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Capitalizing on Market Changes to Grow Your Card Programs (Credit Union Conference Session Presentation Slides) | Vantiv


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The ever-changing and almost daily shifts in the market provide enormous opportunities for credit unions to extend their reach by effectively leveraging debit and credit card programs. These programs are highly visible, provide important consumer functionality and drive revenue and membership growth. In this 2012 Strategic Growth Conference session, we get to learn how to combine the messages in the market with your credit union brand to capitalize on this unique time, including promoting card features and functionality necessary to differentiate your credit union. We will also look at an analysis of key performance indicators and industry benchmarking data to see how your credit union stacks up! More info at:

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Capitalizing on Market Changes to Grow Your Card Programs (Credit Union Conference Session Presentation Slides) | Vantiv

  1. 1. Capitalizing on MarketChanges to Grow YourCard Programs NAFCU Strategic Growth Conference Scottsdale, AZ March 14, 2012© Copyright 2012 Vantiv, LLC. All rights reserved.Vantiv, and the Vantiv logo, and all other product or service names and logos are registered trademarks or trademarks of Vantiv, LLC in the USA and other countries.®indicates USA registration.
  2. 2. Extending the ReachPowerful Tools• Debit and Credit Cards › Market changes = Opportunity › Consumer behaviors drive product design › Analytics provide member insight › Targeted marketing delivers results › Measuring and managing 2
  3. 3. The Regulatory Rearview MirrorA Brief Look• Debit › Durbin Amendment › Regulation E• Credit › The CARD Act• Consumer Financial Protection Bureau › TBD… It’s a new day in payments …and time to look forward! 3
  4. 4. Your Payments ProductsIs the Glass… Half-Empty? Or Half-Full?• Offset revenue loss • Rebuild revenue and through: profitability through: › Increased fees › Offering members clear choices › Higher balance and pricing requirements › Rewarding member engagement › Reduced benefits › Providing new payment solutions › Accelerated expense that members are willing to pay reductions for › Diminished innovation › Reducing costs or features not providing value 4
  5. 5. Payments Continue to Grow! Debit Credit• Transaction volume will • Average spending growth grow by about 8.6% to was 8% in 2011, driven 10% annually through largely by affluent 2016 customers• Transaction volume • No real growth in overall expected to reach about outstandings for several 76 billion transactions in years 2016, up from estimated • 2012 projected spending 46 billion this year growth of 8%-9% Source:, December 21, 2011 Source: 2012 U.S. Credit Card Outlook, Mercator Advisory Group 5
  6. 6. Your Members Have BeenChanging TooAccording to MasterCard, Consumer Trends with Greatest Impact on U.S. Financial InstitutionsTREND DEFINITIONFinances @ the Foundation Financial securityCards are integral role in my overall well- Debit and Credit plays an financial management tools beingIdentity Financial security playspersonalization in my overall well- Card product type and an integral role beingExperiences Trump As consumers becomeand product benefits focus shiftsunique Relationship Rewards more sophisticated, that are as fromPossessions possessions (what I’ve got) to experiences (what I do) as your membersMore for Less RealizingCU product compared to large issuers! Value of that it’s not just about best price; it’s about best valuePower to Foundation of Credit Unions! Bank Transfer Day in social Technology has made it easier for consumers to influencethe People each other good example media is aLess Is More For some, “streamlining”; others products, a little morevisit to in One relationship for all financial just want one site to order their cluttered lives manage financesAt Your Fingertips What do I want? Everything. When do I want it? Now. Mobile applications, account alerts Source: GfK Roper Consulting, Mood of the World–United States, MasterCard analysis, June 2011 6
  7. 7. P2P Payments Platinum Credit Rewards Business DebitPrepaid Mobile Applications How Do You Know What Products To Offer? Low APR, No Fee Credit Student Card Premium Credit Personal Financial Management Closed Loop Gift Card Secured Card 7
  8. 8. Consumer Segments Content Middling Traditionalists Aimless Self- Sufficients Disgruntleds …And Who to Offer Them To? Guidance-Seeking Gen Y Skeptics Millennials EducatedStruggling Techies Opportunists Boomers Gen X Echo Boomers 8
  9. 9. Segmentation Extends Reach Who are our targeted member groups? What products Understand What are their and offers Your Member key appeal to each? characteristics? Who are our most valuable member segments? 9
  10. 10. Analytics Provide Insight Member Data Sources Debit Online Banking/Bill Core Credit Card Card Pay Analytical Segmentation How do they use these Where do they spend? accounts? Campaigns, Offers, Products Extend credit, upgrade Activate, grow, and retain account, promote new 10
  11. 11. Segmentation Develop Card Groups • Any available demographic or performance information: › Last activity › High/Low users › Transaction type › Account type - Card or Checking › Branch locations › VIP › And many more…. 11
  12. 12. Targeted Marketing DeliversResults• Penetration, activation and usage › Promote debit POS transaction types › Highlight debit card over check access › Position credit card as financial tool• Targeted marketing campaigns › Analyze results• Optimize sales channels › Branch, online, ATM, call center• Loyalty programs › Reward behavior and provide additional value 12
  13. 13. Customize Messaging 13
  14. 14. What’s the Effort Worth?Client: $1.7B Financial Institution• Segmentation Objective: › Identify and activate new, never activated debit cardholders › Drive revenue from recently booked new deposit accounts• Targeted Offer: › Use debit card 5 times in 30 days for free companion airline ticket• Results: › 72% activated card and performed at least 1 signature debit transaction › 44% performed at least 5 transactions in 30-day period › 95% sustained usage 6 months post campaign 14
  15. 15. What’s the Effort Worth?Client: $600M Financial Institution › 68,000 debit cards• Segmentation Objective: › Stimulate signature debit transactions in under-performing group – less than $250/mo. in signature transactions• Targeted Offer: › $500 or more = $20 gas voucher; $900 or more = $40 gas voucher• Results: › 83% increase in signature debit volume › Annual interchange revenue up more than $106,000 › Growth in average spend per card moved from $103 to $270 15
  16. 16. What’s the Effort Worth?Client: $1.9B Financial Institution• Segmentation Objective: › Build interchange revenue to offset potential Durbin losses › Develop recurring utility bill pay behavior• Targeted Offer: › 40,000 members who did not use debit card for utilities › Pay one bill = $25 dining certificate; 2 or 3 bills = $50 dining certificate• Results: › 47% increase in signature debit interchange › $125,000 in incremental annual interchange revenue › $750,000 increase in incremental monthly debit card spend › 89% sustained payment usage over a 6-month period, through members setting up recurring payments 16
  17. 17. Measuring and ManagingWhat Works – and What Doesn’t• Determine your success criteria before you start• Evaluate all activities – direct mail, in- branch and online• Review industry performance benchmarks › Recognize the source of the data and how that translates to your credit union (national vs. regional, Visa® vs. MasterCard®, etc.) › Leverage the insight to take action 17
  18. 18. Evaluate Behavior• Benchmark Performance › Control Group › Prior to Campaign › During Campaign › Post Campaign 18
  19. 19. Measure Your ROI• Capture Goals• Target Market• Achieved Performance• All Expenses 19
  20. 20. Benchmarking PerformanceAverage Active Consumer Debit Cardholder EarnsConsumer signature transaction 140 bps ($0.49)Consumer PIN transaction 74 bps ($0.31)Consumer blended 119 bps ($0.43)Business Debit 235 bps ($2.10)Average active cardholder monthly POS transactions 17.0Average active cardholder monthly signature transactions (Visa) 15.2Signature average ticket $35.32PIN average ticket $42Average annual spend $7,800 Sources: 2011 Debit Issuer Study, April 2011, Oliver Wyman 2Q2011 Consumer Credit Products Scorecard, Visa 20
  21. 21. Benchmarking Performance Study Participants Consumer Cards Best-In-Class and Visa Averages Penetration 73% 88% 53% Activation Rate 75% Visa (64.9%) Signature Transaction 13.7 20.5 Per Month / Active Visa (16.2) Annual Interchange $87 $153 Revenue / Active Sources: 2011 Debit Issuer Study, April 2011, Oliver Wyman 2Q2011 Consumer Credit Products Scorecard, Visa Drive Best-In-Class Returns 21
  22. 22. CU Credit Card OpportunitiesCredit Union Times - February 22, 2012 CU Credit Card Programs are Poised to Shine “A credit union can go to its members, particularly those with a credit card issued by a large bank card issuer, and confidently offer them a card which will save them money, carry fewer fees and will come from an issuer they can trust…They have always been able to do that in the past, but now more CUs feel willing to do it.” 22
  23. 23. Trends in the Credit Market• Direct mail solicitations are near pre-CARD Act levels• Promotion of longer term (13 month) introductory rates• National issuers focused on “no frills” cards – no fee, no rewards• Shift in focus from affluent to wage-earners• Active positioning of the product as a financial management tool Source: “Issuers Working to Meet Demand for No-Fee, No Reward Credit Cards” –, February 28, 2012 24
  24. 24. 25
  25. 25. Key Credit Metrics BALANCE GROWTH ACTIVE ACCOUNTS Industry Active Client Industry Active Client Increase Growth Increase Growth 2.77% 5.25% 3.57% 5.93% Source: and internal credit union organic growth calculation, 3rd Quarter 2011 26
  26. 26. Successful Growth is PossibleCampaign Results BenchmarkPrescreen Acquisition Avg. Response Rate – Avg. Response Rate –Campaign 0.99% less than 0.4% Cost Per Acquired Cost Per Acquired Account - $95 Account - $124Balance Transfer Response Rate – 2.86%Campaign Avg. Balance - $3,371Card Usage and 28% Response Rate Avg. Response Rate –Reactivation less than 10% 27
  27. 27. Loyalty Isn’t About Points• It IS about: › Valuing the member for their entire relationship, not just their card activity Debit Merchant- › Providing products that meet their Funded unique needs › Delivering incentives that are relevant, meaningful, and flexible Rewards › Cross selling the right product to the right member at the right time! Credit Enterpris Loyalty Loyal members have more Other Financial Products products, higher balances, and greater satisfaction
  28. 28. Summary• Payments will continue to be a strong tool to extend your reach with your members• Debit and credit card products can generate significant income for your credit union• It takes time to segment your member base – but it’s worth it• Take action on what you know! 29
  29. 29. Questions? Stephanie Polen Vice President, Client Portfolio Management 812-647-9573 30