Banks watch and wait as the rules of the credit card game change.

• Position: MARKETING NEWS

TRADITIONALLY, COMMUNITY BANKS have outsourced their credit card operations to third-party vendors. However, now that banks are searching for new income as a result of overdraft protection rules, some banks may be taking a second look at their credit card operations.

With the credit crisis of 2008 and the new regulatory changes implemented through the CARD Act, credit issuers are facing challenges that have ultimately changed the credit card arena, says Alison Denis, a strategic account planner with TPG Direct, a Philadelphia direct marketing agency. "Winners in the credit card markets will be those who can quickly adapt their strategies and that leverage new technologies and marketing channels," she says.

What can credit card marketers do to improve their chances of winning in this new environment? Denis says that there are three primary strategy plays:

* A stronger reliance on data analytics and tools.

* Portfolio optimization strategies leveraging such things as new products and new approach to customer servicing.

* New marketing tools and channels.

Data analytics and tools

With the advent of the CARD Act restrictions on interest rate changes and fees, there's been a race to capture the most profitable customers, Denis points out.

Optimization solutions that combine a number of variables and output the most optimal offers to maximize in marketing return on investment have emerged as a key tool for bankcard issuers. FICO observes that this type of in-depth analytics is being applied to determine product assignment for both new card member acquisition, as well as credit line management of existing cardholders.

Large retail banks have a wealth of available information that resides internally and that can be leveraged for cross-selling credit cards to existing banking customers with other products--checking accounts, mortgage, CDs. etc. Often times the biggest hurdle is negotiating the access to and usage of the data with the other marketing departments.

Given this new environment, there is even a greater need and incentive for collaboration and support across the entire bank, Denis observes.

Portfolio optimization strategies

A heightened focus on new product development can help provide card issuers...