Editor’s Note: Trellance asked members of its management team to step back and share some predictions for 2018.
In all, eight Trellance thought-leaders offered their predictions. In this second installment, here’s a look at what the four had to say, as well as the implications they see for the credit union community. The first four viewpoints can be found here. (Note: This blog first appeared on Trellance.com.)
Lou Grilli, Director of Payments Strategy
Cryptocurrencies go mainstream. (You can’t have 2018 predictions without a mention of bitcoin!) This time last year, cryptocurrency was a foreign word to most people. Granted by now, it is still not fully understood, but bitcoin’s record-breaking news in mainstream media has brought the topic to everyday conversations. There are now debit cards offered that are tied to bitcoin accounts and Square is allowing bitcoin to be used in its Square Cash wallet, bringing this currency to the forefront.
While 2017 saw bitcoin used primarily as payment for ransomware, or for speculation, 2018 will see bitcoin, and more importantly several other promising cryptocurrencies come to use in everyday transactions.
Implications for credit unions: While bitcoin doesn’t specifically pose a direct threat to credit unions, an increase in the use of cryptocurrencies for international remittances; as a place to store assets instead of share draft accounts, as a P2P payment mechanism, all serve to disintermediate the credit union by creating a new rail, one that credit unions don’t participate in. While we don’t think that credit unions should not be investing in bitcoin, watching the blockchain space for promising use cases is a prudent move for 2018.
Stephanie Hainje, Senior Portfolio Consultant
Credit Face-to-Face transactions will decline to nearly 50% / Debit Face-to-Face to decline to 60%, while e-Commerce will continue to grow. During the 2017 holiday shopping season online shopping grew 15-17% versus the 3.5-4% growth rate of in-store purchases. Consumers are using phones and other devices to make online purchases for convenience and to find better pricing.
Currently, credit face-to-face transactions generates 60% of consumer spend while e-commerce is approximately 27%; compared to debit face-to-face transactions generating 65% of consumer spend with 22% e-commerce.
Implications for credit unions: Credit Unions need to embrace new technologies, implement, understand and promote the value of mobile and digital wallets, as well as promote the safety and security of shopping online with a credit or debit card. The majority of a credit union’s card base is debit and nearly 40% of consumers won’t use a debit card for an online purchase. Issuers need to gain e-commerce growth and be top of wallet/top of glass. Additionally, credit unions need to be more aggressive with credit card acquisition tactics knowing their members are using credit cards – just not the credit union branded card.
Dean Knudtson, Senior Portfolio Consultant
Income from interchange on debit will decline in 2018. The growth of debit transactions continues to decline, ending near 0 growth in 2017, as more people use credit for card transactions. Many POS terminals do not offer the option of PIN versus signature, defaulting away from higher interchange signature transactions.
At the same time, many nationwide retailers are “steering” debit transactions to their choice of lower interchange PIN networks, meaning lower interchange income on large volumes of big-box store purchases. All this means lower revenue from debit cards.
Implications for credit unions: Members are already making the move to credit cards, unfortunately it’s not usually on to the credit unions’ credit cards. Credit unions will need to step up rewards, bonus offers, and promotions to get union-branded credit cards into members’ wallets, and then make those cards top-of-wallet/top of glass.
Shelly-Ann Wilson Henry, PR & Communications Manager
CU marketers will spend as much as 10% of their marketing budget to promote their brands via social media. With so much emphasis being placed on content marketing and more consumers researching their options online, CU marketers will view social media as a worthwhile investment.
Implications for credit unions: CUs will need to spend more time building and monitoring their online presence in order to truly benefit from their investment. Fortunately, there are several products being offered by CUSOs that are designed to help them do this, so it is possible to succeed without having the expertise internally.