PHOENIX – With one using risk-based pricing and another revamping its marketing structure, two card-issuing credit unions, one from Massachusetts and the other from New Mexico, presented differing strategies on how to achieve growth to attendees at the annual Member Forum conference of PSCU Financial Services. Speaking on behalf of risk-based pricing, Joseph Mirachi, senior vice president and chief financial officer of Kirtland FCU in Albuquerque, described a portfolio that in six years has witnessed a tripling of balances from $11 million at the end of 2005 to $32 million today. “We're a credit union that decided not to sell,” declared Mirachi noting also the New Mexico CU has eliminated all fees except late payments and offers a year-end savings rebate. Also speaking at a PSCU panel session on improving card results was Diane Baker, vice president of marketing and administration at Northern Massachusetts Telephone Workers CU, who outlined steps her CU has taken to revitalize a plain vanilla portfolio into a more dynamic product offering CU rewards and other features. The Massachusetts CU ended up deleting many dormant accounts, adopting a platinum card, and abandoning an internal philosophy that “if we leave it alone, it will grow,” said Baker. Instead the CU took a more active approach in marketing the card, awarding large numbers of points under CU Rewards as an incentive. The introduction of the platinum card worked well, bringing in higher balances and greater usage, said Baker in reviewing CU growth which at the end of 2001 stood at $15.3 million and by the end of last year was at $24 million. For too long, she said, her CU ignored the portfolio performance as long as it was operating satisfactorily but soon the comfort zone changed as growth lagged. Mirachi of Kirtland said risk-based pricing and market segmentation “are the two most important elements in producing gains, but you still need to promote your cards internally and externally as well as maximize cross selling opportunities.” Analysis, he said, clearly shows that credit cards are a very valuable product in building member relationships and increasing the members' coveted primary financial institution status. “To remain a viable organization, a credit union must make a commitment to do what needs to be done to be competitive in the market,” he said. “Never stop learning, listen to your members, use your resources and plan to improve your program every year.” In a separate panel at the PSCU forum, executives from Atlanta-based CheckFree Corp. detailed new studies which show that among U.S. households 69% pay at least one bill online with consolidated bill pay at financial institutions reaching 32% of online households. “Paying bills online at a financial institution has started to pull away from paying bills directly at a biller Web site for the first time with consolidated electronic bill payments at $168 million per month and biller direct electronic bill payments at $141 million per month,” said CheckFree in a statement. Presentations were made to the PSCU conference by Kim Sheppard, group executive of CheckFree's Electronic Commerce Division and Bob Homer, vice president. The two executives maintained that consumers are interested in money management functions that are integrated into their online banking and electronic bill payment experience. Check registers and spending/budgeting tools are among their top demands for functionality, they concluded. -

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