I recently read an article on “The Future of Credit Cards” published as a result of a conference devoted to travel and credit card rewards. Executives from Chase, Barclaycard, US Bank, Capital One and American Express were on hand to share their views on the future of credit cards.
My expectation was that they would simply predict the demise of the physical credit card, as mobile technology certainly can replace it almost instantaneously. In one of my February posts entitled “Remember Your Smartphone, Forget Your Wallet”, I addressed this.
However, these execs went beyond the boundaries of simply replacing the physical card. For many, these discussions are not an “epiphany,” individually you may be familiar with some if not all of their talking points. For others, who assume the evolution of technology, they make perfect sense and you ask yourself, “what is the big deal?”
The fact that banks are talking about this collectively is a big deal.
- Big Data – One of the new buzz words certainly familiar within our community. We talk about it in webcasts and conference sessions but what was interesting in the article is the discussion of leveraging that data across multiple vendors. Can a free Subway drink at your local Walmart be in your future? (Only makes sense if your Walmart has a Subway)
- Mobile – Once again not a new concept, but providing realtime “offers” to cardmembers utilizing location and spending data. My wife would love to get a 20% off coupon while standing outside Justice with my daughter.
- Budgeting Tool/Spend Smarter – This one seemed counter intuitive to me based on the concept of the credit card and habits of some people in using one.
Banks hope to offer cardholders not just deals and offers, but information to help manage spending offering information to consumers about how they spend and how to spend smarter. This should be interesting to watch.
- Unbanked/Underbanked – At the conference it was reported that 8.2% of the people did not have a checking or savings account and were referred to as “unbanked.” They also referred to the “underbanked” as people who have a checking or savings account, but use non-bank means of credit, like payday loans. This group represents 20+% of the population and growing.
AMEX partnered with Walmart on the BlueBird prepaid card looking to the next generation who may not want a bank account. As mentioned in the article, it remains to be seen but the next generation might find bank accounts as relevant as land lines, compact discs, and print publications.
- Less Junk Mail / More Social Media – Note was made that credit card marketing is changing. No surprise here. Rising costs of traditional mail coupled with the communication preferences of the next generation makes this a bit of a no brainer. Barclaycard was noted as leading the way in integrating social media with its credit card products by introducing the Ring card .
David Gold, General Manger of Partnerships for Chase Card Services noted that he wakes up every day worried about what will be written online about his products by bloggers who focus on how many cents they can get out of each point. Certainly something we need to watch today.
What does it mean for the stakeholders?
As a customer: Some of it sounds pretty good and high tech. Who wouldn’t want great relevant offers, discounts and ways to spend your money smarter?
The credit card company: higher customer retention, decreased costs, increased revenue and more accounts.
As a vendor: Opportunity! These companies will need consultants, software and hardware to implement these changes.
Will be fun to look back on this in a few years.
To read the whole article go to: http://finance.yahoo.com/news/future-credit-cards-080024294.html