Menu

Thought Leadership – 2016 A Look Back

Thought Leadership – 2016 A Look Back
Posted: Jan 6, 2017
Comments: 0
Author: Tom Davis

CSCU's Tom Davis self grades his 2016 predictions. What grades would you give him?

At the beginning of 2016, I made several predictions about what would be happening in payments and how they would impact credit unions. With 2016 now in the rear view mirror, we thought it would be interesting and fun to take a look back at what happened in 2016 and grade my predictions – the original article can be found here.

Mobile wallets

My Prediction:

"MasterCard Digital Enablement Service (MDES) and Visa Digital Enablement Program (VDEP) have streamlined credit unions’ enrollment in mobile wallets.  In 2016, we expect as more mobile wallets become available from smartphone makers such as LG and HTC, this process will become even more efficient”

How I Did:

‘B’

I correctly called the role that MDES and VDEP had in enabling credit unions to enroll in the “Pays” – by the end of the year more than half are enrolled. But I missed the mark on LG and HTC releasing their pays.

Financial institution branded wallets

My Prediction:

“credit unions …  begin looking at developing their own branded wallets to compete with …Chase Pay and Walmart Pay”.

How I Did:

‘C’

With very few exceptions, credit unions have not flocked to offering branded wallets. While some big names, such as Chase and Citi announced their branded wallets, other financial institutions, such as Bank of America, have realized that there is greater value in being in all the wallets rather than being their own wallet.

Mergers

My Prediction:

“The 6,090 credit unions we have today are expected to decline to 5,400 by the end of 2018”

How I Did:

‘A’

Although my prediction can’t be measured accurately until the end of 2018, according to Callahan’s data, as of the end of third quarter there were 5972 credit unions, a reduction of 39 per quarter. At that rate there will be 5622 by the end of 2018, close enough for an ‘A’!

Credit unions outperforming banks in 2015

My Prediction:

“We expect this trend to continue in 2016” … “we expect banks will raise their rates faster than credit unions, which could create better loan product value to credit union members”

How I Did:

‘A’

Using asset growth as a proxy to measure this prediction, Callahan’s Peer to Peer Analytics shows credit unions having an asset growth of 8.3%, versus 4.6% for banks. We won’t have true measurements until end-of year data is compiled, but every indication points to the same trend, that credit unions have consistently outperformed banks as a whole.

Debit EMV

My Prediction:

“2016 to be the year of EMV for debit.” … “we expect debit will pick up its pace in 2016.”

How I Did:

‘A-’

Issuers have focused on credit card reissue to chip, but lag behind in reissuing debit cards. While debit EMV has definitely picked up in pace, chip-on-chip transactions for debit still remain below 20%.

Payment fraud landscape in 2016

My Prediction:

“Card present fraud will decline and card not present fraud will rise” … “Credit unions will begin to focus on fallback fraud in the card present landscape and will start to look more closely at new technologies, such as tokenization, to combat card not present fraud.”

How I Did:

‘B-'

Card present fraud has declined, card not present fraud has increased, and credit unions have started embracing tokenization, all as predicted. However, fall back fraud is on the rise and requires increased focus; and credit unions need to enroll and promote card not present solutions such as Visa Checkout and MasterPass, which is more than just tokenization.

Millennials

My Prediction:

“Millennials are getting more mature and are gaining wealth, purchasing more, and are transitioning from renters to buyers.”

How I Did:

‘A’

According to the Consumer Housing Trends Report 2016 from Zillow: “Half of all buyers are under age 36, meaning the Millennial generation is driving more of the housing market than we previously understood.“ Compare that with The National Association of Realtors 2015 report on generational trends, which found that “millennials, who are currently between ages 25 and 34, make up the largest share of homebuyers at 32 percent.  While the two data sources don't exactly line up, a rise from 32% to 50% confirms the prediction.

Blockchain/Bitcoin/virtual currency

My Prediction:

“Although we don’t expect to see mass adoption of these technologies in the financial sector, we do expect continued investment and development.”

How I Did: ‘A’

In 2016, the CU Ledger formed. CU Ledger is a research-to-action initiative that is investigating the viability of blockchain used by credit unions, similar to what the R3 consortium is doing for the banks. CSCU is a member, as are 55 credit unions and CUSOs. Visa announced a B2B payments service in partnership with blockchain startup Chain, and several other announcements of investment and development in blockchain were made in 2016.

Federal Reserve’s faster and secure payments initiatives

My Prediction:

“Federal Reserve task forces have delivered the criteria and will begin looking for potential solutions” … “Service and technology providers will begin to innovate and partner in order to win approval for their potential solutions.”

How I Did:

‘A’

Although slightly delayed, the faster payments task force has 19 proposals to make payments faster; these proposals come from several providers who have partnered to win approval for their respective proposed solution.”

2016 saw many innovations, some successes and some failures. Did your predictions happen last year? Let us know by sharing your thoughts in the comments below.

 

 

 

Print
Tom Davis

Tom DavisTom Davis

Tom is President & COO of CSCU. He joined CSCU in 2004 and today wears many hats as highly respected executive and tireless evangelist on new payment technologies and innovations and how they will positively impact the success and growth of credit unions.

Other posts by Tom Davis

Full biography , Contact author

Please login or register to post comments.

search

Featured Stories