Smart Banks Aren’t Building Card Programs, They’re Launching Them
By Liz Froment, Contributor at The Financial Brand
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Executive Summary
- Turnkey credit card programs let smaller banks launch competitive products fast without the heavy cost and complexity of building in-house.
- These programs help institutions keep ownership of customer relationships and revenue while gaining access to valuable cardholder data.
- By offloading infrastructure, banks can focus on growth, loyalty and experience instead of operations.
Credit card programs can drive revenue and build stronger customer relationships, but building a complete program is expensive. Credit cards consistently deliver return on assets between 3% and 6%, outperforming the banking sector’s average ROA of around 1%. However, the technology, compliance, rewards infrastructure and servicing requirements of creating an in-house program outweigh the potential ROI for smaller banks and credit unions.
“Turnkey credit card programs have been a game-changer for both companies and banks alike. They allow financial institutions to issue credit cards to customers without having to build an entire infrastructure from the ground up,” Chikako Tyler, chief operating officer at California Bank and Trust, tells The Financial Brand.
Unlike agent bank programs, where institutions refer customers to larger issuers for small referral fees, turnkey solutions let banks and credit unions own the customer relationship, capture the full revenue stream and access cardholder data for upselling and cross-selling opportunities.
Want more insights like this? Check out Elan’s content portal: Credit Card Issuance: Strategies & Solutions
The Speed Advantage
One of the biggest shifts turnkey programs provide is speed. Banks can launch new card products in months rather than years, skipping the long development process that comes with building programs in-house.
“These turnkey solutions can make it easy for financial institutions to launch new credit card products quickly without long product development roadmaps,” says Tyler. That speed matters when customer expectations shift quickly — and waiting to launch could mean missing the opportunity entirely.
A faster timeline also allows for iteration. “With turnkey programs, card concepts can be introduced and tested at a much faster velocity,” says Josh Miller, head of consumer acquisition, marketing and product development at KeyBank. Instead of committing to a single product over multiple years, institutions can test different approaches, learn what resonates with customers, and adjust.
“Industry veterans will recall that Wells Fargo stepped back from credit cards in the late 2010s only to re-enter the business a few years later,” Adam Neiberg, global banking senior marketing manager at SAS, a data and AI solutions provider, tells The Financial Brand. “This about-face underscores how much a strong card program contributes to customer loyalty and growth.”
With the average U.S. consumer carrying four credit cards, there’s still room in the wallet for banks that can move quickly. For smaller institutions competing against national issuers, that speed advantage can be the difference between staying relevant and losing wallet share — especially when the top five issuers have captured 70% of the market, leaving minimal share for smaller institutions.
The Cost of Going Alone
The cost of going it alone extends beyond just the initial build. In-house credit card programs need to build and maintain teams across multiple areas, including technology, compliance, fraud, customer service and rewards management.
Operational challenges can also grow quickly. “Financial institutions often face hurdles like card operations, client communications and experience, marketing, limited IT capacity, infrastructure management and upkeep and the need to stay compliant while innovating,” says Erik Wichita, head of card services at Fiserv, a global fintech and payments company.
One of the less obvious costs is the trade-off smaller financial institutions make when trying to move quickly. “For some FIs, this complexity could narrow the focus to less bespoke rewards programs and offers to deliver a product to market faster,” Miller says.
Rewards programs illustrate the challenge. “Managing and maintaining a robust rewards program can also be a challenge, requiring significant resources to keep offerings current and aligned with customer expectations,” Tyler says. Rewards often require ongoing vendor relationships and continuous updates to stay competitive, which can pull resources away from core banking operations.
For smaller banks weighing whether to build or partner, these operational realities can tip the decision toward turnkey solutions.
Building Seamless Experiences
A complete credit card program involves more than just issuing cards. Banks also need rewards management, fraud monitoring, customer servicing, digital tools and data analytics, all working together seamlessly.
The best programs operate invisibly to customers. “Keep in mind, most consumers don’t even know they have a turnkey credit card. If the cards say TowneBank, for example, they think, ‘That’s my TowneBank card.’ They don’t know or care that [a third-party provider] is handling the servicing behind the scenes,” says Neiberg. “The customer’s relationship is with TowneBank, the brand they know and trust.”
That seamless experience, from instant card issuance and mobile wallet access to real-time fraud alerts and connections to accounting platforms, requires significant infrastructure that’s often difficult for smaller financial institutions to build alone.
Dig Deeper:
- Credit Card Issuance: Strategies & Solutions
- Yes, Smaller Institutions Can Compete In Small Business Credit Cards
- The Credit Confidence Gap and What It Means for the Next Generation of Cardholders
“By offering solutions that provide a variety of card product offerings, including small business credit cards, integrations with rewards and premium digital tools such as card controls, expense management and data-driven insights, these programs enable banks and credit unions to deliver a more compelling cardholder experience without the heavy lifting, development time and risk,” Wichita says.
Commercial credit cards can deliver even stronger returns through higher interchange rates and relationship-based underwriting advantages. These programs help position banks and credit unions as strategic partners in business operations, strengthening relationships as the client’s business grows.
Freeing Up the Relationship Focus
Outsourcing the operational complexity of credit card programs can help smaller banks redirect resources toward what they do best: building customer relationships.
“A turnkey solution allows financial institutions to offload operational burdens, so they can concentrate on what matters most: nurturing customer and member relationships,” Wichita says.
Smaller institutions have a natural advantage here. Local market knowledge, face-to-face interactions and personalized service can create deeper connections than automated processes at national issuers. Turnkey programs let banks leverage their local relationship strength without getting bogged down in card program operations.
“Partnering with a turnkey provider can reduce technology burdens for financial institutions operating with older tech stacks. Joining forces allows FIs to focus on building new relationships and deepening relationships with existing clients, rather than having to focus on design and requirements,” Miller says.
Turnkey providers also bring specialized expertise that would be difficult for smaller institutions to develop in-house. Merchant-funded offers, compliance, fraud management and data analytics are all areas where turnkey partners already have established capabilities and infrastructure.
Measuring What Matters
Success with turnkey programs shows up in quantitative metrics and behavioral shifts.
Miller outlines some key indicators that signal a program is resonating and notes it’s important to compare the metrics before and after the turnkey relationship to measure its full impact:
- A noticeable spend increase from tenured clients and cardmembers
- A persistent trend in higher activation rates
- An increase in transactions per client and cardmember
- Higher redemption rates and offer acceptance
- Longer client tenure
Transaction data also provides insights into customer spending patterns, which can help drive targeted product recommendations and identify opportunities for additional services like loans or wealth management. However, the real test is behavioral, tracking whether customers choose the card more often, engage more frequently with the bank and show improved satisfaction and retention.
“As a prior CFO, I appreciate the importance of these measurable outcomes — not just for operational efficiency, but for supporting our bank’s goals around strategic growth and deepening customer relationships,” Tyler says.
Competing on Experience, Not Infrastructure
For smaller banks and credit unions, turnkey credit card programs offer a way to compete without the infrastructure burden that once made these programs impractical and expensive.
By bundling technology, rewards, servicing and compliance into ready-to-launch solutions, these programs let institutions focus on what they do best while still delivering the high-quality card experiences customers expect.
