Payment Solutions that Drive Non-Interest Income
After reaching a high point of $241 billion in 2010, non-interest income for financial institutions in the U.S. dropped and has remained relatively flat in recent years, averaging about $222.6 billion from 2010-2014.1 Pressured by consumers’ increasing resistance to service fees (nearly half of all consumers will switch their primary financial institutions in light of new or raised fees2) and squeezed by new competition and increased industry regulations such as the Durbin Amendment, financial institutions are grappling with how to generate additional income. Let’s explore three big opportunities institutions still have to drive non-interest revenue.
Credit card marketing programs
With more options and less consumer loyalty, brand awareness and engagement is paramount today. But brand differentiation in a highly competitive industry can be challenging. Many institutions do not have the resources to support an in-house marketing team, and outsourced agencies often lack the necessary knowledge. But there is another alternative – your payment processing provider.
Vantiv, for example, offers a comprehensive card marketing solution designed to increase card awareness, usage, and revenue. Institutions can choose a strategy based on card revenue growth goals of boosting transaction volume and/or increasing activation. Relevant offers and incentives are built into campaigns, encouraging cardholders to use their card more frequently. Campaigns are customized to help financial institutions extend their brand reach and achieve specific sales goals that drive revenue.
Reporting and analytics solutions
The most valuable data for financial institutions is derived from cardholder transactions. Are customers using their card at the ATM, for debit or credit transactions? How much are they spending and where? Many financial institutions know the value of this type of information, but do not have the systems to apply this data in a strategic and competitive way.
Collecting this information can help institutions develop financial offerings their cardholders want and need, but it must be done in a way that preserves cardholder trust. A balance between respect for cardholder information and its responsible use can benefit both consumers and financial institutions.
Vantiv Analytics is one solution that provides this balance. In addition to giving institutions a deeper understanding of cardholder activity and identifying areas with the largest growth potential, Vantiv Analytics helps protect cardholders by monitoring portfolio activity for suspicious spending patterns. An analytics solution with these types of features encourages loyalty by assuring customers their payments activity is safeguarded, and by providing information that institutions can use for targeted offers to increase portfolio revenue.
Introduced a few years ago, card controls are gaining more traction today. A recent Mercator Advisory Group survey found that 42 percent of all U.S. consumers are interested in mobile-based account controls for debit cards to avoid fraud and control their spending. Additionally, those who have debit cards but choose not to use them (51%) are more likely than debit card users (43%) to be interested in this feature. Three in five consumers said they would be willing to pay for the service.
Card controls present an opportunity for financial institutions to increase card activation, stimulate greater debit card transaction volume, and increase revenue, by enhancing the perceived security of debit cards. Vantiv’s MobiMoney™ app, for example, offers cardholders several features to manage their debit card using their smartphone. In addition to the ability to turn their card on or off, cardholders can limit usage of their card based on location, merchant preferences, transaction type, and threshold amounts. They can also receive instant alerts about potentially fraudulent activity.
In today’s competitive climate, non-interest income has become a necessary revenue source for financial institutions. To learn how your institution can leverage non-interest revenue generating solutions such as card marketing, analytics, and card controls, contact Vantiv.