TNB Card Services Conference Highlights Credit Cards as Most Profitable Credit Union Product

Marking 30 years in the payments industry, TNB Card Services achieved a record level of attendance, with representatives from some 100 credit unions from around the country, at its 2006 Payments Conference in Frisco, Texas. The conference focused on the trends, challenges, and opportunities in today?s payments landscape.

A recurring theme throughout the October 11-13 conference was the changing competitive environment and growth opportunities for credit unions in the debit and credit card space. As Scott Wagner, executive vice president of TNB Card Services, noted, ?Credit card programs are one of the most profitable products in a credit union?s portfolio, despite fraud concerns. Debit cards are also a key building block in the relationship between a credit union and its members. Debit and credit cards will only grow in importance to credit unions? members as electronic payments continue to expand.?

Renée Mauborgne, co-author of the international business bestseller ?Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant,? keynoted the conference. Mauborgne addressed the conventional boundaries of competition and the six paths credit unions can take to reconstruct their market.

Chip Filson, president of Callahan & Associates, echoed several of Mauborgne?s key points. He said, ?Credit unions cannot become the competition to beat the competition. Credit unions must differentiate with values, innovate for value, and leverage their cooperative potential.?

Gift cards represent an ideal opportunity for credit unions to access the ?unbanked,? according to Tower Group?s senior research analyst, Dennis Moroney. ?Gift cards can be used to tap consumers that do not have a relationship with a financial institution, such as underserved markets. Gift cards also provide a service and build loyalty among non-traditional customers.?

Loyalty and rewards were key topics of discussion at the conference. According to Jeff Rankin of VISA USA, cards that offer rewards are growing at nearly 10 percent annually, offering significant opportunities for credit unions to increase usage of cards and increase card penetration among the membership.

The method in which electronic payments are being initiated is also changing. Maureen Maddox of MasterCard discussed how cell phones and other handheld devices are driving payment trends. Cards are evolving into new forms, which is expanding payment options and applications for electronic payments.

Attendees benefited from numerous breakout sessions, which included discussions about fraud, rewards programs, compliance, card marketing, cross-selling, and the pros and cons of selling a card portfolio.

?This event showcased the strategic importance of card programs for credit unions,? said TNB?s Wagner. ?Credit unions must treat their card programs as growth products and manage them accordingly. Whether credit unions oversee their own programs or work with an external source, such as TNB, they should select a partner that has the service, expertise, and capabilities to deliver results.?