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Mobile Prepaid Solutions For An Emerging Consumer Market

How can credit unions attract, retain, and grow relationships with younger consumers to strengthen the vitality of their member bases?

Research recently conducted by FIS shows that large banks outperform community banks and credit unions in attracting Gen Y consumers, many of whom are unbanked. Part of the reason is the tendency for young people to gravitate toward urban areas, where the large banks are found. In addition, an age disparity plays a role: The average unbanked consumer is 11 years younger than the average large bank customer.1

Attract And Retain New Members With Anytime, Anywhere Access

As a result of these factors, smaller institutions face a tough task when it comes to attracting and retaining young consumers.

Many young consumers also turn to alternative financial services providers because traditional financial institutions aren’t keeping pace with changing technologies and their impact upon the youthful, 24/7 lifestyle. What many Gen Y consumers demand are short-term credit, walk-up bill pay, check cashing, remittances and prepaid cards. Gen Y consumers are also about 50 percent more likely than the general population to be unbanked and about 50 percent more likely to use these types of services. According to a CFSI/Core Innovation study, an estimated $89 billion was generated in fee and interest revenue from the financially underserved market for alternative financial services no small sum.2

Young banked consumers are demanding anywhere, anytime access through their mobile devices. FIS’ research shows they are much more likely than the general population to engage in both common mobile banking activities (e.g., checking balances, viewing transactions, paying bills, receiving alerts and transferring funds between accounts) and less common mobile transactions (e.g., depositing checks with their mobile phones, making person-to-person payments and paying bills with prepaid card accounts).

FIS GenNOW Financial Services

Credit unions can re-engage younger members by leveraging growth in the prepaid market and by doing it cost-effectively using FIS GenNOW Financial Services. This innovative solution provides real-time access to funds via mobile or prepaid cards, providing the ability to:

  • Load money to prepaid cards through a mobile app, with access to the funds
  • Make expedited bill payments using a mobile app to avoid late payment charges
  • Track spending and balances easily and manage finances on the go
  • Earn rewards for usage and meeting budget goals
  • Receive notifications of offers reflective of buying habits and interests

The prepaid market is poised to grow, especially among younger consumers. Mercator Advisory Group projects a 2012 2016 compound annual growth rate of 11 percent for open money/financial services cards.3Although specialists have dominated the consumer reloadable prepaid market in the past, recent entries by several large financial institutions highlight the growth opportunity in prepaid cards. Indications are that credit unions and community banks will have to play catch-up to get their fair share of the prepaid market. According to BAI, community banks and credit unions are far less likely to be planning near-term entry into this market.4

FIS GenNOW Financial Services helps credit unions attract consumers just starting out, retain their business and better compete against large financial institutions.

Through its turnkey, white-label solution, GenNOW provides credit unions with a way to compete effectively against both large financial institutions and alternative financial services providers, recapture revenue from opt-in transaction fees, acquire young members at a low cost, and retain members who are increasingly turning to others for services they cannot currently obtain from their credit union.

For more information, contact FIS at 800-822-6758 or http://www.fisglobal.com/products-card-prepaidcards#gennow.

1FIS Payments survey of 4,321 consumers, November 2013
2CFSI and Core Innovation Capital, 2012 Financially Underserved Market Size Study, December 2013
3Mercator Advisory Group, Tenth Annual U.S. Prepaid Cards Market Forecasts, 2013-2016, October 2013
4BAI Research, BAI Demand Pulse Research Study, February 2014

Written By Robert Legters, Chief Product Officer

FIS North American Card Solutions

601 Riverside Ave., Jacksonville, FL 32204

800-822-6758 |robert.legters@fisglobal.com| www.fisglobal.com

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
July 7, 2014

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