The Financial Brand Insights - Fall 2021

This rising payment method exists in two main forms—e-wallets and contactless technology embedded into a card. E-wallets and contactless cards allow consumers to pay by hovering their phone or card over the payment terminal while their card information is passed to the terminal via near-field communication (NFC) technology. The use of contactless payments exploded exponentially in 2020 as people sought protection against possible transmission of the virus. The NewReality: It’s vital to offer contactless payment options to your cardholders. If you don’t you risk losing them to credit card programs with more robust digital offerings. 2. Changing Rewards Environment As a result of the change in where consumers spend their money, the pandemic also necessitated a critical look at credit card rewards. Since people were traveling less, if at all, and spending significantly more time online, the previous credit card rewards environment was upended. With travel nearly coming to a halt, travel rewards decreased in desirability and rewards focused on everyday essentials such as groceries, food delivery and streaming services, which consumed increasingly larger proportions of people’s monthly spend. Credit card products heavily focused on the travel sector were forced to reevaluate their rewards options to provide cardmembers with more flexibility for rewards. For example, some issuers allowed cardmembers to redeem travel points for nontravel purchases at the same value per point, while others launched products that provided cash back on pandemic-friendly spending categories. This set the stage for a competitive landscape in which banks and credit unions offering credit

cards must keep up with rewards trends, which shift with consumer demands and preferences. Keep in Mind: Banks and credit unions should be offering a full suite of rewards to reach the entire scope of cardmembers (consumer, business, young adult, elite, etc.) as these, along with a high level of service, are essential building blocks to score

beyond initial predictions, and is now expected to begin manifesting itself in the second half of 2021. Financial institutions should be mindful of the potential for varying levels of losses, as it can greatly affect the overall profitability of their credit card program (figure 3).

Elan also developed an array of new DIY servicing capabilities and implemented several fraud detection enhancements, which were critical as consumers increased their spending in the e-commerce sector. Additionally, Elan accelerated its overall emphasis on allowing cardmembers to seamlessly apply for credit such as: Text to apply, an area where Elan invested heavily. This functionality enables applicants to text a unique short code, visit a URL, or simply scan a QR code to apply for a credit product from their mobile device. This channel has seen an exponential growth since the onset of the pandemic. Elan’s investments will help its partners better serve their cardmembers through an improved user experience through modernized device optimization, improved data validation, and streamlined real-time acquisition, onboarding and servicing processes. Robust Credit Card Products and Rewards: Elan’s full suite of credit cards offer competitive rewards at no cost to the bank or credit union and includes cash back on frequently-used and pandemic-friendly spend categories. n Read the full whitepaper: Three Trends Shaping the Credit Card Industry As America’s most tenured agent credit card provider, Elan serves over 250 active credit union partners. For over 50 years, Elan has offered an outsourced partnership solution that provides credit unions the ability to market a competitive credit card program to their members and outsource most major functions such as marketing, servicing, compliance, underwriting, etc. For more information, visit

Figure 3

Trend of credit card losses over seven years

favorably with cardholders. 3. Uncertain Future Credit Environment

Net credit card chargeoffs/average credit card loans for credit unions

1.0% 1.5% 2.0% 2.5% 3.0%

Somewhat surprisingly, Americans paid off a record level of credit card debt in 2020, which amounted to almost $83 billion. This is likely due to several factors, including federal relief through the receipt of stimulus checks and other government assistance, and extended forbearance programs from issuers. Not so surprisingly, however, this situation is not expected to last. With spending predicted to surge in 2021 as more and more people become fully vaccinated and the nation continues to open more fully, the timeline for recognizing charge-offs (the amount of defaulted credit card balances) has extended

0% .5%








SOURCE: S&P Global © August 2021 The Financial Brand

Be Aware: Banks and credit unions running a credit card program may be experiencing low losses and delinquency rates today. They should consider this temporary given the predicted jump in consumer spending and inevitable expiration of federal benefits and forbearance programs. Elan Is Committed To Staying Competitive for Our Partners Having a partner like Elan provides banks and credit unions the opportunity to stay competitive and follow market trends. Digital Capabilities: At Elan, the severity and duration of the pandemic required a fundamental shift in strategy. Elan quickly enhanced digital tools for both self-servicing for existing cardmembers, launched new card products to capture new spend trends, and increased frictionless access to credit card applications for new cardmembers.

” With spending predicted to surge in 2021 as more people become fully vaccinated, the timeline for recognizing charge-offs has extended beyond initial predictions, and is now expected to begin manifesting itself in the second half of 2021.





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