ST. PETERSBURG, Fla.—Recent holiday sales data should be a strong Christmas Punch for any credit union not paying attention to being first when it comes to members’ mobile payments, according to one person.
PSCU President and CEO Chuck Fagan emphasized that the old “top of wallet” saying has now officially given way to “top of mobile device.”
“Black Friday and Cyber Monday sales really emphasized the shift from in-store purchasing to online and mobile,” said Fagan, who pointed out that the new definition of PFI is the holder of the payments relationship. “This shift to ecommerce is real. In 2016, we saw ecommerce take first place in holiday transactions over in-store, and now the gap has widened.”
Fagan expects credit unions, overall, to have another strong year in 2018, but to do so they need to focus on several key areas—none less important that cyber security, he said.
“In light of large-scale breaches like Equifax, cyber security will continue to be a top concern moving into the new year,” said Fagan. “It is no longer a question of if you will suffer an attack in this industry, but when.”
Not Solely Technology Issue
How can financial service providers continue to be vigilant about protecting consumers from potential threats?
Chuck Fagan
“The first thing credit unions have to do is recognize that cyber defense is not solely a technology issue—it’s an organizational issue,” Fagan stressed. “You have to get the entire organization behind cyber security. Even if you have been successful so far, the crooks are not going to slow down. They get more sophisticated and they will not stop looking for holes and gaps. Credit unions have to keep a couple steps ahead of them.”
Fagan said that PSCU has invested in tools, technology and people to protect their member credit unions.
“We have sophisticated tools that reach across all of our channels where fraudsters could get in,” said Fagan, adding that the next step is for the CUSO to connect all of the fraud trends happening across the different channels. “That means, for example, using intelligence from potential call center intrusions to help in areas like cardholder traffic, and vice versa.”
Turning to the growing importance of analytics, as many analysts have stated, Fagan said credit unions must get better at leveraging the rich member data they hold.
“Many companies talk conceptually about how to use data and analytics. But PSCU has compelling case studies that show how proprietary data has been used to develop insights that were then applied to a credit union’s business and bottom line,” said Fagan. “Our analytics engine is a leading-edge tool we have spent years adapting and perfecting. For example, we can go back to when an account is opened and take the credit score and go through the lifecycle of the account to map out how the credit score has either increased or decreased, and how the credit union has kept up with the right card product, for instance. If you make a mistake along the way, your card is going down in position, and I don’t know if you get many chances to come back.”
Fagan emphasized that credit unions must get better at targeting offers to members that match where they are in their financial lives, since the big banks are moving fast here.
“My daughter got married two years ago and she and her husband just bought a house,” noted Fagan. “She has received several offers from her bank that address her needs right now. They know where she stands in her financial life. Credit unions have to do the same.”
Choice Is Important
More and more, companies are using loyalty as way to retain and drive activity, said Fagan, who emphasized that credit unions must have a strong cards loyalty program. He said the program has to offer choice.
“Let the member choose. Offer cash and merchandise type rewards, and let the member decide what fits their needs,” he said. Fagan added that credit unions can take on the big issuers’ rewards offers and by also tying in rewards points for other credit union products, such as loans and deposits. “We have seen many of our member credit unions do well against the big banks this way, and driving greater member loyalty.”