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News Scan August 2016

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • Every financial institution needs to generate a steady stream of new customers, yet one of the easiest and most steady sources of new business and related revenue is to reach out to current customers for additional business.
  • With the cost of acquiring new retail, small business or commercial customers being five to ten times the cost of retaining an existing one, and with the average spend of a repeat customer being 50% – 100% more than a new one, financial marketers need to remember that the most efficient investment of marketing funds is to market to customers that already bank with you. Here are seven relatively easy techniques to do just that.
    • Start With the Lowest Hanging Fruit
    • Stay Connected
    • Continually Evaluate Upsell Opportunities
    • Empower Your Customer-Facing Employees
    • Ask for Referrals
    • Leverage Offline and Online Channels
    • Measure and Reward What You Want Done
  • To succeed in cross-selling services to customers, a bank or credit union needs to keep the conversation going. This should be through email, direct mail, statement messaging, SMS texts and as part of the online and mobile banking platforms.

Cybersecurity Sharing Launches for Credit Unions

Source: cutimes Category: Credit Union News
  • The National Credit Union Information Sharing and Analysis Organization officially announced its launch.
  • Their mission - to advance cyber resilience, real-time security situational awareness information sharing, and coordinated response.
  • "This is the first operational and threat intelligence sharing organization dedicated wholly to credit unions,” said Gene Fredrik Sen, executive director of the NCU-ISAO, and vice president and chief information security officer for the St. Petersburg, Fla.-based PSCU.
  • The Consumer Financial Protection Bureau ordered First National Bank of Omaha to pay nearly $28 million back to 257,000 consumers whom the CFPB said were lured into debt cancellation products and charged for credit monitoring services that were never received.
  • According to the CFPB, the bank sold debt cancellation products to its credit card customers from 2010 to 2012. One of the services promoted was a monthly payment should the cardholder become involuntarily unemployed, hospitalized, or disabled
  • First National Bank of Omaha responded to the order saying that some of the problems were the fault of a third-party vendor, Affinion, and its subsidiary, Trilegiant, who provided the service
  • FNB claimed authorization for the services was sometimes delayed or not processed correctly, yet customers were still charged. Once the bank became aware of the issues, it ended its relationship with Affinion.
  • The word is out in one upstate New York community that Great Meadow Federal Credit Union ($25.5M, Granville, NY) is the place to go for financial services. GMFCU’s second quarter loan-to-share ratio of 88.3% bested the 77.7% national average and 57.6% average for credit unions of $20 million to $50 million in assets.
  • The marketing efforts have kept the credit union growing and achieving goals as an institution. So has offering such modern must-haves as mobile banking that includes remote deposit checking and an on-off feature for the debit/ATM card.
  • Lending — specifically auto lending — has been a major driver of bottom line and relationship growth at GMFCU. Refinance specials and car-buying informational sessions with members are part of the GMFCU’s strategy.
  • GMFCU does relationship pricing and lending. The former includes interest rate breaks of up to 0.25% on loans and CDs, depending on the number of products the member has, and the latter includes loaning all the way to E paper with no credit score minimum.
  • A recent survey from Mercator Advisory Group found consumer preference for self-service banking options is on the rise. Of the 3,000 U.S. adults surveyed, 57 percent said they preferred to deposit higher-value checks through a teller rather than a mobile remote deposit.
  • Consumer interest in mobile remote deposit is quickly gaining traction. 21% of respondents would use mobile remote deposit for $1,000 checks, as would 19%for $50 checks.
  • For young adults, self-service banking is particularly valuable. This demographic is more likely to deposit $50 checks with remote deposit or through an ATM than with a teller.
  • When implementing self-service options, there are a few key things FIs should keep in mind:
    • Be consumer-centric
    • Make it simple. Solutions that are intuitive to use are best.
    • Consider adoption initiatives.
  • Three approaches to business intelligence credit unions and community banks can pursue in the name of optimizing their credit card marketing and management:
  • The Macro Approach: This gives overall picture of portfolio health. The average spend per active card, for example, is a useful measure of cardholder engagement.
  • The Loyalty Approach: Rewards data provides a window on card usage and member preferences. It also facilitates liability management, as the rewards program is one of the largest expenses in running a card portfolio.
  • The Engagement Approach: By closely examining cardholders shopping behaviors, issuers are better able to identify opportunities to increase card usage. It’s critical for today’s issuers to analyze and apply transaction-level data (alongside credit bureau data) to insert themselves into the relationships consumers have with retailers like Amazon and Starbucks

Analytics Help CUs Manage Portfolio Risk

Source: cunacouncils Category: Credit Union News
  • A better way to understand risk-based analytics is to think of risk in two distinct ways: default risk and loss given default.
  • Default risk (credit risk) normally is measured at the loan level, and is a rating that captures the likelihood that borrowers will not repay their full loans.
  • That means the credit union may lose principle and interest payments if the borrower becomes delinquent.
  • Loss given default, measured in dollars, represents the value at risk if a default occurs.
  • Loss given default risk is tied directly to collateral securing the loan and represents the recoverable amount if a loan is charged-off.
  • Understanding the different drivers of default risk and loss given default can give credit union a new appreciation for loan analytics and allow CU to use data more meaningfully.
  • A sound default risk model will also give CU a better understanding of its members and the products they provide.
  • Banks have always fought to gain power and market share, knowing their competition and serving a marketplace that had relatively few choices. The battlefield is changing, however, as technology advances and new players emerge. The marketplace is also restless, demanding more from legacy and emerging institutions.
  • In the TV series “Game of Thrones” – a sequence of events occurs around the same time to put an entire country into upheaval. Similarly, in banking, we have had a sequence of events occur to cause significant turmoil in an entire industry.
    • The Digital Revolution
    • The Global Financial Crisis
    • Increased Banking Regulations
  • The Fintech Battlegrounds have been drawn and they have fallen into 3 categories.
  • Disruptors: Those selectively attacking the business of traditional banks
  • Enablers: Those that help traditional banks transform in to digital businesses
  • Collaborators: Disruptors who are partnering with traditional banks to extend their product offerings.
  • Now, the city of Seattle and the Seattle Metropolitan Credit Union are teaming up for a new program, offering loans to help immigrants with green cards — many of whom are low-income — overcome the financial hurdle to becoming naturalized citizens, because immigrants don’t have credit or access to banks as well as have to go through lengthy application process.
  • The loans are for a year and carry a 9.99 percent interest rate — or a similar fee charged upfront, designed to serve Muslims whose faith prevents them from paying interest under sharia law.
  • And at least one other local institution, Express Credit Union in South Seattle, has offered a similar loan since 2010, though that outfit is much smaller and the loans carry a 15 percent interest rate.
  • Becoming a citizen allows someone to vote, avoid deportation and typically earn a higher income, among other benefits, according to the city immigration office. Anyone over 18 who has had a green card for five years can apply.

Got Members Without Checking Accounts?

Source: cues Category: Credit Card News
  • There are many credit union member, whose doesn’t have a share draft account.
  • The possible reason can be that some members have difficulty in maintaining a balance due to fluctuating income whereas some choose not to use a share draft account
  • Prepaid debit card can be an attractive product offering for such members
  • Prepaid cards function like traditional debit cards, while offering even more safety and security as they’re not linked directly to a share draft account. They are easily reloadable and, because they cannot be overdrawn, they also work as a great budgeting tool.
  • Plus they are accepted everywhere traditional Visa cards are, but without the high interest of credit cards. With a prepaid debit card, members can experience the convenience and comfort of shopping or paying bills online even if they don’t have a share draft account.
  • If you have members who don’t have a share draft account, considering tell them about prepaid debit cards that are:
    • Safer than cash
    • Secure
    • Convenient
    • Easy to load
    • Avoid overdrafts and associated fees
  • By contrast, about 88% of people with high credit scores have credit cards, a figure that has changed little over the past decade.
  • With low rates around the world, central banks like the Fed don't have much ammo to fight an economic crisis. With monetary policy officials from Uganda to the U.K. to Australia slashing interest rates in recent days and the U.S.
  • Federal Reserve continuing to kick its own rate hike can down the road, central banks around the world have been left ill-equipped to deal with an unexpected financial or economic crisis.
  • The better part of a decade has passed since the onset of the Great Recession and ensuing global financial crisis, during which time governments around the world slashed interest rates in an attempt to jump-start economic growth.
  • And with rates still at depressed levels years after their initial lowering, international central banks have run out of options for stimulating economic growth. But monetary policy officials have been reluctant to give up on low rates and cut their losses.

Bank Branches Don't Die, They Evolve

Source: americanbanker Category: Banking Industry
  • In the mid-1970s the banking industry was going through a major change in delivery systems with the first ATMs and point-of-sale terminals emerging. The acronym of the day was not BSA or CRA but EFTS — for Electronic Funds Transfer Systems — more simply EFT.
  • What was true in the late 1700s, the 1970s and 1980s is still true today. What made banks in Philadelphia successful in 1976 and nearly 200 years earlier was simply the personal service they provided their customers.
  • Customers may not visit a branch regularly or much at all, but the fact that it is there if they need to deal with a real person is what counts.
  • The bottom line with smart banking — yesterday, today or tomorrow — is to give customers the critical freedom of choice to bank how, when and where they want.
  • Is branch marketing giving you a headache? How can you strike the right balance between empowering branches against the clear need for oversight in order to maintain compliance and brand consistency?
  • In the financial services industry, marketers are faced with significant challenges every day. Your marketing messages can get quickly drowned out and watered down in the heavily regulated and highly competitive financial services industry.
  • Fortunately, it is possible to find that right balance that allows you to maintain control and simplify workflows so you can focus on big picture, strategic initiatives. Few way to do so are:
    • Approval Process
    • Compliance Management
    • Managing Disclosure and rates
    • Brand Consistency
    • Engaging Local Branches
    • Managing Local Marketing Budgets
    • Data Management
  • Implementing the right technologies, you can relieve many of the pain points across your branch marketing operations.
  • According to PYMNTS.com, Visa’s latest EMV data indicates that there are 326.8 million chip cards in the hands of American consumers today, a figure that actually exceeds the total U.S. population and making it by far the world’s largest market for EMV credit and debit cards.
  • MasterCard estimates that only 20 percent of ATMs today are EMV-compliant, and that only 35 percent will be EMV-enabled by October 1, the date MasterCard has set for its “EMV liability shift for ATMs.”
  • CO-OP Financial Services, a provider of financial technology to credit unions based in Rancho Cucamonga, California, suggests eight things every credit union needs to know before the “Liability shift”:
    • Skimming at ATMs is way up
    • The liability shift does not mean compliance is mandatory
    • EMV technology can extend the functionality of your ATMs
    • New, EMV-enabled ATMs can help transform your branches
    • Your processor should be involved in the transition from Day 1
    • Members value security – so educate them on it
    • Securing card data requires more than EMV
    • EMV compliance at the ATM is well worth the investment