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5 posts categorized "Interchange"

October 03, 2011

Bringing a Knife to a Gun Fight - Why Cutting Marketing is a Bad Idea


by Ron Daly 

I'm sure you've heard the old adage "never bring a knife to a gun fight". Good advice - even though I've never been in a gun fight, I know I'll never be bringing a knife. Why? Because you're not only under-prepared, you're going up against someone with a huge advantage. 

I bring this up because of an article in the CU Journal by Paul Lucas, a branding consultant who's worked with a number of CUs and companies (including my own) on their branding. Based on a recent Bankrate article about what consumers shop for in a financial institution, Paul came up with some pretty interesting conclusions about the role branding and marketing play.

From Paul's article:

...17% of shoppers start looking for a new bank because of dissatisfaction with rates and fees, but only 4% of them choose their new bank because of rates and fees.

Why does that happen?

Because shoppers are swayed by brand image, advertising and bank branches in convenient locations. Perhaps this disconnect helps explain why more people are changing banks more often.

How did they choose which institutions to shop? The selection drivers lead me to believe that brand awareness is the key, and of course that's heavily driven by brand image. The big banks get strong awareness by buying it.

Paul also mentioned that BofA spent $2 Billion dollars on marketing in 2010. Two. Billion. Dollars. Spent by one bank. In one year.

What percentage of your budget goes into marketing? Paul makes a good point: 

The banking industry spends around 5% of income on marketing. If the credit union industry spent 5% using smart, targeted creative we could increase awareness, making us more competitive against banks.

Instead of spending more, however, many credit unions have cut the very things that sustain brand image: advertising, branch maintenance and member services staff. It's a downward spiral that left spinning long enough can take a credit union out of the game.

While CUs might have it where it counts (low fees, better rates, more specialized service), every inch of ground they gain gets thrown out the window when they don't pay to make it known.

Now for my two cents -- You really want the business? Time to start asking for it. Maybe the "gun" you bring to the fight isn't $2 Billion, but as any shooter will tell you, firepower's not the only important factor - having a better aim means a LOT. Time to really focus in on the member/potential member. What do they need? What do they want? What do they fear? 

One other important fact from Paul's article says the main reason people start shopping for a new FI is because of a shift in their life's circumstances. Maybe it's time you started wondering what those circumstances are...and how you can be there to help. 

I welcome your feedback in our comment section. 



May 10, 2011

Domino Effect: Are You Helping the Member Understand?


by Ron Daly 

Sometimes the best way to get a result is to give a system a little push. You have to pull the choke to get the lawnmower to start. You give your kid a gentle push on their bike so they can start pedaling on their own. And sometimes, to get members to take action, you have to tell them what's at stake. 

We've talked about Interchange before. The debate is raging on, but that hasn't slowed down the legislation or the outcry on both sides of the wall. Retailers want fewer swipe fees and finance folks all know that we'll be killing free services if we lose Interchange income. The Electronic Payments Coalition has another commercial out about "the domino effect": 


Bill Cheney at CUNA said that over a quarter of a million members have written in to change the rule, according to this NPR article. An article from the CU Journal says the Fed is working on a compromise that will try to please both sides...word's out on whether or not it will, seeing as the cap will still go into effect. It's going to be tough for people to suss out why this all matters, because both groups say they're acting in the best interest of the consumer. 

This is a perfect example of how a national campaign for credit unions would work. A large body (or bodies) would put out the word about CUs and...what? Everyone would know what to do? Examine the video above; what does it ask of the viewer? Do they know who to contact? Who are the champions of "not changing Interchange" in Congress? 

It's time you gave your system a little push. 

Your homework is to think up ten (10) ways to educate YOUR members about Interchange. How are you going to do it? Can you rope in a Senator or Representative to come talk to your members? How about a letter to members? How about a video from your CEO asking members to talk to Congress? Localizing and personalizing a problem makes it stand out more. How are you going to tell your members "if you don't act on our behalf, this is going to hurt"?

Tell us about it in the comments section.

March 03, 2011

Tracking Dodd-Frank


by Ron Daly 

We're recovering from GAC 2011, a three-day frenzy of talk, regulation, talk, meetings, and more talk. The Crashers crashed, the Hill-hikers hiked, and the lawmakers got to see first-hand that credit union folks are dedicated, motivated, and united

The one thing EVERYONE was talking (and tweeting) about? Interchange. It's big, it's bad, it's going to hurt, according to this article from the ABA (yes, that ABA).

  • During the first two years, the proposed rules will eliminate $33.4-$38.6 billion of debit card interchange fee revenues for banks and credit unions. As a result, consumers and small business will face higher retail banking fees and lose valuable services as banks and credit unions seek to offset the loss of debit card interchange revenue.
  • As a result of the anticipated increase in banking fees, the number of unbanked individuals will increase. As a result, many low-income individuals will have to use higher-priced alternative financial service providers, such as check-cashers.

Is this what we want? Obviously not. We need to get ahead of this thing and think about what we're going to lose as a result of these changes. We need information. We need action. 

I encourage you and your senior management team to subscribe to the "Dodd-Frank Tracker" on the ABA website. It DOES cover issues that impact credit union, it's pulling in resources from all over the web and condensing them for YOU. The more you know, the more you can fight against interchange regulation - or react to the fallout. 

Click here to go to their blog directly, or click here to go to their FeedBurner Feed where you can subscribe to their email updates. Read the articles, act on the information. 

February 02, 2011

Did you dream about cards replacing cash? You dreamed too small.


by Ron Daly

 Maybe we've aimed a little low...

Granted, most of us didn't see the change coming - "Smartphone? What the heck is a smartphone?!?" we said in disbelief. Sure, we had Blackberries, but the iPhone surfaced and struck a mighty blow to the way we think about our cell phones. Maybe the phone wasn't the important part. Maybe the smart is where the new money is. 

And boy, is there ever money in smartphones. Not only in the app market, mind you, but in the transfer of money between a buyer and a seller. There are mobile banking apps, of course. There are PFM apps. There's even a device from Square that allows a person to swipe a credit card on their phone. That's pretty mind-blowing. But Starbucks - that's right, Starbucks - has just invented their own way to pay for things via smartphone. 

From the Transaction Directory

"Today, one in five Starbucks transactions is made using a Starbucks Card and mobile payment will extend the way our customers experience and use their Starbucks Card," said. Brady Brewer, vice president of Starbucks Card and Brand Loyalty.

Last year, Starbucks customers loaded $1.5 billion onto their cards, a 21 percent increase from 2008.

In a related story, CNN Money reports on the growing popularity of “mobile currency,” whereby customers use their mobile phones in place of cash or credit cards.

“There’s a lot of money at stake if it’s done right,” said Omar Green, director of strategic mobile initiatives at Intuit.;

For years, we've talked as an industry and as a society about the end of cash, the next wave of finance, and what the future had in store for our money. And maybe we were dreaming small - we just figured debit use would increase and cash would start to drop off as a form of payment. We weren't counting on smartphones to be the next step. Were we? 

Well, as recently as a year ago, Newsweek was predicting that the cell phone would edge its way in as a payment method, as did And here we are, seeing one of America's most interesting businesses jump in and get wet. 

While we are fighting the Interchange battle, who's watching this critical shift in the payment system? No more checks, no more Visa, no more MasterCard OR Interchange income...

Stay tuned...

June 02, 2010

Interchange Fees and Credit Unions - Members Taking Action


by Ron Daly 

Interchange fees are the topic of many blog posts in the industry these days. Some posts are for changes, some are against, some are matter-of-fact and some are downright angry. One alarming article released yesterday says that 90% of yearly interchange revenue could be lost, which comes down to "$15 to $35 per debit card per year". 

CUNA has been pressing the issue in its daily News Now emails. Today's story deals with the Treasury and what Dan Mica called the "most serious threat" facing CUs at this moment in history. But it was a different story (and a different reaction by our company's clients) that caught my attention. 

Read this excerpt from the News Now article, "Grassroots interchange opposition, strong and growing":

WASHINGTON (6/2/10)--While the halls of Congress have emptied for the week, grassroots credit union advocacy regarding interchange legislation continues this week through both legislator-led town hall meetings and credit union activism on several fronts.

One of those fronts is a Credit Union National Association-backed effort to verbally and electronically reach out to representatives, and this communication effort resulted in over 80,000 individual contacts as of Tuesday.

CUNA is asking credit union backers to urge their legislators to oppose federal intervention into the current interchange rules. An amendment offered by Sen. Richard Durbin (D-Ill.) which was successfully added to the Senate's regulatory reform package would direct the Federal Reserve to issue regulations to govern interchange fees charged for debit card transactions. CUNA has recently said that this rule change forces the Fed into the role of a price-fixing body, when interchange fees should be driven by market forces.

State credit union leagues have also chipped in to back credit union concerns, and Virginia- and Louisiana-based credit union leagues are among those that have joined state-level small banking associations to publicly oppose federal interchange intervention.

Some examples of emails sent to members, compelling them to call and email their leaders and take action: 

From Horizons North Credit Union

Screen shot 2010-06-02 at 9.25.53 AM

From Shell Federal Credit Union

Screen shot 2010-06-02 at 9.25.00 AM 

From Belvoir FCU

Screen shot 2010-06-02 at 9.24.12 AM 

They're simple emails with a simple message: "Interchange is going to hurt the credit union. Contact your leaders now and tell them to act in our mutual best interest."

What does it cost you to send an email to your members? Hopefully, the answer is "not much". How much will interchange fee changes hurt your CU? The answer is probably "a lot". Risk versus reward, people. Members need to know about things like this and when it comes to asking them to do something as simple as sending an email, that's only about three minutes of their time. Never hurts to ask, right?

So, here's your million-dollar-question-of-the-week: What's your credit union doing to encourage calls and letters to legislators from members? Tell us about it in the comment section.