Evolving a Credit Card Program for the Underserved
posted by Corey Skadburg on Thursday, June 2, 2016
- agent issue
- credit union
- establishing credit
- financial institution
- interest rate
- secured card
Helping community members build and maintain credit is a core objective for many credit unions. So, too, is earning the business and trust of underserved consumers. The underserved market presents a tremendous growth opportunity for many groups.
In the U.S., there are roughly 70 million low- and middle-income consumers who have some type of relationship with a traditional financial institution yet still turn to alternative providers for things like check cashing and payday loans. In its most recent report, the Center for Financial Services Innovation found the financially underserved market generated $103 billion in revenue. What’s more, many of these consumers have already exhibited financial behaviors that resemble prime-credit audiences.
Identifying those existing members and prospects who fall into this underserved segment is a first step toward outlining a plan to serve them. From there, an organization’s leadership can begin to map out a strategy for evolving the product mix in a way most likely to trigger a response from their unique underserved segments.
Finding success with a credit-builder product like a secured card is far from a breeze. Issuers still must take the necessary steps to comply with several regulations, including Ability to Repay rules. Cards and marketing teams will need to collaborate closely to execute sales, communication – and importantly, cardmember education – plans. There must also be a good program in place for graduating cardmembers into appropriate products as their improving credit profiles warrant. But for those organizations looking to tap into the huge potential of the underserved opportunity, it’s likely worth the effort.