Bolder Thinking Blog

7 ways the credit card industry was impacted in 2019

January 2nd, 2020 | Anuj Shahani

What had the most impact on credit cards in 2019? And what will have an ongoing impact in 2020? Here, Anuj Shahani, Vice President, Comperemedia, shares his thoughts on the major developments that took place last year. 

  1.     Personal/Installment loans and credit cards converge into the same product

Personal Loans gained a lot of traction over the past few years, but in 2019 we saw major issuers such as American Express, Citibank and Chase, who decided to incorporate personal loans (or a variation) in their existing instruments. These unsecured loans belong together and adding this feature to existing credit cards allows consumers convenient access and will continue to gain popularity. Looking ahead, these loans will also be the best defense against POS lenders such as Affirm and AfterPay.

  1.   Email and influencer marketing reached new heights

Email is the only non-pay-to-play digital channel available to marketers. We saw Citi send over one billion emails in 2019 and a good chunk of these are cross-sell. Chase and Bank of America also emailed north of one billion emails in 2019, but they have a significantly larger customer base. Citi has shown volumes of cross-sell do not come at the cost of lower read rates. As long as emails are personalized and creative in their subject lines, consumers will continue to give their attention.

Influencer marketing is just getting started: Major issuers successfully leveraged influencers more than ever before in 2019; this trend will only grow. I strongly believe we will see less of A-list celebrities endorsing credit cards, and more success to be had (significantly better ROI) from niche influencers.

  1.     Year of Paid Facebook

Despite everything that Facebook seems to be going through, it’s become clear that Paid Facebook is an incredibly powerful channel, and we see a growing portion of industry budget spent on this channel. Capital One’s $50MM and Wells Fargo’s $90MM spend in 2019 will become the norm as opposed to the exception.

  1.     Apple Card

It’s tough to create any 2019 list and ignore the Apple Card. The launch was surrounded by as much buzz as one could expect from anything Apple produces. However, the success of this card, while currently muted, comes with change for the credit card industry. Consumers will begin to expect instant views into their spend as well as cash back and points, as well as all card and bank apps to be more visual and real-time.

  1.     Uber Money

This was the sleeper launch of the year that will have a significant impact on the industry long-term. Uber is training the Uber driver and gig-economy-worker that one should get paid multiple times a day, i.e., have access to their earnings as close to real-time as possible. Similar to Apple Card, consumers will expect instant gratification for their wages, spend and rewards. Also, Uber Money brings the consumers one step closer to having everything financial (deposits, savings, investments, loans) accessible by one app and one instrument.

  1.     The Power of Cobrands

American Express’ deal with Delta raised many eyebrows as it became clear that miles programs are potentially worth a lot more than the core airline. With more than 40% of profits for the major airlines coming from their credit card portfolio, Delta has pushed Amex to produce close to 70% of its profits by 2023. These aggressive targets will force issuers to keep their airline cards as competitive as ever in order to achieve and retain top-of-wallet status. No-fee airline cards were a new entrant in 2019 and we expect to see more pressure and innovation in this space.

  1.     Strongest value-props ever

In 2019, the industry made it clear that only benefits that can be marketed will be offered; meaning 1.5% and 2% cash back are table stakes, and rental car collision insurance, extended warranty, and other secondary and tertiary benefits are history. The arms race on the highest earn will continue and the industry will continue to feel the pressure on their margins. A positive outcome in 2019 was extreme lavish incentives (read $500) for minimal spend ($3,000 over 3 months) are not sustainable. We’ll see more of the Freedom Unlimited 4% cash back on everything for the first year, a strategy that has been tremendously successful for Discover become more popular. This is an effort to reduce the flocks of gamers from taking out the new card, receiving the sign-on bonus and never touching the card again.

What do you think?

Have any thoughts about the points above? Any additional developments in 2019 that I haven’t addressed? Please reach me at ashahani@mintel.com and we can discuss!

Anuj Shahani

Anuj Shahani

Anuj Shahani is Vice President at Comperemedia, providing thought leadership to Financial Services clients.