Raddon Report

I have heard many financial institution executives say that 2021 is the “year of the card” when it comes to loan strategies, and consumer demand appears to be supporting that approach. But to deliver on loan strategies that involve credit cards, financial institutions must be willing to look at credit card offers at all levels.

In a recent Raddon Report article, Understanding the Profitability of Accountholders, we discussed how the pandemic and its accompanying economic slowdown have compressed margins at banks and credit unions, putting pressure on earnings. We stressed the importance of understanding what makes an accountholder profitable. In this report, learn how to identify and retain your most profitable retail accountholders, focusing on the top two performing groups – the A and B retail households.

The 2020s look to be a challenging environment for financial institutions. Here are five strategic takeaways from the 2021 Raddon Conference to help banks and credit unions navigate a path to prosperity.

A year containing a pandemic is, generally speaking, not a great year to have made predictions. In this review of the predictions we made for 2020 in January of last year, we will eat some crow. However, many of the things we thought might happen did, in fact, turn out to be the case. 2020 was a wild and woolly year, but on balance we were surprisingly prescient. However, we did miss clearly on the start and the magnitude of the recession.

Here are the predictions made last year and an assessment of each’s accuracy.

Prediction 1: What we said:

I’ve been using the same satellite TV provider for about 15 years. From that you can safely infer that I’m a loyal customer. But in this case, my loyalty isn’t why I keep my current satellite service. As a matter of fact, I have no more affinity for my current provider than I do for any other cable or streaming service. No, the only reason I stay is because my provider has a relatively exclusive relationship with the NFL, and I’ve been a football fan since I could walk. That’s it.

By Karen Kislin and Jan Trifts, Strategic Advisors

New Year’s Day historically has been a time to reflect on the past year and make promises or resolutions to be better in the new year. Over the past 4,000 years of this tradition, the most common resolutions have consistently focused on health, including exercising more and eating healthier, as well as saving more money to be financially healthier.

While we all hope that 2021 is less interesting than 2020 was, there’s no doubt we’ll continue to grapple with challenges and opportunities resulting from the pandemic. As we look to a new year, I consider these the top three issues financial institutions face.

The pandemic and its accompanying economic slowdown have compressed margins at banks and credit unions, putting pressure on earnings. To mitigate this impact, consider understanding how your accountholders contribute to the bottom line.  Are they bringing the necessary value as consumers of your products and services?

Question: Which credit card offers consumers the best value in terms of travel rewards? Answer: There probably isn’t a “correct” answer, and any answer probably has a lot to do with personal preference. But the question itself is becoming less relevant during the COVID-19 pandemic as travel, in general, and air travel, specifically, has essentially ground to a halt.