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August Spending Up, Dollar’s Spending Power Varies by State

Written by from the Product Department · October 22, 2014
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retailU.S. retail sales enjoyed a 13-month high in August 2014, thanks to both back-to-school shopping and late-summer vacations. That’s according to a recent spending report that tracked credit, debit, EBT, prepaid and check spending at some 4 million point-of-sale (POS) terminals from August 2 through September 2.

On the whole, retail spending growth was the largest in more than a year, at nearly 3 percent. Leisure spending rose 3 percent, the strongest growth in six months. Year-over-year growth in the hotel and travel industries totaled 9 percent and 5 percent, respectively. Dollar volume growth for furniture and home furnishings, as well as general merchandise, was up 4.5 percent year-over-year and 4.4 percent month-to-month. August’s year-over-year average ticket growth saw a 1 percent increase, despite gas station average ticket numbers seeing negative growth due to lower gas prices.

Interestingly, although this spending report covers overall spending growth across the U.S., another report from the Tax Foundation points out that how far those extra dollars will go depends on where in the U.S. they were spent. Specifically, the Tax Foundation recently deciphered data from the Bureau of Economic Analysis to create a breakdown of what $100 will buy in each state.

Although the face value of $100 is the same in all 50 states, when it comes to actual purchasing power, the mileage of that $100 varies. In Mississippi, $100 would buy $115.74 worth of goods relative to the national average. On the other end of the spectrum is Hawaii, where $100 would only purchase $85.32 worth of merchandise. Washington, D.C., is even lower at $84.60.

Some other states where $100 is more valuable include: Arkansas ($114.16), Alabama ($113.51), Missouri ($113.51) and South Dakota ($113.38). Iowa came in at $111.73. Illinois is the one state where a dollar is closest to actually buying a dollar’s worth of goods, where $100 nets $99.40 worth.

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Activity-Based #Marketing Meets #Consumers Where They Are

Written by from the Marketing Department · October 20, 2014
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With the growing ubiquity of the smartphone, it’s no surprise consumers are spending more time banking, browsing and buying on their mobile devices. In fact, late last year, mobile banking log-ins outpaced online log-ins for the first time ever, according to Aite Group’s recently released report Activity-Based Marketing: The Future of Mobile Marketing in Banking.

In 2014, another milestone: Consumer hours spent engaged with mobile apps surpassed time spent accessing the Internet via desktop computers. All told, the average smartphone user utilized mobile apps for more than 30 hours per month in 2013.

Consumers’ increased mobile usage means financial institution (FI) marketers must consider innovative new approaches to effectively reach consumers.

Enter activity-based marketing.

Defined as marketing within the context of an activity being performed by a customer or prospect, activity-based marketing strives to meet consumers where they are.

A recent Credit Union Journal article points out more FIs will soon be developing mobile activity-based apps that deliver shopping or information services. Such apps will allow consumers to simultaneously shop and access FI products and services.

“The real challenge for the FI is how do you get involved in the consumer’s decision-making process as early as possible,” Aite Senior Analyst Ron Shevlin told the Credit Union Journal. “For example, use technology to structure and create a single process for shopping for a car, car insurance and a car loan.”

One example of this would involve changing the car-buying process by providing car shoppers with an app that lets them search for the type of car they want, track those cars for future reference and comparison, get a loan for the car when they’re ready to buy it and insure it. An example on the mortgage side would involve the development of an app that lets a user take a picture of a for-sale home or building, access the realtor database and display the price and details. Such an app would allow an FI to identify potential mortgage customers early on in the buying process – a potentially critical time for selecting a lender.

A common thread in these two examples is the creation of a new point of interaction for FIs. Typically, FIs only interact with consumers at the point of purchase — when the consumer is ready to buy the house and needs to find a loan, or when the consumer is sitting down with the car dealer negotiating price. For a number of other types of purchases, FIs’ point of interaction is when the consumer swipes his or her debit or credit card, or even following the transaction, when the check clears.

Activity-based marketing changes that critical point of interaction, allowing savvy FI marketers to proactively identify the need or want for a product or service prior to the point of purchase.

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Global #EMV by the Numbers

Written by from the EMV Department · October 17, 2014
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For a time, it seemed the U.S. migration to EMV could be stalled by a classic chicken-or-the-egg dilemma. Merchants were reluctant to invest in the required payment system upgrades before card issuers embraced the new technology, while card issuers were hesitant to issue chip cards until more merchants got on board with the standard.

Elsewhere around the globe, a growing number of credit and debit cards were being embedded with EMV chips, and compatible card-reading point-of-sale (POS) devices were being installed. Now that the U.S. is well on its way to joining the rest of the world’s major markets, let’s take a look at some global EMV numbers.

In 2013, more than 80 percent of payment cards in western Europe, and nearly 100 percent of the card-reading machines at merchants, financial institutions (FIs) and other POS terminals, were equipped with EMV technology. That same year, in Eastern Europe and Russia, 44 percent of payment cards were EMV compliant and 91 percent of POS terminals were equipped to read them.

In North America (not including the U.S.) and South America, 54 percent of cards and nearly 85 percent of card terminals were EMV-capable in 2013. That same year, nearly 39 percent of cards in African and Middle Eastern countries were EMV-chip embedded, with 86 percent of POS terminals EMV compliant. Lastly, in the Asia Pacific region, 17 percent of payment cards had EMV chips, and 72 percent of POS stations could read them that year.

Of the nearly 2 billion payment cards in circulation in the U.S. last year, only 3.5 million were embedded with EMV chip technology. Although 5,000 new EMV payment cards were issued per day in 2013, the U.S. remained ranked the #1 global fraud target, due in part to its unfinished EMV migration. With Canada reporting a 40-percent decrease in skimming fraud losses post-EMV implementation,  the importance and value of the U.S.’s EMV transition has perhaps never been more apparent.

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Monitoring #CreditReport Remains Key to Fighting #IdentityTheft

Written by from the Consumer Experience Department · October 15, 2014
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A recent Iowa Credit Union League report found just 53 percent of Iowans regularly monitor their credit report for inaccuracies or suspicious activity. This is troubling findings, as a new identity theft occurs every two seconds.

200446176-001Consumer awareness and education is key to fighting identity theft. Financial institutions (FIs) should use their websites, social media accounts and other communication tools to encourage consumers to check their credit reports at least once every year (preferably more often).

Additionally, FIs should encourage consumers to pay daily attention to their financial accounts. Having the ability to log into an account any time to check a balance and see which items have cleared makes keeping an eye out for trouble much easier.

Beyond educating consumers on the importance of pulling a copy of their credit report at least annually, FIs should encourage consumers to find and evaluate credit-monitoring services.

Specifically, FIs should remind consumers that checking their credit report is:

  1. Free — By law, consumers are entitled to receive one free copy of their credit report annually from each of the three credit reporting agencies (Experian, Equifax and TransUnion), so a total of three reports each year. When spaced out throughout the year, consumers can check their status every four months.
  2. An important step in rebuilding and maintaining good credit — Periodically reviewing a credit report helps ensure it’s in good standing when a consumer is ready to apply for credit. It can also help consumers monitor their progress if they are recovering from past credit problems.
  3. Key to managing personal finances — Managing credit, keeping track of spending and putting money in savings are all essential to being financially sound.
  4. Often the first indicator of identity theft — Finding names they don’t recognize, Social Security numbers that don’t belong to them or accounts that aren’t theirs are all red flags for potential identity theft.
  5. The first step in correcting any inaccurate information — If consumers discover something amiss, their report comes with instructions for submitting disputes.

FIs should also educate consumers on the importance of being secure on the Internet. Consumers should be reminded to keep their account credentials safe with complex, multi-character passwords, to never share that information and to dispose of sensitive personal information appropriately by shredding documents.

FIs can play a key role in the ongoing fight against identity theft by advocating for consumer awareness, involvement and proactivity in protecting financial security. Consider placing a Free Credit Report link on your website directing consumers to This page will walk them through the steps of pulling the three free credit reports they are entitled to annually.

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U.S. #EMV Conversion Expected to Drive #SmartCard Shipments

Written by from the EMV Department · October 13, 2014
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Global EMV card shipments are expected to total more than 3 billion by 2019. Although moves by China are driving much of that total, the U.S. is expected to have a great impact on worldwide shipment numbers in the coming years

According to a recent ABI Research report, 1.7 billion EMV chip cards were shipped worldwide in 2013 (a 27-percent increase from 2012). In 2013, 442 million chip cards went to China, which is in the midst of an EMV card conversion to the People’s Bank of China card standard. Fifty-six percent of the 442 million cards sent to China were contactless.

ABI is forecasting double-digit annual growth in EMV card shipments through 2017. However, if not for China, global growth year-over-year would have totaled just 8.5 percent instead of 27 percent between 2012 and 2013. This illustrates the impact a single country’s card conversion can have on total global card shipments. ABI researchers predict with nearly 2 billion payment cards currently in circulation in the U.S., a similar “China effect” could occur as the U.S. migrates to EMV.

EMV card issuance in the United States has been slow going so far, but ABI Senior Analyst Phil Sealy expects it to pick up over the next few months. Indeed, new numbers released by the Payments Security Task Force (PSTF) support Sealy’s expectation. The PSTF, composed of nine of the U.S.’s largest payment card issuers, recently announced an estimated 575 million U.S. payment cards will feature EMV by 2015.

These statistics underscore the importance of issuers getting into EMV conversion queues with their processors and vendors now. As more merchants reterminalize, more cardholders receive smart cards from major issuers and more fraud-prevention proponents tout the benefits, those EMV project lines will only get longer.

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New Payment Terminals for #EMV Could Speed Up #MobilePayments Adoption

Written by from the Mobile Department · October 6, 2014
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Recent data breaches have pushed several large merchants toward EMV. As merchants reterminalize for EMV, many experts believe it creates a wider infrastructure to support mobile payments. That’s because most new terminals will be able to accept contactless payments, like those made via NFC-enabled mobile devices.

As a rule, mobile devices provide enhanced security capabilities for all kinds of transactions. They offer passcode protection and secure chip technology, as well as both device and cloud-based encryption and tokenization features. For its part, Apple Pay combines fingerprint authentication with tokenization to make payment transactions from Apple devices extra secure.

Yet, all mobile payments services, even Apple Pay, are predicted to struggle somewhat to achieve widespread acceptance. This is due in part to few retailers currently having the necessary hardware in place to process mobile payments at the point of sale (POS).

However, recent migration to EMV terminals by Target and other retailers could change that somewhat. Target’s decision to implement EMV sooner than planned may spur other merchants to do the same. Interestingly, however, Target is not planning to enable its POS terminals for NFC. This is likely due to predicted moves by the Merchant Customer Exchange (MCX), of which Target is a member. MCX is working on its own mobile payment solution that would use QR code scanning technology instead of NFC.

That said, if there is a rush of retailers installing EMV/contactless terminals, at least one of the requirements for wider mobile payments adoption would be in place.

We should also consider consumers’ desire for convenience. As Aite Group Analyst Thad Peterson points out in a recent Bank Info Security article, with more retailers moving toward mobile-enabled POS terminals, mobile could come out as a preferred payments method for consumers who value convenience.

“Mobile payments are going to grow rather quickly in an area that not a lot of people are looking at, with the accelerating growth of mobile POS to augment stand-alone POS in retail stores,” shared Peterson.

He goes on to say a number of merchants see mobile POS as a “more contained and closed payments network” than traditional POS systems. This makes mobile increasingly attractive to a growing number of retailers. “The payments infrastructure in the U.S. should be bracing for a soon-to-be realized mobile revolution, and banking institutions must stay ahead of curve,” said Peterson.

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Fighting #CyberCrime Starts with Consumers

Written by from the Consumer Experience Department · October 3, 2014
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I recently had the privilege to participate in the National Cyber Security Alliance’s (NCSA’s) Iowa stop on their “Two Steps Ahead: Protect Your Digital Life” tour. The public event was held on the Iowa State University (ISU) campus on September 4 and aimed to educate consumers and businesses about adding layers of security to their everyday online activities.

U.S. Senator Chuck Grassley, Iowa Attorney General Tom Miller and ISU President Steven Leath opened the event, which featured a hands-on demonstration educating attendees how to step up their security on sites like Google, Facebook and LinkedIn. I was honored to participate in a panel discussion, alongside experts from the Federal Trade Commission, ISU and the Better Business Bureau.

Much of the discussion focused on prevention and protection from cyber crime and identity theft. Among the specifics was the need for a “cyber security army” in the workforce. ISU and other universities are now training future cyber security professionals via innovative cyber defense degree programs. These degrees are leading to new and interesting career opportunities.

Along the lines of prevention, event leaders recommended businesses implement the practice of two-step verification on their websites. Requiring two independent forms of identity verification can help ensure the individual trying to access the account is in fact the account’s authorized user.

Also covered during the event were useful tips for preventing cyber crime by proactively protecting accounts and information. Many of these can be shared with your own employees and customers.

  • Monitor accounts and check credit reports — Consumers should be vigilant about monitoring their account activity on a daily basis and should request a free credit report at least annually.
  • Register for a credit monitoring service — Consumers should shop for one that provides the level and kind of protection that will best meet their individual needs.
  • Keep online information secure — Consumers must keep their passwords robust and never share access information or personal details with anyone. Once they log in, it’s important for consumers to slow down and think about the links they are clicking on and whether sharing specific information within the website seems reasonable.
  • Limit items carried in wallets and purses — This is especially true for PINs, which should never be carried alongside associated plastic.

Data breaches and other cyber security threats are increasing globally, putting our financial institution (FI) clients in a critical position. Because our clients’ customers are often their first line of defense against fraud, providing consumer education is an important part of TMG’s mission to help minimize fraud losses for credit unions and community banks. Events such as NCSA’s “Two Steps Ahead” tour allow those of us in the industry to enlist the help of consumers and businesses in the ongoing fight against cyber crime.

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Phase-in Financial #Alerts to Better Engage Consumers

Written by from the Mobile Department · October 1, 2014
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To increase mobile banking adoption and engagement, credit unions and community banks should consider taking a more active role in helping consumers proactively manage their finances in a digital age.

alertOne way to achieve this is through alerts. Beyond simple balance and transaction updates, alerts provide an opportunity for greater interaction with the banking consumer. This, of course, can lead to increased engagement, lowered servicing costs and even potential revenue-generation.

Many of today’s tech-savvy consumers expect their financial institution (FI) to provide real-time information about their financial accounts. In fact, 74 million American consumers currently receive online financial alerts. Many of these consumers are looking for their FI to move beyond simply facilitating their financial activity to becoming a part of their everyday, digital lives. Expanding the number and variety of alerts offered is one way FIs can significantly increase consumer engagement and effectively deepen that relationship.

With such an expansive array of potential alerts, it’s recommended FIs create a comprehensive alerts strategy, phasing in the following five categories:

  1. Balance alerts — center around account activity and can include such notifications as overdrafts or non-sufficient funds
  2. Event-based alerts — can be based on bill payment, person-to-person (P2P) payment requests or other occurrences requiring the consumer to follow-up
  3. Security alerts — include suspected fraudulent activity, such as suspicious transactions, international credit card charges or password changes
  4. Consumer care alerts — more involved and include notifications requiring consumer and FI interaction (e.g., CD maturing or lease coming up for renewal)
  5. Actionable insights — use data analytics to offer financial management tips and advise based on the consumer’s spending activity (e.g., changes in spending activity compared to historical data)

Although phasing in alerts will create a smooth transition for the consumer, it’s also important to have a defined enrollment strategy. This includes making it easy and convenient for consumers to sign-up for or opt-in to receiving alerts. Equally important is striking a balance between customization and an overwhelming number of options. At their core, alerts are about excellent communication that truly adds value to consumers’ financial well-being.


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#Debit Usage, #EMV Issuance Up

Written by from the EMV Department · September 29, 2014
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A recent debit study found a sustained increase in the use of debit cards by both consumers and businesses in 2013. Additionally, debit program performance showed appreciable improvement last year, as consumers increasingly opted to use debit cards for transactions.

Recent data from TMG’s strategic partner CO-OP Financial Services supports this reported growth. The company found total debit card spending at selected back-to-school merchant categories for August 2014 was up more than 9 percent as compared to the same time last year.

To promote continued debit growth, issuers said they are striving to enhance current performance and make their debit offerings even more attractive. Debit rewards programs are making a comeback, often in the form of merchant offers. Specifically, 48 percent of regulated issuers now offer debit rewards programs (up from 32 percent in 2012), many of which center on a merchant-funded model.

The 2014 Debit Issuer Study also took a close look at recent high-profile data breaches’ impact on debit cards. An estimated 14 percent of all debit cards were compromised by data breaches last year. That’s up from just 5 percent in 2012. Target’s breach, which exposed account details of more than 100 million customers late last year, is no doubt responsible for much of the year-over-year increase.

“The Target breach impacted every financial institution (FI) that participated in the study, causing fraud loss rates to increase in 2013 and compelling issuers to re-evaluate their strategies for improving card security in 2014,” the researchers wrote in a press release.

As a result, many FIs are currently seeking enhanced security solutions, including ramping up EMV implementation plans, for both debit and credit cards.

Nearly 70 percent of debit issuers surveyed plan to offer EMV cards in 2015. Seven percent currently issue them, and 12 percent plan to yet this year. That leaves just 14 percent who have no EMV plans. In 2012, half of issuers had no EMV plans. These numbers encouragingly indicate EMV is continuing to take hold in the U.S.

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Putting #BigData to Work for Your Financial Institution

Written by from the Data Analytics Department · September 26, 2014
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Financial institutions (FIs) that properly leverage Big Data analytics can benefit in a range of ways. Analytics fuel the insights that are increasingly becoming essential to creating the deep relationships consumers have come to expect.

Effectively utilizing Big Data can help FIs roll out real-time, customized offers to their customers and prospects, detect fraud and offer increasingly detailed overviews of credit and liquidity risks.

A recent Bank Systems & Technology article highlights five factors that can play a key role in successfully putting collected data to work for your FI.

  1. Make it count — The key to properly leveraging data begins with determining the most important business concerns from the start. These can include cross-selling, fraud detection and risk management. Once the main topics have been established, begin deciphering how the data related to these issues can best be utilized.
  2. Gather pure data — Reduce inaccuracies, repetitions and other mistakes by harvesting the cleanest data possible. Automation is a good place to start, as it can be employed to separate useful data from useless data as it’s garnered, or shortly thereafter.
  3. Time is of the essence — Data’s worth can erode quickly, making real-time access paramount. Convenient accessibility to the data and user-friendly software can work in tandem to promote constructive procurement of the data.
  4. Diversify — Consider the value of collecting data from a variety of sources. Look to websites and social media to provide useful “unstructured data,” and to “internal structured sources” for insight into risk data and payment figures.
  5. Humanize the process — Making the most of an FI’s data requires oversight and information management. In short, aggregating all of this enterprise-wide data for consumption requires a concerted effort and is only possible with a champion — often the chief data officer (CDO). The CDO is mandated and empowered to accomplish this task. Interestingly, the top three industries employing CDOs are banking, government and insurance.

Information can promote the growth of an FI’s brand and performance if properly managed. Elevating data to its deserved status of strategic asset is the key to successfully mining and utilizing Big Data. For more on how credit unions in particular are using Big Data, check out this recent Credit Union Times article, in which our CEO shares her insight on best practices for data analytics.

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