Payments Predictions for 2018

Payments Predictions for 2018
Posted: Jan 3, 2018
Comments: 0
Author: Lou Grilli

The Trellance Team weighs in on what's to come

As hard as it is to believe, it’s once again time to start in on all our New Year’s resolutions. But first, we wanted to step back and share our predictions for 2018. The thought leaders of Trellance gazed deeply into their crystal balls and came up with their vision for what might happen in this new year, and the implications for the credit union community.

   Mike Chenderlin, Senior Portfolio Consultant

  • To say fraud will increase is not even a small stretch as far as predictions. But 2018 will bring much more complex and evolved forms of fraud to credit unions, in the form of account take-overs, false account openings and synthetic fraud. All ways in which criminals can make money, but which existing fraud detection systems won’t notice. The existence of all the breached Equifax profiles on the dark web just makes this that much easier for fraudsters to open an account, obtain a credit card and a loan, and walk away with the proceeds, leaving the credit union with the liability.

    Implications for credit unions: Many credit unions are dipping their toes into the online and mobile loan origination waters, which is the preferred method for fraudsters to commit crimes remotely. Additional scrutiny needs to be placed on new members and new loans acquired through online channels.

   Dave Chojnacki, Senior Portfolio Consultant

  • We will see an increase of AI technology in consumer lending, customer (member) interaction/retention, payments and fraud detection. Lending is a big data complexity and it makes sense to increase the use of AI in this space. In having larger amounts of data in an AI environment it helps to forecast the overall credit worthiness. AI can be used to take the decision beyond credit scores, income, car and home values, to include inflation and economic growth predictions to help gauge credit worthiness. For improved customer (member) experience AI can pull on a wider variety of data than previously used to refine segments further and offer services based on detailed needs. AI will continue to evolve from the current chatbot interaction to include upselling by digging through larger amounts of data. AI will continue to evolve from the current landscape in providing more on the spot fraud deterrent solutions as e-commerce transactions continue to increase.   

    Implications to credit unions: While there are challenges to implementing AI, including access to data, need for expertise, not to mention needed investment, AI will become a must-have in the everchanging market. Credit unions need to make AI a part of their strategy to continue competing in the payments and lending space.

   Ann Farrell, Optimize Portfolio Consultant

  • Targeting millennials will begin to pay off. For years, the stereotype of millennials has been single people living in their parents’ basement, spending all their paycheck on avocado toast. But with the current robust economy and near full employment, millennials are at the age where they have achieved career-type jobs, getting married and buying houses. Credit unions who made a concerted effort to reach those millennials in the early years where their earnings were meager now have existing members who are now eligible for relevant products like mortgage programs, car loans and credit cards.

    Implications to credit unions: Creating targeted marketing to members who have had a credit card for a few years to offer credit line increases, and creating promotions for first mortgages that appeal to the 20-30-year-old new families will result in increased revenue, and happier members.

    Michele Featherstone, Senior Portfolio Consultant

  • The gig economy will encourage new banking products geared towards helping workers whose income can swing greatly from month to month, or even week to week. Car payments with variable amounts, short term loans built into checking accounts, flexible credit card payment dates, app based retirement savings plans for contract employees, and other new products will be adopted by the growing number of contract workers.

    Implications to credit unions: Credit unions that want to be a part of this growing new economy need to offer increased flexibility in product offerings.

   Lou Grilli, Director of Payments Strategy

  • Cryptocurrencies go mainstream. (You can’t have 2018 predictions without a mention of bitcoin!) This time last year, cryptocurrency was a foreign word to most people. Granted by now, it is still not fully understood, but bitcoin’s record breaking news in mainstream media has brought the topic to everyday conversations. There are now debit cards offered that are tied to bitcoin accounts and Square is allowing bitcoin to be used in its Square Cash wallet, bringing this currency to the forefront. While 2017 saw bitcoin used primarily as payment for ransomware, or for speculation, 2018 will see bitcoin, and more importantly several other promising cryptocurrencies come to use in everyday transactions.
    Implications to credit unions: While bitcoin doesn’t specifically pose a direct threat to credit unions, an increase in the use of cryptocurrencies for international remittances; as a place to store assets instead of share draft accounts, as a P2P payment mechanism, all serve to disintermediate the credit union by creating a new rail, one that credit unions don’t participate in. While we don’t think that credit unions should not be investing in bitcoin, watching the blockchain space for promising use cases is a prudent move for 2018. 

   Stephanie Hainje, Senior Portfolio Consultant

  • Credit Face-to-Face transactions will decline to nearly 50% / Debit Face-to-Face to decline to 60%, while e-Commerce will continue to grow. During the 2017 holiday shopping season, online shopping was projected to grow 15-17%, three times the expected year-over-year overall holiday spend growth rate of 3.5-4%. Consumers are using phones and other devices to make online purchases for convenience and to find better pricing.  Currently, credit face-to-face transactions generates 60% of consumer spend while e-commerce is approximately 27%; compared to debit face-to-face transactions generating 65% of consumer spend with 22% e-commerce.
    Implications to credit unions: Credit Unions need to embrace new technologies, implement, understand and promote the value of mobile and digital wallets, as well as promote the safety and security of shopping online with a credit or debit card. The majority of a credit union’s card base is debit and nearly 40% of consumers won’t use a debit card for an online purchase. Issuers need to gain e-commerce growth and be top of wallet/top of glass. Additionally, credit unions need to be more aggressive with credit card acquisition tactics knowing their members are using credit cards – just not the credit union branded card.

  • Income from interchange on debit will decline in 2018. The growth of debit transactions continues to decline, ending near 0 growth in 2017, as more people use credit for card transactions. Many POS terminals do not offer the option of PIN versus signature, defaulting away from higher interchange signature transactions. At the same time, many nationwide retailers are “steering” debit transactions to their choice of lower interchange PIN networks, meaning lower interchange income on large volumes of big-box store purchases. All this means lower revenue from debit cards.      

  • Implications to credit unions: Members are already making the move to credit cards, unfortunately it’s not usually on to the credit unions’ credit cards. Credit unions will need to step up rewards, bonus offers, and promotions to get their branded credit cards into members’ wallets, and then make those cards top-of-wallet/top of glass.    

    Shelly-Ann Wilson Henry, PR & Communications Manager

  • CU marketers will spend as much as 10% of their marketing budget to promote their brands via social media. With so much emphasis being placed on content marketing and more consumers researching their options online, CU marketers will view social media as a worthwhile investment.
    Implications to credit unions: CUs will need to spend more time building and monitoring their online presence in order to truly benefit from their investment. Fortunately, there are several products being offered by CUSOs that are designed to help them do this, so it is possible to succeed without having the expertise internally.


There are so many other areas that will amaze us in 2018. Which ones are you thinking will come true? Give us your thoughts in the comment section below.


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Lou Grilli

Lou GrilliLou Grilli

Lou is the AVP of Product Development & Thought Leadership at Trellance. In this role, he is responsible for managing the organization’s product portfolio, as well as providing leadership on industry trends related to data analytics and payments.

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