In this fast-paced world of technological advances, consumers are accustomed to providers who anticipate their needs – whether it's a pop-up ad for the shoes they just viewed online or an email offer to increase their credit card limit right when they were considering a big purchase.
The secret behind being one step ahead of the consumer? Harnessing and making sense of data. Every financial institution has a bevy of information about their cardholders just waiting to be accessed and analyzed. The key is knowing what to do with the data you have.
That's where portfolio consulting comes in. An experienced consultant can help take market or cardholder information and turn it into key insights that can inform and drive strategy or marketing tactics. The consultant doesn't take over or replace any role at the financial institution. Rather, the consultant supplements staff efforts and makes their jobs easier. It's a collaborative partnership with clear goals and impactful outcomes.
An experienced consultant can help take market or cardholder information and turn it into key insights that can inform and drive strategy or marketing tactics.
The right consultant should be able to offer insight on what's happening in the payments ecosystem and explain how key regulatory, technological, competitor and economic forces impact the financial institution's debit and credit card portfolios. They should also be able to analyze cardholder data and make recommendations based on specific insights.
For example, consider credit quality and corresponding credit losses. Consultants can help financial institutions understand how declining market credit quality can impact future charge-off rates and necessary reserves for losses, as well as impact the need for a financial institution to review and adjust existing cardholder credit lines. The consultant will identify cardholders in the institution's portfolio who may be at risk given the change within the macroeconomic environment.
A second example where consultants can provide value to card portfolio managers is demonstrating the impact on interchange revenue due to a point of sale debit shift from signature to PIN. Here, the consultant will show how the shift can erode revenue and identify targeted campaigns to slow the erosion.
Value Proposition and Product Development
Some consultants work with card organizations to define new value propositions and products for cardholders or assess what is currently in place.
The consultant will look at portfolio product adoption and usage trends combined with a view of competitor offerings in the market to develop new offerings or rationalize the existing set of offerings. Consultants often discover gaps relative to what competitors are offering, or, in some cases, they discover a redundant product set makes a card choice for the prospective cardholder a challenge.
For example, issuers often have unmet cardholder needs within their customer or member base. Based on credit spend levels, consultants can identify cardholders within the institution's portfolio who are underserved by the mass market product in their wallets. Institutions can capitalize on this by offering and upgrading these cardholders to a more suitable card product.
Marketing Campaign Support
Some consultants also focus on helping financial institutions use market trends and cardholder information to create smart, targeted marketing campaigns to boost activation, usage and spend.
For example, consultants help financial institutions segment cardholders based on demographics, history, spending habits and other characteristics and then create campaigns with targeted messaging – from special offers to information about loyalty programs – all to break the inertia and trigger cardholders to take action.
Consulting can even include a collaborative review of marketing campaign results to determine what's working and what's not.
Bringing It All Together
The ultimate consultant can inform portfolio strategy through in-depth market and trend analysis as well as apply an understanding of cardholder data to effectively create and market new or existing offers to grow the portfolio.
When it comes to growing your card portfolio, understanding the market and the consumer is fundamental. And there's a plethora of information to help you. Interpreting all that information can be intimidating, not to mention time-consuming. Portfolio consultants can help you make sense of it all – to harness the data and put it to work for you.