WASHINGTON–It will take just a few minutes to read this news item: in just one of those minutes, 34 new mortgage apps will be filed, 53 insurance policies but, and 180,000 debit and credit card transactions will take place. That’s a lot of opportunity for a credit union to lose or gain interchange income, according to Todd Clark.
In remarks during an event hosted by CO-OP Financial Services during CUNA’s GAC, Clark, the company’s CEO, noted other companies are pouring investment dollars into mobile and mobile wallet solutions, and for good reason.
In addition to the figures cited above, during that same 60 seconds there will be $144,000 in person-to-person transactions and another $95,000 in digital wallet transactions.
“That’s people never leaving their phones or pulling out a card,” said Clark. “That number is growing rapidly. Forty percent of consumers are digital nomads.”
To capture members’ card business and the resulting interchange, Clark challenged CUs to quit thinking in terms of life stage and to instead think in terms of member lifestyles.
“Lifestyle is about being in the person’s life every day,” he said. “You want to get into the engagement game and own more member moments.
$30 Billion in New Loans
Other data make clear why credit union need to make changes in their approaches, according to Clark. He noted credit unions hold just 6.5% of all consumer loans in total, while the three largest banks alone have 21.1% of the U.S. consumer loan market.
“If credit union could just get to where BofA is it would be $30 billion more in loans,” Clark said. “We think credit cards is a great place to do that.”
Clark asked for a show of hands for how many in the audience have an Amazon Prime account. Nearly every hand was raised. And how many credit unions have run a program aimed at becoming the members’ card on file with Amazon? Just one hand was raised.
Clark further showed data illustrating how the e-commerce market is exploding, while brick-and-mortar store volume is flat.
Todd Clark speaking at CO-OP event in Washington.
“I think whomever has my Amazon account makes more interchange income than all of my other spending combined,” he said. “Then there’s Uber, Netflix, and other expenses that come every month.”
A Move to PFR
Clark said CO-OPO is working with credit unions to move away from a focus on the traditional PFI relationship to instead be the Primary Financial Relationship (PFR) relationship. He urged credit unions to reward members for making the CU’s card their card-on-file with the various online apps they might use, such as $10 for using it with Amazon Prime for the first time. “Are they going to go back and change that back? No,” he said.
Clark noted that in 2019, there was $1.5 trillion in fees associated with transactions, a figure expected to grow by $500 billion over the next five years.
“Don’t let Chime and other companies coming into the market try to peel that away,” he said. “It’s not about the student loan or the car loan, it’s about how do I get engaged with them every single day. Payments is the place you need to be looking.”