DES MOINES, Iowa–Credit unions are being warned that payments and related services account for roughly two-thirds of the largest financial institutions’ revenue, and consumers are beginning to turn elsewhere for these services.
That warning is coming from Eric Schurr, chief strategy officer for agent-issuer and credit card advisor TMG Financial Services, who has authored a white paper, “How to Stay Seen as Payments Turn Invisible,” which is aimed at community financial institution credit card issuers that are facing competitive threats from new entrants to the consumer banking landscape.
“Even among those consumers who have so far remained loyal to products like credit and debit cards, there are signs of trouble,” wrote Schurr. “Sometimes called the ‘Uberization’ of payments, the trend toward automated, behind-the-scenes or invisible transactions threatens the traditional financial institution’s role in the enablement of everyday transactions.”
Not only does this put a strain on relationships and revenue, the availability of payments data is also at risk, said Schurr, noting this is problematic because such data provides an important view of spending patterns and behaviors, which helps credit unions and community banks develop and deliver additional value to their cardmembers.
Included in the white paper are 10 ideas for evolving today’s credit cards for tomorrow’s consumer. Among them:
- Develop product bundles in which the credit card is only one piece to a much larger, more enticing pie.
- Take advantage of location-based or context-aware solutions that drive home the financial institution’s local benefits.
- Get serious about segmentation, thinking beyond the traditional Revolver and Transactor groups.
- Focus effort on getting your card into the primary position in stored-card environments.
Schurr concludes the paper with this thought: “Larger conversations about the future of payments and the value they will deliver to tomorrow’s consumer, must start now. Luckily for credit unions and community banks, you are a part of a larger movement that is already having these discussions. In other words, you are not alone. Take advantage of the expertise found in league, association and consultant circles to prepare your payments programs for what’s coming.”
The white paper can be found here.