Utilization is Critical to Improving Debit Card Portfolio Performance

The income potential of improving debit card portfolio performance – commonly referred to by insiders as PAU (Penetration, Activation, Utilization) – should place it at the forefront of most FI retail initiatives in 2021. In the last of this three-part series, PRI Partner Mike Holt examines best practices for growing a card portfolio through utilization.

Utilization is, in fact, THE critical industry metric for issuers of debit cards to determine portfolio performance strength and income potential. Utilization is a card usage metric, measured by the average number of purchases on each of an FI’s active debit cards in any given calendar month. The accurate tracking and measurement of the utilization metric is an absolute must for good debit card portfolio performance reporting.

“Tracking and reporting the utilization metric is actually the easy part,” Holt said. “Increasing utilization is a little bit trickier and typically requires a bank-wide initiative to achieve.”

Efforts to successfully increase the FI portfolio’s utilization are similar to penetration increasing efforts. 

• Account Opening

There must be a focus on utilization at account opening, according to Holt. Retail employees should mention the benefits of the debit card, how to use it (including for recurring payments and card-on-file), and how much safer it is than cash or checks. Scripting should be themed with the idea that the debit card is the only option worth discussing.

It’s also beneficial to ask employees to explain why they love using their own debit cards. “Having client-facing staff who are active users of the debit card is a critical success factor,” Holt said. “Internal competition to encourage staff to use their cards should be encouraged.” 

• Marketing and Website Design

Effective marketing messaging and website design can improve card utilization. An FI should employ both “push” and “pull” messages for its current and potential customers. 

• Deposit Account Suite

Offering a deposit account suite geared toward driving usage and establishing a usage floor is invaluable when it comes to achieving and beating industry averages.

• Incentive Programs

Bank-driven usage – also known as incentive programs – can be the final factor leading to top-level, best-in-class utilization rates after the previous tactics have been perfected. These programs can be permanent or periodic through the year. Incentive programs should always take holiday spending into account, and they will have more value if they are set at account opening to include a new account program for the first 60-90 days.

Stay up-to-date on debit card profitability and stay in touch with PAU performance. As the number one producer of non-interest income, it’s worth it.

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.