In May 2017, EMI published a blog that discusses how banks use surveys to build small business engagement. In that blog we reported that many leading banks publish recurring surveys that track general business optimism as well as key challenges and opportunities. In addition, banks also carry surveys that cover specific topics on a one-off basis. The following table looks at the topics covered over the past six months:
The banks cover these topics of interest to achieve a number of objectives, including:
- Raising general awareness of the bank and affinity among small businesses
- Positioning the bank as a small business banking thought leader
- Communicating their understanding of the changing issues impacting small businesses
- Highlighting their areas of strength
- Differentiating the bank from its competitors
In fact, the desire for differentiation is leading banks to conduct surveys on specific small business sub-segments or on specific product areas. Recent standalone surveys of this type include:
- U.S. Bank surveys of Asian-American small business owners (October 2017) and Hispanic small business owners (October 2017)
- Surveys by both Bank of America (September 2017) and American Express (November 2017) on women-owned businesses
- Bank of America Small Business Payments Spotlight (October 2017)
- American Express Small Business Saturday Consumer Insights Survey (November 2017)
The proliferation of small business surveys that cover specific topics of interest indicate that they are effective tools in helping banks build awareness and engagement with their small business clients and prospects.
In a March 2017 blog post, EMI highlighted growth in credit card outstandings across the credit spectrum for leading credit card issuers. Our recent analysis of 3Q17 10Q SEC filings for these companies shows that this trend is continuing.
The top three issuers—Bank of America, Chase, and Citigroup—reported growth across all FICO Score segments, with strongest growth coming in the lowest segment. In the aftermath of the Financial Crisis, issuers pulled back on lending to low-prime and sub-prime consumers. With the return to steady economic growth in recent years—and with issuers now believing that they have more robust underwriting and pricing systems—issuers are now refocusing on consumers in lower FICO Score categories.
Assets at both Capital One and Discover skew heavily towards credit card loans. Discover generated 9% y/y rise in credit card outstandings, led by 16% rise in loans to consumers with a <600 FICO Score. Capital One bucked the overall trend, with lower growth for its <660 FICO Score segment. However, it should be taken into account that this segment accounts for 35% of its total credit card outstandings (vs. 15% at Chase, 16% at Citi, and 19% at Discover), so it has less scope for strong growth.
The leading regional bank card issuers—who focus on cross-selling credit cards to existing bank clients—reported a similar pattern. SunTrust has continued its very strong growth trajectory, with overall growth of 16% led by the <620 category. Regions followed a similar pattern, with 7% overall growth in outstandings driven by a 35% rise in the subprime (<620) segment. PNC had strong growth across the credit spectrum. Fifth Third had strong growth in the <660 segment, but from a very low base. The y/y decline in outstandings in its 720+ category resulted in Fifth Third overall credit card outstandings remaining unchanged. Wells Fargo’s overall growth rate (+4% y/y) has slowed considerably in recent quarters. It generated steady growth across most categories, with the exception of the 600-680 FICO range.
Over the past six months, EMI has monitored new credit card launches by leading issuers and identified 10 trends.
- Issuers are moving away from long-duration introductory rates on purchases and balance transfers (BTs), in particular on travel cards.
- A basic earn rate of more than 1% (or 1 mile/point per dollar) is common.
- Most cards are offering a higher earn rate for spending in specific categories.
- Issuers are not competing aggressively on APR.
- The two new affluent cards are metal.
- Many cards continue to promote acquisition-and-activation bonus offers
- Three premium cards (with annual fees) all offered 50,000 bonus points.
- Three other cards (with no annual fees) promoted bonus offers of 10,000 miles or $100.
- In a significant departure from the previous norm, two new no-annual-fee airline cards have been launched
- For higher-end cards with annual fees, the robust travel benefits are emphasized over the rewards program as the core justification for the fees.
- No foreign transaction (FT) fees on travel cards is now becoming a standard feature.
- American Express remains an outlier, by continuing to apply a 2.7% FT fee on its travel cards.
- Most issuers continue to apply BT fees.