Outsourcing Credit Cards Not Always a Disservice

I feel compelled to balance the perspective offered in the recent opinion entitled “Sale of Credit Card Portfolios is Sell-Out of Members’ Best Interest” (CU Times, March 10) by Perry Dawson, a former CU executive who participated in the formation of CSCU (Card Services for Credit Unions). It is a simplistic and unfortunate misrepresentation to imply that credit unions that make the strategic decision to outsource their credit card are doing their members a disservice. It would also be a misrepresentation to imply that all credit unions should sell their card portfolios. Like any strategic decision, it depends. Credit card issuance is more competitive than ever: Card supply exceeds demand and consumers are constantly being enticed with card offers having more credit, better rates, rewards, and so on. The opinion piece stated that “tens of millions” of offers are mailed annually – according to Synovate’s Mail Monitor the actual number is 4 billion! This intense competition helps to explain why most credit union card portfolios have been shrinking for several years. In this environment it would be a disservice to members if credit unions did not continually assess their ability to compete. It is absolutely possible to compete with committed management, dedicated resources, competitive products, and a marketing strategy that is well funded and consistently executed. Especially if you are at a credit union with a $228 million card portfolio, the fourth largest in the country. Most credit unions cannot make this level of commitment to a portfolio that comprises a small percentage of their assets, is declining, and is experiencing increasing charge offs. They must ask if they are meeting members’ needs when members are voting to the contrary by taking other offers. Most credit unions have limited resources and must prioritize to best meet their member needs. Sometimes a card portfolio is deserving of investment and serves a credit union and its members well. Other times, a partnership arrangement will provide the members a win-win solution by improving the card products and reducing the financial and management burden on the credit union. Credit union management is challenging: it is about recognizing the competitive landscape, assessing core competencies and making good decisions for the benefit of members. Doing anything less would be a sell out of members’ best interests. Frank Selker President AssetExchange Portland, Ore.