How Financial Institutions Can Leverage #Data in Credit Card Portfolios

Ultimately, leveraging data should be about creating memorable and optimal cardholder experiences. Real, in-the-moment intelligence gained through data can help FIs enhance their cards programs to better fit the needs of their consumers.

Most businesses, including community financial institutions (FIs), are still abuzz with talk of big data. Many of them have even taken the next step and begun to utilize that data. In fact, a recent survey revealed 63 percent of Fortune 1000 firms had big data in production in 2015.

For credit card-issuing FIs, there is a sea of data readily available. Online banking provides data with every login, click or download. Consumer spending habits and payment histories provide trends that can be leveraged in the future. Even consumer demographics and industry trends can assist with account acquisition and retention strategies.

Before diving into the deep end, however, FIs should identify which problems they’re hoping to solve with data. FIs looking to improve their credit card portfolios can leverage data to do the following, for example:

  1. Make their cards top-of-wallet: Information about cardholders’ current balances, payment histories and average transactions can help FIs spot trends and create strategies to increase card usage. FIs can then target specific cardholder segments through customized campaigns, such as special APRs, balance consolidations and convenience checks.
  2. Increase cardholder engagement: Knowing where, when and how cardholders use their plastic allows FIs to identify opportunities to increase engagement. These opportunities may include:
    • Activation Campaigns: Cardholders identified as “new” or “recent” may benefit from welcome campaigns and activation incentives.
    • Spend Campaigns: Bonus campaigns at popular retailers can encourage usage.
    • Seasonal Campaigns: FIs should consider offering seasonal giveaways and incentives at key shopping times.
    • Cardholder Lifecycle Campaigns: Engaging cardholders by the age of their accounts allows for specialized treatment.
  3. Increase activation: Once FIs identify account holders who have become dormant in their card usage or have not yet activated their cards, they can target those consumers with credit limit increases, product upgrades, bonus points and other incentives.

The key to success in any of the objectives outlined above lies with a credit line evaluation. If an FI’s credit line assignment is too low, and/or its card utilization is too high, the FI’s success with data will be limited. FIs eager to reap the rewards of data should take this into consideration as they plan their strategies.