ST. PETERSBURG, Fla. – Card Services For Credit Unions, the association of more than 3,400 credit unions whose members process their card transactions with Fidelity National Information Services (formerly Certegy) is more confident than ever that CUs can provide their members with the credit and debit cards they want and that the CUs benefit directly doing so.
And the message for the executives of the more than 175 credit unions attending the group's 2006 annual conference, held May 3-6 in St. Petersburg, Fla., was that the organization wants to help their CUs achieve those objectives.
"If we seemed defensive in the past, in large part it was because we hadn't yet done the statistical analysis necessary on the large amount of data we have," explained Robert Hackney, president of CSCU.
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Two years ago, CSCU hired a statistical analyst whose record keeping and analysis was only now making it clear just how strong a position CU credit card portfolios are, relative to the industry's performance at large.
The numbers, when examined, appear very attractive. On average versus Visa issuers as a whole, CSCU credit union issuers performance lagged only at a few points in 2005, most notably those tied to attracting credit card balance transfers, an area where CUs lag their competition.
But at every other point from credit unions to credit card processors and the card associations, credit union credit card portfolios have matched or beaten the industry averages.
When it comes to transaction growth, both credit and debit credit union card portfolios beat the industry average by over three percentage points (15.7% for CUs, compared to 12.4% for the industry overall).
On credit card portfolios, credit union portfolio averages for 2005, met or exceeded industry averages on average monthly card usage (5.4 times per month for CUs, versus 4.7 times per month for the industry overall); percentage of accounts active per month (59% versus 54%); percentage of accounts with finance charges, per month (64% versus 57%); total volume increase over the course of the year (9.1% versus 8.7%) and annual sales volume per account ($4,341 for CUs, $4,340 for industry overall).
Credit unions lagged the industry on the increase in total outstanding balances for the year (7.3% for the industry versus 6.9% for CUs); annual cash volume per account ($345 versus $902); average cash disbursements ($402 versus $1,009); and average outstanding balances ($2,181 versus $2,708).
Hackney attributed the lower CU numbers in some of the categories to two factors. First, the numbers of CUs which still have not begun to offer a platinum card program and, second, by CUs not being aggressive enough with balance transfer programs.
"Platinum cards among CUs have seen phenomenal growth in 2005, 38.5% for the year," Hackney said, "but the reality is that the percentage of CU portfolios offering a platinum program is still lower than the industry overall. Some 16% of CU card portfolios offer a platinum program versus 40% among other issuers and CUs still have more classic and gold card programs than other issuers do."
Card analysts point out that, statistically, platinum programs perform more strongly than either classic or gold across a variety of categories and have an overall 81% higher average income as well.
Hackney also said CSCU would begin to help member CUs start to attract balance transfers which, he said, was a key way they could build their card portfolios more quickly.
Credit unions seeking to increase the numbers of their balance transfers must offer competitive percentage rates, combined with making their employees and members aware of the benefits of making balance transfers, Hackney explained while adding that CSCU understood that while average performance for CU card portfolios might be strong, it did not represent every CU's card issuing experience. Two New Initiatives
Now that the organization had been better able to take stock of the weaknesses CUs experience in their programs, Hackney announced that CSCU would take two steps to better prepare its member CUs to tackle those weaknesses.
First, CSCU will revise its Virtual Card Consultant program to make it more proactive and user friendly and, second, the company will expand its staff to begin offering in-house card consulting to CUs seeking to make their credit card programs perform better.
The Virtual Card Consultant, or VCC, is something CSCU member CUs can access online and which can give them an easier way of both understanding their portfolio's performance and seeing how the portfolio would change if the CU were to change a given parameter, such as lowering or raising an interest rate.
But the current VCC requires card executives to be proactive themselves and to seek out the VCC's services. After the renovation, the VCC will perform portfolio analysis automatically and e-mail the analysis to the card executive each month. The revised VCC will automatically analyze the card portfolios for revenue opportunities and segment CU portfolios by member category as well, Hackney said. An additional part of the revised VCC will "red flag" troubled card portfolios for individual attention from the second initiative, CSCU's new in-house consultant.
Hackney said the in-house consultant program would seek to help CUs one-on-one with their card programs and to provide them the sorts of individualized analysis, which they need to make their card programs more streamlined, efficient and productive.
The card consultant will help CUs analyze their revenue trends and make comparisons; analyze their percentage rates and fees and reward programs as well as look at their returns from their card portfolios and give the card executives something they can present to senior CU management.
Of the two, the VCC revision will take the longest since that will take significant reprogramming of the site, Hackey explained. CSCU expected to have the revised VCC available to member CUs as early as the first half of 2007. By contrast, the in-house consultant may be in place as early as July of this year, Hackney said, adding that the organization has already begun taking a look at the people they want to hire for the position.
"It's not clear yet whether we are going to charge for the consultant service," Hackney said, explaining that the organization was torn between wanting as many CUs as possible to take part in the program and still considering the possibility that it may have to make at least a minimal charge for it.
One measure of how much the organization has grown came in a sad way as well. For roughly the last decade the group has held its annual conferences and meetings in the restored Renaissance Vinoy hotel in St. Petersburg and the hotel had become a favorite of many regular attendees. But next year the meeting will have to be held in Orlando in order to accommodate the event's steadily increasing size. "It's a real double edged sword for us," explained Sue Chrzan, spokesman for the group. "Our conference attendees love the Vinoy, where we have been for the last 10 years, but we really have outgrown the facility. This year all the available rooms are full and we couldn't stay for next year."
By coincidence, their last time at the Vinoy had some star appeal since the group had to share at least the first part of its stay with the New York Yankees, which were in town to play a three-game series with the Tampa Bay Devil Rays.
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