UK customers are increasingly willing to multi-bank, and already more than a half (53%) take their credit card from an alternative to their current account provider.
Is there scope for credit card issuers to win market share by sharing consumers’ financial data with third parties in return for benefits?
A report released by PwC, Who are you calling a challenger? How competition is improving customer choice and driving innovation in the UK banking market, states that 39% of consumers would agree such a deal with their financial institution.
Increasingly, retail customers are not seeking more full-service banks, but rather providers that specialise in specific products or segment needs.
As the report notes, the advent of Open Banking, enabled by technology and regulatory developments, will be particularly influential on competitive dynamics.
Supported by a new regulatory regime, the initiative means banks will be able – and required – to share more customer information than ever before.
This will be achieved via APIs which enable systems to be connected in a far more modular and component-based way across organisational boundaries.
Making infrastructure available through standardised interfaces will be a major trigger for new competition, from many different sources.
Open Banking will give rise to new business models, with some providers choosing to specialise in niche areas rather than offer a traditional suite of products or attempt to manage the customer’s end-to-end experience.
In the credit card sector, however, there is much scope for improvement and optimisation of the customer experience. The majority of banks do not offer separate apps for different products such as credit cards.
As customers shift to digital channels, issuers will be under pressure to optimise their mobile and online channels to increase conversion rates.
Speaking purely as a cardholder and not an editor, the Amex app is outstanding, offering personalised notifications for payment and spending reminders, balance updates and statements. As a non-customer, Barclaycard and Capital One also offer standalone credit card apps that colleagues speak highly of – but as for the rest, how many really good credit card account apps are out there?
A number of major issuers do not even offer the most basic account-management features on their mobile banking apps. Too many banks have taken the view that they aim for one front door in terms of mobile interaction with the consumer – one app for all products with the credit card added on as an afterthought.
With annual credit card-switching rates in the mid-teens, against the current miserable rate of 3% for current accounts, consumers are already more than willing to shop around.
A decent credit card management app is no longer a luxury. Expect issuers to offer apps including travel notifications, the option to block and unblock cards, and personalised rewards.
Or how about geo-location controls, enabling cardholders to say their card can only be used within so many miles of a specific location in proximity to their smartphone?
We may even see issuers offering an incentive to cardholders prepared to share financial data with third parties.