The financial crisis of 2007-2009 and the Credit Card Accountability, Responsibility, and Disclosure Act profoundly impacted the credit card industry, including tighter credit for many consumers and significant expenditures to credit card issuers to comply with its mandates. Here we look at the best practices companies are using to sustain and grow profitability over the long term to deal with these impacts.
The financial crisis of 2007-2009 and the Credit Card Accountability, Responsibility, and Disclosure Act (the CARD Act of 2009) have had a profound impact on the credit card industry. The Act has resulted in tighter credit for many consumers and caused credit card issuers and their technology partners to incur significant expenditures to comply with its mandates.
In the short term, credit card issuers focused their efforts on shedding risky accounts and altering billing practices, which have impacted revenues. Less attention was paid to the drivers of the cost structure supporting their credit card business. In order to sustain and grow profitability over the long term, credit card issuers will need to address their cost structures and make fundamental changes to their operating models.
Leading practices among companies using new costing methods to drive operating and strategic decisions have resulted in benefits such as: