Bringing Debit Programs Top-of-Mind and Top-of-Wallet

Competing in Debit

Traditional financial institutions face unprecedented challenges these days due to sweeping changes in payments. With increasing pressure from fintech companies, neobanks, banking as a service and other nontraditional financial services, this highly fragmented industry is providing consumers with various alternatives for transacting, paying bills and managing money.

Driven by a dramatic shift recently in consumer shopping habits, debit is playing an increasingly central role in the relationship financial institutions have with their customers.

“Each debit transaction presents an opportunity for the bank or credit union to reinforce the value they’re delivering to that customer or member, as well as demonstrate why debit matters,” said Steve Sievert, Executive Vice President, Marketing & Brand Management at PULSE.

Key reasons to focus on a robust debit program

A vibrant debit program enables issuers to create a deeper and stickier relationship with their customers and fend off competition from nontraditional competitors, according to Sievert.

These opportunities come as consumers also have changed how they use their debit cards, particularly since the start of the pandemic. Debit is the most frequent touchpoint issuers have with their customers. Data from the 2021 Debit Issuer Study, commissioned by PULSE and conducted by Oliver Wyman, show that the typical cardholder completes more than 25 transactions per month using their debit card.

“Each debit transaction presents an opportunity for the bank or credit union to reinforce the value they’re delivering to that customer or member, as well as demonstrate why debit matters.”

Steve Sievert, Executive Vice President, Marketing & Brand Management, PULSE

Debit cards are now widely used in card-not-present channels, meaning online shopping for goods and services. In addition, the Debit Issuer Study reported an increase in mobile wallet payments using debit cards, with a total of 2 billion transactions in 2020 across the three most prominent wallets, up 51% from the previous year. Significant growth was also reported in using debit for in-app purchases and account-to-account transactions in apps such as Venmo, while contactless, “tap-and-go” transactions grew more than sixfold in 2020.

Furthermore, financial institutions cannot overlook the importance of debit to their bottom line. Data from the Debit Issuer Study shows that debit interchange contributed one-third of non-interest income for smaller financial institutions exempt from the Regulation II interchange cap. Larger, non-exempt financial institutions are also experiencing growth in debit’s contribution to non-interest income, which increased to 7% in 2020, up from 5% in 2019.

 

Competing in Debit-1

The importance of leveraging consumer preferences

When promoting debit, financial institutions need to focus on areas that matter to their customers or members, including convenience, security and fraud protection, and money management. Programs and campaigns should also reflect the buying habits and preferences of today’s consumers. In addition, what a company stands for and how it impacts society is increasingly important to consumers. For example, a recent report from Nielsen found that a majority of consumers (52%) purchase from brands that support causes and issues they care about.

Steps to promote the value of debit

Before you consider how to promote your specific program, start with some strategic questions by imagining your customers’ point of view. What would your customers miss if your debit program no longer existed? What elements of your program can differentiate your offerings from those of your competitors? And consider two important factors that you can control:

  • Local community focus: For community banks and credit unions especially, community involvement is key. Look for ways to support purpose-driven marketing opportunities that can make an impact in your local community and build trust and brand equity with your customers. “Promoting purpose-minded marketing campaigns can both deepen the relationship with account holders and serve as a catalyst to use their card more often with local merchants,” Sievert said, “which can be good for cardholders, the community and the performance of the financial institution.”

  • The power of a positive customer experience: Each touchpoint between the institution and the cardholder is a moment that matters in the relationship. “The experience that is delivered by brands today is just as important, if not more important to some customers, as the product itself,” Sievert said. “Issuers with high-performing debit programs know the importance of delivering ‘in the moment’ and prioritize opportunities to deliver experiences through a debit lens.”

How PULSE helps clients promote debit

PULSE supports programs designed to help issuers promote to their customers the importance of keeping their debit card both top-of-mind and top-of-wallet. These programs capitalize on current consumer buying habits and preferences. Among the initiatives that PULSE can assist with:

  1. Set It to Debit – The “Set It to Debit" effort promotes the consumer use of debit as the card on file for digital and recurring purchases – such as ride-sharing, monthly subscriptions, mobile phone and utility bills. The program can be a powerful tool for driving transaction volume, because once the card is set by the customer, experience shows they are unlikely to change it. “Set It to Debit” can also promote the use of debit cards for account-to-account apps, mobile wallet apps and in-app transactions.

  2. Purchase with a Purpose – The community-focused campaign can be a key differentiator for local financial institutions seeking to support specific causes on behalf of their customers. The message to the customer is that every time they use their debit card, your institution will donate funds to a local charity. Financial institutions can drive even deeper community involvement by having their employees suggest local charities. “This is a way that local financial institutions can differentiate themselves from competitors,” Sievert said. 

  3. Seasonal and other awareness campaigns – Financial institutions can design multiple campaigns that can be modified and updated throughout the year to activate specific benefits of their debit card program. Awareness campaigns should draw attention to some key differentiators, such as security features and card controls, especially with card-not-present transactions and during busy shopping seasons.

For questions about these ideas and more, please contact your PULSE Account Executive or a PULSE debit expert.

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