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These innately budget-friendly cards are ideal for helping members with their financial commitments.
The strategies credit unions deploy to grow debit portfolios in 2023 may wind up pulling double duty. That’s because many of the approaches to enabling a member’s everyday payments also move a credit union closer to becoming that member’s trusted primary financial relationship.
What follows are seven strategies that credit union debit card issuers can execute over the next 12 months, each with an eye toward earning member trust.
1. Focusing on Direct Deposit Capture
Members spend more confidently with a debit card that is tied to a well-funded account. This year, credit unions can optimize their onboarding processes to encourage members, and potentially even incentivize them, to trust their paychecks to the cooperative.
Acting as a member’s receiving institution effectively transforms a credit union into a hub for all things personal finance. Not only does this deepen engagement with members, it also expands the credit union’s member intelligence, setting its strategists up for more personalized cross-selling.
2. Expanding Debit’s Digital Footprint
It’s not hyperbolic to say a new debit cardholder may never actually hold their card. As P2P, mobile wallets, ATM pre-staging and card-on-file e-commerce experiences reach ubiquity, the physical attributes of a payment mechanism become less important.
In 2023, credit unions can curate the partnerships and technology integrations necessary to create the most elegant digital experience possible for their debit cardholders. This can include investments in digital issuance, mobile wallets, expanded P2P features and greater online banking functionality.
3. Educating the Cardholder Base
It’s no secret that mobile payments remain low among today’s credit union members. Industry averages hover under 4% of total credit and debit spend. While it may be tempting to view these numbers as signals of indifference among cardholders, that would be a mistake. In our experience, the inactivity is a problem of awareness, not interest.
Recognizing that debit cardholders who use a mobile wallet regularly spend an average of 50% more, credit unions can lean in on mobile pay education in 2023. Doing so effectively starts by analyzing the transaction behaviors of their top performers and leveraging those insights for relevant teaching-style communications. The more localized, the better. (Imagine a 10-second video showing how to use Apple Pay at a popular local retailer.)
4. Homing in on Security
Within those mobile-pay education campaigns, credit unions can focus in on the security of mobile payments as a strong motivator for action. With payments and identity fraud at all-time highs, consumers are taking their personal roles in protecting their accounts more seriously.
Using simple language, credit unions should explain the benefits of tokenization, encouraging members to reduce the number of times in a day they must hand over their debit card numbers and associated personal identification numbers.
5. Segmenting Debit Cardholders with Analytics
Credit card strategists are no strangers to segmentation as a marketing strategy. For decades, it’s been a best practice to communicate and incentivize card use based on which of the four standard pay-down behaviors a cardholder exhibits. With debit, things aren’t as simple. For starters, there is no pay-down behavior to analyze. Second, there is a plethora of “best practices” to choose from when it comes to data segmentation within a debit portfolio.
In 2023, credit unions can set a well-defined direction for segmentation and begin to understand more about where the stand-out, contributing debit cardholders are finding the greatest value in their cards. This will help optimize revenue ahead of new card-not-present interchange tables.
6. Prepping for Interchange Impact
Speaking of interchange strategy, credit unions can set their sights on new ways to incentivize card use while also controlling their own expenses. Debit loyalty programs are likely to take a back seat to digital investments as credit unions shift from incentivizing with rewards to incentivizing with convenience.
Encouraging cardholders to set their debit cards as the default or preferred method of payment with certain retailers is another effective strategy for the coming year. Credit unions that employ the assistance of predictive analytics to identify the right retailers can achieve the greatest results here. Co-op Solutions’ SmartGrowth consultants, for example, have identified restaurants, furniture, office, pet and travel merchants as those most likely to see increased debit spending in the first quarter of 2023.
Network routing should be a particular area of focus as cooperatives across the nation look to optimize profitability. By taking assertive steps to control network fees and maximize interchange potential, credit unions will be better able to monetize one of their stickiest payment offerings.
7. Bundling Services to Keep Nomadic Members
Thanks to the influx of fintech, big bank and big tech competitors, the battle for loyalty will rage on throughout 2023, and likely far beyond. Credit unions should lean into their people-helping-people cultures to ensure members feel the credit union difference at every interaction.
Dovetailing efforts to socialize and solidify their values, credit unions should also consider making product changes to elongate the debit cardholder experience across the entirety of their financial concerns. Solution bundling with debit at the center enables credit unions to deliver an experience that emanates from a trusted personal finance hub.
It’s All About Trust in 2023
As members navigate the torment of personal budgets during a time of intense economic uncertainty, they will be hungry for honest advice and reliable transaction tools. The institutions that deliver those two salient experiences will be in the best position to earn primacy in the minds of its members.
The innately budget-friendly debit card—enhanced with the modern features of the digital era—is an ideal means for members to stay on track with their financial commitments. Add in the people-over-profits framework of a credit union issuer, and you’d be hard-pressed to find a financial tool more worthy of a credit union member’s trust in 2023.
Tina Rioux is a senior portfolio advisor for Co-op Solutions, a provider of payments and financial technology to credit unions.
