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560 Carillon ParkwaySt. Petersburg, FL 33716Payments Risk Management Digital Banking Analytics LoyaltyMobile 24/7/365 Contact Center Strategic Consulting844.367.7728pscu.com2 018 A N N U A L R E P O R T
Contents2CEO/Chair LetterDelivering on an ExceptionalMember Experience3PSCU Boardof Directors4Mission and Values &Executive Team6Industry Drivers12162024Safeguarding Your DataEnabling Our Owners’GrowthAdvancing Automationfor Credit Union EfficiencyEmpowering Vision forthe FutureSecurity32Strong FinancialPerformanceManagement Discussionand AnalysisDigital EnablementEnhanced EfficiencyInsights & Analytics8Growth StrategiesTrusted Strategies to YieldMember Growth28Cooperative Spirit36Advisory GroupsCredit UnionRepresentationYour Possibilities Delivered. On their own, these three words denote shades of deeper meaning. Combined, they express apromise—one marked by over four decades of experience, 1,500 credit unions with 59 million membersserved, 2.6 billion unique transactions per year and over 210 million in fraud savings in 2018, representingan industry-leading experience for members.Additionally, these words are the making of a story—one authored by you, our valued Owner credit unions.No matter your strategic priorities, PSCU is dedicated to delivering new possibilities through a highly integratedsuite of payments solutions and renowned commitment to service.This promise of something bigger belongs to you.Because like your service to community, we’re at our best when we deliver on the investments that drive anexceptional experience for your credit union and your members.PSCU by the Numbers:PSCU is driven by2,100 employeesServing over1,500 credit unionsWith 59 millionmembersProcessing 2.6 billionunique transactionsSaving 210 millionin fraud
Delivering on YourPossibilities: ProvidingLeading Digital SolutionsChuck FaganPresident and CEOJeff MarchChairDelivering on anExceptional MemberExperiencePSCU’s view of what constitutesservice has always been evidentin our model of credit unioncollaboration and scale. Alignmentwith the best interests of our Ownercredit unions is eminently related toour success.Over the past year, we continuedto make strategic investments inproprietary and advanced tools toposition you for success in anever-evolving payments landscape.Our investments are at the heartof our commitment to serviceexcellence and digital innovation.For more than 40 years, we’ve beena full-scale credit union serviceprovider at the front of an entireindustry, and we continue to possesscapabilities unmatched by othersthat address our credit unions’ mostpressing needs. Our history andreputation are your guarantee of anexceptional member experience andthe delivery of new possibilities.2We redefined digital bankingwith the launch of Lumin Digital.This represents an opportunity toprovide our Owners with a robust,tightly integrated solution that helpsexpand member engagements andbolster competitiveness with largebanks. Using the industry’s mostsophisticated technology, LuminDigital increases memberengagement through targetedactionable and unique digitalinteractions—to help create amore personalized journey andgreater credit union connectedness.Expanding CollectionsCapabilitiesThis year’s expansion of ourcollections offering with theacquisition of CU Recovery enablesPSCU to better assist credit unionswith non-performing andcharged-off loans.By providing a fully integratedcollections experience to ourOwners, we are facilitating animproved risk management strategy,and easing the burden of collectionsresponsibilities for credit union staff.Sharpening AnalyticsHeightened focus on ourindustry-leading data andanalytics offerings remains a keypriority. PSCU’s expanded analyticsservices, including Member Insight,leverage data from billions oftransactions annually, and help ourOwners understand the profitability,growth opportunities and riskin their portfolios.Our advancement in the area ofpredictive analytics is helpingcredit unions forecast outcomesto positively impact their growth.Through a variety of statisticaltechniques, our teams have thepowerful ability to help credit unionsdrive growth and enable experiences.PSCU Board of DirectorsIncreasing Investmentin Fraud SolutionsOver the past year, PSCU hascontinued to respond to evolvingfraud trends by heavily investing insecurity tools to protect credit unionand member data. We provide acomprehensive, 360-degreeapproach to security throughsolutions such as Linked Analysis,Alerts and Controls, Dark WebMonitoring, Pindrop anddedicated security analysts.Linked Analysis is a proven,multi-layered tool that uses machinelearning to monitor and analyzeaccount behaviors before fraudulenttransactions occur. This makes for atruly holistic risk managementexperience for our Owners.Collectively, we are prepared forand continue to invest in the stateof accelerated change taking partin our industry. We are confident inour best-in-class payments solutions,growth strategies and the abilityto provide a leading memberexperience. Most importantly, weare inspired by your patronage andthe many ways you allow us todeliver your possibilities.Jeff MarchCathie TierneyGene FoleySean RathjenDave DossChairCitadel FCUPresident/CEOVice ChairCommunityFirst CUPresident/CEOTreasurerHarvard UniversityEmployees CUPresident/CEOSecretaryConsumers CUPresident/CEOPast ChairOneAZ CUPresident/CEOCraig EsraelCathy PaceAndrew RosenKit SnyderRob StuartBoard MemberFirst SouthFinancial CUPresident/CEOBoard MemberAllegacy FCUPresident/CEOBoard MemberHawaii State FCUPresident/CEOBoard MemberConsumers CUPresident/CEOBoard MemberOnPointCommunity CUPresident/CEOFrank WeidnerChris ShockleyAmy SinkBoard MemberWings Financial CUPresident/CEOAssociate DirectorVirginia CUPresident/CEOAssociate DirectorInterra CUPresident/CEOGoverned by a Boardcomprised of our Owner CEOs,PSCU is directly aligned with theneeds of our credit unions andtheir members. Our Boardensures the successfulgovernance of the PSCUcooperative, and remainscommitted to helping ourOwners compete and prosperin the payments landscape.3
PSCU Executive TeamMISSION AND VALUESPSCU partners with credit unions to enable growthand provide an unparalleled member experience.Brian CaldarelliEVP, Chief Financial OfficerScott WagnerDean YoungTom GandreEVP, Chief Revenue OfficerEVP, Chief Experience OfficerEVP, Chief Operating OfficerChuck FaganPresident and CEOLynn HecklerEVP, Chief Talent OfficerAt PSCU, we are committed to exceptional service experiences that enable credit union growth andsuccess. We deliver possibilities through our comprehensive, highly integrated suite of traditional anddigital payments solutions, which helps to optimize the member experience. Every member of thePSCU team is committed to being an industry champion, and to serving as an extension of our Ownersthrough each interaction.45
Industry DriversConsumer Behavior:As an industry credit union strategic partner and thought leader, PSCU offers a holistic memberexperience, and continues to monitor the evolving payments landscape, including e-commercetransactions, digital integration, business intelligence and fraud mitigation.Credit, Debit, Mobile WalletsFraud Mitigation TechniquesWe focus on system rules that identify andrespond to current and emerging threats.KEY INDUSTRYINFLUENCERSBusiness Intelligence and InsightsWe use performance-improvement strategiesto drive value to member relationships.In 2018, PSCU published Eye on Payments,a consumer research study focused on criticalcredit union questions around consumerbehavior and payment preferences.Top Reasons for Card Usagefor Credit Union MembersWe found that security is the leading factorin credit union member decisions pertainingto their payment choices. Beyond security,choice in payment method is driven by thetype of retailer and purchase, as well as theconsumer perceptions and attributes of eachpayment method.Digital Integration for a Frictionless ExperienceWe invest in digital tools and technology todeliver a seamless experience.Key ConsumerPayment Preferences Credit – Credit cards remain the preferredE-Commerce TransactionsWe drive growth with impactful adoption strategies.payment method for credit union members.Given their ease of use and convenience,credit cards represent the most commonlyused method for retail purchases.93%of credit card users receiverewards and benefits27%of credit union members use adebit card to avoid overspending Debit – Debit cards represent the secondCONSIDER THESE FACTS75%make paymentdecisions primarily based uponwhich is the most secure13%of credit union memberssurveyed have been a victim ofcard fraud in the last year638%of those surveyed cited concernsabout security as a reason for notusing mobile payments4%most preferred payment method for creditunion members, particularly at routine retaillocations. Convenience, safety and easeof use are the primary reasons cited forthis preference. Mobile Wallets – Credit union membersacross all age groups are becoming morecomfortable with mobile wallets as part oftheir daily purchase routines. As mobilewallet adoption grows and point-of-saleacceptance advances, current transactionsmay slowly shift to mobile, especially forsmall ticket transactions that are currentlyheavily cash-based.of credit union memberssurveyed have had theiridentity stolen in the last yearSource: Eye on Payments 2018: Safety and Convenience Drive Payment Behaviors, PSCUSource: Eye on Payments 2018: Safety and ConvenienceDrive Payment Behaviors, PSCU7
PSCU DELIVERSGROWTH STRATEGIESGrowth Section Divider8Consistent revenue growth allows PSCU to continuallyreinvest in products and solutions that enable creditunion success. Because economies of scale arefoundational to our Owners’ long-term success,we’re committed to continuing the momentum ofthis year’s performance to fuel Owner growth.9
Leveraging Growth for Increased InvestmentPSCU is committed to the growth of our CUSO and the subsequent investment opportunities thatresult from our expanded solution capabilities.Enabling Sustainable GrowthTrusted Strategies toYield Member GrowthPSCU remains passionate about our responsibility to helpcredit unions leverage the depth of data in Member Insightto build growth strategies and tactics to enhance yourcard portfolio.Throughout 2018, we proudly served as an extension ofyour team to deliver best-in-class payments solutions andleading consulting services that enable credit union growth.Credit unions working with Advisors Plusconsultants versus those that do not saw:1.5X5.9XHIGHERTRANSACTIONGROWTHHIGHER BALANCEGROWTHAdvisors Plus supports credit unionsthrough targeted campaigns that yieldedthe following:CONDUCTED1,200MARKETINGCAMPAIGNSTo deliver enhanced value to PSCU Owners,Advisors Plus offers:CAMPAIGN RESULTS 165millionIN BALANCETRANSFERS Expert advice for improved card management withproject leadership and implementation assistance. Avenues and themes for encouraging members’ card use,including websites for reward redemption and campaignsdelivered through PSCU’s Access Point and QuickAssist.TARGETING5.5 millionCARDHOLDERS Predictive modeling to aid credit unions in membercare, determining best-practice promotional offersand addressing needs.Deepen insights to enablegrowth strategiesProvide better scalability,integration and improvedmember experienceExpand our delinquencymanagement functionalityGrowth StrategiesAdvisors Plus Growth StrategiesAdvisors Plus, PSCU’s strategic consulting team, partnerswith credit unions to help them meet their businessobjectives. Advisors Plus consultants create insightful,data-driven financial and marketing solutions that leadthe industry in measurable results. Credit unions workingwith our Advisors Plus consultants and consulting analystsexperienced 5.9 times higher balance growth and1.5 times higher transaction growth than thosewho did not.Redefine digital banking todrive member engagementENGAGED WITH300 Digital BankingContact CenterThe formation of our newcompany, Lumin Digital,redefined digital banking forour credit unions in 2018. Thisdigital platform helps drive member engagementfor our Owner credit unions, and offer exceptionaluser experiences. Lumin Digital provides acomprehensive, integrated suite of digitalbanking capabilities built with the industry’smost sophisticated technologies to help creditunions create a truly personalized journey andconnected relationship with members.We are proud to have provided greater scalabilityand integration through our new contact centermodel. The optimization of our contact centertechnologies enables us to more seamlessly serveas an extension of Owner credit unions. Ourinvestments this year have helped us improveand automate member service operations, whileoptimizing interactions between contact centeragents and credit union members.PartnershipsLeveraging an expandingaddressable market to drivegrowth at PSCU, we have already onboardedover 1.3 million Jack Henry & Associates accounts.Our partnership with Jack Henry & Associates, aleading provider of technology solutions andpayment processing services for financialinstitutions, allows us to further reinvestin the business.CollectionsWe expanded our collectionsfunctionality and solutionsdelivery with the acquisitionof CU Recovery, enhancing our account recoveryand collections services to provide more robustofferings and integrated member experience.OWNERS1011
Risk DividerPSCU DELIVERSSECURITYSquarely focused on our ability to detectand prevent fraud, PSCU has continuedto invest in the development of ourcomprehensive risk management offerings.Our 360-degree approach to safeguardingcredit unions and their members is basedon four key pillars of protection: fraudtransactions, lost/stolen accounts, disputedtransactions and delinquent accounts.1213
PSCU also became the first CUSO to utilize Pindroptechnology in the fight against call center fraud.This investment provides an added layer of voice security,enabling us to proactively block attempted fraud andmove quickly to protect the available credit of thoseaccounts from potential fraud loss.Safeguarding Your DataPSCU fraud management stopped more than 210 million in potentialfraud for our Owners in 2018 by blocking fraud at the point-of-sale, inthe contact center and online, among other channels. This achievementwas realized while preserving an industry-leading false positive rate.Added to our nationally recognized, fraud-fighting capabilities in2018 was Linked Analysis—an Artificial Intelligence (AI) solution thatrigorously examines the connection among credit unions and acrosschannels to positively predict and prevent fraud before it occurs. In2018, Linked Analysis prevented over 6.3 million in fraud losses forour credit unions. This advanced technology is expected to furtherenable a holistic risk management experience for our Owners thatspans all channels.PSCU is leading the industry with high fraud recovery rates and thelowest fraud loss-to-sale ratios, delivering a secure experience. Expansionin delinquency management also occurred in 2018 with the PSCUacquisition of CU Recovery—a solution that enhances our currentaccount recovery and collections services, enabling us to provide amore robust offering for our members, and ultimately a moreintegrated member experience.PSCU is committed to service excellence and continuesto invest heavily in digital channels to enhance offeringsfor our Owners, enable engaging member experiencesand protect members from fraud. Our newly formedpartnership with Ondot gives us the ability to offer themost robust Card Alerts and Controls tool on the market,and to deliver on that commitment. This partnershiprounds out some of our newest investments, all designedto deliver on our promise of protection.Fraud Recovery61%51%40%30%CreditDebitAdditionally, we work around the clock to monitor threatintelligence on the Dark Web and determine the extent offraudsters’ actions. Our sophisticated tools and strategicDark Web monitoring techniques allow us to fight back inreal-time, and protect critical member data.Fraud Prevention StrategyFraud Loss to 100 Sales 0.14The Equifax Breachand Increase in CallCenter Fraud20172018Card Not PresentImpacts theMerchant 0.08 0.07DARK WEBPINDROPLINKED ANALYSIS3-D SECUREALERTS & CONTROLS(All Channels)(Contact Center)(All Channels)(All Channels)(All Channels) 0.03Cyber SecurityCreditEnterprise Risk ManagementDebitPSCUIndustryHOW WE FIGHT FRAUDMonitoredGeneratedtransactionsfraud alerts toinitate investigation2.6 billion142.6 millionProcessedStopped overfraud casesin fraudulenttransactions385,000 210 millionAchieved7:1false positive ratio vs.industry average of 12:1 12.1 millionsaved due tocharge backs15
PSCU DELIVERSDIGITAL ENABLEMENTDeepened engagement through personalizationis a key initiative that spurred our investment ina new wave of secure, fast and reliable digitalsolutions for credit unions. These solutions addressand satisfy the need for online, mobile and digitalbanking payments options for members, and helpensure a future aptly grounded in digital success.1617
Digital EnablementFaster Money Movement Strategiesand Digitally Focused SolutionsAs a key driver of our digital enablementstrategy, PSCU announced our investment inLumin Digital—a leading-edge, cloud-basedplatform that meets growing member demandfor digital banking capabilities. Fully integratedwith PSCU’s DX Mobile, Lumin Digital has helpedPSCU become a leading provider of digitalpayment services for credit unions, and we arecommitted to remaining at the forefront ofthe digital payments landscape whiledelivering unparalled member experiences.Throughout 2018, PSCU continued to invest in the strategiesand technologies that enable nearly instantaneous moneymovement between member accounts and their creditunion institutions. Our teams are vigilant as new systemscome to market that allow for rapidly accelerated clearingand settlement of payments, with support networks anddigital solutions to ensure that our Owner credit unionsremain relevant and competitive in the financialservices marketplace.Simplifying theMember ExperienceCurrent MobileApplicationsDX MobileCredit CardAdditionally, we are enhancing the credit union experiencethrough digital innovation that meets the demands ofconsumers and ensures future revenue potential for ourOwners. Those innovations include:Loyalty DX Mobile Lumin Digital Digital interfaces, including QuickAssist,Card LockAccess Point and Evolve Better integration through APIsVALUEProvides greater value tomembers by helping themachieve their personalgoals and aspirations.ENGAGEMENTRedefining digitalbanking through aproprietary memberengagement platform.18RELATIONSHIPSDeepens relationshipswith members by offeringthe right support andproducts at the right time.Lumin DigitalThe formation of Lumin Digital was announcedat PSCU’s annual Member Forum in April 2018,and serves as a key investment in the deliveryof both an unparalleled member experienceand strategies for credit union growth. As aPSCU company, Lumin Digital’s offering providesseamless, single-page access to card services,data analytics and contact center support.A cloud-based digital banking platform builtusing market-leading technology, Lumin Digitalprovides a tightly integrated and customizedexperience that rivals the offerings available fromthe big banks. In creating a truly personalizedjourney, Lumin Digital delivers credit unionsenlightened engagement, increased value anddeepened relationships, all at secure speedwith minimal risk.19
PSCU DELIVERSENHANCED EFFICIENCYPSCU’s solid back-office modernization strategy is aligningproduct delivery with shifting market demands, keepingour operations best-in-class and scalable. A reinvestmentin existing resources helps support an excellent memberexperience and leverage digital navigation as a means ofenhanced efficiency.2021
EfficiencyPSCU is pr
560 Carillon Parkway St. Petersburg, FL 33716 844.367.7728 pscu.com Payments Risk Management Digital Ban
