AS AMERICAN EXPRESS faces increasing cardholder defaults and a rising cost of funding, its Global Network Services (GNS) business is becoming increasingly important to the company to insulate it against losses. Dropping profits, a sliding share price and ratings downgrades are concerns for the company, which is currently honing its strategy to weather the worsening economic storm.
Letter from the editor
As the effects of the credit crisis move from the sub-prime sector and structured finance into the real economy, issuers are grappling with higher loss provisions and focusing on risk management. For the moment, this phenomenon is most prevalent in developed markets like the US and the UK, but emerging markets are increasingly being drawn into the economic turmoil. The growth markets for credit card lending are under threat, not only from higher losses, but also because the funding crunch has eroded the ability of issuers to expand their customer base at a critical time.
Stamp duty drop spurs Irish issuers
Rapid growth in consumer lending, and particularly mortgages, means that Irish consumers are now among the most heavily indebted in the world; coupled with the economic downturn, this portends challenging times for the market’s cards industry. Nonetheless, a unique tax means profit per card rates are robust
Emerging markets under spotlight
Rapid growth has been heralded as a sign of success in emerging markets, but industry observers are speculating whether a boom in the credit card industry in such countries will soon be followed by a bust. Difficulty in sourcing funds from international capital markets is also taking its toll, and forcing issuers to reconsider their business models. Jane Cooper reports
Competition drives Malaysian market
Malaysia has a vibrant and competitive payment cards market, underlined by the large number of issuers competing for market share. There has been a plethora of new card launches in recent years, and the market also boasts some of the most lucrative benefit and rewards programmes anywhere in the world
Counting on green demand
The issue of climate change has become increasingly important for many European consumers in recent years. Numbers of blue-chip companies and large financial institutions in Europe have invested in launching their own carbon footprint reduction initiatives.
Redefining talent
As the retail banking community works its way through the many changes in the market ¡V resulting from either their own activities, or those of others ¡V there has been a re-evaluation of what talent actually looks like. Considerable pressure has been exerted by the media upon those whom they believe to be responsible, and the inevitable finger-pointing has ensued.
Foreign players spur Egypt competition
The entry of international banks into Egypt has spurred competition in the cards market and introduced consumers to more sophisticated product offerings. They brought with them aggressive marketing and expansion strategies, compared to the more cautious approach to card issuance adopted by local banks
The rise of the mega-players
New opportunities emerging from the Single Euro Payments Area (SEPA) will accelerate consolidation in the European card processing sector, and in the next three to five years it seems certain that a few mega-players will dominate the market. Europe’s card processing landscape is also likely to see retail banks, and particularly smaller players, outsourcing processing operations to specialists.
Databank
Major network performance
Downloads
Lafferty Cards Insider - intelligence to bank on for the global cards & payments industry
Lafferty Retail Banking Insider - intelligence to bank on for the global retail banking industry
