By Jeremiah Lotz
Today’s credit unions should be prepared to provide members with access to options when it comes to payments. While new payment methods such as digital wallets and real-time payments are important, optimizing credit and debit card programs is also imperative for credit union success.
Here are eight innovations in card products and technology credit unions should have on their radar when it comes to optimizing, improving and marketing their card programs:
Contactless Cards. Each day, more and more consumers are using contactless/dual interface cards for tap-and-go transactions. Thanks to a reduction in the time it takes to complete a purchase, using contactless cards improves the point-of-sale experience for consumers. Once consumers realize their purchasing experiences can be enhanced and quickened through contactless, they will naturally start to gravitate toward these cards at all locations where they are accepted. Contactless is also expected to drive mobile adoption as an increasing number of consumers experience the ease and speed of tap-and-go payment methods.
Metal Contactless Cards. Many credit unions are beginning to offer cards made of certain types of materials associated with different loyalty or rewards programs. Metal cards are seen as higher-end cards which can and are being used to differentiate an issuer’s brand and program offerings.
Installment Payments. Credit unions are starting to explore the ability to give members the option to turn a high-dollar transaction on their credit card into a lower rate or fixed installment plan “loan” versus the traditional revolving balance option. For example, a credit union might see a member has made a large purchase and offer him / her the ability to pay the purchase off over a set amount of time for a small fee, versus paying a high interest rate for revolving the balance. Some larger banks and issuers – including American Express and Chase – already offer similar programs, which give consumers more control over their finances by allowing them to choose how and when they pay.
Digital Issuance. Issuing a digital card that can be accessed through a consumer’s mobile wallet provides instant availability to cards during initial opening or lost/stolen situations, essentially eliminating the three- to four-day waiting period consumers typically experience when being issued a new card. Allowing for mobile and card-not-present transactions through digital issuance will make consumers less likely to move to a different card when theirs is lost/stolen, as they can continue making purchases and transactions while awaiting the physical card replacement.
Enhanced Authentication and Biometrics. While there are numerous different authentication capabilities available today, technology will continue to improve and become more advanced in the years to come. In particular, credit unions are exploring how to pass biometric authentication across channels to improve the member experience. Right now, biometric authentication is most commonly used to access a mobile app and is fairly secure given it utilizes a user’s fingerprint or face recognition for access. But how can that translate to the phone channel and be used to make authentication stronger in other channels? For credit unions, enhanced authentication techniques not only improve the member experience and deliver enhanced security, they also provide more data to analyze and utilize to make informed decisions about which authentication practices are best suited for particular members and channels.
Loyalty and Rewards. There has been a shift across the industry as it relates to the types of loyalty and rewards program offerings and perks members want from their credit union. Overall, they want choice in how and where they use their rewards. Issuers and other providers are starting to let consumers make their own choices when it comes to loyalty and rewards. A current trend is allowing consumers to redeem points for a purchase they have already made – essentially “removing” the transaction from their balance or lowering the overall cost of the purchase in exchange for loyalty points. Cashing in on reward points for experiences is another up-and-coming trend.
Data and Analytics. Now that the industry has a better understanding of how to collect and analyze data, these insights are being used to personalize and improve the cardholder experience. For credit unions, it allows them to make faster and better decisions for members. For example, if a member purchases a flight and rents a car, the credit union might reach out to the cardholder and remind her to turn on card controls via the credit union’s mobile app so transactions are not denied while traveling. Credit unions are now using the data they have been collecting and analyzing to create experiences based on known information leading up to certain events or specific times.
Artificial Intelligence (AI) and Robotic Process Automation (RPA). Using data and technology offered through AI and RPA can enhance the member experience and ensure members are being offered card programs or other financial services offerings the most relevant to them. While these technologies do not change how payments themselves are made, they are giving credit unions, issuers and other financial institutions a way to create better experiences. Whether it is disputing a fraudulent transaction or serving a member when he or she calls in to the contact center, using AI and RPA allows for more automation and predictive analysis so financial institutions can be better prepared to serve members and consumers.
Jeremiah Lotz directs PSCU's initiatives to empower the company's Owner credit unions with innovative and engaging payment solutions. Jeremiah leads an experienced team dedicated to delivering PSCU's credit, debit, prepaid, fraud, mobile banking and online bill payment services. He also manages the strategic relationships PSCU forges with leading payments technology providers to ensure Owners have access to world-class platforms and solutions that build profitability and loyalty.