Mining for Profits

By Mathis, Bill | Independent Banker, February 2002 | Go to article overview
Save to active project

Mining for Profits


Mathis, Bill, Independent Banker


Payment Processing

Leverage your card program for sales, service and loyal customers

A well-executed payment card portfolio can be an important part of an independent community bank's growth strategy. On a rudimentary level, a portfolio can be a profit center. More importantly, however, community banks can use a card portfolio to capitalize on their greatest asset-customer intimacy.

A properly deployed payment card program can not only solidify this relationship, but also create new opportunities for cross selling other products and services. According to a study conducted by the Bank Administration Institute, 72 percent of retail banking executives list improvements to cross sell, retention and service as their number one driver for revenue. And successful card portfolios help banks do just that: Increase cross-sell opportunities, enhance customer retention and improve customer service.

Today's card portfolio can be quite diverse and very powerful. The Internet, of course, has had a lot to do with it. While e-commerce is still in its infancy, it's already a big baby. Forrester Research, for example, says that consumers in the United States are expected to spend upwards of $65 billion in 2001.

Why is this important? Because the payments industry was one of the first beneficiaries of e-commerce, 95 percent of the transactions executed on the Web are completed via payment cards, compared with about 33 percent in non-Internet transactions. This is in part due to the high level of public trust in the card-issuing institutions and the potency of global branding campaigns.

In addition to online retail purchases, there's also huge potential in consumer-- to-government payments, such as tax bills. Just three years ago, the Internal Revenue Service started accepting cards as a payment form for federal taxes. Additionally, many state and municipal governments are following suit. Then, of course, there's the reverse, with government-to-consumer payments, when the government actually sends tax refunds, pensions and other benefits directly to a payment card.

Wider Selection

Once upon a time, community banks had just one type of payment card to offer their customers-a credit card that supports only one type of transaction-consumer-to-business payments. Now, with debit cards and stored-value cards, banks can offer a card that allows consumers to pay before, during or after a purchase is made.

This growing diversity of consumer payment options has translated into more ways for community banks to participate in the burgeoning payments business and, at the same time, has created more opportunities for them to deepen customer relationships.

Stored-value cards, sometimes called pre-paid cards, are already becoming quite popular with the parents of teenagers. They enable the teenagers to have the convenience and security of a cashless payment device, while their parents no longer have to worry about their kids mishandling credit. And it doesn't take much imagination to see that a large pool of stored-value card customers may also be more receptive to student-loan pitches.

In short, a diversified card portfolio can help independent banks cross sell other products and services.

The Power of Segmentation While enhanced payment card portfolios are important tools for helping independent banks enjoy stronger customer relationships and more revenue opportunities, there are also ways for the tools themselves to become more effective profit centers. The answer is segmentation.

Segmentation, a form of data mining, is a strategy that considers people's income profiles, lifestyles, interests and their buying habits. When good segmentation information is combined with strong promotional campaigns, card usage, customer retention and overall program profitability can rise substantially.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Mining for Profits
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.