Jet Set or Budget Bet

Today at a Glance:

• Luxury Leaps, Basics Build: Credit's Two Realms
• Making Marks: Actions Hitting Targets
• Reimagined, Redesigned, Reborn

I aim to highlight two reports for us today as combined they tell a story that helps?get a fuller understanding of what's being offered and what's working?for consumer credit cards.

1. Marisa Frys 's?Application Behavior Report?(What's Working)

2. Emily Pardo 's?Financial Profile?(What's Offered)

What's Offered?

Credit's two realms have been pretty clear. Cashback credit cards are for subprime and near-prime consumers while travel cards are for prime and super-prime consumers. As Millennials and Gen Z's entered the mix, this demarcation started blurring and the pandemic accelerated this blur even further. But, when I comb through Emily's Financial Profile report, I see that this divide may still be in play while not as stark as it used?to be.

Overall the industry is de-risking and we see super-prime get the majority of the offers.

Capital One and Citi are the two issuers that are bucking this trend.

It's fascinating to observe how Capital One and Citi adopt distinctly different strategies to engage customers and prospects. Capital One employs initiatives like Credit Wise, Shopping, and Cafes to create a "brand halo" effect. This approach allows even non-customers to interact with some of Capital One’s offerings, potentially increasing their likelihood of choosing Capital One for their future banking needs.

Conversely, Citi focuses on providing exclusive services such as Citi Shop and Citi's Travel Portal to existing customers only. This strategy reinforces loyalty and enhances value for current users, creating a more closed ecosystem.

Both strategies have their merits, and it remains to be seen which approach will prove more effective in the banking sector. This dynamic raises a significant question:?is inclusivity or exclusivity more effective in fostering long-term customer loyalty and growth?

What's Working?

The U.S. consumer is signing up for credit cards. Why?

1. One set of consumers need credit

2. Issuers are giving hundreds (thousands in some cases, of?dollars?reasons).?More on this point next week while exploring our Q1 Offer Index results.

3. New credit card value props are so compelling that consumers want the perks being offered

Overall, for the industry, we see:

Bank Websites and Apps?(sourced via Paid Search in many cases) were responsible for 1 out of 4 applications generated in Q1 2024

Direct Mail holds its ground with 1 in 5 applications generated via this channel

Cross-sell and upsell via?Email?continue to be one of the most cost-efficient acquisition channels

We don't analyze Paid Search on a syndicated basis, but Marisa helped inform me that Citi, Amex, and Chase all increased their Paid Search spend in Q1 2024, explaining the bump we see in the Bank Website & App applications.

Let me know if you are interested in learning more about how we could update you on Paid Search on an ongoing basis.

Both these reports deserve a full review so I'll stop here and let you dive into both the reports.

Application Behavior Report;?Financial Profile

Reimagined, Redesigned, Reborn

Citi announced a refresh of their Premier card, Strata Premier

I asked my mostly reliable assistant, ChatGPT, to compare Strata to Sapphire Preferred and Venture.

Some questions that are top of mind for me that our team can help you with:

• How do recent financial outcomes influence the balance between aggressive marketing and prudent risk management?
• How are successful banks differentiating their card offerings in a competitive market?
• How can you refine your current cross-selling and upselling techniques?
• Reflecting on shifts in consumer credit profiles, what adaptations are necessary for product offerings?

As ever - Anuj