Advice for the credit card industry in 2020: ‘If you want to take the island, burn your boats’

February 18th, 2020 | Anuj Shahani

I attended the Rakuten Marketing Dealmaker conference in Scottsdale, AZ last week and one of the keynotes repeated this Julius Caesar quote: “If you want to take the island, burn your boats.” 

For the credit card industry, this is exactly the mantra we need to adopt. We continue to slowly hedge our bets and up the ante bit by bit. What we need is a new, revolutionary approach so that we can walk away from ‘5% cash back for gas,’ ‘3% for restaurants,’ and ‘2% cash back on everything else.’ While these rewards are rich, they are not helping the industry gain market share.

The fintechs are breaking down the gates and it’s a matter of time before we see something revolutionary from them, driving everyone else to scramble. 

Rakuten enters the cash back game

Rakuten (too much of a behemoth to be considered a fintech) continues to push a very ambitious agenda. They are slated to launch their personalized cash back ahead of the 2020 holiday season.

Just to be clear, they intend to offer personalized cash back via Rakuten Rewards (aka Ebates), not via a credit card. But this move is going to give customers pause and raise their expectations. As a consumer, it’s hard not to wonder: “If Rakuten can personalize my rewards based on a few online clicks, why can’t my bank personalize my rewards given that they have access to my entire spending history?”

In my opinion, this is going to be the start of the end of our existing credit card value propositions. Consumers will expect to receive rewards that truly cater to their specific lifestyle. We saw plenty of lifestyle reward cards launched in 2019, and this trend will likely continue in 2020, but the reality is that many consumers are chasing a similar lifestyle and thus, the differentiation hardly exists: “Wherever I spend is where I want the highest rewards.”  

Revolutionizing personalization in the credit card industry

For a credit card issuer, making the economics work isn’t going to be easy, but if we wish to gain real market share and stay relevant in an ever-changing landscape, I view this as a cost of doing business. Those who are in a position to stay ahead of the curve and can offer something within the next 12-18 months will have a huge advantage over the rest of the industry. Once consumer expectations start to shift, fintechs will step up to the challenge, try to create an offering, and gradually steal market share.

I also view a number of positives for the industry by moving to personalized rewards:

  1. Personalized rewards would be extremely hard to game. We shouldn’t have to offer high sign-on bonuses and thus limit the churners.
  2. The cost of change becomes harder. While future laws may allow consumers to go elsewhere with their data, Erica at Bank of America (for example) should have the best understanding of her clients’ spend and continue to offer them the highest rewards.
  3. Erica should also be in a position to truly help her clients with their spending. If a client is making a purchase that they simply can’t afford, this is the only way Erica can actually know enough about their finances to make a recommendation.

Personalized recommendations related to consumers’ financial well being is one growth opportunity area for FSIs to create new products and services. The true financial well being of customers is a goal most FSIs have; however, education isn’t moving the needle. We need to be present in their lives as situations come up, and it’s only at the right moment that the right guidance is going to help make any real change happen. Changing consumer habits is the hardest thing, but personalizing rewards, making recommendations, and feedback is the only option to make a real dent in consumer habits. I’m pretty sure we all get that. The question remains, however: Who is willing to move forward and conquer this island?”

This is a topic I am extremely passionate about. Please don’t hesitate to contact me ( with your thoughts and comments. Let’s embark on this journey together!

Anuj Shahani

Anuj Shahani

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