LONDON, Aug. 12, 2015 (GLOBE NEWSWIRE) -- 2016 is likely to be a pivotal year for the UK's credit card market as issuers realise the full impact of interchange reduction on profitability. In recent months, response strategies have become clearer, and a number of issuers have cut-back or entirely removed rewards programmes.
Consequently, within the co-brand market, there is a heightened sense of caution as both issuers and partners work to maintain a compelling and profitable customer proposition.
Despite the pressure of a reduced value pool, co-branding still remains an important element of the credit card market. With a number of issuer programmes having their benefits reduced, customers are increasingly likely to find better value from retail propositions who have a lower cost of providing benefits than traditional issuer led rewards.
"Customers highly value the rewards offered by co-branded cards and despite the more testing economics, issuers and partners must work together to deliver on customer expectations," said Mark Jackson, Managing Director of ACG's International Partnership practice. "Engaged cardholders are much more loyal to the partner's brand, buying more products over a longer period of time, while improving the underlying performance of the partner's business. Those that can retain a strong proposition and marketable customer base will be best positioned to reap the benefits of a successful partnership."
Impending regulation could ultimately galvanise the industry and we may see a number of issuers and partners positively altering the construct of propositions rather than simply diluting rewards. A mindset shift is required to be able to operate in the new environment - ACG recommends that partners discover the true motivational factors that drive cardholder spend and focus their programmes around this.
ACG constantly supports partners and issuers in navigating through the regulation process with engagements ranging from strategic reviews and programme launches to programme optimisation and new product development. Our range of engagements allow us to deeply understand how different businesses are affected by regulation and advise how individual programmes can adapt most effectively.
About Auriemma Consulting Group
ACG is a boutique management consulting firm with specialised focus on the Payments and Lending space. We deliver actionable solutions and insights that add value to our clients' business activities across a broad set of industry topics and disciplines. Founded in 1984, ACG has grown from a one-man shop to a nearly 50-person firm with offices in New York and London. For more information about ACG's International Partnership practice, please contact Mark Jackson at 0207 629 0075 or mark.jackson@acg.net.