Fintech lenders and marketplace lending platforms have reshaped the consumer lending landscape, introducing new channels for installment loans and point-of-sale financing. While these providers have gained significant market share and visibility, credit card issuers continue to possess substantial advantages that differentiate them from newer competitors. Established customer relationships, flexible revolving credit products, and extensive consumer data remain powerful assets for traditional lenders.
Rather than attempting to mimic the marketplace lending model, card issuers should focus on reinforcing the unique benefits of credit cards while strengthening customer retention strategies. By leveraging credit bureau insights, promoting the value of revolving credit, and tailoring their market positioning based on institution size, banks can effectively compete with marketplace lenders and identify new opportunities for growth.
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Data for today’s episode is provided by Mercator Advisory Group’s report – Credit Card Lenders: Hone Strategies and Do Not Let Fintechs Scare You.
Advice for Card Issuers battling back against Marketplace Lenders:
- Persistent customer education on the benefits of revolving lending vs. installment loans
- Don’t conform to the marketplace lending model
- Banks should be viewed as receptive lenders offering fair rates
- Adjust representation to consumers based on bank size:
-Large = National/Global partner
-Smaller = Regional/Local partner - Harvest credit bureau data looking for attrition or opportunity
- Implement value-add attrition programs, as well as balance transfers and cash advances
About Report
Marketplace lenders and non-bank point-of-sale finance lenders are not likely to disrupt the course of credit card lending.
Marketplace lenders now dominate the installment loan industry, a segment previously dominated by banks. Loan options are appearing everywhere, but fintechs are simply repackaging old lending products for loans and point-of-sale finance. Credit card issuers should focus on their products’ benefits rather allowing these aspiring disrupters to change the playing field.
