Recurring Transactions are the Future of Payments: Is Your Credit Union Getting Left Behind?

By Nicole Jass, Vice President of Data Products, Vantiv, now Worldpay. 

With the rise of new payment methods, such as mobile wallets and P2P, I often get asked about the future of credit and debit cards. The truth is, cards aren’t going away anytime soon. However, you’re going to “see” a lot less of them.

As buyer’s habits have shifted from in-person to online purchases, fewer shoppers are pulling a piece of plastic out of their leather wallets. Just as importantly, as the role of these cards shifts from the traditional swipe or dip, to loading and saving on a merchant’s website, the decision of which card to use will no longer be made at the point of purchase.

It will have been made long before.

Worldpay sits at the point of purchase at over 800,000 merchant locations, allowing us to collect sophisticated data on 21 billion transactions annually. By integrating, linking, and enhancing this information using Worldpay’s proprietary Vivid Data EngineTM, we can compare transactional usage trends between credit unions and national banks.

One thing we’ve discovered is that as cardholder behaviors evolve, card not present (CNP) transactions are gaining a larger piece of the pie. In fact, CNP transactions now make up over 7 percent of sales transaction volume for credit union-issued cards. This represents growth of 7 percent over just the past year.[1]

However, national banks are doing even better. With year-over-year growth of 12 percent, CNP transactions now represent nearly 9 percent of total sales transaction volume for national bank-issued cards.

Drilling down further to recurring transaction activity, a subset of CNP transactions, the song remains the same. Credit unions experienced robust 65 percent growth between 2016 and 2017. Yet national banks saw 80 percent growth over the same period. This difference allowed national banks to pick up market share in this channel, and they now have nearly three-quarters of recurring card transaction volume.

All this begs the question: what can your credit union do to compete for CNP and recurring payment transaction activity?

  1. Go after 30- to 50-year olds: Worldpay’s research finds that cardholders in the 30-50-year-old, affluent market segment lead the charge in CNP. More specifically, those in this age range with kids at home tend who are highly educated professionals, and spend a large portion of their disposable income online on goods like electronics, media, and clothing are moving to online even quicker. However, the typical credit union member skews a bit older than this segment and older than the typical cardholder at a national bank. Credit unions need to put a big focus on acquiring cardholders within this high-potential demographic.
  2. Engage your current cardholders: Although credit union cardholders skew a bit older, they also have higher income, on average, compared with those of national banks. Credit unions should do all they can to retain and grow these relationships. One way to do this is through loyalty and rewards programs focused on set-and-spend, recurring shopping activity.
  3. Encourage recurring payments: With the growing popularity of subscription-based home delivery services like Blue Apron and Hello Fresh, as well as online ordering from fast food and fast casual family dining establishments, you should incent your cardholders to load your card in their user profiles when they sign up for these services.

Learn more about this topic by watching the On-Demand Webinar:  “Your Cardholders Are Sending Spend Signals.” After watching this session, you’ll walk away with the details your credit union needs to know in order to pick up the signals your cardholders are sending to make impactful decisions based on the full picture of your members spending habits.

[1] Worldpay proprietary customer data, based on analysis of over 800,000 merchant locations, $1 trillion annual sales volume, and 21 billion annual transactions.

Vantiv, now Worldpay is the NAFCU Services Preferred Partner for ATM, Debit Card & Gateway Processing; Credit Card Processing & Servicing. More information and educational materials are available at nafcu.org/vantiv

Top Auto & Home Insurance Trends to Watch in 2018

By: Corrin Maier, Vice President TruStage Partner Management, CUNA Mutual Group.

The 2017 insurance marketplace assessment by CUNA Mutual Group revealed six major consumer auto and home insurance trends you’ll want to keep an eye on in 2018 that impact everything from consumer experience and pricing to how credit union members may buy insurance in the future.

Here’s a high-level outline of what we discovered:

  1. The shift to direct purchasing is real: more and more, people are using direct channels over face-to-face.
  2. The online channel is still largely used for research, but buying is behind projection – most shoppers move from online to offline.
  3. More often, consumers get the best carrier through a single experience and are increasingly open to shopping in non-traditional spaces such as auto dealers and other retailers.
  4. The decision to shop is more frequent and driven primarily by rising prices.
  5. The Internet of Things (IoT) is supporting a move toward personalized pricing, based on driving behavior, home data, and more.
  6. Increasing use of ridesharing services puts negative pressure on premiums.

In our recent webinar titled “Top Auto & Home Insurance Trends to Watch in 2018,” we dived deeper into the causes and effects of these trends, and you can view it on our Preferred Partner Page of the NAFCU website.

Among other learnings presented in the webinar: insurance carrier profitability and growth rate are highest among those focused on direct channels. At the same time, online bind rates are generally low, as the consumer experience is still under-optimized. Source: SNL

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for Analytics, TruStage® Auto & Home and Life Insurance Products. More information and educational materials are available at nafcu.org/CUNAMutualGroup 

©2018 CUNA Mutual Group, All Rights Reserved.

Insights from the Non-Member and Driving Credit Union Engagement

By: Brian Werger, Director, TruStage Insurance Program, CUNA Mutual Group.

At the annual Discovery conference in August, CUNA Mutual Group Chief Economist Steve Rick predicted ongoing economic growth into 2018. Even with new car sales slowing from an 18 million-per-year peak and increasing interest rates, credit unions will continue to benefit from the second largest economic expansion in U.S. history. But, it won’t last forever. Rick stated that credit union membership growth will slow to 3 – 3.5 percent through 2018, due to slower job growth and slower lending trends.

This potential decline points to increasing focus on expanding membership. Recent research from TruStage® CUNA Mutual Group’s consumer insurance brand, examines an often-untapped opportunity for credit unions to grow. “What Matters Now®: Insights from the Non-Member,” is a deep-dive into non-member and under-engaged member mindsets, lifestyles, attitudes, and habits. These crucial insights can be invaluable tools for your credit union to reach this audience. Watch the recent webinar for a breakdown of the research here. 

Who are non-members?
Only 22 percent of hardworking families surveyed were fully engaged credit union members, meaning they consider their credit union their primary banking institution.* The other 78 percent of hardworking Americans fall into three areas of opportunity for membership growth: partially engaged members, disengaged members, and true non-members.*

Partially engaged members acknowledge that they are a credit union member, but say that their primary banking is done elsewhere. Disengaged members have credit union products, but don’t consider themselves to be credit union members (and note that only a small percent of this group were members via indirect loans). True non-members have no credit union affiliation at all.

Diversity impacting behavior
Among its key findings, the research revealed prominent levels of diversity among the three opportunity segments, which were more likely to be a Millennial or from a race other than white (vs. the “engaged member” population). These segments put a high value on brands that reflect their cultural identity, and that they were more likely to choose a financial institution based on a personal recommendation. This will be significant to credit unions aiming to grow membership in an economy where over the last 5 years, multicultural consumers accounted for 92% of US consumer growth, and whereby 2020, multicultural consumers will account for 98% of growth.

Recommendation: Add engagement level to your segmenting
Most credit unions already segment their targeting efforts based on demographic factors; an engagement filter can be a valuable addition. Take a closer look at the disengaged members. The What Matters Now research showed that this was the population with the highest propensity to make the credit union their primary financial institution in the future.

For more insights gathered by the What Matters Now research program, watch the recent webinar here. 

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for Analytics and TruStage® Auto & Home and Life insurance products. More information and educational materials are available at nafcu.org/CUNAMutualGroup 

Tools to Boost Auto Lending

By Betty Seifu, Lending Program Manager, Allied Solutions.

A recent report released by the National Automobile Dealers Association predicted an increase in auto sales and leasing for a third straight year in 2017.[i]

With these car activities building momentum among consumers, there is an increased opportunity, and honestly, a need, for a strong game plan for scoring these potential auto loans.

Not only are you already competing with other financial institutions for loan opportunities, but now you’re also up against new players who have entered the field. Less traditional businesses like retail, mobile and peer-to-peer lenders are getting into the game to expand their services and attract new members.

This poses a threat to what credit unions have been seeing in terms of winning over auto lending consumers; many individuals are now looking for the best deal on the market no matter who is offering it to them.

Get ahead of your auto loan competition by building a strong lending program with unique and attractive consumer benefits.

Rewards Programs

Offering retail or cash rewards to borrowers who finance their vehicle through your institution is one way to draw in new auto loan business. One vendor surveyed participants of their auto rewards program and found that 95% of the respondents rated the program 5 out of 5 stars. In fact, this program vendor reports that their auto rewards program has increased their lending approval-to-book ratios as much as 90% on direct auto loans![ii]

Consumers are clearly very interested in auto loan rewards. And why wouldn’t they be? It is basically free money! These programs are likely to entice your consumers and generate a lot of new auto loan traffic for your institution, so why not sweeten the pot with multiple benefits for your borrowers?

Load up the bases so you can get that grand slam!

Cash Rebates

An independent study performed in 2016 by Aha! Online Consumer Research reinforced how much of a win-win complementary benefits really can be for lending institutions and businesses alike. More specifically, the study found that just about any individual presented with the opportunity to earn cash back would be interested in participating. In fact, 97.3% of consumers surveyed said they want their insurance company, employer or association to offer a cash back rewards program.

Much like a retail incentive in an auto rewards program, do not underestimate the value of a rebate check! According to this study, 82.6% of consumers surveyed prefer receiving a $500 check from their employer, insurance company or association over an offer of $1,000 off the price of a vehicle.

Take a look at the scoreboard: consumers want cash back, so offer them cash back!

One such cash-back rewards program offers a $500 rebate check to consumers leasing or purchasing a new vehicle from participating vehicle brands. This auto rebate program, called BonusDrive, is new, simple and quite attractive to consumers in the market for a car. In fact, BonusDrive is so new you may not even have been aware of its existence.

This puts you in pretty good field position considering that your competitors have likely not even heard of auto rebate programs, let alone thought about offering a program of their own.

By marketing this program to your consumers you place yourself at the top of the roster for financing when it comes time for your consumers to apply for an auto loan on their new car. Move to the top of the league today by adding unique auto loan benefits programs to your starting lineup. With the added bonus of being able to market and cross-promote these various programs, you will ensure that your credit union stays top of mind for consumers looking to choose an institution for their car buying and financing needs. Game over. The final scores are in and everyone wins!

Be sure to catch up on Allied Solutions’ recent auto loan podcast series to learn ways your credit union can take action today to better attract modern consumers, especially millennials. These podcasts address how to use market data to attract auto purchasers and utilize digital communication channels to invest in a stronger auto loan program.

Listen now: 

Building a Competitive Auto Loan Package: Go Big or Go Home

Understanding the Auto Market: Get Into the Minds of Millennial Buyers

New Allied logoAllied Solutions is the NAFCU Services Preferred Partner for Insurance- Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown Protection (MBP). More educational resources and partner contact information are available at www.nafcu.org/allied.

 

[i] National Automobile Dealer’s Association https://www.nada.org/steven-szakaly-auto-sales-forecast-2017/

[ii] AutoLine Marketing Group http://myautoline.com/

 

Developing the Right Strategy to Engage Millennials

By: April Lewis-Parks, Director of Education and Corporate Communications, KOFE.

Millennials (generally defined as age 18 to 34) are quickly becoming the largest consumer segment in the U.S. They outnumber baby boomers by 11 people. However, despite their numbers, Millennials struggle to achieve financial independence. They are among the least likely to engage with traditional financial products and services. So, what can credit unions do to bring this generation into the financial fold?

The financial experts at KOFE: Knowledge of Financial Education captured this dilemma in a new infographic, “Millennial Money: Banking and Credit Fear.” As you can see, it details the challenges facing credit unions that are eager to engage America’s largest consumer segment.

The biggest roadblock to millennial product engagement is the inherent mistrust of financial institutions. Many believe big banks played the largest role in causing the Great Recession, and they don’t have the knowledge to differentiate those organizations from smarter alternatives, like credit unions. As a result, they lack an understanding of how traditional financial products improve their ability to manage money effectively.

Nowhere is this more apparent than with millennials use of basic checking accounts. Nearly one in four millennials say they will never open a bank account. However, more than half that number say it’s because they don’t have enough money to keep the account open. That points to a lack of knowledge about accounts that offer no minimum balance requirement and protections to avoid overdrafts.

Education is often the key to fostering more engagement. By increasing awareness of credit unions’ member-centric culture and educating consumers on the benefits offered by traditional financial products, credit unions can overcome millennials’ reticence.

This is the driving principle that led the certified credit counselors of Consolidated Credit to create KOFE, developing an out-the-box platform that can be used by partners, such as credit unions, to educate unbanked and underbanked individuals, particularly millennials. Using a third-party platform allows credit unions to engage in effective outreach, without diverting revenue into developing in-house education systems.

For an in-depth conversation about how to use financial education to capture your members’ attention watch KOFE’s webinar on demand now.

KOFE Logo 117

KOFE (Knowledge of Financial Education) is the NAFCU Services Preferred Partner for Financial Literacy. More educational resources and contact information are available at www.nafcu.org/KOFE.