A Celebratory Prediction for 2017! CU Membership Growth to Stay Strong

Posted By: Elizabeth Rowe | October 21, 2016 | 0 Comments

CONSUMERS AND CONSUMER CREDIT

Consumers Increasing Credit Card Debt

13 October 2016, Muskogee Daily Phoenix and Times-Democrat

Research from WalletHub finds that “consumers racked up a record-setting $34.4 billion in credit card debt during the second quarter of 2016.” This buildup is characterized as the largest second-quarter increase since 1986. And what solidifies this “ominous trend?” The “greatest annual increase in 2015 of credit card debt since 2007 — $71 billion — and the smallest quarterly pay-down since 2008 — $27.5 billion.” In the most recent Fed release documenting consumer credit through the end of August, consumer credit increased (seasonally adjusted) at an annualized rate 8.5% with revolving credit growing at an annualized rate of 7% and installment credit growing at 9%.

Prepaid-Card Use Picks Up

21 October 2016, The Wall Street Journal (Asia Edition)

A new FDIC survey shows that in the 12 months before June 2015, 27% of unbanked households used prepaid cards for basic banking services which were up from 22% in 2013. Among all households, 9.8% of all households used GPR prepaid cards in 2015 vs. 7.9% in 2013. Great news from the survey was that the percentage of unbanked households, which peaked at 8.2% in 2011, is continuing to fall and in 2015 was down to 7%, with the greatest gains being among black and Hispanic households which saw their unbanked household numbers fall by 10%.

PayPal Profits Match Estimates Amid Strong Revenue, Increased Market Share

20 October 2016, The Street

PayPal seems to be benefiting from the news around its expanded payment options, post-alliance announcements with Visa and MasterCard, and its growing market share in the P2P space. In Q3, its revenues were up 18% (YOY), its “active customer accounts climbed 11% to 192 million, and the number of processed transactions jumped 24% to 1.5 billion. Total payment volume was $87 billion, an increase of 25%, ‘which was faster than the growth rate of e-commerce.’” Of note, PayPal’s CEO said: “We are further expanding the ubiquity and value of the PayPal brand and moving deliberately towards achieving our vision of becoming an everyday, essential financial service for people around the world.”

CARDS

Costco’s New Co-branded Visa Cards are Mostly Used Outside the Warehouses

20 October 2016, Silicon Valley/San Jose Business Journal

In its first full reporting quarter after the switchover of its credit card cobranding relationship from AmEx to Citibank Visa, Costco has reported that 70% of the cards’ transactions are happening outside its stores. Card volume for the quarter totaled $28B with month-over-month card growth of 70,000 cards. Costco says the number of cards that have been activated has surpassed its estimates and that 800,000 of its Visa cards have now been activated.

CREDIT UNION AND RETAIL BANKING INDUSTRIES

Economy, Credit Union Growth to Remain Strong in 2017

18 October 2016, Credit Union Times

CUNA’s chief economist predicts that credit unions will continue to grow their membership, the overall economy will grow, and the U.S. economy will not slip into recession. In 2016, CU membership will increase 3.8% with 3.3% growth projected for 2017. For that same period, the U.S. economy will grow 1.6% this year, and he has a more bullish outlook for 2017, predicting a GDP increase of 2.4% in 2017. Unemployment will fall to full employment (4.7%) which means credit unions’ lower-wage employees will be hard to hire and hard to retain, but the upside is that new loan growth will grow smartly. Overall loan growth over the next year will be 9% with new vehicle sales hitting an all-time high. After one more small interest rate increase at the end of 2016, three additional increases in 2017 will bring us to a total 1% increase in the Fed funds rate.

Credit Union Mergers and Members: Infographic

19 October 2016, Credit Union Times

Hoping to shoot down the tenacious myth that members have a negative reaction to their CUs being involved in a merger, CU Times posted an infographic showing some the results it found in a post-merger survey of CU members. Members who’ve been through a merger report that since the merger, 87% have been satisfied with their credit union and 65% agree strongly or agree somewhat that their “access to modern account features (i.e. mobile banking, RDC, etc.) has increased since the merger.”

MOBILE BANKING AND PAYMENTS

Mobile Payments Usage Remains Flat in North America: Accenture Study

19 October 2016, Electronic Payments News

A new Accenture study finds that in North America, awareness of mobile payments has increased a bit (to 56%), but its use as an actual alternative to paying by cash or card remains stuck at 19%.Consumers continue to use cash with 60% of consumers using cash weekly, which is down from 67% in 2015. That sharp decline in the number of cash transactions is reflected in the 3% uptick in the number of credit card transactions (debit card use YOY is unchanged). Consistent with other surveys, Accenture found that when it asked the 64% of consumers who’ve never made a mobile payment why they haven’t, it heard:

REGULATION, JUDICIARY AND LEGISLATION

Corporate Recovery Litigation Has Cost More Than $1B: NCUA

20 October 2016, Credit Union Journal

The NCUA has spent more than $1B on legal fees as it sues the banks and securities firms that sold the “faulty mortgage-backed securities” that led to the failure of 5 corporate credit unions. The two law firms hired by the NCUA have worked for contingency fees of 23% of recovered monies, and after paying the lawyers, the NCUA has now recovered a net $3.1 billion.

Attorney General Leads Criminal Investigation of Wells Fargo Bank

20 October 2016, The San Mateo Daily Journal

It was the Los Angeles City district attorney who first launched an investigation into Wells Fargo employees opening unauthorized checking and savings accounts, lines of credit and at least 2 million debit and credit card accounts. That investigation is now widening as the California Department of Justice has obtained a warrant seeking the “names of customers who had accounts opened without their permission, the names of employees who opened the accounts and their managers, and fees associated with the improperly opened accounts.” A key new feature of the warrant’s affidavit is its focus on the computer crimes involved with the thefts. It asserts that employees used the bank’s computers to obtain customers’ personal identifying information (PII) and then used those PIIs to commit “false impersonation and identity theft by opening unauthorized accounts, credit cards, and various other products that resulted in the accumulation of fees and charges for Wells Fargo.” Those fees have topped $3M, and several state and city treasurers have now closed, or are closing, their accounts with Wells Fargo.

Elizabeth Rowe

Elizabeth Rowe

Elizabeth tracks the shifting payments landscape for both PSCU and its member owners. Focusing on the interstice of the economy, competition, consumers, technology, payment products and channels and regulatory guidance, Elizabeth gleans the key challenges and opportunities facing our industry, our strategic plans and our success fulfilling our mandate of serving the American consumer.
Elizabeth Rowe

 


 

 
 
 

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