The ever-changing and almost daily shifts in the market provide enormous opportunities for credit unions to extend their reach by effectively leveraging debit and credit card programs. These programs are highly visible, provide important consumer functionality and drive revenue and membership growth. In this 2012 Strategic Growth Conference session, we get to learn how to combine the messages in the market with your credit union brand to capitalize on this unique time, including promoting card features and functionality necessary to differentiate your credit union. We will also look at an analysis of key performance indicators and industry benchmarking data to see how your credit union stacks up! More info at: www.nafcu.org/vantiv

1. Capitalizing on Market
Changes to Grow Your
Card Programs
NAFCU Strategic Growth
Conference
Scottsdale, AZ
March 14, 2012
© Copyright 2012 Vantiv, LLC. All rights reserved.
Vantiv, and the Vantiv logo, and all other product or service names and logos are registered trademarks or trademarks of Vantiv, LLC in the USA and other countries.
®indicates USA registration.

2. Extending the Reach
Powerful Tools
• Debit and Credit Cards
› Market changes = Opportunity
› Consumer behaviors drive product
design
› Analytics provide member insight
› Targeted marketing delivers results
› Measuring and managing
2

3. The Regulatory Rearview Mirror
A Brief Look
• Debit
› Durbin Amendment
› Regulation E
• Credit
› The CARD Act
• Consumer Financial Protection Bureau
› TBD…
It’s a new day in payments
…and time to look forward!
3

4. Your Payments Products
Is the Glass…
Half-Empty? Or Half-Full?
• Offset revenue loss • Rebuild revenue and
through: profitability through:
› Increased fees › Offering members clear choices
› Higher balance and pricing
requirements › Rewarding member engagement
› Reduced benefits › Providing new payment solutions
› Accelerated expense that members are willing to pay
reductions for
› Diminished innovation › Reducing costs or features not
providing value
4

5. Payments Continue to Grow!
Debit Credit
• Transaction volume will • Average spending growth
grow by about 8.6% to was 8% in 2011, driven
10% annually through largely by affluent
2016 customers
• Transaction volume • No real growth in overall
expected to reach about outstandings for several
76 billion transactions in years
2016, up from estimated • 2012 projected spending
46 billion this year growth of 8%-9%
Source: www.paymentsource.com, December 21, 2011 Source: 2012 U.S. Credit Card Outlook, Mercator Advisory
Group
5

6. Your Members Have Been
Changing Too
According to MasterCard, Consumer Trends with Greatest Impact on U.S. Financial Institutions
TREND DEFINITION
Finances @ the Foundation Financial securityCards are integral role in my overall well-
Debit and Credit plays an financial management tools
being
Identity Financial security playspersonalization in my overall well-
Card product type and an integral role
being
Experiences Trump As consumers becomeand product benefits focus shiftsunique
Relationship Rewards more sophisticated, that are as from
Possessions possessions (what I’ve got) to experiences (what I do)
as your members
More for Less RealizingCU product compared to large issuers!
Value of that it’s not just about best price; it’s about best
value
Power to Foundation of Credit Unions! Bank Transfer Day in social
Technology has made it easier for consumers to influence
the People each other good example
media is a
Less Is More For some, “streamlining”; others products, a little morevisit to in
One relationship for all financial just want one site to order
their cluttered lives
manage finances
At Your Fingertips What do I want? Everything. When do I want it? Now.
Mobile applications, account alerts
Source: GfK Roper Consulting, Mood of the World–United States,
MasterCard analysis, June 2011
6

7. P2P Payments
Platinum Credit Rewards
Business Debit
Prepaid Mobile Applications
How Do You Know What
Products To Offer?
Low APR, No Fee Credit
Student Card
Premium Credit
Personal Financial Management
Closed Loop Gift Card
Secured Card 7

8. Consumer Segments
Content
Middling Traditionalists Aimless
Self- Sufficients Disgruntleds
…And Who to Offer Them To?
Guidance-Seeking Gen Y
Skeptics Millennials
Educated
Struggling Techies
Opportunists
Boomers
Gen X
Echo Boomers
8

9. Segmentation Extends Reach
Who are our
targeted
member
groups?
What products Understand What are their
and offers Your Member key
appeal to each? characteristics?
Who are our most
valuable member
segments?
9

10. Analytics Provide Insight
Member Data Sources
Debit Online Banking/Bill
Core Credit Card
Card Pay
Analytical Segmentation
How do they use these
Where do they spend?
accounts?
Campaigns, Offers, Products
Extend credit, upgrade
Activate, grow, and retain
account, promote new
10

11. Segmentation
Develop Card Groups
• Any available demographic or
performance information:
› Last activity
› High/Low users
› Transaction type
› Account type - Card or Checking
› Branch locations
› VIP
› And many more….
11

12. Targeted Marketing Delivers
Results
• Penetration, activation and usage
› Promote debit POS transaction types
› Highlight debit card over check access
› Position credit card as financial tool
• Targeted marketing campaigns
› Analyze results
• Optimize sales channels
› Branch, online, ATM, call center
• Loyalty programs
› Reward behavior and provide additional value
12

13. Customize Messaging
13

14. What’s the Effort Worth?
Client: $1.7B Financial Institution
• Segmentation Objective:
› Identify and activate new, never activated debit cardholders
› Drive revenue from recently booked new deposit accounts
• Targeted Offer:
› Use debit card 5 times in 30 days for free companion airline ticket
• Results:
› 72% activated card and performed at least 1 signature debit
transaction
› 44% performed at least 5 transactions in 30-day period
› 95% sustained usage 6 months post campaign
14

15. What’s the Effort Worth?
Client: $600M Financial Institution
› 68,000 debit cards
• Segmentation Objective:
› Stimulate signature debit transactions in under-performing group –
less than $250/mo. in signature transactions
• Targeted Offer:
› $500 or more = $20 gas voucher; $900 or more = $40 gas voucher
• Results:
› 83% increase in signature debit volume
› Annual interchange revenue up more than $106,000
› Growth in average spend per card moved from $103 to $270
15

16. What’s the Effort Worth?
Client: $1.9B Financial Institution
• Segmentation Objective:
› Build interchange revenue to offset potential Durbin losses
› Develop recurring utility bill pay behavior
• Targeted Offer:
› 40,000 members who did not use debit card for utilities
› Pay one bill = $25 dining certificate; 2 or 3 bills = $50 dining certificate
• Results:
› 47% increase in signature debit interchange
› $125,000 in incremental annual interchange revenue
› $750,000 increase in incremental monthly debit card spend
› 89% sustained payment usage over a 6-month period,
through members setting up recurring payments
16

17. Measuring and Managing
What Works – and What Doesn’t
• Determine your success criteria before
you start
• Evaluate all activities – direct mail, in-
branch and online
• Review industry performance
benchmarks
› Recognize the source of the data and how that
translates to your credit union (national vs.
regional, Visa® vs. MasterCard®, etc.)
› Leverage the insight to take action
17

18. Evaluate Behavior
• Benchmark
Performance
› Control Group
› Prior to Campaign
› During Campaign
› Post Campaign
18

19. Measure Your ROI
• Capture Goals
• Target Market
• Achieved
Performance
• All Expenses
19

20. Benchmarking Performance
Average Active Consumer Debit Cardholder Earns
Consumer signature transaction 140 bps ($0.49)
Consumer PIN transaction 74 bps ($0.31)
Consumer blended 119 bps ($0.43)
Business Debit 235 bps ($2.10)
Average active cardholder monthly POS transactions 17.0
Average active cardholder monthly signature transactions (Visa) 15.2
Signature average ticket $35.32
PIN average ticket $42
Average annual spend $7,800
Sources: 2011 Debit Issuer Study, April 2011, Oliver Wyman
2Q2011 Consumer Credit Products Scorecard, Visa
20

21. Benchmarking Performance
Study Participants
Consumer Cards Best-In-Class
and Visa Averages
Penetration 73% 88%
53%
Activation Rate 75%
Visa (64.9%)
Signature Transaction 13.7
20.5
Per Month / Active Visa (16.2)
Annual Interchange
$87 $153
Revenue / Active
Sources: 2011 Debit Issuer Study, April 2011, Oliver Wyman
2Q2011 Consumer Credit Products Scorecard, Visa
Drive Best-In-Class Returns
21

22. CU Credit Card Opportunities
Credit Union Times - February 22, 2012
CU Credit Card Programs are Poised to Shine
“A credit union can go to its members, particularly
those with a credit card issued by a large bank card
issuer, and confidently offer them a card which will
save them money, carry fewer fees and will come from
an issuer they can trust…They have always been able
to do that in the past, but now more CUs feel willing to
do it.”
22

24. Trends in the Credit Market
• Direct mail solicitations are near pre-CARD
Act levels
• Promotion of longer term (13 month)
introductory rates
• National issuers focused on “no frills” cards –
no fee, no rewards
• Shift in focus from affluent to wage-earners
• Active positioning of the product as a
financial management tool
Source: “Issuers Working to Meet Demand for No-Fee, No Reward
Credit Cards” – PaymentSource.com, February 28, 2012
24

25. 25

26. Key Credit Metrics
BALANCE GROWTH ACTIVE ACCOUNTS
Industry Active Client Industry Active Client
Increase Growth Increase Growth
2.77% 5.25% 3.57% 5.93%
Source: NCUA.gov and internal credit union organic growth calculation, 3rd Quarter 2011
26

27. Successful Growth is Possible
Campaign Results Benchmark
Prescreen Acquisition Avg. Response Rate – Avg. Response Rate –
Campaign 0.99% less than 0.4%
Cost Per Acquired Cost Per Acquired
Account - $95 Account - $124
Balance Transfer Response Rate – 2.86%
Campaign Avg. Balance - $3,371
Card Usage and 28% Response Rate Avg. Response Rate –
Reactivation less than 10%
27

28. Loyalty Isn’t About Points
• It IS about:
› Valuing the member for their entire
relationship, not just their card activity Debit
Merchant-
› Providing products that meet their Funded
unique needs
› Delivering incentives that are
relevant, meaningful, and flexible
Rewards
› Cross selling the right product to the
right member at the right time! Credit
Enterpris
Loyalty
Loyal members have more Other Financial Products
products, higher balances,
and greater satisfaction

29. Summary
• Payments will continue to be a strong
tool to extend your reach with your
members
• Debit and credit card products can
generate significant income for your
credit union
• It takes time to segment your member
base – but it’s worth it
• Take action on what you know!
29

30. Questions?
Stephanie Polen
Vice President, Client Portfolio Management
Stephanie.polen@vantiv.com
812-647-9573
www.nafcu.org/vantiv 30