June 25, 2007

Cards are one of the most diverse payments instruments in existence today. There are legions of credit card holders and a growing number of debit card users, and the popularity of gift cards shows no sign of waning. This is on top of more-specialized instruments, such as payroll cards and cards linked to consumer-directed healthcare accounts, that are gaining the attention of more and more financial institutions and their clients.

Opportunities abound for banks and other issuers in a space that is sometimes viewed as too mature or too saturated -- especially on the credit card side. However, many banks are proving that through the use of technology -- both established and new -- there still are uncharted paths to be discovered in the card business.

According to Richard Winston, director of North American payments with Chicago-based Accenture, the question that arises -- particularly with regard to credit cards -- is how to identify and retain the most-profitable customers while also delivering distinct services to them. This becomes even more challenging, he says, as banks also strive to do so while increasing cost efficiencies on their end.

"I've been hearing for the past 20 years that the card space has matured," comments Rajive Johri, president and director, First National Bank of Omaha ($18 billion in assets). "The industry has actually become more efficient in processing and marketing. It's still a very competitive space. There's a huge amount of room for credit products to grow, such as the healthcare area."

New York-based JPMorgan Chase's ($1.2 trillion in assets) Frank Dombroski, VP, commercial card solutions, prefers to think of the card space as having reached a plateau. For this reason, he says, it is more important than ever for issuers to be innovative in their approach to cards.

"Now it's going to take innovation to look at the next level. There are still significant growth opportunities, especially in the commercial space," Dombroski says. "The way commercial cards have been used up to now was for 'walk around' payments where you pay with plastic for on-the-spot buying. Growth is in leveraging cards as settlement tools for any kind of procurement."