Rediscovering The Power Of Debit
Many banks who backed off debit following increased regulation saw their income in other product lines take a hit, indicating the importance of this product in building profitable relationships. According to MasterCard Advisors, the number of different merchant categories in which a consumer uses their card is far more predictive of future profitability than the number of times they use their card. Identifying high-value debit segments allows you to make strategic decisions on things like when to switch people over during a portfolio conversion and who to spend most of your messaging dollars on during this process. It also allows financial institutions to incentivize differently when branch employees open potentially high value accounts, rather than treating all debit products the same.
Next Generation Commerce
The investments made now in mobile payments and retail relationships will help carry financial institutions through a number of upcoming changes in the retail space, including the growing tablet market and even television-based commerce.
The idea of buying something you see on a show or advertisement, either through dedicated applications or right from the TV via remote or voice command, is the next new buzz in some merchant circles — so it should certainly be on financial institutions' long-term radars too.
What Your Membership Wants
A panel of Gen Y bank customers had some interesting requests for banks, including the ability to test drive an institution’s online and mobile environment before they became a customer or member and an elimination of the disconnect between the business names that consumers know and the merchant names that appear on their actual statements.
While this group remains open to just about any new product or service, the interface must be intuitive enough to figure out without guidance in 15 minutes or less. And, it needs to be recommended by peers or family.
“I don’t want to be the guinea pig,” says one panelist.
A panel of small business owners indicated they were also after solutions that would help them save time and increase their organization capabilities. And unlike some younger customer segments, they’re actually willing to pay for these benefits.
“If doing business with you is easy, I don’t really look at pricing, aside from maybe the rate on our auto loans” says one panelist. While profitable, business owners can also be harder to acquire than your standard consumers.
“Once I trust an institution I’m not really looking anywhere else,” says the same panelist. Only one of the four participants reported being approached by another financial institution trying to capture their business.
Some services like RDC may go unused by business customers because they don’t seem practical.
“Scanning multiple checks yourself takes more time than just dropping them off at the branch,” says another panelist. Other times, business owners don’t sign up for these options because the institution never took the time to fully explain or advertise them.
The Lasting Effects Of Fraud
According to a survey by ACI Worldwide and AiteGroup, 12% of US consumers who experienced card fraud changed card providers as a result. And even if that consumer stays with their card provider, behavior and profitability can be impacted. After the suspect card was replaced (usually at a cost of between $3-5 for the issuer), 44% of consumers used the card differently in all or some payment circumstances. And a full 33% used the replacement less than their original card.
FIS unveiled a FI branded mobile wallet — which works using any smartphone and without any additional hardware on the merchant side — to deliver POS purchases and ATM withdrawals. The solution relies on either NFC (when the customers and merchants are so equipped) or QR codes generated on the merchant card reader screen or an ATM screen and scanned by the smartphone. All of these options eliminate the risk of card skimming by removing plastic from the equation.
Fiserv is taking another route with its Mobility Master Wallet, which aims to makes financial institution's existing mobile banking solutions a hub to integrate, aggregate, and control any number of third-party wallets. From this master wallet, users can add, activate, deactivate, and remove cards, set transaction limits, or specify the use of certain cards for certain merchants.
Fuze Network also unveiled a reCHARGE solution that allows funds to be loaded from any POS terminal onto any card account. They advise that current customers have increased spending by 125% percent, and the chance to compete with both non-financial institution prepaid companies and larger card issuers for more income is certainly a tempting prospect for smaller issuers like CUs.
Lastly, Plastyc demonstrated how far prepaid technology has come, with a full demand deposit account (DDA) experience card meant to replace consumers’ bank checking accounts.
You can deposit to the card (FDIC insured) using POS retail terminals or mobile RDC for checks. And because it has an account number and routing number, you can also set up direct deposit. The company even provides a virtual checkbook where customers can fill out the information and have the company mail the paper check, without ever coming into contact with it themselves.
Read The Day 1 Recap