To improve the chances that consumers will value a particular issuer's card out of the many in their wallets, that issuer must use all of the data at its disposal to make the card experience personal, bankers say.
"You really have to understand what is important to [consumers]," said Carol Smith, a senior vice president at Citi Cards, in a panel discussion at SourceMedia's 2014 Card Forum and Expo. "Your business needs can be a little bit different from that of the consumer, and sometimes you have to take a step back and really do what's right for the customer."
For example, a customer who never carries a balance won't respond well to being bombarded with balance transfer offers, she said. Banks can examine the data they have on this cardholder to determine what the best marketing approach will be.
An extreme example of targeting a communication based on a customer's individual data comes from Guatemala's Meat Pack, a specialty shoe retailer. The merchant's app used location data to detect when customers entered a rival's store, then sent a timed offer for a discount at Meat Pack. The size of the discount was based on how fast the customer ran across the mall to Meat Pack's store, and as each second passed, the discount got smaller. The goal was to have each shopper racing out of the rival's store to get to Meat Pack as fast as possible.
This particular example, while fun, may not apply well to financial services, said Andrew Davidson, a senior vice president at Mintel Comperemedia. "I'm not suggesting we have credit card customers sprinting down the street as the APR escalates," he said.
Even so, it's clear that an issuer must be careful to offer a product that customers will want to stay engaged with, said Manish Bhargava, senior vice president of consumer products competitive intelligence at Bank of America.
"Typically, everyone carries two to three cards in their wallet but probably they have 15 in their drawer, or more," he said. "If you sell the consumer the wrong product, it's going to end up in the drawer." And since this unused card is an open credit line, there is a risk in having it neglected by its proper owner, he said.
Jay Das, senior director of risk management at Barclaycard US, said in a separate presentation that the way to make the most of individual customer relationships is to distill big data into little data.
"Little data is the insight you get out of that big data," he said. "At the end of the day, big data is not the final destination."
For example, looking at data on the customer level can tell an issuer whether a customer who does not use a particular card for fuel and auto maintenance is a good target for marketing around gas rewards. It could be that the customer is buying gas on a competitor's card, but it could also be that the customer lives in downtown Manhattan and has never needed a car.
This type of analysis can also help in risk management. If a customer is using an issuer's credit card to pay bankruptcy attorneys, that's valuable knowledge, Das said. The bank may not be able to prevent the customer's bankruptcy, but it may think twice about raising that customer's credit limit.
Credit cards are, unfortunately, a commodity as interchangeable as coffee, Bhargava said.
"There are so many options out there. If you do not serve your consumer right, that is the first product that they get detached from," Bhargava said. "It's not like a checking account where you have 30 bill payees that you have to move."
And today, banks are at a disadvantage when it comes to keeping consumers' trust.
"Privacy is top of mind for consumers. The Target breach has not helped our cause at all," Bhargava said.