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CO-OP Financial Services Blog: Insight Vault

2014 Time Capsule: Are Your Relationships More Intense?

General / by Vice President, Chief Marketing Officer

Is Integration Really a Need for Speed?We couldn’t have done it ourselves.

How many times have you said this exact thing? But in 2014 this sentiment took on a whole other meaning. With so much innovation, change and activity at hand, attempting to do everything alone was beyond impossible. It was bad strategy.

This past year, key partnerships enabled CO-OP and its credit unions to move forward with speed:

  • OnDot, CO-OP’s partner on CardNav by CO-OP, won multiple awards for its breakthrough card control technology – including Best of Show at Finovate Spring 2014 and Popular Science’s Best of What’s New for Security. With CardNav, credit unions can introduce brand new security technology to their members, which makes this a big win for you. On October 29, we announced that Bethpage FCU became the first credit union to launch CardNav, an event duly noted by the trades. 
  • The Members Group, our partners for full-service credit processing, helped our clients enjoy a banner year in credit growth. Not only does TMG provide a seamless operational experience for CO-OP credit unions, but they also kept full-service credit clients on track with evolving technologies like EMV. 
  • CO-OP’s investment in tech innovators Alkami and Finivation is paying dividends. Our partnership with Alkami is helping credit unions offer a fully-integrated online and mobile banking bill payment solution (see December 1 news release on First Tech FCU here, and a story in Credit Union Journal here). Finivation’s role in CO-OP product development continues to maximize efficient connectivity in support of emerging product lines. 

With so much rapid-fire change going on, keeping our clients up to date has been nearly as challenging as providing the right products and services. This year we were thankful for the support we had from all of our partners, who participated in THINK Evolution and THINK It Out sessions, added key insights to our webinars, and worked with the CO-OP team to help us understand the trends, innovations and opportunities that shaped this dynamic year.

Did partnerships play a bigger role for you in 2014? If your experience was anything like ours, two things were increasingly evident. First, staying ahead of new developments requires partnership. New technology, business models and consumer expectations – they all add up to new, heavy demands on your organization. Instead of trying to be the expert at everything, reach out.

That leads to our second revelation: Cooperation is everything. Big banks may have size; financial services upstarts may have chutzpah. In this industry, we have each other. This year our team got a little bigger, bolder, more ambitious – and maybe a little more like a family. We hope yours did too.

CU Members Making Cash Boxes Ring

General / by Senior Manager, Public Relations and Corporate Communications

The final results are pending, but three companies in the service of the industry found that credit union members got the 2014 holiday shopping season off to a robust start.

The Members Group found that credit spending increased 12.97 percent, and CO-OP Financial Services and Saylent found that debit spending increased 6.71 percent from Thursday-Monday of Thanksgiving Weekend compared to 2013. 

The finding of a 6.71 percent increase in debit card spending covered activity at 20 different merchant types nationwide by members of credit unions that use CO-OP for transaction processing. The year-over-year comparison was performed through an advanced analytics solution, CO-OP Revelation, powered by Saylent, and was conducted by Saylent’s FInsights360 consulting team.

CO-OP and Saylent also found:

  • Comparing 2013 to 2014, credit union members increased their debit card usage and spend most at cosmetic stores, with a close to 108 percent increase in transactions and a 98 percent increase in spend.
  • The day with the largest increase in debit card spending compared to last year wasn’t Black Friday or Cyber Monday as one may expect but rather Thanksgiving Day, with an increase of 14 percent. This uptick may be reflective of the broader retail trend of opening in the afternoon and evening on Thanksgiving. 

At the same time, TMG found a 12.97 percent increase in credit spending for users who carry credit cards issued by TMG’s financial institution (FI) clients. TMG’s analysts attribute this to healthy growth in the credit card portfolios of TMG’s clients and the fact cardholders used their credit cards on average 1.35 percent more this year as compared to last year. The analysis is courtesy of the card processor’s proprietary analysis tool, ClearTrend. The tool can provide similar data on a per-FI basis for the processing clients of TMG.

Additional data from TMG includes:

  • Electronic spending (shopping from online and mobile devices with a credit card) increased 24.7 percent year-over-year.
  • Of the three days analyzed (Thanksgiving, Black Friday and Cyber Monday), Black Friday was the biggest day for credit card spending, accounting for 42.03 percent of all credit card transactions. On average, the transacting cardholder also spent more on Black Friday ($147.63) compared to Cyber Monday ($131.45) and Thanksgiving ($111.54).

Happy Birthday, Target Breach! Now Go Away

General / by Vice President, Chief Marketing Officer

Almost a year ago to this day, America lost a good deal of its financial complacency. When Target announced on December 19, 2013, that data on millions of its customers had been breached, there was no going back. Suddenly, everyone knew what they should have known years before: Every retailer that handles your payment data is a point of vulnerability.

A survey conducted by the Ponemon Institute for Experian Data Breach Resolution in April 2014 uncovered some interesting insights into how consumers experience data breaches:

  • Between 2012 and 2014, the percentage of respondents who had experienced a data breach doubled.
  • 76 percent of respondents who had experienced a data breach reported stress as the primary impact.
  • 62 percent had received two or more data breach notifications involving separate incidents.
  • What did respondents want companies to do following a data breach?
    • Compensate victims with cash, products or services: 67 percent.
    • Provide identity theft protection: 63 percent.
    • Provide credit monitoring services: 58 percent. 

According to the survey, data breach victims want frank communication. Asked what could have been done to improve communication following a data breach, 67 percent wanted more explanation of the risks and harms they might experience; 56 percent wanted disclosure of all facts; and 33 percent didn’t want the facts to be sugar-coated.

Meanwhile, who is responsible for data breaches? CUNA has unleashed a campaign – Stop The Data Breaches – to activate consumers around the issue of retailer responsibility by asking Congress to set consistent data security standards for merchants.

It’s unclear whether consumers understand who is responsible for breaches – on any level. Is it merchant vulnerability or a card issuer problem that creates the opportunity for a data breach? Is it the merchant or the issuer who foots the bill? By raising awareness around this issue, perhaps CUNA can help educate the public about how data breaches unfold, and what credit unions are doing in response.

According to CUNA data, the Target breach alone caused credit unions to reissue 4.6 million credit and debit cards at a cost of $30.6 million.

In honor of the Target breach’s first birthday, we might like to send the problem of merchant data breaches off on a nice, permanent vacation. That isn’t likely to happen. The Identity Theft Resource Center reports that 720 data breaches have occurred in 2014, exposing nearly 82 million records. Of these, approximately 79 percent of compromised records are attributed to “businesses.”

Fight Insecurity 

What can credit unions do to address this ongoing problem? Here are a few action steps:

  • Make security a top priority. Give your credit union the tools and resources necessary to combat fraud – and to respond quickly and effectively to fraud occurrences, including merchant data breaches. Security technology, such as EMV and tokenization – may be worth the expense in fraud savings. And mobile card controls like CardNav by CO-OP can reduce exposure.
    Want a step-by-step guide to preparing for a merchant breach? Check out “Tackling the Target Breach,” a 10-step guide for credit unions. Read Now 
  • Improve communication. In the case of communicating about data breaches and fraud, you simply cannot be too good. Members are anxious about this topic, so information is welcome and needed. This subject is complicated: To the extent that you can help members figure out clearly what’s happening and how they can best respond, you’ll provide valuable help and build trust with your members. 
  • Check out This initiative is worth a look, not only for the political action it seeks, but also for the information and perspective it provides into the relationship between consumers, merchant breaches and credit unions.



Heard the Stories? Now Click into Action

General / by Vice President, Chief Marketing Officer

If you participated in CO-OP’s “Year in Review: Top Stories of 2014” webinar, then you’ve already heard our top stories for the year. (If not, click here to download PowerPoint slides and a recording.)

Now what?

Here are a few ways to click into action – while there’s still time left in the year to make a few headlines:

1) Change Your Channels. If you don’t think it’s time to change your channels yet, look closer. According to The Millennial Disruption Index, 68 percent of Millennials say that in five years the way we access money will be totally different; 70 percent say the way we pay for things will be totally different; and 33 percent think they won’t need a bank at all. Three new channels to consider:

2) Get It Together. Integration really is the new black for financial institutions. Read up on six products that bring you closer to an integrated 2015.

3) Go Millennial. If you’re just the tiniest bit tired of hearing about the younger generation, take heart. Older folks (and by “older” we mean “over 35”) are behaving more and more like young people every day. The fastest-growing demographic on Twitter is 55 to 64 year-olds.

But in case you’re still interested in what Millennial bank switchers had to say about their financial services preferences and attitudes toward money, check out CO-OP’s proprietary research, “Unlocking the Millennial Mystery.”

4) Highlight Your Members.  It’s not just that listening and responding to member feedback will help grow your credit union – although, seriously, listening and responding to member feedback will help grow your credit unionit’s that early response to CO-OP’s consumer site shows that members really like finding out about other members. Help your members interact about money. And put the spotlight on them, by nominating them to be profiled on by clicking here.

5) Start THINKing. Couldn’t we all use a few new ideas? Get an avalanche of inspiration: 

6) Fight In-security. You worried about it all year. Now finally get current on security – the trends, challenges, new developments, pitfalls and opportunities. This webinar has the latest. 

7) Apple Pay: Do It Up. We know. There are reasons to hesitate on Apple Pay. Do it anyway. If you’re a CO-OP processing client, we’ll help you get started. To get the lowdown on the tokenization service you’ll need to participate in Apple Pay, visit our Tokenization Resource Center.

Questions about Apple Pay? Ask The Expert here.

2014 Time Capsule: Millennials and Member Experience

General / by Senior Manager, Public Relations and Corporate Communications

12-08-14_MillennialsFull disclosure: Member experience was supposed to be one of several hot topics for 2014. But its influence was felt in virtually every blog post, white paper, webinar and infographic we created this year. Simply put, everything comes down to member experience – product innovation, operational excellence, revenue growth. If you aren’t thinking about member experience, you aren’t thinking.

Something similar might be said about our Millennial friends. While they weren’t the subject of every waking thought, their influence was everywhere – in our discussions of omnichannel access, integrated technology, social media, financial literacy and evolving member needs.

Whether you want to look back at the year we had – or forward into the future of credit unions – Millennials and member experience are bound to be the topics at hand. Here are four takes from 2014:

All About Millennials

These posts zeroed in on Millennial life challenges, behavior and preferences – sometimes with surprising results:

  • Are Millennials a generation of control freaks and delegators? Read More
  • What drives the Omnichannel Generation? Read More
  • What do Millennials really want from credit unions? Read More
  • Would young adults rather shop small? Read More
  • Can credit unions actually reach Gen Y via social? Read More 

Rethinking Your Member Experience

Again, nearly every topic we covered in 2014 was member experience driven. This past spring, however, we wondered whether looking at member experience itself through the lens of member needs might yield some new insights. Here’s what we found:

  • Which Psych 101 principle might help you motivate your members? Read More
  • Why you can’t build a better member experience without basics. Read More
  • Do your members trust you? Read More
  • How do you build a sense of belonging? Read More
  • Get the full download on the Hierarchy of Member Needs. Download Now 

How Three Credit Unions Connect with Gen Y

Nothing tells the story like a great case study. These three credit unions aren’t wondering how to connect with Millennials – they’re actually connecting.

  • BECU connects with Millennials where they live. Read More
  • Redwood Credit Union leverages education to retain young members. Read More
  • Georgia’s Own Credit Union is building a community of young members by targeting their needs. Read More 

Bonus: Access the THINK Vault

Millennials and member experience were also a focus throughout CO-OP’s THINK initiative this year. Here are three items that highlight Millennials:

  • Millennials explain their experiences with and attitudes toward financial services. Watch Now
  • MasterCard’s Chris Ensley dives deep into the Millennial experience. Watch Now
  • Learn more about CO-OP’s proprietary research on what drives Millennial bank switchers. Read More

EMV, Tokenization and Fraud: 2014’s Top Story?

General / by Senior Manager, Public Relations and Corporate Communications

Convenience in Store: Vcom Boom at 7-ElevenThe one-year anniversary of the Target breach has again brought the on-going battle against fraud to the forefront of industry thinking. Looking back on 2014, it is remarkable the impact the breach had – and continues to have – on the credit union movement.

The Target breach can certainly be pointed to as a key development that led to Visa’s decision to offer a free perpetual license of their EMV Application Identifier (AID). MasterCard followed shortly thereafter. In this way, a U.S. EMV solution for debit, compliant with Durbin, was struck.

And, since September, Tokenization – an enabling and fraud-fighting technology for Apple Pay – has dominated industry news.

As we reported in September, CO-OP believes tokenization and EMV together will provide even better security for the U.S. payment system. Think of EMV as the security for a plastic card in a card present transaction, and tokenization as the security for digital transactions, whether mobile or online. So while the technologies are similar, they are designed for different cases. Coupled together they will make it much more difficult for fraudsters and improve the security of all transactions.

So, the trio of closely related topics – EMV, Tokenization and fraud – can be fairly said to have been the leading story of 2014. Here’s what Insight Vault had to say about it in the past year:

  • Does EMV Use Tokenization? Your Questions Answered. Read here.
  • Apple Pay Is Here. How is CO-OP Helping? Read here.
  • Evolving at the Speed of Apple? Read here.
  • Will Tokenization Eat EMV’s Lunch? Read here.
  • Did Apple Create a Tokenization Crisis? Read here.
  • CO-OP Presents Tokenization Webinar Sept. 24. Read here.
  • 4 More Questions You Aren’t Asking About EMV. Read here.
  • 4 Questions You Aren’t Asking About EMV. Read here.
  • EMV: Finally in the Cards? Read here.
  • “Network News” on EMV. Read here.
  • EMV Budgeting Can Be Easy. Read here.
  • Credit Cards Can Be a Sound Launching Pad for EMV. Read here. 

What do you think was 2014’s top story? Join CO-OP’s “Year in Review: The Top 14 Stories of 2014,” a live webinar featuring a lively look back at the year’s top trends and developments: December 9 at 10 a.m. Pacific/1 p.m. Eastern. Register Now

2014 Time Capsule: Integration

General / by Vice President, Chief Marketing Officer

02-18omni-finan1When we think back on 2014, what pivotal moments will we recall? As we’ve said many times, this year has been extraordinary for innovation, inspiration and change. Ideas that have been brewing for years suddenly gained momentum in 2014. And new ideas (can you say “Apple Pay?”) materialized and found traction in record time.

This month, Insight Vault takes another look at a few of our key topics for 2014 – how they developed, and where they might be heading in the year to come. First up: Integration.

The Omnichannel Revolution 

This year’s integration conversation began as an exploration of the omnichannel member experience. As consumers become increasingly connected – online, on mobile devices and through the Internet of Things – the member experience is evolving to include a multitude of interactive channels.

How did we track the omnichannel revolution? These posts help tell the story:

From Omnichannel to Integration 

As 2014 unfolded, the discussion about omnichannel member experience evolved into one about integration – and not surprisingly so. As credit unions look to deliver an omnichannel experience, it’s integration that brings everything together.

Are credit unions ready to integrate? This seems to be a developing situation, as these posts about integration suggest:

  • Destination Integration: 10 Perks You Can’t Overlook Read More
  • Is Integration Really a Need for Speed? Read More
  • 6 Tools to Integrate Now Read More
  • Is Your Credit Card Program Integrated Enough for You? Read More
  • Real-Time Payments Now – Or Pay Later? Read More 

Will integration continue to be a hot topic in 2015? Without question – although, like the discussion around the omnichannel revolution, the conversation about integration will certainly evolve in the months to come.

Want more? Join CO-OP’s “Year in Review: The Top 14 Stories of 2014,” a live webinar featuring a lively look back at the year’s top trends and developments: December 9 at 10 a.m. Pacific/1 p.m. Eastern. Register Now

November Top 5 Must-Reads for Credit Unions

General / by Senior Manager, Market Analysis

11-25-14_Top5MustReadsThis month on Insight Vault we’ve been talking about transformation. What’s transforming the credit union space? No surprise here: It’s mobile payments. What drives the growth and adoption of mobile payments? And how do you compete in a crowded, rapidly-changing marketplace? Learn more in this month’s Must-Reads:

Visa’s 2015 Action Items: Apple Pay, Tokenization, Passwords, EMV

As the New Year approaches, Visa is thinking about many of the same things you are: Apple Pay, tokenization and EMV – as well as the pros and cons of passwords. This is an interesting take, not only on Visa’s plans, but also the challenges facing the card industry.

Go Digital, But Don’t Forget Banking’s Human Factor

As branch transformation and mobile delivery continue to flourish, will human interaction and values become a differentiating factor, especially for smaller institutions like credit unions?

Banks are Facing Increased Competition from Startups

This author’s opening graphic is a screenshot of Wells Fargo’s personal banking and small business homepages with callouts to competitive products and services. It’s worth 1,000 words, succinctly showing the current state of fintech startups and how they impact financial institutions.

INFOGRAPHIC: The Vastly Different Payments Worldview of Millennials

How differently do Millennials view payments? Some 44 percent would rather use mobile than cash for small payments; 50 percent want mobile payments to speed up; and 70 percent think payments will change dramatically in the future.

Who Is Driving Mobile Money Adoption?

It’s not just the demographics, but growth in mobile payments that make this story an interesting read. A significant proportion of North Americans – 40 percent – have used their smartphones to make payments at merchant locations, up from just 16 percent two years ago, according to an Accenture survey.

Does EMV Use Tokenization? Your Questions Answered

General / by Senior Manager, Public Relations and Corporate Communications

11-24-14_TokenizationFlowAs part of CO-OP’s “Innovation in Payments” webinar held November 18, Caroline Willard, EVP, Markets and Strategy, and Michelle Thornton, Manager, Core Products, fielded questions about the latest security technology. What did credit unions want to know?

Q: Is it true that if you hover over an EMV card or an iPhone using Apple Pay, you can capture the data on it? 

A: One important thing to remember is that both of these technologies use cryptograms to secure data. So the data that someone might capture as part of an EMV or Apple Pay transaction isn’t repurposeable.

In Apple Pay, the token that is on a particular phone for Apple Pay is specific to that phone: That phone has identifying data. So if a token were used from any other device, it wouldn’t work because the cryptogram wouldn’t have the identifying information from the correct phone.

On the EMV side, there are transaction counters that would show that a new transaction wasn’t valid because the number and cryptogram were already seen in a previous transaction.

Q: Does EMV use tokenization?

A: EMV does not use tokenization; they’re two different technologies. It’s possible to become confused because they do both use similar kinds of technology, so you hear them talked about in the same breath. They both use cryptography, but EMV and tokenization are two distinct things.

Q: In Apple Pay, are tokens assigned per card or per transaction? 

A: The token is static, but it’s specific to that phone and that card. So, for example, if you’ve got a card and you’ve got three phones, you would have three different tokens. Each phone would have a static and a unique token for that one card.

What is dynamic is the cryptograms around those tokens. Those are unique each time you do a transaction.

Q: Would Apple Pay or EMV have prevented the Target breach?

A: It wouldn’t have prevented the breach itself, but what EMV would have done is prevented compromised numbers from being used to create counterfeit cards. EMV cards are difficult to reproduce, so fraudsters typically don’t attempt it.

The other part of the question was about whether Apple Pay would have prevented it. Again, it wouldn’t have prevented the breach, but it could have prevented certain types of transactions using those numbers.

CardNav by CO-OP, for a third point, would absolutely have been able to prevent some fraudulent activity by alerting members to suspicious transactions and enabling them to shut down their cards if there was a compromise.

In each case, it’s not so much a question of preventing the breach, but what happens with compromised numbers after a breach occurs. These three technologies can absolutely help in different ways.

Q: Can CardNav by CO-OP be fully integrated with existing CU mobile apps, so that members can access it using a single sign on? 

A: We will be deploying on an API version of CardNav by CO-OP, so you can tuck it into your existing mobile app and have it be accessible to your members without having a separate sign on. That’s on our roadmap for 2015.

To watch a recording of the full “Innovation in Payments” webinar, click here.

Find out more about Apple Pay and tokenization for your credit union here.

Learn more about EMV for your credit union here.

Get the latest on CardNav by CO-OP mobile card controls and alerts here.

Do More Locations Make Happier Members?

General / by Vice President, Chief Marketing Officer

Two Efficiency Boosts for Your ATMsCredit unions are at an odd crossroads with locations. On the one hand, changing branch economics make it difficult to justify adding – or even maintaining – an extensive number of locations. On the other hand, members want convenient access, even when they move or are not close to home. These opposing trends raise a curious dilemma: Do more locations make happier members?

CO-OP research suggests that they do – and reveals an alternative approach to achieving locational happiness. CO-OP and Raddon Financial Group surveyed 20,000 members at 25 credit unions in Fall 2013 to find out how CO-OP ATMs and Shared Branches help credit unions strengthen their member relationships. What did we learn?

CO-OP ATM and Shared Branching users are engaged members. In national Raddon surveys, three of the four top influencers in choosing a PFI (Primary Financial Institution) were location-based: convenient branch locations, access to many ATMs with no surcharge fees, and convenient ATM locations.

Users of CO-OP ATMs and Shared Branching tend to live farther from the nearest branch: That’s why they’re using these locations. Yet, 81 percent of frequent CO-OP ATM users and 71 percent of frequent CO-OP Shared Branching users considered their credit union to be their primary financial institution. Only about half of non-users called their credit union their PFI. 

Having more options helps you serve younger members, increase product usage, build loyalty and create fans:

  • Millennials connect with Shared Branching and ATMs. Though Millennials comprised only 20 percent of the survey sample, they represented 26 percent of members who used both CO-OP Shared Branching and ATMs.
  • ATM and Shared Branching users do more business with their credit unions – translating into more deposits and more loans, even when members are geographically distant.
  • Providing access through CO-OP ATMs and Shared Branching builds loyalty. And the more members use these channels, the more loyal they say they are.
  • CO-OP ATM and Shared Branching users rank their credit unions high, indicating a greater likelihood of bringing future business to their credit unions and recommending their credit unions to friends and family. 

Not only does it appear that members are happier when they have access to more locations, but CO-OP Shared Branching and ATM access seem to fit the bill. Through CO-OP, members enjoy greater access:

  • 30,000 surcharge-free ATMs nationwide – more ATMs than any bank network.
  • More than 5,000 Shared Branching locations – the fourth largest branch network in the U.S.
  • 2,200 Vcom self-service Shared Branching kiosks, many of which are conveniently located within 7-Eleven stores. 

Meanwhile, credit unions don’t have to struggle with having to provide more locations in an environment that offers less economic return per location. CO-OP ATM and Shared Branching make massive access achievable. And that makes your members happier, all the way around.