Achieving best-in-class status as a modern card issuer is paramount for sustained growth and profitability. This detailed analysis, based on a recent PYMNTS Intelligence and Visa DPS collaboration survey of 451 U.S.-based payment executives, reveals that average customer lifetime value (CLTV) is the definitive indicator of excellence. Issuers with high CLTV, defined as an average of more than $2,500 per cardholder over the total time they’re a customer of the issuer, are twice as likely to report strong business performance compared to their counterparts. This data book distills the strategic imperatives and operational focuses that distinguish these high-performing issuers.
Key Findings for Achieving Best-In-Class Status
Elevate CLTV as the Core Metric
High CLTV is what primarily identifies a best-in-class issuer. CLTV represents the total revenue a cardholder is expected to generate over the entire time they hold a card. Issuers with high CLTV (averaging more than $2,500) are twice as likely to report strong business performance (44%) compared to low-CLTV issuers (22%). This strong correlation underscores the metric as a critical benchmark for prioritizing strategies that enhance retention, reduce churn and attract high-value customers.
Diversify Revenue Streams Beyond Traditional Sources
High-CLTV card issuers significantly outperform the competition by deploying an average of 7.5 monetization strategies. This is substantially more than the average low-CLTV issuer. These strategies extend beyond basic transaction fees and interest and include late fees, processing fees, co-branding fees, account maintenance fees, overdraft protection, cross-border fees and applicable programming interface/integration fees. This broad approach also involves offering a diverse portfolio with two additional features and two additional types of cards compared to average low-CLTV issuers.
Leverage Strategic Partnerships Tailored to Issuer Type
The approach to strategic partnerships varies significantly among best-in-class issuers and depends on their organizational structure. For banks and credit unions with high CLTV, co-branding is a primary monetization strategy (62%). This strategy leverages the reputation and loyal customer base of partner brands. In contrast, high-CLTV FinTechs differentiate themselves through innovative direct issuance strategies such as single-use virtual cards (29%) and instant issuance to digital wallets (33%). These FinTechs prioritize speed, convenience and enhanced security to cater to tech-savvy customers.
Lead with Advanced Personalization in Customer Experience
Modernizing the customer experience is crucial, with 31% of issuers considering advanced customization options key to a best-in-class platform. High-CLTV issuers prioritize advanced analytics (18%) and flex credentials (10%) for innovation in the coming year. These issuers emphasize highly tailored experiences and seamless access across cards, devices and shopping channels. Furthermore, 67% of issuers consider enhanced performance tracking and predictive analytics to be features of a technologically best-in-class platform.
Prioritize User-Centric Design in Platform Upgrades
One in five issuers (20%) prefers a user-centric design when upgrading their issuing platform. This indicates a strategic focus on enhancing user experience features before back-end upgrades. This approach is driven by strategic investments aimed at attracting and retaining cardholders. Issuers experiencing strong business performance are actively reinvesting, with 75% planning platform upgrades within the next two years. Notably, digital-only banks and large national banks are more likely to prioritize user-centric upgrades.
Proactively Address Integration and Customization Pain Points
Nearly one-third of issuers cite some type of integration issue as the most significant challenge they experience with card-issuing platforms. This highlights the critical need for flexible, resilient, and scalable technology. Limited customization options are a common pain point for high-CLTV issuers (34%) and smaller fintechs (31%). Overcoming these challenges is essential for maintaining operational efficiency and offering dynamic cardholder features.
Select Issuer Processors for Speed, Innovation and Security
When choosing an issuer processor, fast processing is the most sought-after attribute. High-CLTV issuers specifically select processors based on their ability to enable unified and contactless user experiences. These can include features such as flex credentials, contactless payments and virtual cards, alongside advanced security features like tokenization and advanced data analytics. This contrasts with low-CLTV issuers, who are still catching up by partnering for more traditional functionalities, such as rewards and multicurrency support.
Conclusion
Becoming a best-in-class modern card issuer is not merely about offering competitive products, but a holistic strategic approach centered on maximizing CLTV. This requires a proactive focus on diversifying revenue streams, strategically leveraging partnerships, leading with personalized customer experiences, prioritizing user-centric design, resolving integration and customization challenges and making informed processor choices based on speed, innovation and security. By adhering to these principles, financial institutions can solidify their market position and ensure sustained profitability in the evolving payments landscape.
