Creating a Framework for Successful Credit Card Innovation

Content

• Executive Summary
• Chapter 1: Overview of Innovation
  • 1.1 Major industry trends
  • 1.2 Definition of innovation
  • 1.3 Credit card overview
  • 1.4 Types of consumer credit
    • 1.4.1 Bank cards
    • 1.4.2 T&E (travel and entertainment) cards
    • 1.4.3 Retail/store cards
    • 1.4.4 Consumer credit
    • 1.4.5 Payday lending
  • 1.5 Advantages and disadvantages of credit cards
    • 1.5.1 Advantages
    • 1.5.2 Disadvantages
  • 1.6 Innovation in credit cards
• Summary
• Chapter 2: Market Opportunity
  • 2.1 Global overview
    • 2.1.1 Mortgages
    • 2.1.2 Consumer loans
    • 2.1.3 Credit cards
    • 2.1.4 Major credit card trends
    • 2.1.5 Europe as an example of divergent markets
    • 2.1.6 Stakeholder views
    • 2.1.7 Consumer protection
    • 2.1.8 Consumer protection debate
    • 2.1.9 Consumer lending
    • 2.1.10 Consumer finance risk/margin
    • 2.1.11 Key market segments for innovation
  • 2.2 Lifecycle events
  • 2.3 Significant consumer lifecycle events
• Summary
• Chapter 3: Innovation background and history
  • 3.1 Background
  • 3.2 Origins of innovation
  • 3.3 Innovation theory
  • 3.4 Types of innovation
  • 3.5 Technological concepts of innovation
  • 3.6 Innovation in organisations
  • 3.7 Economic conceptions of innovation
  • 3.8 Evolutionary innovation versus radical innovation
  • 3.9 Sources of innovation
  • 3.10 Diffusion of innovations
  • 3.11 Failure and innovation
  • 3.12 Innovation management
  • 3.13 Measures of innovation
  • 3.14 Disruptive versus sustaining innovation
  • 3.15 Key principles
  • 3.16 Innovation managing change
    • 3.16.1 Innovation outcomes
  • 3.17 Managing innovation failure
  • 3.18 Market lifecycle implications
    • 3.18.1 Phase 1: financial infancy (birth-20 years old)
    • 3.18.2 Phase 2: financial development (20-40 years old)
    • 3.18.3 Phase 3: financial stability (40-60 years)
    • 3.18.4 Phase 4: financial maturity (60 years and over)
  • 3.19 Lifecycle event segmentation
• Summary
• Chapter 4: The Credit Card Consumer
  • 4.1 Overview and definitions
  • 4.2 The myths versus reality of innovation
    • 4.2.1 Failure and innovation
    • 4.2.2 Innovation and credit card organisations
    • 4.2.3 Disruptive innovation
    • 4.2.4 Innovative structure
  • 4.3 Demographics
    • 4.3.1 Market stage
    • 4.3.2 Key customer segments
  • 4.4 Behavioural attributes
    • 4.4.1 Key market segment factors
    • 4.4.2 Household expenditures
    • 4.4.3 Consumer spending patterns
    • 4.4.4 Financial services usage
    • 4.4.5 Population classifications
    • 4.4.6 Revolve segmentation
    • 4.4.7 Marketing role in segmentation
    • 4.4.8 Segmentation
    • 4.4.9 Segmentation recommendations
  • 4.5 Key drivers and operational impacts
    • 4.5.1 Lists and databanks
    • 4.5.2 Operational resources and imperatives
    • 4.5.3 Card processing providers
    • 4.5.4 Databases
    • 4.5.5 Potential partners
• Summary
• Chapter 5: The Competitive Landscape
  • 5.1 Overview
  • 5.2 Strategy
  • 5.3 Credit card issuers
    • 5.3.1 Products
    • 5.3.2 Key questions for competitive review
    • 5.3.3 Innovation best practices
    • 5.3.4 Innovative lending products
    • 5.3.5 Product profitability
    • 5.3.6 Credit/risk management
    • 5.3.7 Risk strategy critical strategy development
    • 5.3.8 Decision and account management software
    • 5.3.9 Predictive models
    • 5.3.10 Summary of key credit risk processes
    • 5.3.11 Analytical techniques
    • 5.3.12 Positioning
    • 5.3.13 Attrition studies
    • 5.3.14 Distribution
    • 5.3.15 Attrition studies
  • 5.4 Card products
    • 5.4.1 Credit card segmentation
    • 5.4.2 Contactless cards
    • 5.4.3 Prepaid cards
    • 5.4.4 Biometric products
    • 5.4.5 Smart cards and chip cards
    • 5.4.6 Mini cards
    • 5.4.7 Commercial cards
    • 5.4.8 Dual cards
  • 5.5 Other loan products
• Summary
• Chapter 6: Infrastructure and Operating Environment
  • 6.1 Credit bureaus
  • 6.2 Lists and databanks
  • 6.3 Operational resources and imperatives
  • 6.4 Card processing providers
  • 6.5 Databases
  • 6.6 Potential partners
• Summary
• Chapter 7: Marketing Issues
  • 7.1 Innovation strategy
  • 7.2 Potential new segments
    • 7.2.1 Sub-segmentation in the US and Australia
  • 7.3 Account acquisition
  • 7.4 Internal 'lifecycle' management
  • 7.5 Retention
  • 7.6 Communication strategy
  • 7.7 Attrition
  • 7.8 Loyalty and reward programmes
  • 7.9 Innovation development
• Summary
• Chapter 8: Innovation in Product Development
• and Launch
  • 8.1 Overview
  • 8.2 Strategic innovative winners revolving credit a key success
    • 8.2.1 Strategic imperative
    • 8.2.2 Current competencies
    • 8.2.3 Distribution lower costs
    • 8.2.4 Transactor/debit cards are not effective when compared with store cards or credit cards
    • 8.2.5 Revolving credit definition
    • 8.2.6 Revolve model and segmentation
    • 8.2.7 Target market segmentation
    • 8.2.8 Risk strategy critical strategy development
    • 8.2.9 How to identify revolving credit customers
    • 8.2.10 Balance transfers and low APR offers
    • 8.2.11 Credit line increases and line activators
    • 8.2.12 Authorisations and referrals
    • 8.2.13 Point of sale and ATM limits
    • 8.2.14 Customer service issues
    • 8.2.15 Marketing strategy and implementation
    • 8.2.16 Product profitability
    • 8.2.17 Conclusion
  • 8.3 Global examples of innovation
    • 8.3.1 DIY rewards card
    • 8.3.2 University student cards
    • 8.3.3 Home equity loan with credit card line of credit
    • 8.3.4 Card with instalments and/or pay-later facility
    • 8.3.5 Technology privileges with card
    • 8.3.6 Gold card investment programme
    • 8.3.7 Automobile manufacturers card
    • 8.3.8 SME card
  • 8.4 Other product options
• Summary
• Chapter 9: Distribution
  • 9.1 Distribution channels
    • 9.1.1 Channel structure
    • 9.1.2 Channel strategy
  • 9.2 Recent trends
  • 9.3 What are the challenges of distribution?:
• Summary
• Chapter 10: Summary
  • 10.1 Significant consumer lifecycle events
• TABLES
  • Table ES.1: External forces shaping innovation
  • Table 2.1: Comparison of estimated consumer debt in Australia, Canada, the UK and US, 2007
  • Table 2.2: Major financial lifecycle events affecting consumers
  • Table 3.1: External forces shaping innovation
  • Table 3.2: Major financial lifecycle events affecting consumers
  • Table 4.1: Retail customer segmentation strategies
  • Table 4.2: Merchant segmentation strategies
  • Table 4.3: Population distribution and target segments by age group
  • Table 4.4: Adult population aged over 18 by socio-economic class
  • Table 4.5: Average weekly household expenditure by category
  • Table 4.6: Migrant inflow over 10 years by age group
  • Table 4.7: Penetration of consumer durables
  • Table 4.8: Financial services usage
  • Table 4.9: Average value of debt by age group
  • Table 4.10: Segmentation profile of credit card market
  • Table 4.11: Key lessons for developing profitable segmented portfolios
  • Table 5.1: Asian market size and projected CAGR for all consumer lending, 2008
  • Table 5.2: Summary of basic segment product features for European example
  • Table 5.3: Account benchmarks for US card issuer
  • Table 5.4: Summary of the different card use types
  • Table 5.5: Understanding how the key consumer attributes vary between markets
  • Table 5.6: Reasons why customers dispose of their cards (Asian examples)
  • Table 5.7: Reasons for new card cancellation
  • Table 5.8: Sales channels by spending potential
  • Table 5.9: Segmentation strategies by customer segment and product type
  • Table 5.10: Key selling points for purchasing and T&E cards
  • Table 5.11: Comparison of non-card loan types, 2006 one market example
  • Table 6.1: Partnership strategy evaluation
  • Table 7.1: Examples of US and Australian market sub-segments
  • Table 7.2: Internal account lifecycle management
  • Table 7.3: Successful product upgrade strategies
  • Table 7.4: Reasons for cardholders leaving credit card issuers
  • Table 8.1: Assessment of current competencies
  • Table 8.2: Comparison of new card decisions and 12-month results for Asian and US models
  • Table 8.3: Variation in credit line increases for US card issuers
  • Table 8.4: Summary of the different types of card user
  • Table 9.1: Characteristic differences between financial products and cards
  • Table 10.1: Major financial lifecycle events affecting consumers
• FIGURES
  • Figure ES.1: Innovative structure
  • Figure 1.1: Relative positioning of brands, 2005
  • Figure 1.2: Competitive product gap
  • Figure 2.1: Total lending to households in selected European countries and the US, 2004
  • Figure 2.2: Gross margin versus credit risk, 2005
  • Figure 3.1: Everett Rogers: 'Diffusion of innovations'
  • Figure 3.2: Disruptive technology
  • Figure 3.3: The innovation challenge within the card organisation
  • Figure 3.4: Performance of issuer, 2006
  • Figure 3.5: Issuing performance metrics, 2006
  • Figure 3.6: Characteristics of credit card market lifecycle
  • Figure 3.7: Major trends in a growth market
  • Figure 3.8: Consumer lifecycle
  • Figure 3.9: Consumer lifecycle events
  • Figure 3.10: The financial lifecycle the four main phases
  • Figure 3.11: Phase 1 financial infancy (14-20 year old consumers)
  • Figure 3.12: Lifecycle events financial infancy (14-20 year old consumers)
  • Figure 3.13: Lifecycle event management financial infancy (14-20 year old consumers)
  • Figure 3.14: Phase 2 financial development (20-40 year old consumers)
  • Figure 3.15: Lifecycle events financial development (20-40 year old consumers)
  • Figure 3.16: Lifestyle event management financial development (20-40 year old consumers)
  • Figure 3.17: Phase 3 financial growth (40-60 year old consumers)
  • Figure 3.18: Lifecycle events financial growth (40-60 year old consumers)
  • Figure 3.19: Lifecycle event management financial growth (40-60 year old consumers)
  • Figure 3.20: Phase 4 financial maturity (consumers aged 60+)
  • Figure 3.21: Lifecycle events financial maturity (consumers aged 60+)
  • Figure 3.22: Lifecycle event management financial maturity (consumers aged 60+ )
  • Figure 4.1: Strategic innovation summary
  • Figure 4.2: Steps to developing an innovation strategy
  • Figure 4.3: Innovation test cycle
  • Figure 4.4: Innovative structure
  • Figure 4.5: Segmentation comparison revolvers versus transactors
  • Figure 5.1: Vision for a medium-sized Asian bank
  • Figure 5.2: Competitive review of annual fees and interest rates, identifying possible new product segments or
• sub-segments
  • Figure 5.3: Profitability per credit card (Asian example)
  • Figure 5.4: Sensitivity of credit card business to change
  • Figure 5.5: Understanding the distribution gap
  • Figure 5.6: Channels for unsecured consumer credit
  • Figure 8.1: Conceptual framework for new product innovation
  • Figure 8.2: Organisational changes required to allow new product development to flourish
  • Figure 8.3: Innovation new product team
  • Figure 8.4: Example of a product plan
  • Figure 8.5: Detailed test plan involving marketing, risk and operations
  • Figure 8.6: Comparison of distribution channel costs
  • Figure 8.7: Estimated Asian credit card profitability
  • Figure 8.8: Revolving/transactor segmentation model
  • Figure 10.1: The innovation challenge within the card organisation
  • Figure 10.2: Innovative structure
  • Figure 10.3: Profitability per credit card Asian example
  • Figure 10.4: Conceptual framework for new product innovation