Optimizing and Marketing Your Debit Card Portfolio

Financial institutions have a significant amount of influence on their cardholders’ financial lives. From product offerings to fees and customer service, a great bank or credit union can equip their cardholders with the tools and knowledge to improve their financial standing and financial literacy. A poor bank or credit union can place unnecessary roadblocks in their cardholders’ way.

However, it’s a two-way street between financial institutions and their cardholders. Cardholders can and should influence how their financial institutions do business. Their needs and wants can help shape how financial institutions do business and influence the products they offer.

In order to best optimize and market your debit card portfolio, your financial institution needs to consider both sides of this street. You have an obligation to your cardholders to provide and inform them of your debit card offerings that can empower them. You also need to be able to understand their needs in order to completely optimize your portfolio. 

Optimizing Your Debit Card Portfolio

A debit card portfolio, as opposed to a single debit card offering, exists for a simple reason: to offer a variety of options for your cardholders, who have differing needs and wants. You can think of debit cards a little like fashion in this regard; we all wear clothes, and they more or less serve the same purpose for everybody, but different clothes exist for different situations and for different tastes. 

As a result, personalization is a vital part of your debit card portfolio. Even small perks such as allowing cardholders to customize the design of their debit cards is meaningful. Larger perks, including varied rewards programs, can be an advantage to your institution as well. 

At some point you will receive diminishing returns when it comes to debit card choice, and that diminishing return can actually turn negative thanks to human psychology. Humans like choice, but only to a point. It’s an overwhelming feeling—not a comforting one—to go into a supermarket and see 30 different choices of toothpaste. Our fear of making the wrong decision starts seriously manifesting itself with five choices, and at 20 or more choices it can seriously impede the selection process.

What does this mean about card portfolio optimization, if anything? The answer is simple: Cardholders don’t want endless choices. Rather, they want meaningful ones. This doesn’t mean you need to limit your debit card portfolio to two options; While that might be meaningful, it might not provide the optimal amount of choices your cardholders need or want.

What Do Your Cardholders Want?

The financial services industry is pretty consistent across the country, but individual regions have different banking needs and preferences. Cardholders in a rural area will want and need something different than a metropolitan area, for example. 

As a result, your market is unique. What your cardholders want is tied to their market. Consider asking the following questions about your customer base and region:

Only you can determine what kind of card portfolio will work for your market. Regardless of your eventual choice, keeping your market in mind when developing card strategies is extremely important.

Marketing Your Debit Card Portfolio

Optimizing your debit card portfolio is a necessary step to ensuring that your card business is set up for success. But it isn’t the only one. Marketing that debit card portfolio is equally important. An effective marketing campaign can help propel your debit card product into the next level of success.

Education as Marketing

You know what your debit cards do. You’re aware of the differences between debit and credit cards and the benefits and drawbacks of each. You also know how an ATM network works and why most financial institutions charge you a fee for using a non-network ATM to access your money. 

While these seem like basic truths to debit cards and debit card usage, many of your cardholders don’t know these things. It’s a natural assumption on the part of financial institutions that their cardholders know more than they do—a common phenomenon called “the curse of knowledge”—but it can have sizable consequences. The reality is that financial literacy isn’t nearly as pervasive as financial institutions probably think:

• Only 24% of millennials demonstrate basic financial literacy.
• Only 57% of adults are financially literate.
• The Financial Industry Regulatory Authority (FINRA) found that financial literacy regarding has been decreasing.

This lack of knowledge presents an opportunity to financial institutions, however, to use education as marketing. Whether this consists of informational blogs, paid media campaigns, viral social media posts, or a special section of your website, effectively educating cardholders can be an easy first step in introducing them to your financial services and products. As basic as it sounds, answer the following questions:

• What is a debit card?
• What kinds of debit cards are there?
• What is the difference between debit and credit cards?

Your cardholders will ask these types of questions. Are you answering them? If you are, are you answering them in an efficient way that drives those potential cardholders down the sales funnel?

Don’t Forget Digital Marketing

Most financial institutions are good at traditional forms of marketing. Whether it’s billboards, television ads, radio ads, or print advertising, these traditional ways of advertising are tried and true and can reach plenty of cardholders. 

Don’t forget about digital marketing. Many of your younger cardholders have cut the cable cord in lieu of commercial-free streaming services or listen to podcasts on their commute instead of the radio. Are you doing what you can to communicate your message to those who wouldn’t otherwise hear it?

Inspiring Trust and Loyalty

Any relationship is built on trust and loyalty. Without them, it’s just really difficult to succeed in that relationship, whether it be between people or businesses. Unfortunately for financial institutions, that trust isn’t always there—especially from millennials and Gen Z. 

Some of this is out of your hands. The 2008 housing crisis and subsequent economic crash had negative ramifications for most millennials in one way or another, and those consequences aren’t so easily brushed aside. A 2016 white paper authored by Facebook revealed that only a stunning 8% of millennials trust financial institutions.

Millennials aren’t the only demographic you need to cater to, but they are a demographic that matters. They will matter more and more as they continue to accrue wealth and assets. What it means for your financial institution and for your debit card portfolio is that trust is going to be of paramount importance. 

These are just a few things that you need to be able to do regarding your card portfolio that matter to your consumers:

• Don’t try to bait and switch your cards.
• Be careful with upselling.
• Communicate fees and requirements clearly and in writing. 

Remember That Your Cardholders Have Options

Trust is only part of the equation. Loyalty matters as well—perhaps even moreso.  We’ve seen that the average bank or credit union acquires new account holders at a rate of 20% of its card base per year, but it also loses 19% of its card base per year. Loyalty is therefore extremely important, as it prevents cycling accountholders in and out and can enable growth. 

Part of this is due to the sheer amount of competition. As a financial institution, you know all too well that you’ve got competition wherever you go. In 2018, there were 4,708 FDIC-insured commercial financial institutions and 77,647 FDIC-insured commercial bank or credit union branches in the United States. Physical locations aren’t the whole picture, of course; fintech companies are competing more and more in spaces previously occupied by legacy banks or credit unions.

Your cardholders can get a debit card from almost anywhere. The process is simple enough. It’s perfectly legal to have bank or credit union accounts from multiple financial institutions, too. With online banking, it’s never been easier to open accounts or explore your options.

How can you keep your cardholders when alternatives are everywhere? Build loyalty. Cultivate your relationship with your cardholders and develop trust. Trying to find shortcuts isn’t really possible, and it won’t help you in the long run. 

TransFund Makes Money Move

Debit cards are on the frontline of your cardholders’ day-to-day financial lives. It’s important to offer a suite of cards that those cardholders find useful. Optimize your credit card portfolio by focusing on meaningful choices, market your cards through education and creativity, and try your best to foster trust and loyalty. 

TransFund can equip you to advance your financial institution’s debit card business by providing card solutions, ATM solutions, merchant solutions, and marketing solutions. If you’re looking for a business partner to take your financial institution to the next level, contact us today.