A credit card issuer’s main goal is to approve and issue as many profitable credit cards as possible. Issuers partner with retailers to increase their market share. Retailers offering timely credit card origination will be able to improve customer experience, which will result in more cards being issued and, ultimately, greater profitability. A recent shopping experience revealed some issuers are not maximizing their account opening process for retail partners.
A Study in Customer Experience
I was at a top retail store purchasing Christmas presents. At the register, the salesman invited me to apply for their private label credit card. He informed me that if I was approved for the card I would save 20% on my items. I decided to apply because I had already been thinking about opening another credit card and this card would save me $34.
When I told the salesman I would like to apply he was enthusiastic and told me that “the process shouldn’t take more than 5 minutes”. I was surprised to hear this because I work with dozens of FIs that complete the origination process in seconds.
Why Customer Experience Impacts Profitability
My professional curiosity about the length of the decision time got the best of me so I waited for the process to complete. But this got me thinking–if I had been shopping during a busy time I wouldn’t have waited 5 minutes after already waiting in line. It also may have discouraged the customer behind me from applying for the card after watching my experience. Retailers cannot afford for their origination process to take up to 5 minutes during a major sale or holiday peaks. Reports estimate that on Black Friday 2012 there were 307 million store visitors and that between Thursday and Sunday there were almost 600 million store visitors.
Having the process of opening a new credit card take this long when customers are already frustrated with long lines could tarnish the customer experience and may discourage a number of customers who may have otherwise became card holders. Customers are more inclined to apply for a store credit card during the holiday shopping season when their volume of purchases is likely to be the highest and to take advantage of the discounts and rewards that are offered when they are accepted for a store credit card. But the wait time could be a deal breaker. With the large volume of store visitors, the holidays are a great opportunity for issuers to increase profits by having retailer partners issue more private label credit cards.
What Can Be Done
With the holiday season behind us, now is the perfect time for issuers to evaluate their credit card origination system. If the number of credit cards that were issued during the last year, especially during the holiday season, did not meet their goals, then issuers should consider upgrading their system.
When doing so, issuers should make sure the system:
- Automates as much of the process as possible: the majority of the process, including application entry and decisioning, can be automated and should only include manual review when necessary
- Allows users to use their account immediately: when a consumer receives their new card in store they are likely to spend more on that purchase and become a regular shopper at the retail store
Don’t let your customers have the same experience I did. By incorporating all of these capabilities into their origination system, issuers will feel confident that they are giving retailers the fastest and most efficient system. This will ensure a better customer experience, resulting in more cards issued and more profitability for the issuer.
