Raddon Report

By Caroline Vahrenkamp and Lynne Cornelison

The payments landscape is changing dramatically as new channels and entrants are transforming how consumers pay for goods and services. For years, financial institutions have relied on the non-interest income payments generate, and they face the risk of losing that much-needed revenue as margins become increasingly thin.

Eighteen months after the onset of COVID-19, where are we economically in the United States? And how are things likely to change moving forward?

The COVID-19 recession was by far the shortest in U.S. history, lasting two months, from February to April 2020. The average length of recessions since World War II has been 11 months, and the Great Recession of 2007–2009 was 18 months. However, this recession’s brevity does not imply that it was modest. In fact, the peak unemployment rate was higher than it’s been since the Great Depression in the 1930s.

Out of all the products that a financial institution offers, credit cards are the most unique and challenging to design because they have dual functionality. For some, credit cards are a way to borrow. For others, they’re a way to make payments.

As we look at trends in consumer credit card usage and data from the Raddon Performance Analytics program, we find commonalities among financial institutions with the highest credit card household penetration and balance growth. What are these institutions doing that makes them top credit card performers?

The topic of labor shortages continues to headline my newsfeed. Even though the U.S. added significantly more jobs in June, more of the workforce is quitting, adding to the shortages. While these shortages appear to be impacting the hospitality and food and beverage industries the most, they are not uncommon to financial services.

Financial institutions face constant cybersecurity threats in the form of account takeovers and ransomware attacks, according to Rick Van Luvender, vice president, Global Security Services, Fiserv.

As the world emerges from the pandemic, financial institutions are realizing that some consumers are less than satisfied with their overall experience over the past 12 to 18 months. In new analysis of relationship surveys Raddon completed for dozens of institutions, it’s clear that accountholder perceptions of their experience have been declining for some time, but the pandemic accelerated that decline.

The pandemic and its accompanying economic fluctuations have upended how consumers bank, impacting not only their behavior but also their expectations. Too many financial institutions are assuming their accountholders are the exception. They aren’t. Just ask them.

By: Marcy Scanlin and Caroline Vahrenkamp

With 46 percent of consumers anticipating applying for a loan this year, it’s more important than ever to get your share of the market before it cools. In lending, timing is everything: Knowing who is in the market for what NOW is how financial institutions gain, preserve and recapture the share that is increasingly going to the largest banks and virtual lenders.

To be in the right place at the right time with the right offer, your lending department needs to know:

In previous Raddon Report posts we addressed the characteristics of profitable and unprofitable accountholders and ideas for growing relationships with both.  Our most recent Raddon Report provided several tactics for turning unprofitable households into profitable ones, and now we’ll share a case study that shows those tactics in action.