Boston, MA, November 26, 2008 – A new report from Aite Group, LLC assesses the current
state of credit card issuing in the United States. It examines the challenges issuers face, and their strategies to acquire new customers, retain their
current ones and achieve higher activation rates. Based on interviews with 12 of the top 100 U.S. credit card issuers, conducted by Aite Group in October
of 2008, the report also examines issuers' attitudes toward their vendors, including card networks and processors.
Credit card issuers are going through their most turbulent times since the introduction of credit cards. Potential new legislation and
regulation threatens to reshape their business model, and issuers are facing rising charge-offs and a continued assault from merchants lobbying to cap
or reduce interchange rates. Meanwhile, issuers must continue to deal with day-to-day challenges, such as new customer acquisition, card activation, and
customer retention and card usage. In that context, issuers expect rewards to remain front-and-center to their strategy - notably merchant-funded rewards
that alleviate issuers' reliance on interchange funding. A majority of issuers also expect the branch channel to be their most successful acquisition
channel in the next 24 months.
"Given the prevalence of offering rewards as part of their marketing strategy, issuers should step-up their ability to tap
merchant-funded rewards," says Adil Moussa, analyst with
Aite Group and author of this report. "It is also disconcerting to see issuers betting on the branch to grow their portfolio. While we applaud their
efforts to cross-sell existing checking account holders, issuers may be missing out on evangelizing to younger, debit card-oriented generations."
This 39-page Impact Report contains 24 figures. Clients of Aite Group's Retail Banking service can download the report by clicking on the
icon to the right. 
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