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Now Is the Time to Bring Card Issuing In House

Now Is the Time to Bring Card Issuing In House
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i2c’s vice president of global product management, Dan Hanks, spoke with David Shipper, strategic advisor at Aite Novarica, and John Chappelle, chief digital officer at Community Bank of the Chesapeake, about why now is the time to self-issue credit cards.

The on-demand webinar addresses several key points, such as:

  • Benefits of self-issuance over an agent-bank model.
  • Must-have features of a profitable and customizable credit card program.
  • Low-risk portfolio migration strategies.
  • How to implement new trends, such as Buy Now Pay Later.


Why Is It Important to Self-issue Credit Cards?

For banks and credit unions who issue cards, it’s important to find new ways to diversify the revenue streams that your bank has. John Chappelle said, “Non-interest income was a huge driver for us [Community Bank of the Chesapeake (CBTC)],” when bringing card issuing in house. Merely unlocking the power of interchange can make all the difference.

With an agent-bank model, banks are able to put their name on a credit card and get it into the market, but there’s no differentiator there. It becomes a cookie-cutter credit card that is no different from the bank down the street or in the next county.

Chappelle continued, “On the agent-bank model, we were generating activity, but the fraction of returns we were getting wasn’t worth the effort we were putting into it from the business development side and the marketing side.”

David Shipper added, “The interchange, interest income, and maybe fee income – all of that is lost if you don’t have a program at all. And on the agent-bank program, you only get a portion of that income, so revenue is a huge driver for banks who are exploring in-house credit card issuing.”

“There’s also a risk of losing the customer,” Shipper continued, “If you don’t offer a credit card or if your credit card is just bare bones, then your customer is going to open a card with someone else, and they’ll open it with either a competing product that’s local or a national product.”

And the danger for issuing banks who don’t differentiate their card programs is that the competing banks will start encroaching on your bank’s core services, like checking and savings accounts, mortgages, and lending once they have the cardholder on their system.

Don’t miss our blog article about the value in a direct-issuing credit card program!

What Are Some Key Features That Drive Card Adoption?

Digital Card Issuance

Being able to instantly issue a digital card and provision that digital card to the customer’s mobile wallet is important. The digital-first transformation continues to be important for banking customers who are looking for frictionless ways to manage and spend their money.

Personalized/Customized Rewards

Banks who issue and manage their own card programs are able to meet their customers’ needs more easily. And that means offering personalized or customized rewards for their cardholders, whether the customer wants cryptocurrency perks or airline miles. In-house issuers are able to win loyalty with rewards and points.

Card Material

Even down to the card material and aesthetics, in-house issuers have the upper hand. To be sure, metal cards and elaborate card designs aren’t for everyone, but they can be a differentiator for some customers. Having this level of control over the card program is only possible for self-issuing banks.

BNPL Conversion

To compete with BNPL providers, banks who issue credit cards in house are able to innovate their card program by converting a portion of a credit card balance to a term loan, or BNPL term, enhancing the cardholder experience by allowing them to pay a set payment amount over time.

A competitive card program is a top driver for successful issuing banks. There must be flexibility, creativity and scalability. Be sure to check out our blog article, “How Can Banks Boost Their Credit Card Issuing Program” for even more insights!

What Does It Take to Run a Card Program In House?

What will likely come as a pleasant surprise to banks who are considering in-house card issuing is one critical piece of information: with the right issuer processor, your bank can issue credit cards with the staff you already have!

While it’s normal to have concerns about launching and running a new card program, it’s also important for banks and issuers to lean on their issuer processor for support, guidance and partnership.

John Chappelle mentioned a few keys when self-issuing credit cards.

“You have to have organizational commitment to bring a card-issuing program in house because an in-house card program does touch multiple facets of the organization.” And while Chappelle also noted that a card program isn’t too different from what you’re currently doing, namely lending and loans, the organization will need to rethink current responsibilities to accommodate an in-house card program.

Even so, Chappelle said, “To date, we haven’t added one single employee to service our in-house card solution.” By outsourcing some of the call center needs and keeping the core services in house, CBTC has been able to fully run their program and focus on innovation and making a great product.

Want to Learn More About Credit Card Issuing?

Check out The Ultimate Resource Center for Credit Card Issuers! Feel free to bookmark the webpage and check back often for new material.

We’ve also put together a free e-book called, “7 Must-have Features for Your Card Program.”

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