A surprising number of credit unions still don't seem to take management of their credit card portfolios seriously, according to card consultants who regularly work with credit unions to improve their credit card performance.
The executives pointed out failure to really understand some basic card metrics, like card account profitability and what goes into developing it as part of the problem, along with a failure to assign someone at the executive level to really take responsibility for growing the card program.
“I think many credit unions, most credit unions, have a staff member who is assigned to the credit card program for the day to day,” explained Brian Scott, vice president with The Members Group, a payments CUSO affiliated with the Iowa Credit Union League. “They can answer member questions about the cards and similar concerns, but that's not the same thing as having someone regularly take a look the portfolio from the 30,000-foot level with an eye towards improving profitability.”
Card consultant Ondine Irving made the same point, though she added that the fight to get credit unions to assign someone at the executive level to the card program is an ongoing effort.
“As I have said for over 10 years, a credit card program must be properly managed and measured,” Irving wrote in an email response to a reporter's question. “A product champion is required to allow for accountability and ownership. It is not enough for the card program to be 'part' of someone’s responsibility. The highest profit-making product deserves its own owner.”
Scott largely agreed, adding that he was often surprised at how few credit unions really understand how much money their credit card programs make for them. This is a key gap in knowledge because, he said, without that perspective, credit union executives can wind up making mistakes, such as making broad decisions about a portfolio based on risk alone.
“Sometimes executives will tell me they have pulled back on a portfolio because they took fraud losses of $10,000,” Scott said by way of example. “But I will point out that the same program, even with those losses, made them $190,000. Executives have to have the complete picture to make decisions.”