Non-Interest Income and Future Business Models Panel Discussion
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Consumers are willing to pay for services that they find either adds convenience or delivers value. In this podcast and presentation from the 2013 NAFCU Annual Conference, Dave Schneider, Brent Dixon, and Paul Muse discuss how to expand your credit unions credit and debit opportunities and explore innovative products that can help guide your future credit union operations, including new approaches to increasing penetration, activation, and usage of the fundamental card. Also, learn to leverage new payment options that will appeal to Gen Y consumers, including Internet PIN debit, PINless at the point of sale, and payments and delivery of service through mobile.
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Non-Interest Income and Future Business Models Panel Discussion
- 1. Non-Interest Income and Future Business Models Strength or Weakness? Opportunity or Threat? Change brings new opportunities for credit unions! • As it relates to Non-Interest income, for 1st Advantage, it’s not about a new idea but about improving performance with existing structure. – Improve collection of current fees. – Increase performance of investment services, mortgage fees, insurance services, card activity, & small business relationships. – Regulation changes bring focus, not distraction. 1
- 2. People Helping People • Credit Unions offer a better option for consumers when it comes to non-interest income as it relates to fees. • Our culture sets us apart in relation to how we work with members regarding fee situations. Business Models • Collaboration and CUSOs work well when people align with the culture of the credit union. At 1st Advantage, we believe in having control and giving direction when it comes to employees of a CUSO. • If you are not offering non-interest income products and services or not having good performance, it is time to ask why. • We need to leverage our loyalty and trust to form win-win situations. • Doing nothing and expecting better or similar results is no longer an option. 2
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- 12. Non-Interest Income and Future Business Models Panel Presented by Dave Schneider PULSE The Debit Opportunity Annual Credit Union Interchange Revenue Per Active Consumer Debit Card $108 $88 $74 $63 4th quartile 3rd quartile Best-inclass 2nd quartile 1st quartile Source: 2013 PULSE Debit Issuer Study 24 12
- 13. Interchange Advantage Consumer Debit Interchange, Blended (Signature & PIN) Average ticket = $37 Business Debit Interchange Blended (Signature & PIN) Average ticket = $90 $1.69 (193 bps) +525% $0.37 (105 bps) +60% Exempt Credit Unions $0.27 (34 bps) $0.23 (64 bps) Regulated FIs Exempt Credit Unions Regulated FIs Source: 2013 PULSE Debit Issuer Study 25 New Approaches to Increasing Penetration, Activation and Usage Expand debit use Target Gen Y • Internet PIN debit • Heavy debit users • PINless POS • Budget conscious • Mobile payments • Merchant loyalty/rewards • P2P/A2A 26 13
- 14. Case Study: Randolph-Brooks FCU • South-central Texas CU • More than $5 billion in assets • “Really Free” Checking – – – – No monthly service fees No minimum balance Free checks 10¢ cash back on all debit purchases, including PIN debit Source: www.rbfcu.org 27 “Dime Every Time” Success • Paid out $7 million in 2012 • Program has grown each year since its inception in 2007 • RBFCU has returned more than $29 million to members since 2007 • CU membership has increased more than 60% over the period $7 million $4 million 400,000 250,000 “We know that members enjoy the cash back and therefore choose to use the card more.” Randolph-Brooks FCU 28 14