Suzanne Savage of Savage Consulting helped CUNA Payments Roundtable participants boil down two days of intensive sessions covering issues ranging from digital currency to digital wallets.
She also gave attendees some direction in starting their payment strategies when they return to their credit unions.
Payments innovation is largely being driven by nonfinancial-institution players, Savage said. “Google, PayPal, and others are disintermediating our members in favor of these nonfinancial-institution-driven programs,” she said. “These guys want to sell stuff. Amazon wants to sell stuff and PayPal wants to facilitate selling stuff. They want to promote loyalty.”
Also, card-based, revenue-generating transactions are threatened by programs such as Target’s Red Card and PayPal. Savage advised credit unions to work with their transaction processing partners to determine if their transactions are dropping, and try to migrate transactions back to cards.
“If I give you one homework assignment, it’s to go back and look at your ACH data,” Savage said.
She noted that credit unions have “crazy good” data on automated clearinghouse (ACH) reports. For instance, she told of working with one credit union whose top ACH transactions were going to Chase, Capital One, and American Express.
“Now they know which members to target for credit card accounts,” Savage said.
Credit unions must develop a bottom-up payments strategy that begins with accounts and cards members desire. This means accounts that provide surcharge-free ATM access, ease of use, and mobile device access.
The next strategy is improving technical competence. Websites, call centers, and mobile applications must be easy to use.
“In terms of interface ease of use, your credit union is competing with Apple and Amazon,” Savage said.
Credit unions must work to build loyalty the way Amazon and Apple have done, Savage said. The best way for credit unions to be relevant in the digital wallet space today is to offer accounts and cards members want.
For credit unions, a payments strategy boils down to relationships, Savage said. This includes member service, personalization, and, again, offering products members want such as remote deposit and personal financial management tools.
Even as the payments landscape changes, building loyalty and retaining members remains more important than ever. “It will always be cheaper to keep members than to acquire new ones,” Savage said.