While the competition is steep, there has never been a better time to bring the credit card program in-house. Thanks to new technology provided by fintechs, banks and credit unions can leverage modern platforms to build a strong in-house credit card program.
These platforms, built as banking-as-a-service platforms, are affordable and enable issuers to launch products faster.
In the past, financial institutions have allowed their banking software to limit what services they offered to customers. Many banks and credit unions have considered legacy systems too large or costly to disrupt, leaving little room for product growth and innovation. In turn, the credit card market has been dominated by major card networks such as Mastercard and Visa. However, this is starting to change as fintechs are making their play into the market with companies such as Apple and Uber offering credit cards.
Modern card platforms save financial institutions money upfront and in the long run. The pay-as-you-go pricing models that are associated with these platforms do not require significant initial costs, making an in-house credit card program a more affordable investment for financial institutions.
Additionally, these platforms save financial institutions money in the future through reduced maintenance and support costs. With modern card platforms, financial institutions can effortlessly conduct updates and modifications to tailor card products to meet the needs of customers. As a result, banks can achieve a lower total cost of ownership through the reduced investment fees and maintenance costs.
In addition to saving money through the pricing model, financial institutions can also save the expense of replacing their core system. In the past, implementing a card platform would require a full integration with the core, which limited options and increased expenses.
However, the banking-as-a-service platform approach enables financial institutions to implement a card platform as a greenfield, or fresh, installation on top of the core using open banking and API connections. A modular credit card platform sits on top of a bank’s existing core structure, using APIs to share data between the card platform, the card networks and the bank’s core system in real time. This lowers the cost and risk of a major core conversion while quickly adding the benefits of a card program.
One thing banks and credit unions can learn from fintechs is how to leverage mobile-first and open banking technology to quickly and easily roll out a credit card program. Unlike legacy systems, new tech platforms provide financial institutions with the flexibility needed to future-proof their software. Additionally, a vertical stack enables faster deployments and reduces the complexities that come with integrating multiple technologies.
Financial institutions can work with partners who conduct regular screenings to ensure systems stay ahead of compliance regulations, fraud protections and upgrades. Looking ahead, financial institutions striving to remain viable should leverage new technology platforms provided by fintechs to meet the evolving needs of customers and to stay at the leading edge of innovation.
