Successfully Navigating the Debit Payment Evolution provided food for thought for debit portfolio managers and was led by Tony Ficarra and Jeff Fazio of FIS. The session began by providing an understanding of how the economy has affected the usage of debit by consumers and opportunities with new target groups like the under banked.
The FIS workshop also provided a valuable reminder of debit portfolio imperatives:
- Penetration: increase the number of cards issued
- Activation: increase the percent that are activates
- Utilization: use incentives and strategies to increase consumer usage of the card
Many issuing and activation policies are more conservative these days than modern risk management techniques might require. Transaction risk monitoring and tools like POS denial at big risk merchants significantly reduce risk from Debit cards. For customers that are having trouble qualifying for a debit card, consider prepaid or debit for ATM use only.
To improve activation, it is possible to provide the consumer with instantly issued debit cards that are activated by the customer service representative in the branch as a new customer gets a new checking account (DDA). Putting hurdles between the customers and activation reduces the percent of the cards issued that will become active.
Utilization is primarily about loyalty and merchant relationships and FIS offers clients a loyalty platform with flexibility for a variety of rewards. One of the suggestions that stood out for maximizing revenues was developing a small business debit strategy. Segmenting small businesses from the consumer card portfolio allows the bank to manage risk for lending purposes. It also is another opportunity to offer a debit card. Businesses tend to have higher dollar volume and higher ticket sizes ($/transaction). These cards tend to bring higher revenues for the bank.