Affinion Identifies Remedies for Financial Institutions Impacted By Durbin Amendment

Value-Added Enhancement Programs Will Help Recoup Revenues Lost as a Consequence of Lower Interchange on Debit Card Transactions

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Affinion Group

Jun 16, 2011, 09:34 ET

STAMFORD, Conn., June 16, 2011 /PRNewswire/ -- The recent legislative and regulatory reforms impacting financial institutions, including the Durbin Amendment which is expected to go into effect on July 21st, could eliminate up to $14 billion in annual revenue from banks and credit unions. (1) The loss of this vital revenue stream comes as average account profitability has fallen up to 15%, and as consumers become increasingly sensitive to the pricing of programs and services from their financial institutions.

Affinion Group, which creates and markets private label programs that address fundamental consumer needs for protection and peace-of-mind, as well as savings on travel and leisure and everyday lifestyle services, is ideally situated to alleviate some of the financial strain that banks, card issuers and credit unions are facing in light of the legislation. The solutions offered by Affinion, which are designed for rapid deployment, can dramatically improve account profitability in three critical ways: 1) by extending the length of the relationship between a financial institution and its customers; 2) by generating incremental revenues through additional products and services that consumers expect and want to receive from trusted relationships with their financial institutions; and 3) by identifying and providing incentives for customers to engage with banks in ways that reduce the costs associated with servicing an account.

Throughout the course of its nearly 40-year track record of generating billions of dollars in additional revenues for its financial institution clients, Affinion has demonstrated its capabilities through various configurations of its programs that have been offered to entities of all sizes - national, regional, community and credit union:

Consumers consistently report their interest in receiving identity theft protection services from trusted financial institutions. As the category leader in the marketplace, Affinion has protected the identities and provided credit monitoring and reporting for millions of consumers, with roughly nine out of ten consumers satisfied based on a recent study.
A comparison of average free checking accounts versus fee-based accounts that included Affinion-provided benefits showed that the latter programs more than doubled the lifetime value of an account due to a 2.5x increase in average account balance and a 1.7x increase in average tenure. As a result of the high degree of relevancy and value inherent in the benefits, these accounts also reported 30% higher satisfaction with the institution as compared to those accounts with free checking.
Through its innovative FlexChecking service, Affinion designs custom programs to stimulate consumers to adopt behaviors that will reduce the institution's cost of servicing accounts. For instance, a majority of consumers identified online banking as a behavior in which they would engage, in order to maintain a free checking account. This allows financial institutions to decrease its cost of servicing significantly.

"Our wide array of solutions not only provides financial institutions with additional revenues, but also increases customer engagement and enhances loyalty," said Lloyd M. Wirshba, President and CEO of Affinion Group, North America. "We have a strong track record of proven programs for protection and peace-of-mind products, as well as lifestyle and leisure products for everyday savings, that are able to be customized and implemented quickly to meet the needs of our financial institution partners and now, more than ever help to recoup revenue losses they may be facing in light of recent legislation."

Many of the products offered by Affinion to financial institutions have been endorsed by leading financial industry associations, such as the American Bankers Association (ABA) and more than 30 State associations, and Affinion has previously been named a preferred partner of the National Association of Federal Credit Unions (NAFCU). The Company works with thousands of financial institutions, including 18 of the 20 largest credit card issuers in the US, and has generated more than 100,000,000 new accounts over the past decade.

About Affinion Group

As a global leader with almost 40 years of experience, Affinion Group enhances the value of its partners' customer relationships by developing and marketing loyalty solutions. Leveraging its expertise in customer engagement, product development and targeted marketing, Affinion provides programs in subscription-based lifestyle services, personal protection, insurance and other areas to help generate increased customer loyalty and significant incremental revenue for more than 5,550 marketing partners worldwide, including many of the largest and most respected companies in financial services, retail, travel, and Internet commerce. Based in Stamford, Conn., the company has approximately 4,150 employees throughout the United States and in 16 other countries, primarily in Europe, and markets in 16 countries globally. Affinion holds the prestigious ISO 27001 certification for the highest information security practices, is PCI compliant and Cybertrust certified. For more information, visit www.affinion.com.

(1) http://education.cardhub.com/interchange-fee-study-2010/

SOURCE Affinion Group