Consumer lending has many forms and credit cards are increasingly a profitable one for credit unions. Historically, the industry has looked to outside vendors for credit card management due to its inherent risks and complexities. As core processors catch up to technology advancements and credit unions acknowledge technology to be of crucial importance to survival, in-house card management is a reality for many credit unions. Below are two of the main reasons that credit unions are jumping on to the in-house credit cards trend, and one reason your members will love you for it.
But First, Coffee...and Efficiencies
Are you a coffee lover who still buys the whole bean coffee, enjoying the aroma of freshly grinding your beans? Coffee machines have evolved faster than credit card technology! You can get a coffee machine that not only grinds your whole bean coffee but fills in water automatically from the tap, boils and percolates the perfect cup, all with the touch of a single button. The most efficient machine is one that can get everything done on its own. The issue in the past has been, that while many cores were able to house credit union card management, they did not do so efficiently, and third-party add-ons were required for a full-service product.
As cores adapt, integrating instant issuance and card loan servicing seamlessly, credit unions can experience efficiency in serving their members. The technology should reduce the amount of manual processes your MSR's have to take, including the amount of data they have to enter manually and transmit to the CU's card provider when opening a new account. Troubleshooting card management issues, such as security and fraud, also become an easier process.
Despite the introduction of EMV technology to the US market, card fraud is at an all-time high, with a projected $9.1B loss in the US for 2018. The leading culprit has moved from counterfeit credit cards to CNP, or Card Not Present transactions, finding the latter's security much easier to navigate around than chip technology on card present transactions. Card management for members through the same system means all the information pertinent to that member is accessible without logging in and logging out of multiple systems, and you are better prepared to address any security concerns. Core systems are now capable of advanced security technology, such as hot carding, card blocking, member daily limits, customizable expiration frequencies and more features that were once only available through expensive third parties.
If Data is Gold, Cost Savings is Platinum
This leads us to the second reason that credit card management within the core is beneficial to your CU. All the member information and data is readily available in the core. No signing into multiple systems. Not only does this create efficiencies, this gives you greater marketing power. You know and understand your members spending habits and can use that data to market products and services effectively. Conversely, this data also allows you to quickly view any foreseeable risks when extending additional credit.
Credit unions who have switched to in-house credit card management achieve savings through this type of intelligent marketing, as they now have the ability to analyze and cross-sell against the card information and transaction activity maintained in their core database. In fact, credit unions are realizing an average of 100% savings on what they paid to third parties for outsourced receipt and processing of payments, 50% on card statement services, and 20% on marketing for an overall saving between 35% and 50%.
Invite your +1 to the Table
While improving operations and saving money is fantastic, don't forget the key component of the credit union difference: The "member first" mentality. Offering industry-leading options for debit and credit cards is a sure fire way to improve the member experience. Having all of their financial data linked, where they can view and pay their bills all from within a branch or via mobile banking.