) Transaction growth 12% 10% 20% 10% 9% 8% 8% 7% 15% 8% 7% 6% 10% 4% 5% 2% 0% 0% PIN Transaction Growth Signature Transaction 0% 5% 10% 15% 20% 25% 30% 35% Growth Signature txn growth (%) 2010 Forecast 2010 Actual 2011 Forecast Large Banks Credit Unions Community Banks1. Weighted by 2010 transaction volume 27Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 28. Prepaid Card Mix FIs offering Prepaid Card1 % of Issuers 100% 2009 2010 80% 73% 67% 60% 40% 27% 29% 22% 27% 20% 14% 9% 6% 10% 0% Gift Cards Flexible Savgins Payroll Cards General Purpose Other Prepaid Account/Health Reloadable Cards Cards Saving Account Cards1. Regulated FIs are FIs with at least $10 BN in assets and are hence subject to the interchange cap; Exempt FIs are not subject to the cap but are subject to other provisions 28Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 29. Underbanked Consumers More Likely to Have Prepaid/Payroll Cards than Other Consumers 29Source: Javelin, 2011 Prepaid Cards and Products, Expanding and Innovating for Mass Market Appeal, April 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 30. Underbanked Consumers More Likely to Use Prepaid/Payroll Cards than Debit or Credit Cards 30Source: Javelin, 2011 Prepaid Cards and Products, Expanding and Innovating for Mass Market Appeal, April 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 31. Gen Y Consumers Use Prepaid Cards More Frequently than Other Generational Segments 31Source: Javelin, 2011 Prepaid Cards and Products, Expanding and Innovating for Mass Market Appeal, April 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 32. Consumer and Member Interest 32©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 33. Mobile Interest 33Source: Yankee Group, A View from the Trenches: What Consumers Think of Mobile Transactions, February 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 34. Mobile Banking Activities The basic mobile transactions to serve these customers 34Source: Forrester Research, North American Technographics Financial Services Online Survey, Q4 2010 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 35. Mobile Banking Adoption/Interest 84% 93% 73% Already offer or plan to introduce. 35Source: PULSE 2011 Debit Issuer Study - Oliver Wyman - May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 36. Rewards Programs as Popular than Ever Incidence of Most Frequent Use of Rewards Cards Criterion for Most Frequently Used Rewards Card of respondents who have a rewards card of respondents who use a rewards card most frequently Q. Are any of these rewards cards your primary card? (Base 223) Q. What is the most important reason you use your primary rewards card? (Base 173)22% - Rewards card isnot primary card 78% - Rewards card is their primary card Reward cards attract a more affluent card member base. Use reward cards to bring card to top of wallet. 36Source: Auiemma Consulting Group, Online Survey of 508 Credit Users, Feb 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 37. Transaction Marketing Offer And User Flow 1 2 Merchant Transaction Merchants create an marketing company offer for a specific Vendors enable Credit member segment, Unions and card along with the partners to match the amount and duration offer against of the offer. debit/credit card information. Transaction Marketing Process Credit Union Member and credit card The member providers activates the offer Credit Unions and and receives a reward credit card providers once a transaction for present the offer to the merchant is the segment(s) the posted. merchant wishes to 4 target. 3 37Source: Forrester Research, Boosting Revenue With Merchant-Funded Offers, May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 38. Merchant Offers on Online Transaction History My Credit Union 38Source: Forrester Research, Boosting Revenue With Merchant-Funded Offers, May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 39. Solutions for Credit Union 39©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 40. Credit Union Member Demographics Credit Credit Union Union Married 54% Average Age 46.4 Marital Status Divorced 11% 18-34 26%* Single 24% Age 35-44 21% Other 11% 45-54 24%* Children in Home? 28% 55+ 29% Checking 98% Median Income $49.1K Banking Savings/CD 93%* <$25K 19% Average Investments 47% Income $25 - $50K 33% $50 – $75K 20% $75K+ 28% *Statistically significant at 95% confidence level 40Source: Millward Brown, 2011 Brand Tracking Study ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 41. Credit Unions and Generation Y 41Source: Aite, The IT Priorities of US Credit Unions, February 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 42. Gen Y Behaviors Gen Y consumers are heavy users of both online and mobile services Electronic methods and devices are used for routine tasks such as balance inquires, statement viewing and CSR questions Financial institutions have the ability to shape Gen Y behavior today A strong electronic strategy is a must for attracting Gen Y By 2012, 90% of credit unions expect to have a dedicated budget for social media efforts 42Source: Javelin Strategy & Research, Gen Y: How to Engage and Service the New Mobile Generation, May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 43. GEN Y Financial Needs One out of five Gen Y consumers lacks a demand deposit account (22%); 6% still do not have any banking products One in every five Gen Y consumers switched financial institutions over the past 12 months Financial institutions need to develop product offerings that resonate with this group Education and financial management are essential in developing “trusted advisor” role that Gen Y consumers value and will create relationships that translate into higher value 43Source: Javelin Strategy & Research, Gen Y: How to Engage and Service the New Mobile Generation, May 2011 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 44. Example of Credit Unions Targeting Gen Y 44 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 45. Key Takeaways 45©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 46. Key TakeawaysCredit Union revolvers have decreased, but Credit Unions havemore revolvers than overall portfolios – Use APRs and rewards to attract either segmentCredit Union members are more sensitive to interest rate thangeneral populationCredit Unions are seen as more trustworthy than other financialinstitutions and viewed as a financial consultantOpportunity to capture more cardmember spend in categories likegrocery, major household purchases or major home improvementwith acquisition and usage campaigns 46 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 47. Key TakeawaysReach underbanked consumers and Gen Y with prepaid productsMobile banking growth and adoption rates are high. Usage anddemand is growing. Basic functionality is used most.Rewards attract more affluent card member baseFocus on developing a strategic approach to attract Gen Y asCredit Union members 47 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute
  • 48. Questions? Kevin O’Donnell Vice President Discover Financial Services kevinodonnell@discover.com 48 ©2011 DFS Services LLC Confidential and Proprietary Do Not Copy or Distribute

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