When Chase wants to move markets it can. According to yesterday’s investor meeting, the dominant player in retail banking booked 8 million accounts in 2018, has 40 million active credit card holders and processed 9 billion transactions. Indeed, if you live in the U.S. and have good credit, it is likely you have at least one account with Chase. I personally have 3 Chase cards and like each one for different reasons, whether it is the cool metal card, the everyday bonuses of Freedom, or my cherished Amazon Visa.
Consistant with my thought that one Chase account is not enough are the drivers they see in multiple account holders and people who use reward points. The report states that multi-card redeemers generate 2X revenueand have 4X spend.
So when you are already so deep into the American household budget, how do you build for future growth? “My Chase Plan” was positioned as the next growth opportunity. It resembles American Express’ Plan It, Pay It program in many ways. As a consumer, you can isolate a particular purchase and set it on different payment terms than your routine account. For example were I do buy a $4,000 Viking refrigerator, with My Chase Plan, I could flag that purchase for installment payments and there would be a shadow account to track the payments, which will typically be on an installment payment schedule rather than a revolving term. It is nice because I could decide in advance to pay that refrigerator off in 12 months with accelerated payments, rather than the typical 1/36 revolving term.
The O-Wow! for Chase is big enough to keep their marketeers busy for a while. They size non-Chase card usage by Chase cardholders at $250 billion. There is a certain brilliance to this strategy. The largest card issuer in the US indicates that their current cardholders transact elsewhere with a quarter of a trillion dollars in spend, and they want to get deeper.
Chase ties this together with their digital customer engagement positioning:
- My Chase Loan enables customers to access their existing lines
- Chase Offers provides merchant rewards to customers and customer activity to merchants
- Credit Journey adds stickiness to the site
- The promise to bring scale to U.S. contactless payments
Bloomberg this morning added
- The tool allows card customers to select from past purchases of more than $500 and choose to finance them over a longer period with monthly fees instead of being charged interest.
- The bank will also introduce “My Chase Loans,” which allows targeted card customers to borrow against unused credit-card lines. Clients can use the Chase mobile app to select a loan amount to be transferred into their checking accounts.
The strategy is epoch. Chase can remold the card business with its installment play. Running in competition to Amex will cause other top issuers to address the installment market. And for Chase, it shows real forward thinking in aiming at the few non-Chase customers in the U.S. Market.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
