Issuers recognize the Web's competitive impact, TSYS® survey says
Budgets, security concerns remain key challenges
Columbus, Ga., Sept. 23, 2003 - Most consumer-credit issuers use the Internet to support some elements of their card programs, especially customer service, according to a survey of major institutions commissioned by TSYS® and conducted in partnership with FiSite Research. Issuers expect to focus their future Internet activities on customer service more than new account acquisition.
Results of the 2003 Summer Executive Online Credit Card Survey, including results of an earlier survey of consumers' online account management preferences, were discussed at the American Bankers' Association/Foreword Financial Bank Card Conference in Dallas this week.
"We've learned that the Internet could soon become the primary channel for cardholder account management because it gives issuers opportunities to reduce servicing costs and improve service quality," says Olin Wise, senior director of E-Business Services for TSYS. "They believe offering customer service online is a competitive issue, but few of these executives believe the Internet will become the primary channel to acquire new accounts any time soon."
Here are some highlights of the executives' responses:
- 85% of the institutions surveyed reported some card-related activities on the Internet, usually customer servicing activities like account information, bill payment, customer care or other self-service functions.
- One in four consider Web activities as an opportunity to gain competitive advantage in the marketplace.
- About half of the issuers use the Internet to attract new accounts, and two-thirds of these use some form of Internet advertising.
- Yet three out of four respondents report that the Internet generated less than 10% of new accounts in the past year.
- 60% of issuers surveyed don't predict greater reliance on the Internet as an acquisition channel because of "customer quality issues," and 40% cite "low approval rates" from online sources.
Issuers cite multiple reasons why they don't move more card-related services to the Web: corporate budget constraints, security concerns, cardholder adoption and changing technology. Many issuers cited security risks as a key challenge to their efforts to enhance existing online features.
"Before card-issuers can use the Internet effectively to acquire new accounts, the industry must develop better technologies to help them control the specific risks related to the Internet channel," says Paul Jamieson, president of FiSite Research. "Only then will these institutions have a chance to capture the growing market of consumers who use the Web to compare, apply for and acquire new credit cards."
The survey includes responses from 33 consumer-card issuers - monoline banks, retail banks, credit unions and retailers - representing more than 150 million cardholder accounts. One-third of respondents represented portfolios of more than $1 billion in receivables, while the remainder represented portfolios of less than $1 billion. Responses were collected in July and August.
About TSYS
TSYS (NYSE: TSS) (www.tsys.com) brings integrity and innovation to the world of electronic payment services as the integral link between buyers and sellers in this rapidly evolving universe. The E-Business Services division of TSYS specializes in Internet-based self-service solutions and secure transaction processing for credit-issuing institutions. Synovus (NYSE: SNV) (www.synovus.com) owns an 81-percent interest in TSYS. For more information, contact news@tsys.com.
About FiSite Research
FiSite Research delivers independent research and advisory services focused on the online banking and payment services industry. For further information about FiSite Research visit its website at www.fisiteresearch.com.
Contacts
Eric S. Bruner
TSYS Media Relations
+1.706.644.8457
ebruner@tsys.com
Paul M. Jamieson
President, Director of Analytics
+1.781.367.9282
pjamieson@fisiteresearch.com