Market Comment

The Cards industry evolved through a variety of challenges during the global economic crisis, which has given way to a slow, yet sure, recovery. Credit card spending was disproportionately hit in reduced consumer spending, and whilst confidence is returning in line with the upturn, the world of credit looks very different post-recession. In addition, the recent prospect of consumer credit reform and security problems further threaten profit margins.

In our view, such times call for companies to focus on existing portfolio improvement - all too often overlooked or misunderstood - rather than customer acquisition. Card portfolio rationalisation and optimisation are now seen as pre-cursor to new product development, migrations, and other complex business change; leaving companies both more profitable now, and well-placed for economic growth. But whilst such health-checks are key, a lean, optimised and diversified portfolio will look different for each provider. Companies would also be well-advised to consider any subsequent cuts to the portfolio against the changing definition of what makes a ‘good customer' - keeping in mind the potential negative impact on customer relations should they dismiss a portfolio segment too hastily. Indeed, there are plenty of solutions to address the problem of inactive cardholders, designed to prompt existing customers' plastics back to the coveted front-of-wallet position. New products, including loyalty programmes, have been used with this aim in mind, and Bluerock has a strong track-record of managing, and delivering such developments.

For all enquiries contact Julian Sawyer:

[email protected]
020 7213 9760

Interesting Links

Contactless cards - An overview from the UK Cards Association

‘A Better Deal for Consumers' - The government white paper behind the headlines

Glossary - Useful definitions of key terms from the UK Payments Administration

Cards & Loans - Consumer advice from the FSA's Money Made Clear site