Card, mobile credential, payment and security
Annual CR80News campus card banking survey
It seems that banks are picking and choosing their battles when it comes to campus card partnerships, with some expanding their reach and others holding steady at their previous numbers. With subtle overall growth, however, it seems that it’s business as usual despite possible future regulations.
A year ago, the CR80News Banking Survey examined the impact that new regulations might have on the campus banking market. The 2012 survey saw very little year-over-year growth, and while there weren’t any earth shattering moves in 2013, the landscape has changed nonetheless.
The nature of banking relationships is changing. There are positive changes such as a strong crop of new partnerships from two survey leaders and a new player in the market boasting impressive experience from its international campus partnerships. There are negatives as well including looming regulations and continued bad press.
No longer is it just about having a bank branch on campus and combining a student ID and debit card. Those were the simpler times when banks, campuses and students believed–for the most part–that the service was good for all parties.
What some considered questionable student account fees from Higher One, a leading provider of financial aid dispersal services, raised the ire of some students, consumer advocates and the mainstream press. The issue percolated all the way up to Washington, dragging an entire industry segment along for the bumpy ride.
A General Accountability Office report released in early 2014 recommends regulations for campus banking relationships, and the U.S. Department of Education has started the process of creating new rules expected before the close of the year.
The nature of campus banking partnerships and financial aid dispersal services are likely to change as these regulations unfold.
The two largest movers year-over-year were Blackboard and U.S. Bank.
U.S. Bank added nine new institutions to its partner list in 2013. One partnership ended during the year fixing the total at 63. In addition to its retail-banking footprint, U.S. Bank offers a prepaid option effectively expanding its ability to serve campuses nationwide.
U.S. Bank is a nationally chartered bank and licensed to operate in all 50 states. With the introduction of its prepaid campus card product in 2012, U.S. Bank is able to offer programs in all 50 states. In fact, several of the bank’s campus partners are located outside of its 25-state retail footprint including two of their new 2013 additions.
Blackboard added 12 new partnerships while two ended in 2013 bringing its total to 35. Its Discover-branded BlackboardPay offering made a major impact in 2012 entering the survey for the first time with an impressive 25 client partners.
Wells Fargo added one new institution to its partner list, bringing its total to 37 campus card partnerships and continuing its hold on the number two position. Also licensed to serve all 50 states, Wells Fargo maintains a nationwide presence and features the largest retail footprint of all the banks, spanning 39 states and D.C.
Adding to its existing Midwest presence is TCF Bank, with two new campus card partnerships. With its total of seven campus partners, TCF is the last of the banks to increase its year-over-year numbers.
Holding steady since last year’s survey are SunTrust, Commerce Bank, Heartland Campus Solutions/CNB and PNC Bank with two, three, 23 and 26 partnerships respectively.
Perhaps the most significant change to the landscape this year, however, doesn’t come in the form of increased numbers but rather a new presence altogether.
Santander Universities U.S. has entered the campus banking market this year following its purchase of Sovereign Bank in 2009. The Spanish bank enters the market with four campus card partnerships located in Rhode Island and the greater Boston area.
Santander’s U.S. footprint spans the Northeastern seaboard including Maryland, New York, New Jersey, Pennsylvania, Delaware, Connecticut, Rhode Island, Maine and New Hampshire.
While campus banking partnerships started with the goal of providing basic banking services to students, a range of added features and services have complicated the once simple offering.
Financial aid dispersal is a feature more institutions want, says Don Becker, assistant vice president of student and prepaid card partnerships at Commerce Bank. With increasing pressure on university budgets, refund disbursement may work its way into more and more university RFPs in an effort to reduce costs and provide better service for students.
Long-time campus bankers are also figuring out the prepaid market. Network branded prepaid cards are a relatively new product on campus and they require banks to invest in different systems, platforms and marketing, Becker says. The banking compliance regulations for prepaid cards are still in the development stage and it may yet be too early to tell if prepaid cards will begin to displace existing campus debit cards on a wider scale.
Certainly some providers see strong advantage in prepaid. “It is a great example of how the offerings have evolved, giving the institution and their students options that weren’t widely available six or seven years ago and that are decidedly more consumer friendly than the average checking account,” says Jeff Staples, vice president market development at Blackboard Transact.
Staples believes prepaid is the ideal choice for financial aid dispersal. “Universities can put credit balances in the hands of their students in 15 minutes, with no risk of overdraft and access,” he says. “That is the epitome of ‘free and clear.’”
Another trend is the appearance of network-branded debit products on campus.
“Some institutions are interested in adding the ATM-only functionality without the Visa branded logo,” says Stephen Nixon, vice president and manager of Wells Fargo’s Campus and Workplace Banking Programs.
In other cases, however, Nixon explains institutions are interested in going to a network-branded debit program and maintaining issuance on campus. “This method requires more significant changes to the campus issuance operation largely due to the security requirements associated with instantly issuing Visa-branded plastics and card stock,” he says.
Wells Fargo also offers a Visa branded debit card that the bank centrally issues to students.
Financial aid dispersal, branded prepaid and branded debit can all add value to the student ID card but they also can complicate things. The days when all parties readily agreed on the merits of a campus card banking partnership seem like a long time ago.
Perhaps they will return, but in the meantime, the “wait and see” approach from last year’s survey still applies today as future regulations are anything but clear.
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