Will there be a virtual open bar? Addressing the challenge of B2B financial services events during social isolation

Thousands of people flying in from all over the country. Hotels filled to capacity. People packed shoulder-to-shoulder in an enclosed room. Handshakes and exchanges of business cards. Buffet dinners.

Almost everything about conferences seems foreign in our current reality. Indeed, most fall conferences have already announced that they will not take place in-person. Some have been postponed, some cancelled, many turned virtual. In a few cases, such as some recent investor conferences and a Forrester conference, the switch to remote has been seen as a success. In most cases, however, the decision to waive registration fees betrays a lack of confidence on the part of both sponsors and attendees about a virtual event’s ability to deliver value. But, you say, registrations and log-ins have increased as no travel expenses, no missed work and no registration fee lowered the decision bar almost to the floor. The problem: Any quantitative improvement likely masks a significant qualitative drop in engagement.

If we take a step back and think realistically about how conferences provide value, the situation becomes clear: Conferences create an opportunity for sponsors to get concentrated exposure to and interactions with their prospects; attendees get a break from their daily routine with the valid justification of an immersive opportunity to learn from experts and peers. Move the conference to the web and all those things disappear. Indeed, a virtualized conference in the form of a series of presentations becomes almost indistinguishable from a thematically-connected series of webinars.

As the threat of COVID stretches into the foreseeable future, it’s incumbent on all parties involved—the conference organizers, the sponsors and the prospective attendees—to think creatively about how to fashion virtual events into something that takes advantage of the positives and mitigates the negatives. Nothing about greater registration volume and potentially greater expert participation for a virtual event inherently leads to lower attendee engagement and fewer sales prospect interactions. In fact, it’s potentially quite the opposite. The first step down a path of creating valuable virtual events is to identify and isolate the key components of live events that people find valuable:

  • For sponsors: The value comes from getting their name and capabilities in front of their target audience and being able to engage with them directly to generate sales opportunities.
  • For attendees: The value comes from the opportunity to learn from industry experts and their peers, as well as the potential to find solutions to their business challenges.

Having identified these elements of value, the question then becomes: How can we create this value virtually, irrespective of the way it was generated in live events? The answers should produce a framework that would be more productive than putting two days’ worth of presentation sessions on the internet and offering virtual networking lounges that will never be used. Here are some of our ideas.

Generate marketing and sales value for sponsors:

  • Sponsored structured virtual chats and roundtables that create opportunities for peers to discuss topics of high relevance and interest to them, moderated by sponsor representatives
  • Sponsored virtual group icebreaker activities to help forge connections between peers from similar businesses and/or geographies
  • Tinder-style (“swipe right”, “swipe left”) sponsor pitches for 1:1 meetings to enable attendees to choose the sponsors with whom they want to interact, thus ensuring higher-quality conversations

Generate learning value for attendees:

  • A greater number of shorter sessions, spread over more days, because nobody will sit through multiple 45-minute online presentations
  • Asynchronous Q&A spanning the entire duration of the conference so that attendees have an opportunity to reflect on content, discuss it with teammates, and then pose questions
  • Multiple instances of live sessions to increase the options for attendees to join (thereby also increasing exposure for sponsors and presenters)
  • Small, structured breakouts to create substantive opportunities for attendees to learn from each other

We believe that these ideas serve as a good starting point and also enable a wide variety of iterations, depending on the specific sponsors and attendees and topics. They represent a sincere effort to do more than bide time until the business world “returns to normal” because at this point, it’s doubtful that anyone can accurately predict when that will really occur.

Credit Card Issuers: Adjusting to the “New Normal”

The impact that the COVID-19 pandemic has had on our society and economy is huge, and the effects are likely to persist for some time to come. This blog looks at some of the most important changes affecting the credit card sector, how issuers have responded to these challenges in the short term, and what they need to do as the economy starts to reopen and they look to get the sector back on an even keel.

Spending

The trend. The pandemic has led to significant changes in consumption patterns. Overall spending fell as the lockdowns took effect. Spending in categories like travel and entertainment registered huge declines, which were partially offset by increases in everyday spending categories like grocery. There were also changes in purchase methods. As a result of stay-at-home limitations, digital commerce growth rose strongly. And at the point of sale, consumers moved decisively away from cash and embraced contactless payments. According to Mastercard research from the end of April, 51% of Americans are now using some form of contactless payment. The switch to contactless is likely to persist: according to the 2020 American Express Digital Payments Survey, 58% of consumers who have used contactless say they are more likely to use contactless payments now than before the coronavirus outbreak.

The response. Issuers initially responded to the change in spending patterns by:

  • Changing bonus earning categories to encourage consumers with travel-centric cards to use these cards for everyday spending. Chase introduced higher earn rates for grocery spending on its Sapphire Cards and most of its travel-oriented co-branded cards.
  • Extending the eligible period to meet a spending threshold and qualify for activation bonuses on new cards. American Express and Citi extended this period by three months.

Next steps.

  • Issuers need to ensure that contactless payment functionality is available on all of their credit cards.
  • Card networks and issuers should increase the spending limit for contactless payments. Note that this has already taken place in most European countries in response to the pandemic.
  • Issuers should switch from chip-and-signature to chip-and-PIN. A recent Mastercard survey found that 72% of consumers would prefer to avoid signatures.

Borrowing

The trend. The economy retrenched in recent months, and cardholder borrowing has fallen, due to both decreased spending and a desire to reduce debt. This was evident in issuers’ credit card outstandings for the first quarter. EMI analysis of 22 leading issuers found a 4.4% y/y rise in average credit card outstandings in 1Q20. However, the y/y rise in end-of-period outstandings was just 1.7%, indicating a pull back in balances towards the end of the quarter.

In terms of key credit quality metrics, there was no dramatic upsurge in delinquency or charge-off rates, but these metrics take time to register and many consumers have taken advantage of payment relief programs. According to TransUnion, 3.2% of card accounts were in financial hardship programs in April, up from less than 0.01% in March.

The response. At the onset of the pandemic in mid-March, most issuers were quick to introduce payment relief programs (mainly deferrals on minimum payments and waivers on late fees) and they also engaged in the following activities:

  • Dramatically raised their provisions for loan losses in their 1Q20 financials.
  • Scaled back credit card solicitations. Bank of America reported that card loan origination fell 55% between February and the first two weeks of April.
  • Tightened underwriting. In its 1Q20 financials, Discover reported that it significantly tightened underwriting and pulled back on credit line increases and balance transfer offers.
  • Cut credit limits. According to an April 2020 CompareCards survey, 25% of credit cardholders said that their credit limits were cut involuntarily, or that their cards were closed in the previous 30 days.

Next steps.

  • In the near term, issuers will likely need to continue existing actions, such as extending relief programs. However, as the economy returns to some degree of normality, issuers will scale back or end relief programs, inevitably leading to increased delinquencies and charge-offs.
  • Issuers should redeploy staff to engage directly with cardholders on their repayment plans.
  • Issuers should develop information/advice for consumers on how to improve their debt management and make the materials easily available by publishing on various media.

Channel Usage

The trend. Because the pandemic has forced banks to close many branches, there has been a significant rise in digital channel usage for financial needs. More consumers are trying digital channels for the first time, and existing users are depending on digital channels for a broader array of financial activities. This migration to digital channels is likely to persist.

The response. Issuers actively directed cardholders to digital channels for their customer service needs.

Next steps. To consolidate the recent gains made in digital channel usage by credit cardholders, issuers should:

  • Accelerate the promotion of digital channel benefits on websites, in social media and in monthly statements.
  • Ensure that digital channels are providing a positive user experience.
  • Expand digital channel functionality.
  • Promote human channels for cardholders who need to engage directly with the issuer.