Benefits of a Robust Credit Card Product Strategy

A credit union’s credit card portfolio has potential to become a highly lucrative asset with an appropriately aligned product strategy.

A “one size fits all” product strategy cannot support the interests of all members. A credit union can count on current members turning to them when the need arises to open a credit card, but will the available product set be enough to entice the member to apply? Offering a robust and extensive suite of credit cards, to capture a wide variety of needs, is paramount to success.

What does a robust credit card suite look like and how does it benefit all parties?A robust credit card product suite contains a wide array of payment solutions that caters to members that walk in every day. The college student, millennial couple, small business owner, mid-sized corporation, and the retired CEO all want access to credit and all have differing needs. By offering only limited solutions, a credit union, may eliminate the opportunity to fulfill a specific need and therefore miss out on an opportunity to maximize credit card revenues.

Adopting a robust and diverse credit card strategy opens doors for all members. College students and credit challenged members are looking for credit building products and a credit card is a simple way to begin to build a history. Implementing a graduation strategy, to help these beginners transition into better products for future purchases, like mortgages and auto loans is also necessary for creating lasting relationships. An institution also needs to have products that appeal to the mass market along with members looking for wealth management strategies. Affluent cardmembers are seeking rewards, personalized local service, extra

fraud protection, low fees and customizable rewards options like airline miles, concierge services, cash back and points.

Obtaining top-of-wallet status in today’s highly competitive environment requires a healthy rewards program. According to the J.D. Power 2015 U.S. Credit Card Satisfaction Study, 52% of cardmembers selected their new card for a better rewards program. The study also found that the 54% of members who understand and enjoy the benefits their card has to offer, use their card more.1

Businesses of all sizes and scales seek the ease of use and immediate availability that credit card products provide. Small business owners rely heavily on access to credit during the launch of their business, so a flexible, low-interest credit solution keeps these members happy and engaged. Established mid-sized corporations seek tailored features and benefits including spend controls, expense monitoring, and larger limits that afford them the availability to make large purchases when needed.

Benefits of a Robust Credit Card Product Strategy

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of members who understand and

enjoy the benefitstheir card has to offer,

54%use their card more.1

1 J.D. Power McGraw Hill Financial. (2015). Attractive Rewards and Benefits Drive Credit Card Selection, Satisfaction and Spend. [Press release]. Retrieved from http://www.jdpower.com/press-releases/2015-us-credit-card-satisfaction-study

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Needless to say, every business and every consumer is unique with varying credit needs, and attempting to leverage a single card strategy will not draw them in or sustain profitability long term. From an institutional perspective, placement is imperative in terms of optimizing revenue. Having businesses in appropriate products will optimize experiences and will provide enhanced revenue returns for the institution. Offering a small business owner the flexibility to choose the reward type that interests them, the spend controls necessary to monitor their employees’ utilization, and the expense tools necessary to make the management process seamless, creates long-term sustainability and lasting partnerships between the institution and its member base.

What does the credit card landscape look like?The credit card landscape requires an institution to offer an optimized product suite, not only because of member individuality, but also because the average cardmember isn’t carrying as many credit cards as years past, which has lowered the opportunity to capture a share of wallet. The following chart highlights the average number of credit cards per American, compared annually. While the number of accounts per person has decreased, the total amount of cards opened nationwide is on the increase. In Q1 of 2010, about 386 million credit card accounts existed as compared to about 422 million in Q2 2015.2

What does credit card utilization look like? The table below captures credit card utilization along with average credit score in 2016 by generation, according to CreditSesame.com.3 To appeal to younger generations, like Millennials and Generation Z, credit unions should focus on transparency, financial literacy, benefits and a program to help them grow as cardmembers.

Benefits of a Robust Credit Card Product Strategy

2 Number of credit card accounts in the United States from 1st quarter 2010 to 2nd quarter 2015 (in millions). (2016) Retrieved from http://www.statista.com/statistics/245431/number-of-credit-card-accounts-in-the-united-states-2012/

3 Who’s Sabotaging Their Credit? A Startling Look at How Americans Manage Their Credit. (2016) Retrieved from https://www.creditsesame.com/blog/whos-sabotaging-their-credit-how-americans-manage-credit/

Year

Average Number of Credit Cards (including

those with none)

Average Number of Credit Cards

(card owners only)

2014 2.6 3.7

2008 2.9 3.7

2006 2.9 3.6

2004 2.9 3.6

2002 3.3 4.0

GenerationCredit

UtilizationAverage

Credit Scores

Baby Boomers (born 1946-1964) 45.0% 663.9

Generation X (born 1965-1981) 56.6% 631.7

Millennials (born 1982-2000) 57.7% 624.2

Generation Z (born after 2000) TBD TBD

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Capturing Market ShareSmart Credit Matters (smartcreditmatters.com), a website provided by Elan Financial Services, is dedicated to the financial literacy of its partners’ members and helps consumers of all ages understand how credit works and explains how to reach their goals. The emerging generations will need resources like this to understand how to best leverage credit to obtain future goals.

Millennials are a strong generation, numbering 83.1 million according to the US Census Bureau.4 Not far behind the Millennials is Generation Z, those born around the turn of the century. By the year 2020, Generation Z will account for 40% of all consumers. Generation Z is a philanthropic, environmentally aware and skeptical generation that has been raised

through the recession and the age of technology. They expect fast, transparent information and they are used to finding their own information online.5 Credit unions can expect Generation Z to look for mobile access, immediate real-time rewards and alerts, and opportunities for self education.

Elan Financial Services has captured all card product options to cover from the college student and credit challenged to the affluent and business owners looking for rewards with no rules and association benefits. Partnering credit unions are able to provide Elan’s robust and diversified product suite with their own logo, ensuring their members are satisfied with a customized credit card and are maintaining solidarity with their credit union.

Benefits of a Robust Credit Card Product Strategy

4 United States Census Bureau. (2015). Millennials Outnumber Baby Boomers and Are Far More Diverse, Census Bureau Reports. [Press release]. Retrieved from https://www.census.gov/newsroom/press-releases/2015/cb15-113.html

5 Abramovich, G., (June 12, 2015). 15 Mind-Blowing Stats About Generation Z. Retrieved from http://www.cmo.com/articles/2015/6/11/15-mind-blowing-stats-about-generation-z.html

Your products: Elan’s products:

Secured Credit Card

Business Rewards

Mass Market

Business / CommercialMasterCard or Visa Business Bonus Rewards Plus / MasterCard or Visa

Business Bonus Rewards / MasterCard or Visa Business Card MasterCard or Visa Community Card / MasterCard or Visa Company Card

Mass MarketAmerican Express Cash Rewards / MasterCard or Visa Bonus

Rewards MasterCard or Visa Platinum

Credit ChallengedMasterCard or Visa Secured / MasterCard or Visa College Card

Mass AffluentAmerican Express Travel Rewards / MasterCard or Visa

Bonus Rewards Plus

Wealth ManagementAmerican Express® Premier / MasterCard® or Visa® Elite Rewards

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For almost 50 years, Elan has helped credit unions grow their business and meet the needs of their members. Along with a robust credit card suite, Elan also offers mobile payment technology and mobile apps for easy access. Elan also provides an online and in-person training program for new partners to help them navigate the product suite and match credit cards with individual cardmember needs. Year after year, our partners remain pleased with the Elan solution, as Elan has seen more than a 96% partner renewal rate.

For more information, call 1-800-223-7009 or cupartnership.com.

Benefits of a Robust Credit Card Product Strategy