Boost Card Success With Quality Data

Brian Scott, from creditunionmagazine.com
September 17, 2009 | COMMENTS

Every swipe of a credit card generates hundreds of lines of data. Everything from merchant information to purchase details to rate and finance statistics are captured and stored following each plastic transaction.

Buried deep within this data are the answers to questions that can mystify even the most sophisticated credit unions:

• How can we increase our wallet share?
• Where are we most at risk from fraudsters?
• How will compliance changes impact our profitability?

Because such a mountain of data is gathered behind the scenes of our nation's complex payment systems, it can be difficult to mine exactly the information a credit union needs to answer these tough questions. Wading through pages of green bar reports can produce results, but it takes days to perform.

To more efficiently analyze card portfolio data, credit unions turn to reporting software designed to provide real-time, customized intelligence on cardholder behavior.

Taking data analysis up a notch, modeling software keeps a credit union from having to guess how to improve marketing, profitability, and fraud prevention, eliminating the need for trial-and-error tactics that can cost a credit union thousands of dollars in misappropriated investment. The software uses today's data to predict the impact of proposed activities, such as marketing proposals, rate increases, limit decreases, or changes to payment due dates.

Detecting trends is another advantage of reporting software. Card managers who want to understand the ebb and flow of card use to better budget for processing expenses can run a report detailing the seasonality of their card programs.

Risk managers can do the same, generating reports that outline when and where their traveling membership is using cards for vacations and setting fraud-prevention parameters to protect members during heavy travel periods.

Profitability analysts who want to understand how interchange revenue might be increased can also call up data detailing from where the largest interchange infusions are coming, helping them understand which cardholder behaviors to encourage.

Detailed data can also assist card personnel charged with balancing profitability and member satisfaction. For instance, a credit union that wants to better manage delinquency can call up a report outlining exactly which cardholders are behind on their payments, by how many days, by how much, when their last payment was, and what their recent history of payments has been.

The ability to easily call up and organize this kind of data allows credit unions to be individualized in their approach to members, but to also do so efficiently and in line with maintaining a sustainable card program.

As the credit card-issuing community as a whole looks at card profitability through the filter of new regulations, quick access to detailed information will be imperative.

Take, for example, the decision to move from variable-rate cards to fixed-rate cards. Before credit unions decide whether to migrate their portfolio to fixed-rate only, they can use modeling software to predict outcomes, giving them a better basis for their ultimate decision.

By using customized reporting software, a credit union facing this decision can build a report showing how many members have fixed-rate cards in their wallets, how frequently they're using them, where they're using them, and how they're making payments.

Similarly, they can look at their existing variable-rate accounts to determine how their overall credit card program may look if their entire portfolio switched to variable-rate only cards.

Information is always there. It's simply a matter of how easily it can be unearthed and analyzed. As credit unions battle complex decisions, data can be a very friendly ally.

Brian Scott is vice president of sales for The Members Group, Des Moines, Iowa. It provides credit unions with card processing solutions, as well as custom reporting, data analysis, and modeling tools. He can be reached at 800-268-1884, ext. 5252. This article originally appeared on creditunionmagazine.com. Reprinted with permission.