NAFCU Services Blog

Dec 06, 2011 by David Frankil
Categories: Growth & Retention

Card products are the secret to long-term (member) relationships

The dust is still settling from Bank Transfer Day, having given many credit unions across the country an opportunity to introduce themselves to a brand new set of members. But as every credit union marketing person knows, getting a member to join is only half the battle. Building a rich, multi-faceted, long-term relationship is more difficult and takes time.

We recently recorded a podcast with Stephanie Polen, Vice President of Client Portfolio Management for Vantiv (our Preferred Partner for Debit, Credit and ATM Processing) on how card products help extend and deepen deposit relationships.  Stephanie has spent the last several years working as part of Vantiv’s ‘Portfolio Optimization Team,’ helping credit unions across the country grow their debit and credit portfolios through acquisition, activation, retention, and rewards, with a focus on increasing portfolio profitability and generating additional revenue. That’s kind of a mouthful, but what I’m trying to say is she definitely knows her stuff when it comes to successful card programs!

So in our podcast we asked Stephanie how a credit union should be thinking about addressing this challenge, because even though a member’s decision to switch may have been based on fees, their decision to engage more deeply has to be based on a broader understanding of value – the value provided by solutions offered by the credit union.

Not to be overly dramatic, but you should approach this task with a sense of urgency – we’ve been presented with a great opportunity to gain market share, and you can bet that the institutions that have lost customers are going to try and win them back.  Big banks are not going to go down without a fight - they are in the midst of a self-created PR nightmare, but they have too much business savvy and financial and technological wherewithal to be taken lightly.

All of which is to say that credit unions should leverage the relationships they have with their electronic payments solution providers to offer innovative and competitive products, features and functionality.  Those things, along with price, are important to consumers, and will ultimately dictate their perception of value, which translates directly into the breadth of their relationship and tenure with an institution.

Stephanie emphasizes the importance of debit cards as a great starting point in this engagement process – they help extend the relationship because they transform the deposit from a static funding source into continuous, active affirmation of the member relationship with the credit union.  Every time a member uses your debit card it reinforces the credit union’s brand and value, and positively affirms their choice of doing business with you.

This reinforcement strengthens the relationship and increases the likelihood that the member will turn to the credit union for additional services.  According to Stephanie, debit cards account for 50% of all debits to demand deposit accounts and 40% of all consumer spending – and have come to represent consumers’ preferred spending tool.

Credit cards, while mostly distinct and separate from the deposit account relationship, also dynamically reinforce the value of the credit union relationship every time a transaction is conducted.

As Stephanie notes in our podcast, with the right technological support, credit cards can effectively be linked to the deposit relationship through relationship-based rewards programs, overdraft protection, and even incorporated into deposit product pricing strategy – for instance, consider using the number of credit card transactions as another way for members to “earn” free checking.

These concepts are not by any means limited to your newer members – increasing penetration rates of debit and credit card use among existing members should also be a key goal.

Both debit cards and credit cards are two of the most “interactive” products that a credit union can offer, and therefore provide some of the best opportunities to help solidify a member’s choice of you as their preferred, trusted financial partner.  Best of all, this is one of those win-win solutions, given the interchange and interest income that the credit union can derive from debit and credit card use.

Learn more from Stephanie about using card products to foster valuable member relationships by listening to the full podcast. AND, check out the full conference session Stephanie will be presenting at NAFCU’s Strategic Growth Conference in March.

Post written by Dave Frankil, President, NAFCU Services Corporation

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