Take the lead: Your playbook for winning with modern credit card products

The consumer credit card market is changing. Where banks and traditional financial institutions (FIs) once held a monopoly on credit card issuing, they’re now facing competition from all sides.  

Your organization can disrupt the disruptors in the credit card space. All it takes is one simple ingredient: deliver a credit product that customers love. To make that product offering a reality, you need modernized issuance and processing infrastructure.  

In this playbook, we’ll walk through the key steps to design a winning credit card proposition by modernizing your banking technology.  

The legacy of legacy

If you’ve ever struggled against your existing banking core, then you’re not alone. IDC research finds that 40% of FIs list their legacy core as a major roadblock in their digital transformation journeys. While legacy systems helped banks usher in the age of digital payments and card issuing infrastructure, they’re not built for the modern age. Systems that are slow to react and difficult to adapt have no place in today’s highly competitive market. 

Meanwhile, banks that modernize their credit card technology with infrastructure built in the 21st century could see massive returns on investment (ROI). IDC found that modern payments platforms can open up new growth opportunities for banks by enabling faster and more effective product development, leading to a 43% increase in revenue. At the same time, modern technology can cut costs by 21% thanks to simpler maintenance requirements and higher efficiency compared to slow and increasingly archaic legacy hardware.   

Dream big. Start small.

These are big benefits. However, you don’t need to rip out your core systems to make them a reality. Quite the opposite: when it comes to modernization, it’s best to start small. Instead of performing a heart transplant on your banking core, modernize your stack one piece at a time. Move one product, such as a specific credit card, onto a new infrastructure platform, and focus your efforts on refining that offering. All the while, your existing core keeps on working with no disruptions to standard operating procedures. When you’ve proven the value of your first modernized product, you can assess new opportunities to update more of your stack or perform migrations. 

This approach to payments technology upgrades is known as progressive modernization, and it’s helped FIs around the globe secure and expand their market position. By empowering seamless product enhancements, a progressive modernization approach equips FIs to stay ahead of the field and cater to customer demands as they happen.  

Delight customers, grow your business

Of course, consumer demands in the credit card market are always evolving. And with a progressive modernization approach, you’ll be able to adapt along with them.  

Winning in today’s market requires products that cater specifically to your customer’s needs. You simply cannot build loyalty with a product built in 1995. While previous generations of cardholders were content to accept products that had the same sets of basic features, today’s consumers expect more personally tailored offerings.  

Incumbents using legacy systems have been slow to introduce new features that meet these customers’ expectations. Meanwhile, new technology can equip your institution to quickly and nimbly capitalize on these shortcomings. With a modernized stack, you’ll position your organization to pivot and address trends as they arise, make inroads with growing customer segments, and expand your market share.  

Here are some of the main features and capabilities you can implement with your modernized card products to stay ahead of the competition: 

• Digital self-service: Customers expect to be in total control of their account. They don’t want to call your customer support line or visit a branch every time they want to order a card or manage their account. Instead, it’s crucial to support each credit product with robust digital experiences that support common customer journeys. 
• Built-in Buy Now, Pay Later (BNPL): BNPL isn’t going anywhere. In fact, many consumers now expect BNPL features on their credit cards, too. Rather than accruing one large amount of debt to be repaid, BNPL allows customers to split individual purchases made on their credit card into installments.  
• Robust incentives: It’s not enough to offer eye-catching interest rates. Instead, customers want compelling offerings like rewards that encourage card usage. When done right, rewards offerings will help propel your card to top-of-wallet status by providing genuine value to your cardholders. 
• Personalized experiences: If there’s one thing your average customer doesn’t want to be, it’s a number. They want to be acknowledged as an individual, one who plays an important part of your business plan. Even without traditional face-to-face customer interactions, it’s still possible to build personalized experiences for your customers by tailoring rewards offerings to their segment, implementing specialized risk profiles, developing tailored digital experiences, and more. 
• Real-time support: Customers are on the move. They can’t keep waiting for days or weeks at a time just to get their new card in the mail. Instead, your card program should be built to support everything in real time, allowing for instant, seamless interaction with your product. 

These are just a few of the capabilities that customers expect from a 21st-century credit card – which you can deliver through a modernization initiative. For more information on the most in-demand credit card features, check out our ebook, 5 Features Today’s Credit Card Customers Demand.  

5 Steps to a modern credit card offering 

Market-leading products. Secure payments infrastructure. They’re both possible through a progressive modernization approach.  

Here are the five high-level steps that your organization can take as you embark on your credit card modernization journey: 

1. Choose a strong first use case 

This is possibly the most important step of the whole process. To prove the value of your modernized card offering, you need to start strong. Carefully select a debut use case that immediately earns a place in the market: it should not only help you retain and acquire customers, but also set you up for future success. Here are six factors for you to consider as you pick your initial use case: 

• Identify: Start by identifying a compelling customer need. For example, if you want to reach Gen Z customers, you might focus on that demographic’s need to build better credit by offering a secured credit card. As you narrow down your target segment and use case, ensure that your proposed product features the key features customers expect. 
• Clarify: Your organization is totally unique. Use that to your advantage. What’s your primary differentiator in the market? Come up with a crystal-clear edge for you to express both in your product design and in your customer messaging. A regional bank, for instance, could leverage its local knowledge to develop products that are hyper-tailored to the needs of its community. 
• Plan: Scope out the economics of your market opportunity with this use case. Establish figures like the total addressable market (TAM), revenue models, and budget to help establish the scope and potential profit for your product. By planning out these figures, you’ll be effectively allocate your resources. 
• Stay adjacent: Ambition is one thing, but it’s crucial to play to your strengths when you’re starting a modernization initiative. Choose a use case that’s adjacent to your current offerings: it should be a distinct proposition, but not so unlike your previous projects that it requires a major hurdle to develop.  
• Building blocks: Don’t let this be a one-and-done project. Choose product capabilities that will be relevant to future projects. That way, you can implement features that can be reused later, reducing future implementation time. For example, if you’d like to introduce a commercial credit card product in the future, then implementing a consumer credit product first could help you build out the base credit processing and issuing capabilities you need for later offerings 
• Speed to market: Speed is critical to demonstrating the ROI of modernization. Rather than putting yourself through a years-long implementation cycle like most traditional banking products, choose a feature that you can release within 12 months. That way, you can minimize the burden on your organization and quickly start seeing results. 

2. Identify your business requirements 

What are you looking to achieve with modern technology? Modernization isn’t a goal on its own. Rather, it should always be a means for achieving a larger business development goal. Do you need new infrastructure so you can fill a gap in your product offering? Are you looking to defend against a particularly strong competitor? Or are you wanting to make inroads with a certain customer segment? 

Completing this step at the outset of your modernization process will help guide your approach to every task that follows: infrastructure development, product design, use case selection, and partnerships. By narrowing your business focus, you’ll be able to proceed through each phase of the modernization process with clarity. 

3. Get help and find a partner  

Once you’ve identified your business requirements, it’s time to bring your use case to life. There’s no need to go it alone for this step. While traditional bank product development involves continuously adding new features on top of an existing core, it doesn’t have to be that way. Instead of overburdening your core with time-consuming new product add-ons, you can partner with a card issuance and processing provider to implement your new credit card product as a sidecar to your core. 

Partnering with an experienced provider can help minimize the business impact of modernization. Choose a provider that offers the issuing and processing capabilities you need to power a modern and configurable credit card product, such as cloud infrastructure, API connections, and data streaming. That way, all you’ll have to worry about is integrating with the provider, empowering you to further accelerate your speed to market and reduce the pressure on your IT resources. 

4. Work as one team 

It can be easy to think of technology modernization as a strictly IT function. However, it’s key to think both horizontally and vertically. Rather than silo off your IT teams to work on infrastructural upgrades while your business team chases market opportunities, have your IT and business teams working together as one organization. 

This might not seem intuitive at first. After all, these two groups typically perform entirely separate duties. However, modernization isn’t a one-and-done project. It’s part of a cultural change with your business. The ideal state is to be a technology-enabled business, where your thriving infrastructure can power and accelerate business innovation.  

Coordinating your business and IT functions can take several forms. For example, you can schedule routine meetings between teams to synchronize your modernization efforts and ensure that business goals and infrastructural projects are aligned. No matter how you choose to implement it, engaging and aligning your technical and business teams can help ensure your organization stays consistent.  

5. Expand to additional use cases 

With your selected use case and chosen technology provider, you’ll be ready to develop and launch your first modern credit card product. Once that product’s been successfully launched and proven in the market, you’ll be ready to start modernizing additional products in your roadmap.  

Your first modernized product likely took some time to develop. However, as you consider progressing through your development pipeline, think about the resources and experiences you’ve assembled by this stage. You’ve established modernization mindset across your IT and business teams, solidified your business objectives, integrated with a technology provider, and launched your first modernized product. Use these lessons and assets to your advantage, and you can accelerate your speed to market for future offerings. 

Accelerate your possibilities  

When you modernize your credit card product, you’re not only entering the space with a strong proposition. You’re solidifying your market position and building towards future growth opportunities, staking your claim against the competing innovators and disruptors. 

Episode Six (E6) is here to help make it possible. As a global provider of credit card issuance and processing technology, we bring a proven track record of helping banks and brands deliver exceptional payments products. We’re not just a short-term vendor. We’re a long-term partner with a commitment to your ongoing success. When you sign up with E6, you’re entering a relationship with a partner that will help you achieve your modernization goals and jumpstart your market share and revenue growth.  

Ready to see the benefits of modernization for your organization? Contact E6 today to start your journey.