Card Issuers: Unleashing the Potential of the Internet for Sales and Service

January 5, 2005

Abstract

San Francisco, CA, USA January 5, 2005

Celent Communications evaluates the state of online cardholder sales and services and finds that while there are clear best practice players, the majority of issuers are behind the curve.

Are there any new frontiers in online financial services? Surprisingly, there are, right under the noses of IT- intensive card issuers. While issuers have customer segmentation and product manufacturing down to a fine science, distribution and customer care remain seemingly old-fashioned and reliant on one channel for customer acquisition (direct mail) and another for customer service (call center/AVR). The fact that most card issuers have not put significant effort into their online cardholder services is evident in relatively low adoption. There are as many active cardholders online now as there were active online banking users in 2002.

According to Alenka Grealish, coauthor of the report and manager of the banking group at Celent, "Card issuers that have excelled in online sales and services have treated the Internet as a separate channel rather than a separate business. Moreover, they have leveraged it not just as a passive channel (e.g., customer self-service) but also as a proactive marketing channel. They have discovered that at numerous points along a customer痴 life cycle庸rom the information-intensive customer attraction and acquisition phases to the customer service phase葉he Internet channel not only improves results but also lowers cost. By building better online sales and service, issuers are finding預s did their counterparts in the retail bank葉hat more customers will come and that active online customer rates over 30 percent are achievable."

Ariana-Michele Moore

, coauthor of the report and senior analyst, adds "The Internet also provides a very favorable and cost-effective channel to serve cardholders without diminishing quality of service. In a competitive environment where cardholders churn over the slightest bump in service and margins are dwindling, this is quite significant."

This 41-page report contains 11 figures and five tables. A table of contents is available online.

of Celent Communications' Retail Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

  San Francisco, CA, USA January 5, 2005

Card Issuers

Return to report Abstract

 

EXECUTIVE SUMMARY 3
THE STATE OF CARD ISSUERS 5
  Performance Pressure 5
  Effectiveness of Traditional Direct Mail is Fizzling 7
  Rise of the Retention Mantra 8
PUTTING THE INTERNET IN ISSUERS' ARSENAL 11
  Adoption: Behind the Curve 13
  Pinpointing Internet Opportunities 13
HARNESSING THE INTERNET FOR CUSTOMER ACQUISITION 16
  Learn From the Past 17
  Change the Mindset 18
  Jump-Start Direct Mail 20
THE INTERNET AS A SERVICING CHANNEL AND RETENTION TOOL 23
  Help Desk 24
  Customer Servicing 27
  Driving Cardholder Value 29
THE ROI JUSTIFICATION 32
  The Return Side of the Equation 32
  The Investment Side of the Equation 36
  Beware of Pitfalls 36
CONCLUSIONS 39

 

        

 

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