Marketing Prepaid Cards to Align with Distinct Customer ...eo2.commpartners.com/users/cba_man/downloads/121128_Presentatio… · Marketing Prepaid Cards to Align with Distinct Customer

Marketing Prepaid Cards to Align with Distinct Customer Segments

November 28, 2012

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Phil ValvardiGeneral Manager, Prepaid Solutions

Fiserv

CBA Webinar Series

November 28, 2012

Tim SloaneVP Client Services / Director, Prepaid Advisory Service

Mercator Advisory Group

© 2012 Fiserv, Inc. or its affiliates.

Agenda

• Key Considerations When Marketing Prepaid Phil

• Marketing by Non-Traditional Competitors Phil

• Mercator Q1 2012 Bank Survey Results re: Prepaid Tim

• Prepaid Market Dynamics Tim

• Questions and Answers

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November 28, 2012

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Key Considerations When Marketing Prepaid

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Prepaid Market Indicators

• Prepaid has moved far beyond prepaid phone and gift cards to become an alternative to traditional bank accounts

• 68 million underserved adults becoming growing users of reloadable prepaid cards

• Gen Y and younger crowd are active prepaid users

• US government phasing out paper check payments

• Reloadable prepaid accounts are in widespread use, with over 10 million general purpose reloadable (GPR) cards active today

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November 28, 2012

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Key Sales/Marketing Channels to Consider

• Existing consumer customers• New consumer customers• Commercial customers

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Key Product Considerations

• Open Loop versus Closed Loop• Reloadable versus Non-Reloadable• Funding Sources:

- Consumer, government, corporate or all sources?

Open Loop

Funding SourceReloadable

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November 28, 2012

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Why Consumers Choose Prepaid

• Average Annual Cost of Ownership:• Prepaid card with direct deposit $153

• Basic bank checking account $259

Source: 2011 Bretton Woods Analysis

Cost Effective Consumer Account

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Why Consumers Choose Prepaid

• Financial inclusion - equivalent to a bank account• Shop and play online• Pay bills• Totally electronic account• Avoid NSF fees• Avoid check cashing fees• Load payroll, benefits, etc.• No credit check required• Safer than cash• More convenient than checks• Widespread acceptance

Cardholder Benefits

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November 28, 2012

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Regulatory Landscape Impacts Your Program

• Dodd-Frank and Durbin

• FinCEN

• OCC

• CFPB

• Federal preemption limited

• State regulation

• Overall increased regulatory scrutiny

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Determine Your Role(s)

• Issuer

• Program manager

• Processor

• Distributor

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November 28, 2012

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Marketing by Non-Traditional Competitors


Whose Branch is This?

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November 28, 2012

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Whose Branch is This?

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The New Deposit Slip

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November 28, 2012

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Publicly Traded, Non-FI Competitors

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Private Non-FI Competitors

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November 28, 2012

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Tim Sloane, Mercator Advisory Group

Consumer Bankers Association WebinarThis document represents Mercator Advisory Group’s written analysis. Our discussion of these topics is considered an essential part of our deliverable, and our full analysis is incomplete without the related discussion.


November 28, 2012

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Prepaid Cards: A Survey of Bank Attitudes, Adoption Rates and Deployment Plans

• Survey Deployed in March 2012.

• 310 completed responses.

• Respondents directed to one of four different surveys :

• Have implemented prepaid(109 respondents)

• Currently evaluating prepaid(40 respondents)

• Evaluated prepaid in the past (58 respondents)

• Never evaluated prepaid(103 respondents)

Source: Mercator Advisory Group Copyright Mercator Advisory Group 2012

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Asset Size Is Not A Determinant in Prepaid Participation


0 20 40 60 80 100 120

Implemented

Evaluating

Evaluated in Past

Never Evaluated

Respondent Distribution By Assets

Under $100M $100M to $250M $250M to $500M

$500M to $1B $1B to $15B Over $15B

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November 28, 2012

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Banks That Have Already Implemented Prepaid(109 Respondents)



Strong Adoption of Gift Cards with Interest Focused on GPR and Payroll Cards (S1Q2)


0 20 40 60 80 100

Gift

GPR

Payroll

Travel

Health

Incentives

Gov

Campus

Currently Offer Plan to Offer No Plans

# of Responses

Base: 109Multiple Answers Allowed

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November 28, 2012

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Serving LMI Community and a New Product For Low Balance Accounts Topped GPR Solutions


0 5 10 15 20 25 30 35

Other (please specify):

To support account turndowns

To meet the payroll needs of our

commercial accounts

To target current account holders

as a new account type

To create a new account type

that targets the low and …

Base: 109Multiple Answers Allowed

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New Account For LMI

New Account for Current Low Balance Account Holders

Payroll Implementation for Commercial Accounts

Turn Down Solution

Other


Top Goals That Drove GPR Decision


Increase existing account holder Value

Attract new bank customers

Payroll solution for commercial

A cost effective product down market

Profitability of the prepaid solution

Cost effective turn down solution

Attract new deposits

OtherBase: 109Multiple Answers Allowed

# of Responses 0 10 20 30 40 50 60

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November 28, 2012

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63% Indicate GPR Met Their Prelaunch Goals

Base: 109


Add value to existing account holders

Attract new bank customers

Payroll solution for commercial

A cost effective product down market

Profitability of the prepaid solution

Cost effective turn down solution

Attract new deposits

Base: 32 That DeployedPrepaid (Multiple Answer)

65%

81%

63%

63%

70%

77%

77%

# of Responses

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Prepaid Market Dynamics

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November 28, 2012

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Open Loop Prepaid Market Growth


$5 $10 $17 $33

$52

$78

$125

$148

$184

$226

$271

$325

$389

$-

$50

$100

$150

$200

$250

$300

$350

$400

2003 2005 2007 2009 2011 2013(f) 2015(f)

Amount Loaded onto Cards($Billions)

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11 Prepaid Categories, 26 Prepaid Market Segments

• Cash Access– Travel– Open Money / Financial Services– Open Gift– Remittance / P2P

• Business Time & Expense– Events & Meetings– Employee/Partner Incentives– Consumer Incentives

• Campus• Digital Content

– Digital Media– Games & Ring Tones

• In Store Gift Cards

• Government– Social Security– Nutritional Assistance– TANF – Court Ordered Payment– Prisons– Transit (Tolls & Light Rail)– State Unemployment

• Insurance Casualty Claims• Payroll & Benefits

– Payroll– Benefits– FSA / HSA

• Petroleum• Utilities• Telecom

– Prepaid Mobile– Prepaid Long Distance

Open

Closed

Mixed


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November 28, 2012

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GPR Meets Broad Needs:But Each Use Case Has A Unique Business Model

• Cash Access– Travel– Open Money / Financial Services– Open Gift– Remittance / P2P










Open

Closed

Mixed


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Today’s Discussion Focuses on:Prepaid Financial Services

• Cash Access– Travel– Open Money / PFS– Open Gift– Remittance / P2P










Open

Closed

Mixed


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November 28, 2012

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Payroll Card Growth Continues

$13.6

$17.2

$19.7$21.2

$24.3

$28.0

$32.2

$37.0

$0

$5

$10

$15

$20

$25

$30

$35

$40

2007 Load

(Actual)

2008 Load

(Actual)

2009 Load

(Actual)

2010

Load(Actual)

2011 Load(e) 2012 Load(e) 2013 Load (e) 2014 Load (e)

Bil

lio

ns

Forecast Of $ Load On Open Loop Payroll Cards

CAGR 2010-2014 = 15%

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Today’s Discussion Focuses on:Prepaid Financial Services

• Cash Access– Travel– Open Money / PFS– Open Gift– Remittance / P2P










Open

Closed

Mixed


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November 28, 2012

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Open Loop Prepaid Financial ServicesUS Load Forecast 2007 – 2014


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Prepaid Financial Services Growth By Source

Mercator Advisory Group Has Identified Three Distinct Areas of Growth for the Prepaid Financial Services Market Segment:

• Organic growth of existing Prepaid Financial Services suppliers.• New Entrants Into the Prepaid Financial Services market

(Primarily InComm & Blackhawk).

• Financial Institutions deploying Prepaid Financial Services products.


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Marketing Prepaid Cards to Align with Distinct Customer ...eo2.commpartners.com/users/cba_man/downloads/121128_Presentatio… · Marketing Prepaid Cards to Align with Distinct Customer