The Fintech behind Credit and Debit: Using Technology to Drive Revenue in Today’s Dynamic Market

BY RENDER DAHIYA

The old way of doing debit and credit cards no longer applies for credit unions, given the current innovative, competitive and fluctuating environment they’re facing. Is your CU leveraging the latest technology to capitalize on today’s market factors? Learn how to do so to connect with your customers on a one-to-one level.

The financial services industry is in a state of flux: Fintech and other startups are creating new forms of competition, disruption and even collaboration; regulatory changes are an ever-present factor (the Consumer Financial Protection Bureau will turn five this summer); and U.S. financial institutions have recently invested a great deal in the transition to EMV-enabled cards (at a total estimated cost of more than $6 billion).

With these factors at play, credit unions and banks are under intense pressure to offer competitive products and drive profitability. Financial institutions are re-evaluating their entire product line to identify winners and losers based on the cost of doing business, market demand and opportunity – for growth, loyalty and account volume. So how do traditional offerings like credit and debit card accounts fit in? Depending on the approach, they can be part of the problem or part of the solution for credit unions and banks.

The Cost of Doing Business

Let’s face it, costs have gone up. Whether you are talking about overhead costs, such as labor and real estate, or product-specific costs, like marketing and materials, there is very little that is less expensive than it was even five years ago.

Just consider EMV cards, which cost as much as 10 to 20 times more to produce than a mag stripe card. What does this mean in practical terms? Let’s say your organization issues 50,000 cards per year and you use a traditional method to produce, manage and securely store those cards. That transition to EMV just cost your organization an extra $105,000 in production fees alone. This is a sunk cost to your business, for cards that may or may not ever be issued. What’s more, those cards will now sit in a warehouse as costly and perishable inventory.


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