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Case Study: New Approach to CLIP Achieves Growth for Chartway FCU

Case Study: New Approach to CLIP Achieves Growth for Chartway FCU
Posted: Mar 28, 2017
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Increase in Year-over-Year Outstandings from $115m to $133m

There is no doubt that the consensus across the financial industry is that we are all operating in a competitive market place. However, those in the know understand that competition brings opportunity to grow to levels beyond what we thought possible.  This was the sentiment expressed by Chris Slane, Director of Payments at Chartway Federal Credit Union, one of the country’s leading credit unions. “Credit unions are conservative,” Slane noted.  “There is a lot of risk aversion in the industry particularly regarding credit limit increases and members defaulting … but in order for us to elevate the industry we have to be prepared to take the risks; we have to get beyond the narrative of evading any option which might impose a loss and start getting into psychology of growth through strategic risk.  We need to be willing to step out of our comfort zone and meet the members where they are.” Slane, along with Denise Bennett, Chartway’s VISA Consultant, shared the process that lead to a successful Credit Line Increase Program (CLIP) with their strategic partner, CSCU.

Change is important for Growth

It had been several years since Chartway offered their members a broad-scale credit line increase program.  A line increase in late 2014 had limited reach to qualified members and did not result in significant outstandings growth. By 2016, Chartway determined what they wanted to achieve and recognized that they needed to approach credit line growth differently.  Having joined the team after Chartway’s initial CLIP offering, Bennett surmised, that “it seems that the previous line increase program was not comprehensive and systematic enough. It only included a very small portion of the portfolio and the program didn’t maximize the credit opportunities based on the results from a tracking mechanism that was run to assess its effectiveness. As a result, Chartway knew going forward that measurement and reporting had to play an important role, as well as effective collaboration with their Lending partners. 

CSCU’s comparative reporting significantly helped Chartway determine that a more comprehensive CLIP was warranted.  Chartway’s members’ line utilization far exceeded their peers.  Higher than peer line utilization signified that deserving members were running out of spend runway, resulting in less spending power, less than optimal usage and perhaps members not thinking of Chartway as their ‘top of wallet’ card.  One of the most meaningful opportunities was to offer their members the credit they deserved, opening up a tangible benefit to qualified members and increasing their ability to spend and borrow more with Chartway. However, the approach to the increase this time had to be prudent and thoughtful, tying to Chartway’s overall culture and brand theme:  Life.  Made Affordable. 

This is what made CSCU’s well packaged opportunity so timely. “CSCU’s program put together all of the big pieces that we would have had to do on our own, which would be very costly, inefficient and time consuming. The beauty of doing a CLIP with them is that the tracking and reporting is built in.   It provided us the ability to measure key metrics, present management with a solid ROI, and determine the extent of our success.  Our CSCU Consultant provided monthly reports with information that also compared our portfolio line utilization to that of our peers,” Bennett noted. “CSCU did most of the heavy lifting. Chartway still had the responsibility and the control to review the accounts and the increases and to decide who we were going to grant increases to.   CSCU, along with FIS and Twenty Twenty Analytics, made the process very streamlined,” she added.

 

Reporting Success

 

Chartway’s outstandings went from $115 million at the end of 2015 to $133 million by the end of 2016. “We have very aggressive growth goals for outstandings and without the CLIP we wouldn’t get there. We had an active portfolio of about 35,000 cards and 21,000 cards qualified for an increase after scrubbing. Overall the program was a success.” said Bennett.

 

  • Pre-CLIP balances $117m

  • 43k accounts reviewed  

  • 2k (51%) accounts qualified

  • Post-CLIP Balances $ 126m

  

 

Both Slane and Bennett agree that credit unions should have a competitive card product and a fulfilling member experience. “Right now the market is so saturated with options.  One way for us to retain and engage our members is giving them ‘TLC.’   So, benefits like increasing their credit line to provide them more purchasing power and improve card utilization ratios, which, by the way can improve members’ credit score, is important,” said Slane. “Positive customer experience should also focus on members growing as you grow --- remembering to simply keep the member in the center,” added Bennett.

Chartway wants to double their credit card business over the next five years.  To achieve this, they know that the card portfolio has to keep evolving.  It is the only way to maintain relevance in the industry. They also plan on maintaining their partnership with CSCU in executing their programs and encourage other credit unions that may have the same challenges to seek help. “It is probably better to do it working with CSCU or an entity like CSCU because there are regulatory concerns and CSCU has already ironed out the wrinkles, I would have been concerned if we did it on our own. It’s like having a great tax consultant; if you are audited it helps to know that you have a supportive, knowledgeable and fact-based partner by your side.” said Bennett.

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Kristen Feazell

Kristen FeazellKristen Feazell

Kristen Feazell is CSCU's Optimize Marketing Consultant and has a great understanding of how to reflect a company’s culture coupled with memorable messages to create effective marketing campaigns across all media outlets. She has more than 10 years of experience in the payments industry in both

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