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News Scan July 2016

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • To keep CU’s card portfolio strong, it's critical to develop and nurture active cardholder relationships.
  • With targeted campaigns based on data, market trends and consumer behaviors, CU can encourage its cardholders to spend more – and more often – with CU’s card.
  • Segmenting cardholders based on their usage level can help understand where each cardholder is in the life cycle of their relationship with particular CU.
  • The goal is to have sustained growth, not just a temporary increase.
  • With targeted campaigns, CU can entice each segment of cardholders with the offers that are most likely to interest them.
  • By always working to move each cardholder to the next level, CU remain engaged with cardholders, which helps build stronger loyalty and deepened relationships.
  • For the second year in a row, the 2016 Performance Against Customer Expectations (PACE) Index, published by FIS, polled consumers globally about their financial institution expectations, the importance of 18 key attributes, and how well their primary financial institution meets those expectations.
  • While the majority of banked consumers continue, for now, to place their primary financial provider as their first choice when a significant life event occurs, the move to digital transactions (and digital interaction) can quickly change this advantageous competitive position.
  • Consumers are increasingly expecting quick responses, instant access to insight, more control of their financial lives and increased personalization.
  • While the length of new auto loans has increased, borrowers are less likely than ever to keep the loans to full term, according to a new study from TransUnion.
  • The average term for new auto loans increased to 67 months in 2015 from 62 months in 2010, according to the study.
  • The study found that, despite the growth of longer loan terms, auto loan duration—the length of time a consumer keeps a loan and the loan remains in the lender's portfolio—has declined. While risks on longer-term auto loans are higher than short-term auto loans, credit unions auto loans delinquency rates are low.
  • Large US banks got a lift from the June "Brexit" vote in the second quarter, but could face long-term pain from a British retreat from the European Union.
  • Banks attributed the bounce to a rise in market volatility after the British vote, resulting in double-digit revenue gains in some trading operations.
  • Morgan Stanley chief financial officer Jonathan Pruzan pointed to a "high level of activity at the very end of June, primarily due to Brexit as we supported our clients."
  • Banks have already begun informal discussions with regulators in other European countries on procedures for obtaining bank licenses and establishing compliance with local capital requirements
  • The pace of decision-making is expected to accelerate when Britain officially notifies the EU of its plan to leave, triggering a two-year negotiation period.

Top of wallet means something different now

Source: cuinsight Category: Credit Card News
  • Top of wallet is a commonly used phrase understood to mean your card is the first to be reached for when a wallet is opened.
  • However, with less wallets being opened and more online purchases being made, the techniques to stay top of wallet have to change as well.
  • Mobile wallets are gaining more and more traction on a monthly basis with tech savvy members, which can be either a blessing or a curse.
  • There are many instances that a consumers uses the default card for payment and never try and choose another card, even though these payment services have the ability to add multiple cards.
  • So, instead of competing to be top of wallet, really credit unions are competing to be the only card in wallet.
  • If your institution doesn't take customer attrition seriously, you’re missing out on valuable insights that could point to huge gaps in your customer experience.
  • A managed attrition process can make a huge difference in your institution’s growth; it can also help you gain valuable insight to help you improve the customer experience and slow future runoff.
  • Beyond the reality check, a managed attrition process can be used as a road map to identify gaps in an otherwise exceptional customer experience. Use customer attrition to your advantage so that you can learn and improve from it.
  • Sure, not every customer is profitable, but if you aren’t measuring customer attrition in some way, you won’t know what you’ve lost or whether you are retaining your most profitable customers.
  • As large banks start to report earnings this week, they're expected to confirm that low interest rates are a double-edged sword.
  • JPMorgan Chase will kick off bank earnings Thursday. Its comments will be parsed by Wall Street as it seeks clues about the industry’s exposure to recent shifts in the global economy.
  • Bank revenue, derived largely from the spread in the interest rates charged on loans and paid on deposits, continues to come under pressure as rates remain stubbornly low.
  • Rates are expected to remain low following the economic uncertainties triggered by the United Kingdom's Brexit vote to sever its economic and political ties with the European Union.
  • Another challenge: The industry is still dealing with bad loans to struggling or bankrupt energy companies and money set aside to cover related losses.
  • Potentially making things more difficult, year-ago results were “boosted by strong capital markets revenues, wealth management, and unusually low loan-loss provisions,” Erik Oja, banking analyst at S&P Global Market Intelligence, wrote in a note to investors.

Social Media Benchmarks for Credit Unions

Source: thefinancialbrand Category: Credit Union News
  • The following analysis incorporates data for 169 credit union over nine quarters, starting in Q4 2013, ending in Q4 2015
  • In Q4 2015, credit unions in the sample generated 3.34 million Facebook likes, up 54% from 2.17 million likes in Q4 2013. In 2015, the average quarterly increase was 3.2%, down from an average of 8% in 2014.
  • On a per 100 members basis, Facebook likes grew from 6.5 likes per 100 members in Q4 2013 to 10 likes per 100 members in Q4 2015, with two-thirds of the increase happening in 2014.
  • Mid-sized credit unions (those with 50k to 100k members) generally out-performed the larger credit unions.
  • The credit unions in the database tweeted more than 476k times in Q4 2015, 88% more than they tweeted in Q4 2013. On average, in 2014, the credit unions tweeted 10% more than the previous quarter. That average quarterly growth rate declined to 6.5% in 2015.
  • Not all credit unions are interested in implementing the same delivery channels and online transaction capabilities.
  • 87% of American adults own or have regular access to a mobile phone, 71% of those mobile phones are smartphones with Internet access.
  • Most smartphone owners are young adults 85% of 18-29-year-olds own one. 54% of adults age 50 to 64 own a smartphone. 78% of college graduates use smartphones.
  • In 2014, 22% of mobile phone users used mobile payments up from 12% in 2013. In 2014, 41% of U.S. consumers used a phone to pay at a merchant location.
  • In Oct 2014, 1 million users signed up for Apple Pay in the 3 days after its launch but Apple Pay isn't the most popular payment system.

Which U.S. banks have highest UK exposure risk?

Source: usatoday Category: Banking Industry
  • Major U.S. banks have high financial exposure to the United Kingdom and could face increased risk on loans and deposits at their branches there as a result of last month's Brexit vote
  • The estimated financial exposure for the top five banks ranged from $70bn to $120bn each
  • The Financials select sector SPDR exchange-traded fund fell 8.1% in two days after the Brexit referendum amid concerns about their U.K. exposure. But since then the bank stocks have halved their losses as worries ebbed. However, the British pound this week declined anew against the U.S. dollar, posing another potential financial challenge for banks.
  • The exposure is categorized by various types of borrowers, including banks, public sector entities, such as government agencies and central banks, non-bank financial institutions, insurance firms and pension funds, as well as corporate or household counterparties
  • The bank's high U.K. exposure "doesn't necessarily mean they will see losses on their loans or deposit flight at their U.S. branches instead means many of the claims "will be considered more risky."
  • Wells Fargo recently introduced the Wells Fargo Cash Wise Visa® Credit Card, which features flat-rate cash-back rewards and a lengthy 0% APR promotion. It’s the only credit card issued by the bank today that offers flat rewards over 1%.
  • Wells Fargo is the latest of several major issuers to add a flat-rate cash-back credit card to its portfolio. In recent years, Capital One, Chase and Barclaycard each started issuing 1.5% cash-back cards, and Citi began issuing a flat-rate cash-back card with a higher rewards rate.
  • The Wells Fargo Cash Wise Visa® Credit Card doesn’t come with the highest rewards rate but offers a long 0% APR period: 0% for 15 months on purchases and balance transfers, and then the ongoing APR of 13.24%-25.24% variable. This makes it a strong choice for some.

Instagram Fraud Scheme Targets Navy Federal

Source: cutimes Category: Credit Union News
  • An Atlanta man was sentenced to more than three years in prison last month for running a social media scheme that deposited more than $1 million in fraudulent checks at the $75.1 billion Navy Federal Credit Union, USAA and BB&T.
  • Stefon D. Clark, 27, was also ordered by U.S. District Court Judge Steve C. Jones in Atlanta on June 23 to pay restitution of more than $613,000. Clark pleaded guilty to two counts of bank fraud and one count of conspiracy to commit bank fraud.
  • According to court documents, Clark, Johnson and Curry ran the scam that lasted at least 17 months and compromised more than 240 bank accounts, which resulted in more than $600,000 in losses to the Vienna, Va.-based cooperative and the two banks.
  • They each pleaded guilty last year to conspiracy to commit bank fraud. Johnson and Curry also were ordered to pay more than $613,000 in restitution.

Credit union strategy: The doorbell is ringing

Source: cuinsight Category: Credit Union News
  • A monumental change has been ringing our doorbell for the past few years and is now walking right through—whether we are ready or not. Boards are responsible for strategy, policy, and advocacy, and the call for board performance is loud and strong.
  • Boardroom dynamics with an organizing principle for strategic excellence, relevant policy shaping, and advocacy in the community and across the nation have a far-reaching positive impact on the membership. This article shares insights from boards aspiring to answer the call for an increased positive member impact.