December 19, 2020

Changing Climate in the Consumer Lending Marketplace: What We’re Seeing and Hearing​

Jim Stewart

Jim Stewart

CEO, Epic Research

Three Things We’re Hearing

  • Big credit card opportunity for retail banks!
  • Financial services digital advertising grows
  • Credit card metrics returning to “normal”

A two-minute read

Big Credit Card Opportunity for Retail Banks!

  • Epic recently conducted a survey of nearly 1,400 consumers, which revealed a large marketing opportunity for local banks to offer a competitive cash back/rewards card to their customer bases
Big Credit Card Opp for Retail Banks (1)

Financial Services Digital Advertising Grows

  • Mirroring the rebound in financial services direct mail volume, digital advertising has increased in the past few months as indicated in the increase in cost-per-click across a number of products
EMII - Google Search - Cost per impression JAN-OCT 2020
  • The Epic Marketing Intensity Index (EMII) measures acquisition spending for consumer finance products (cards, loans, deposits, home equity, education) and channels (direct mail, search, paid digital)
  • Checking and savings lead the way in the online recovery, with search spend now approaching pre-pandemic levels
EMII-C+S Search Spend v Index Search Vol
  • Consumer demand, as shown in the blue search traffic line, has stayed steady
  • While credit card mail volume has rebounded close to pre-pandemic levels, online spending still lags
EMII-Credit Card Search Spend v Index Search Vol

Credit Card Metrics Returning to “Normal”

  • Recent commentary from some of the top card issuers indicates several consistent trends:
  • Spending is back to pre-shutdown levels or above
  • Balances remain 5% - 15%+ below the same period last year
  • Delinquencies remain favorable
  • Mid-year rankings of the top issuers did not change much from 2019 and reflect across-the-board balance shrinkage
U.S. Mastercard _ Visa credit card issuers
  • Recent increases in marketing spending for new customer acquisition should help bring growth back to card portfolios in 2021

Quick Takes

Thank you for reading.

The next Epic Report will publish in three weeks on January 9th.  

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Jim Stewart

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