Four More CUs to Issue Amex Though MBNA; Card Giant Moving Fast With Product it Believes CU Members Want

WILMINGTON, Del. – MBNA, the monoline card issuer which is a leading purchaser of credit union card portfolios, hopes to have all 80 of its credit union agent issuing clients agree to permit the marketing of its MBNA Rewards American Express Cards to their members by the second quarter of 2005 – and the firm announced that four more have said they will start issuing the new product. The four include the $627 million Eli Lilly FCU headquartered in Indianapolis; the $448 million First FCU headquartered in Tempe, Arizona; the $443 Knoxville TVA Employees CU, headquartered in Knoxville, Tennessee; and the $1.1 billion Technology Credit Union, headquartered in San Jose, California, according to the company. “We believe we have a good product that will have a lot of appeal to many credit union members,” explained Hal Erksine, a senior executive vice president of MBNA who handles the card giant’s relationships with credit union clients. “Sometimes the credit union members may not realize how much they want this product until they get the opportunity to have one.” Erskine was referring to the appeal he said the company has found the new product holds once perspective cardholders learn that it does not carry a fee. American Express’s proprietary cards all carry fees, which sometimes can range into the hundreds of dollars. Fees among card issuers have been largely vanishing as the industry becomes steadily more competitive. The four new CUs will join the $2.2 billion Desert Schools FCU headquartered in Phoenix, which was the first credit union in the country that agreed to begin issuing the cards as part of the new program. MBNA was the first financial institution to begin issuing American Express cards after a court decision in 2004 allowed financial institutions to issue additional card brands. Steven Daigle, an executive vice president with MBNA, reported that, so far, the credit unions had almost universally viewed the new product favorably, seeing it as yet another card option that their members might want. Daigle admitted however that some credit unions had expressed skepticism about how many of their members, in the end, would want the new card which has a perception of being a higher end and more costly brand. Daigle pointed out that the card brings many benefits, such as complimentary enrollment in MBNA’s WorldPoints reward program, with one point for every purchase and two points for travel and dining purchases until 2006. A broad range of concierge services, such as access to tickets and hotel reservations also comes with the card, along with access to American Express’s travel network. Want A Card, Get A Card Both Erskine and Daigle said that MBNA was not using any prequalification criteria to decide which credit unions would be the most likely markets for the card and was seeking a broad distribution. “We believe that the credit union members who opt to receive the card are the ones who can best decide if they should have it,” Erskine said. He also explained that the card issuer was not replicating a previous mistake. When it first rolled out the new card to non-credit union cardholders, the firm asked them to opt out of having their card accounts switched over to the new product. After a number of cardholders objected, the company moved swiftly to call all the affected cardholders and switch back those who had not wanted the new card after all. Richard Thornburg, senior vice president with the Elli Lilly FCU confirmed that MBNA had not sought to do any prequalification of who would be offered the cards and really had not explained the product very well to him either. “I really don’t know that much about it,” he said. “They called me and explained the broad outlines of the program and asked me if we wanted to be part of it and I thought it was a win-win for our members and so said yes,” he said. “I just thought they had considered that we are a somewhat scientific, pharmaceutical credit union and might have a membership which was more inclined to want and could afford the card.” Ken Burns, CEO of the $1.1 billion Technology Credit Union said his credit union was set to start issuing the cards through MBNA in about 60 days and said that he didn’t know what criteria the card issuer was using to decide who should be offered a card. “I would expect they will have some guidelines for issuing just like we would,” Burns said, “but I can’t say off the top of my head what those might be.” -