In surveying 451 issuers, PYMNTS Intelligence found in the report “Best-in-Class Modern Card Issuer: Driving Customer Lifetime Value Through Innovation,” a collaboration with Visa, that CLTV is a critical metric reflecting customer profitability and allows issuers to segment their base, prioritize retention strategies, reduce churn and attract high-value customers.
Quantifying the Top Performers
While 31% of issuers surveyed reported an average CLTV of $1,000, 21% achieved an average CLTV of $2,500 or more, indicative of high-CLTV issuers. The report found that 44% of high-CLTV issuers reported a “great year” compared to 22% of low-CLTV issuers.
High-CLTV issuers achieved their success by using multiple monetization strategies, offering personalized financial products and employing data analytics to optimize user engagement. Advanced customization was considered a key component for financial institutions aiming to stay ahead and was cited by 31% of issuers as what makes an issuing platform technologically best in class. Issuers viewed advanced customization and data analytics as central to driving consumer engagement.
Data-Driven Seamlessness
When describing a best-in-class issuing platform, surveyed card issuers emphasized providing customers with a seamless, personalized user experience as paramount. Advanced customization enabled them to tailor products based on spending habits and preferences. Examples of advanced customization included providing customer portals that allowed cardholders to manage cards, set controls and review transaction history.
Enhanced data analytics further bolstered engagement, and 67% of issuers said they valued advanced performance tracking and profitability metrics. High-CLTV issuers specifically planned to innovate for personalization and seamless access, prioritizing investments in advanced analytics (18%) and flex credentialing (9.5%) in the coming year. Advanced analytics empowered issuers to understand spending habits, predict needs, deliver personalized offers, and identify upsell and cross-sell opportunities, thereby increasing retention and profitability. Flex credentials, on the other hand, enabled seamless access across cards, devices and merchants that high-value customers demanded.
The Value of Personalization
The focus on personalization was a distinguishing feature of high-CLTV issuers. In contrast, low-CLTV issuers tended to focus more on broader strategies like basic security and rewards programs, perhaps addressing immediate risks before implementing more cutting-edge convenience features. This underscored that best-in-class platforms must offer not just security and reliability, but also a seamless user experience.
The importance of personalization and user experience was evident in how issuers approached platform upgrades. While challenges such as integrating with other systems (cited by a third of issuers) and limited customization options persisted as pain points, even for high-CLTV issuers and large national banks, issuers were prioritizing upgrades based on strategic investments to attract and retain cardholders.
The report found that 20% of issuers preferred a user-centric design when implementing upgrades, a priority echoed by high-CLTV issuers who cited user-centric and modular upgrades equally (21% each). This indicated a market recognition that the user experience, encompassing intuitive design and personalization, was just as vital as the underlying technology. Issuers reporting strong business performance were planning platform upgrades, with 75% of those having a “great year” planning upgrades within the next two years.
Continuously refining user experience and using real-time analytics were seen as pathways to securing long-term customer loyalty.
