As we begin a new decade, I want to share three words that I believe will define the future of the credit union movement: primary financial relationship (or “PFR”). Do our members see credit unions as the first place they go to for all their financial needs? They should. Americans have at least five accounts with different financial institutions, and of those that belong to credit unions, only 20% see it as their primary relationship.1 With big tech and fintech actively engaging in our market and growing market share, deepening relationships with our members is critical!The good news? Credit unions are very much defined by the human-centered relationships we have with our members. Yet the question many of you are asking is: how do we take it from here? Where should my credit union invest to stoke this growth? We believe that owning more member moments through payments is the path to building a stronger economic index for each credit union. Credit unions that understand the correlation between payments and loans and focus on growing both can raise overall volume, engagement, and revenue. Designing for members’ lifestyle, not just their life stage, is the way forward.Today, payments represent almost 80 percent of a consumer’s interactions with their primary financial institution, and banks are surpassing credit unions in the payments to lending performance ratios.2 Credit card loan portfolios make up 21.6% of total loan volume for the country’s top three banks, in comparison to credit unions’ 6.5%, and they are outperforming our industry by more than $300 billion in total loans.3 Additionally, there is $500 billion of incremental interchange revenue up for grabs in the next five years that will drive overall loan growth.4 Think about the dozen times per day, year-round, that a member dips, taps or clicks to pay, and how that everyday interaction can lead to more opportunities within your credit union – from lending to selling other products and services. By focusing on payments, we’re not only driving engagement, but we can use that data to understand our members better and offer them the right financial products and services when they need them. When we do that, we become more than an institution; we become their trusted primary financial relationship.We all have a tremendous opportunity ahead of us and CO-OP is boldly investing to design and deliver the solutions that will give your credit union the scale, technology, and resources to grow. From securing top of wallet with latest digital wallet solutions and rewards programs to supporting them with consistently reliable member service through our Contact Center. All of this, backed by industry-leading security and risk management systems and easily accessible through a library of APIs (Watch: Learn about the new CO-OP Developer Portal). 2SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Todd Clark Todd Clark is President/CEO of CO-OP Financial Services (www.co-opfs.org), a provider of payments and financial technology to credit unions. Web: www.co-opfs.org Details Sources:1 Federal Reserve: “2016 Survey of Consumer Finance”2 McKinsey: “Global Payments Report 2019: Amid Sustained Growth, Accelerating Challenges Demand Bold Actions”3 CU Data from Callahan database; Bank balances from 10-Qs (BofA, Chase, Wells Fargo, Citigroup)4 Accenture: “Payments Pulse Survey: Two Ways to Win in Payments”
Hymans’ figures showed two companies needed more than two years of earnings to cover IAS 19 deficits, including Balfour Beatty – the engineering and construction firm – needing 1,166 days.Some 83% of the FTSE 350 firms could cover deficits with six months of earnings.The security of pension funds, as defined by the size of the IAS 19 deficit in relation to the firm’s market capitalisation, remained stable at 1%, down from 6% in 2009.Hymans said the market capitalisation of the firms with DB outfits stayed around £2.1trn, while earnings increased significantly.“Actual spending on DB pensions has decreased from £16bn (at April 2013) to £15bn (at April 2014),” Hymans Robertson said.In 2014, pension contributions were 25% lower than the firms’ interest payments to service debt and is near 80% lower than dividend payments, Hymans said.Despite the increased affordability of schemes, Hymans Robertson partner Jon Hatchett said companies and schemes should avoid the temptation to storm towards full funding.“It may seem counterintuitive, but racing towards full funding increases risk significantly,” he said.“Slow and steady funding, with limited exposure to investment risk, significantly reduces the possibility of deficits worsening over the next 20 years.“The Pensions Regulator has given the green light to this approach and companies should be strongly considering it,” he added. The affordability of defined benefit (DB) schemes has increased dramatically among the UK’s largest listed companies, with the payoff period for IAS 19 deficits now below 30 days.New research from UK consultancy Hymans Robertson showed the typical FTSE 350 company could now pay off its scheme’s IAS 19 deficit with only 29 days of earnings.This is due to rising earnings with the UK corporate sector, and improved funding levels despite declining bond yields.However, while the average figure for FTSE 350 companies has fallen, the spread among the corporates still raised concern.