When Steering Card Strategy, Resist the Urge to Switch on Autopilot
By Nicole Volpe, Contributor at The Financial Brand
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For many bank and credit union strategists, credit and debit cards are essential components of the accountholder relationship and important contributors to revenue — including fee revenue at a time when it’s in high demand. Despite that, most institutions, especially smaller ones, don’t always treat their card offerings as a strategic capability.
In a way, that’s not surprising. Facing larger and better-resourced competitors, smaller financial institutions may assume they have fewer ways to compete on card features and functionality. At the same time, a broader shift to digital touchpoints can make it easy to overlook the role cards still play as everyday engagement tools.
But research makes clear that card business lines have persistent high potential and remain among the most visible and most frequently used touchpoints an institution offers. In recent FICO research on primary banking relationships, accountholders ranked credit cards among the most important products and services — second only to savings accounts, and ahead of real-time payments. Another recent survey, by Vericast / Dynata, reports that 91% of respondents said cards are a critical aspect of their primary financial relationship and that 68% prefer using physical debit or credit cards for everyday purchases.
The upshot is that credit and debit cards can become key drivers of primacy, brand, and loyalty, and thereby move from “table stakes” products to strategic ones. Banks and credit unions looking to leverage that potential can start by reconsidering some key dimensions of product design, issuance, and measurement they’d otherwise treat as routine.
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Activation and Issuance
Typically, when an existing or new accountholder signs up for a card (or replaces a lost card, for that matter) the next step in the process is to wait. Physical cards can take seven to ten business days to arrive by mail, and when they do, the customer or member must activate them manually, whether online or by phone.
That’s strange when you consider the level of initiative and intent the would-be cardholder brought to taking the steps required to sign up or request replacement. Perhaps one of the institution’s marketing campaigns appealed to them. Or perhaps they had come to a branch to open a new checking or savings account. They’ve made up their mind, taken a deliberate action, and filled out a series of detailed forms. And then the financial institution asks them to wait while their intent dissipates.
Research has begun to pick up on consumers’ frustration with such practices. In the Vericast / Dynata survey, 74% of respondents said receiving a card instantly at their institution is important, rising to 86% for Millennials and 85% for Gen Z. When asked what benefits they associate with instant issuance, respondents named convenience (79%), security (53%), and hassle-free activation (51%); nearly a quarter (23%) tied it to a stronger relationship with their institution. Yet, in the same survey, half of consumers say they have never received an instant-issue card.
“If you’re the financial institution, this might seem like an operational distinction,” said Nicole Machado, Vice President of Product Management – Card Solutions at Vericast. “But if you’re the customer or the member, it puts the experience in a whole new light because the transaction is truly complete — you have your card securely in hand and you can use it immediately.”
The opportunity is to use issuance as a moment to affirmatively activate the relationship by supporting digital-wallet setup and encouraging immediate use.
Supporting Top-of-Wallet Behaviors
When it comes to giving their card products design features that inspire and engage cardholders, many financial institutions may focus first on the scale of larger national issuers. Thinking about credit cards, for example, the lion’s share of the market goes to a small handful of large national players with massive resources. They’re able to diversify their offerings with more metal options than the periodic table, not to mention robust reward programs and service tiers. As for debit cards, the path to differentiation may seem less obvious at first.
But in fact, once a card is issued, top-of-wallet status is within reach for most institutions, provided the program is designed with an intention to connect with the cardholder, reduce friction, and reward usage. In a consumer survey by TD Bank most respondents favored credit or debit cards as their primary purchase mechanism, citing convenience (64%), the chance to maximize rewards (60%), and stronger purchase security (46%). Eighty-three percent said they had a rewards-based credit card.
While rewards are a critical driver of top-of-wallet behavior, they may not be right for every institution because they can be expensive to fund and manage. Well-designed programs drive engagement and growth both by deepening loyalty and habit among existing cardholders and by attracting new ones. To be sure, general-purpose rewards programs can be costly: estimates of the value of total card-reward redemptions range from $50 billion to $100 billion annually.
For community financial institutions, a debit rewards program that involves discounts and merchant-funded rewards may be a viable option. By partnering with local businesses, institutions can develop highly relevant programs that also support building or deepening business banking relationships. “Consumers are quite dialed-in to these programs,” Machado said. “But defining and building them requires your marketing and product teams to work together.”
Design and Personalization
Another way to encourage top-of-wallet behavior is through physical-card design. Done intentionally, this can also be a less resource-intensive strategy.
The card remains one of the few brand objects a customer carries and displays in public. Its material, weight, finish, and design signal the issuer’s brand values — and, by extension, the cardholder’s values. In the Vericast / Dynata survey, 60% of respondents said the sustainability of card materials matters to them, with an even higher share among the younger customers many institutions are eager to reach.
Other physical attributes can strengthen identification, differentiation, and frequency of use. Machado cited color-core options as one inexpensive example. “If you have cards stacked in your wallet, you see it and you remember why you might prefer to use it, you know which one to pull out.”
Card controls can serve a similar purpose. A basic set of controls can be configured around specific use cases or customer needs, increasing the likelihood of primacy and engagement. Institutions can guide individual users through setup to make their card more relevant, or package features for defined personas and segments. A parent-sponsored starter card for a teenager, for example, might include usage monitoring, spending limits, and other restrictions. The same operational toolkit could support differentiated products for small-business owners, frequent travelers, or other priority segments.
Performance Measurement
Such segmentation also opens the door to tracking performance, by connecting accountholders’ fulfillment and personalization choices to activation, usage, and revenue goals. In fact, analyzing e-commerce activities across all industries, research by McKinsey has shown that personalization can drive a 10-15% revenue lift.
A Vericast report aggregates other compelling data points: 82% of instant-issue cards are activated immediately upon receipt compared with 50% for cards that are mailed. Personalized credit card customers average slightly more than 10 transactions per month.
According to Machado, the larger point is that card programs too often remain on “the operational side of the house,” treated as fulfillment rather than strategy. Ultimately, measurement changes that. To unlock the strategic potential of card offerings, institutions must first make the critical program-design decisions. But then they must connect those decisions to activation, usage, revenue, and relationship depth.
