Annual CR80News survey shows growth rates drop by half from prior year
By Chris Corum and Andy Williams, CR80News
The number of partnerships between campus card programs and financial institutions continued to grow in 2007, though not as rapidly as in recent years. The annual CR80News campus card/banking partnership survey reported a modest increase of 8% in 2007, down from 16% growth in 2006 and a 30% average growth in 2004 and 2005.
Participating in the survey were the major players offering campus card partnerships: U.S. Bank, Higher One, Wells Fargo, Wachovia, PNC Bank, TCF Bank and Commerce Bank. As a group, a net gain of nine new partnerships was reported for the year.
- Leading the field, as it did in 2006, was Minneapolis-based U.S. Bank with 30 partnerships, a 7% gain. It reported four new partnerships but lost two others.
- Close behind is Higher One, the New Haven Conn.-based online financial institution, which reported 27 partnerships for a 17% increase for the year.
- Third on the list is Wells Fargo, San Francisco, which went from 22 campuses in 2006 to 24 in 2007, for a gain of a 9%.
- In terms of percentage growth, Pittsburg-based PNC Bank had the strongest showing, registering a 27% increase, rising from 11 to 14 campuses.
- Wachovia Corp., Charlotte, N.C., and TCF Bank, Wayzata, Minn., lost one institution but adds another to remain stable with 16 and 10 partnerships respectively.
None of those surveyed reported a lesser number of partnerships than the previous year. “Growth in campus banking partnerships on ID cards seems to be steady,” says Whitney Bright, vice president of campus banking for U.S. Bank.
A historical perspective
Year-to-year growth can help spotlight trends but only historical review can show the whole picture. In 2003 when CR80News first began tracking bank/college partnerships, 47 were identified among the survey participants. In this fifth edition of the survey, this number is well on its way to tripling, with 127 partnerships.
Other interesting elements emerge when the survey results are looked at in aggregate.
First, the financial institutions actively partnering with campuses have not changed much since the first survey in 2003. Added to the list is Commerce Bank, Kansas City, Mo., though the institution should have been included previously as it was a provider in 2003. SunTrust has been removed. The Richmond, Va.-based bank still services Florida State University and University of Central Florida but has not responded to survey requests.
One new player may be emerging in Heartland Payment Systems. The Princeton, N.J.-based company acquired General Meters and launched its first banking partnership, in conjunction with Oklahoma-based CNB Bank, at Slippery Rock University late in 2007.
There also is a very small rate of turnover in campus banking partnerships. Most campus card programs that had partnerships in the initial surveys still maintain their partnerships today. Out of 115 programs reported in the 2006 survey, just four (3.5%) were not on the list in 2007. While this could suggest that partnerships are difficult to end due to contractual and other factors, anecdotal evidence suggests that campuses are generally satisfied with their financial partnerships.
Geography as a determining factor
Another factor that determines a campus banking partner is geography. Banks have a footprint of states that they can serve based on state laws that govern interstate banking. This narrows the list of partner options for some campuses and makes other state’s fertile battlegrounds.
What states feature the most banks fighting for your campus card partnership? Colorado and Illinois are in the footprint of six of the seven surveyed institutions and Arizona lies in the footprint of five.
Momentum combines with geography to play a factor as well. Certain banks have a stronghold on campuses in certain states and regions. PNC is extremely strong in Pennsylvania with 12 campus partnerships. In the Southeast, Wachovia is strong while TCF is strong in the Great Lakes region. In Texas, Wells Fargo and Higher One have both found great success with 12 and 10 partnerships respectively.
Because Higher One is accessible anywhere there is an Internet connection, it can serve every state. U.S. Bank and Wells Fargo serve 24 states and Wachovia serves 20.
All of this is important if you’re looking for a bank partner. Obviously you need a bank or a financial institution that works in your area.
Trends in campus banking
An emerging trend regards university-branded credit cards linked to the student’s ID card: “U.S. Bank saw some new technology developments in 2007 with our first implementation of an instant issue Visa-branded ID card program at the University of Wisconsin Eau Claire,” adds Bright.
Wachovia is experiencing the same thing. “Colleges and Universities continue to express interest in Wachovia’s Visa Check instant issuance program in association with their ID Cards,” commented Wachovia’s William Caldwell, assistant vice president, campus card relationship manager.
“Many of these programs want the benefits of a card … which handles their financial needs, not only on campus, but anywhere Visa is accepted,” Caldwell adds. “Also, the widely used ATM Campus Card program offers additional value since more on campus services have expanded PIN based purchasing capability through national ATM networks.”
Campus banking services outside the survey’s scope
Not all banking relationships fell under our strict definition for this survey, i.e. a spot on the campus card. While these results were not included in our survey, they do show the many additional services banks can offer colleges. For example:
- U.S. Bank operates nine branches on campuses without a campus card partnership.
- PNC has relationships with 30 other universities that can include combination ATMs, special offers for financial services to students, faculty and staff, sponsorships and financial literacy.
- Higher One services another 56 colleges in addition to the campus card partnerships, offering a financial aid delivery service that is not tied to the official campus ID card. Casey McGuane, Higher One’s senior vice president for client operations, says the company has been doubling the number of its clients for the past several years and is “probably on track to make 115 this year.”
- Commerce Bank also has partnerships with two universities that do not include an ID card partnership. “These are Kansas State University and Missouri State University. We have branches on each campus and offer customized financial solutions to students, faculty & staff,” says Commerce Bank’s Don Becker.
Judging from survey results, the state of campus card bank partnerships is healthy and stable. While the gains in 2007 were significantly smaller than those in prior years, every one of the surveyed financial institutions reported increasing or, at least, maintaining 2006 levels.
Perhaps a modest growth rate of 8% should be viewed as a win in a year when budget cuts are the norm and a general down economy prevails. This could be the case even though bank partnerships often are revenue neutral or create revenues for the campus … because the process of change and implementation requires valuable time and effort from campus administrators wrestling with budget-related issues.