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CREDIT CARDS and DIGITAL FINANCE

Announcing a major new Lafferty Group initiative for the credit cards and digital finance industry

THE CREDIT CARDS and DIGITAL FINANCE Global Research and Advisory Service

This global research and advisory service aims to provide unique knowledge and insights into the fascinating intersection of credit cards and fintech. Case study-based and delivered in digestible monthly reports, it monitors best practices, provides commentary on products and services, analyses related fintech trends across the world, and provides incisive coverage across the latest developments in the credit cards and digital lending space.

Facing the new reality of the Fintech age
It is now clear that the world of payments is rebooted for good and these common threads run across the globe:

  • Open source platforms. Institutions are gearing towards open source IT architecture. As a consequence, even credit is now offered to consumers on the fly (on websites, while browsing through online catalogues, for e.g.) and innovations like virtual credit cards with only a digital key and no plastic are taking off in a big way.
  • Power of API. Payment networks and institutions are now publishing their APIs for vendors and partners to connect with them. The new PSD2 regulations rolled out by the ECB is a real gamechanger that is making the rest of the world to sit up and notice. Now Fintech companies and other disruptors can offer instant online credit to shoppers by tying up with consumer lenders and P2P marketplaces.
  • Ready access to credit across channels — Institutions and networks in the payment industry are patching up omni-channel access for their customers. Anywhere- Anytime payments are the order of the day.
  • Mobile is the leader. Consumers can not only choose their credit provider but also negotiate in real time through mobile apps to get the best deals on credit cards.
  • Flexibility for merchants and customers to initiate and complete a payment transaction. The pervasive spread of online commerce has completely changed the transaction flow of the payment transaction.
  • Credit is now more democratic as open platforms on the Internet enable anyone to participate. The payment industry is becoming increasingly democratic and very willing to embrace new disruptive technology like Blockchain, Internet of Things, Digital Wallets, etc.
  • Power of social media — the global reach of social media is placing the greatest amount of information in the hands of the greatest number of people. As a result, access to credit is also entering the social media zone; simple and seamless.

Vast scope for credit cards and digital lending
The Lafferty research and advisory service is delivered in a series of separate, regionally-focused services for the world's main geographies, as follows:

  • Asia-Pacific
  • Europe
  • Middle East and Africa
  • North America
  • Latin America-Caribbean

    Each monthly report provides coverage across the various dimensions of the credit cards and digital lending business. All the key linkages across the landscape — consumer lending, retail banking, debit cards, prepaid cards, merchants, processors, regulators, networks — are covered.

    Why Lafferty is coming out with this programme

    Credit cards — on the edge or on a cusp of fintech innovation?
    The venerable credit card has served the banking industry well for the past forty years, turning in rich profits and superlative RoEs. The credit card has been the primary engine powering the great consumer spending boom in the US and UK that has ensured their world economic dominance. But the success of the credit card hasn't been consistent across the world. Many of the emerging markets have simply not been able to build a profitable and sizeable credit cards portfolio.

    Much of the fintech innovations and growth of mobile payments transactions have been either in replacing cash, or with the card in its plastic form being replaced by a digital product that is not only cheaper but easier to use. This vision has met with a fair amount of success in debit cards and prepaid cards; but the credit card industry really doesn't yet have much to boast about.

    While mobile and other digital payments continue to gain share in the debit and prepaid as against traditional payment method, banks seem to have shifted their focus away from credit cards. In fact, the credit crisis has led to reduced credit avail¬ability, while regulatory standards have tightened and consumers are being made more cautious about getting into debt.

    The rise of the fintech juggernaut
    Fintechs abound in the payment industry, bringing a lot of ingenuity and entrepreneurship to the payments system. Yet, clouding this entrepreneurial spirit is risky behaviour or, at the very least, a proverbial lack of skin in the game. The new providers do not provide the safety and security that conventional card issuers do. Credit card issuers, being the bearers of risk by providing a line of credit to their customers, have a huge value that cannot be replaced by technological gig. The key word in the term "credit card" is credit — not card!
    It's easy to get caught up in the excitement around alternative and mobile payments, especially with all the developments that are happening in the smartphone world, and much of this excitement revolves around the technologies.
    The plastic-based revolving credit card is now looking anachronistic and even geriatric. Credit cards must now reinvent themselves in a new avatar that blends them seamlessly into the hectic world of digital commerce. Access to credit will always be coveted by consumers and honoured by merchants the world over. However, a makeover is needed for the traditional credit to thrive in the 21st century of constant fintech innovations.

    Credit Cards can be the ace in the pack for banks and fintechs

    Banks across the world are faced with an increasingly competitive marketplace coupled with consumers experiencing an absence of surplus funds to time them over economic cycles. Banks also have to rejig their core strategies and differentiate themselves through improved products and services. Customers are now least interested in who physically processes a transaction and where it processed: in fact they are largely oblivious to most things except the price and the quality of services offered.
    Payment APIs from fintechs are looking to capture a sizeable share of the cards industry, but unless they start showing profits with a compelling revenue model, they will also fall by the wayside.
    Credit cards can be the ace in the pack for both banks and fintechs: a sustainable offering for a long run.

    Benefits of this service

    Our intention is that every monthly report will provide insights for players in the credit cards and digital lending industry to make critical decisions on a timely basis guided by our in-depth research and recommendations.
    The case studies provide a viewing gallery of all significant new developments in pay-tech (payments fintech) as well as incisive analysis on all the areas and items that are the moving parts of the credit cards and digital finance industry. The key areas covered in the advisory service are many. Depending on the individual case study, these will include:

    • soliciting prospective customers through digital channels
    • use of latest fintech tools for on-boarding new customers
    • KYC and regulatory management
    • digital outreach to customers and prospects
    • credit cards and online credit
    • technology platforms and interfaces
    • differentiated product and service offerings
    • Key fintech and other innovations
    • the effects of P2P / marketplace lending/ alternative credit and other forms of consumer finance
    • key emerging opportunities
    • the role in financial inclusion
    • how merchants and acquirers are influencing the issuing business through their innovations
    • opportunities and niches for exploitation by processors
    • interchange rules and their role in impeding or enabling the growth of credit cards
    • APRs, fees and other service charges and their influence on the P&Ls of the various players
    • Innovations in loyalty and rewards
    • How fintech is bringing about changes in customer engagement.
    • The role of the cards/payment networks — both international like Visa, Mastercard, UnionPay, Discover, American Express and the regional and domestic networks (RuPay, Troy, etc)
    • The innovations and pace of growth of online commerce (e-commerce and mobile or m-commerce) affecting the digital credit industry
    • Influence and disruptions caused by mobile payment channels like mobile wallets and the opportunities they present for credit cards
    • Use of fintech for operational efficiency — eg underwriting, collections, fraud management
    • Seeing through the 'hype factor' of Blockchain, DLT, Biometrics, AI- ML, IoT and other such buzzwords
    • A detailed review of portfolio quality of different issuers, their strategies, product launches, marketing and sales campaigns, and their financial performance
    • Who are the real game-changers?
      Deliverables
      Each monthly issue will be range in length from 15 to 25 pages with the following contents:
    • Case studies of current leading-edge fintech initiatives in the credit cards and digital finance space. Each will be illustrated by charts, tables and ratings.
    • Briefings on the state of the credit cards and digital finance industry across each region — with advice for participants on the opportunities available, and how to overcome legacy market and infrastructure obstacles with fintech strategies
    • Recommendations for use in designing strategies, improving execution, creating new addressable market segments, improving processes and practices and increasing profitability
    • A tabulation of all other notable credit cards-fintech initiatives currently underway in the region, with ratings of their significance
    • A briefing on major news developments in the region and worldwide in the credit cards-fintech space

    The research service is complemented by access to our team of senior analysts and researchers. Subscribers simply book an appointment to gain access to bespoke, tailed advice.

    Each case study will include:

    • An executive summary
    • Country/regional overview
    • Technological solution
    • The business model
    • Market segment
    • Key differentiators
    • Key investors
    • Key potential opportunities
    • Leveraging from learnings
    • The operating model
    • Profitability

    For further information about Lafferty Group's new

    Credit Cards and Digital Finance Global Research and Advisory Service contact Michael Lafferty — Michael.lafferty@lafferty.com. Phone: +4478 5040 7272

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