Connie Davis | SVP, Digital Commerce, FIS
April 27, 2020
The competitive landscape for credit unions is expanding with the entrance of indirect competitors ranging from retailers such as Amazon and Walmart to fintech companies such as Facebook and Google. Plus, digital banks such as Chime will further modify the banking landscape in the next few years. Juniper Research is forecasting a 54 percent increase in digital banking between now and 2024 as younger consumers opt for digital over traditional financial institutions.
As a result, the legacy payment card experience we have grown accustomed to may be vulnerable to becoming disconnected from the credit union, and top-of-wallet status among cardholder members could be in jeopardy.
Since the earliest days of the digital movement, credit union executives have looked at their own digital transformation as a necessary strategy to attract new members and stay relevant with existing ones. With membership demographics similar to those of large banks’ customers, credit unions compete for top-of-wallet status among members who increasingly use various digital and mobile wallet options.
To remain competitive in the increasingly fragmented card industry, ask yourself:
Used for card-on-file recurring payments, on e-commerce sites such as Amazon for one-click checkout and near-field-communications (NFC) wallets such as Apple Pay™, tokenization provides the foundation for secure, frictionless digital payments. Implementing it must be the first step.
Tokenization protects card data by replacing a card's primary account number (PAN) with a randomly-generated sequence of numbers that can be used for mobile wallet purchases, streamlined eCommerce checkout or converted from payment credentials on file for recurring/subscription payments. Tokenization makes it impossible for fraudsters to “read” the card data they attempt to steal from payment databases.
Tokenization contributes to better experiences for your cardholder members:
There are a variety of use cases for tokenization and your credit union. FIS urges you to get involved and, at a minimum, align with and educate your teams on the benefits of tokenization for Card on File and eCommerce. This will allow merchants to remove the sensitive payment data from their databases and secure your cardholders’ payment credentials, reducing risk and liability for your credit union.
Despite a slow start compared with other countries, the United States mobile payment market is rapidly increasing – according to eMarketer, by 41 percent between 2018 and 2019 – as consumers become comfortable with the technology. It’s time to determine how you extend your brand digitally to your cardholder members. Options to consider include:
Key features that integrate with a digital app in a way to drive brand loyalty and increase card usage across digital channels are available through our FIS API hub. Examples of APIs from FIS Code Connect include:
As cardholders continue to rapidly migrate towards digital payments – in-person and e-commerce – it’s critical to adopt a “digital-first” mindset – one that provides your members with a safe, secure and easy way to pay. We want your payment card to be their preferred choice of payment.