For those who came to the ninth annual Credit Card Forum looking for sunshine and a new product or marketing idea, only one wish was granted.
They never found any "magical elixir" for their industry's current, cyclical doldrums. Speakers pretty much stuck to the basics that made the credit card business profitable in the first place.
The Faulkner & Gray-sponsored forum "Finding High-Growth Opportunities in a High-Risk Market" offered none of the drama of last year when American Express Co. chief executive officer Harvey Golub used the event to invite bank partnerships with Amex.
Judging by the list of 600 or so in attendance, high-level bank card executives tended to stay home to deal with rising delinquencies and chargeoffs amid slower growth.
Richard W. Vague, president of First USA Inc., said in his keynote address that competition had caused credit quality to diminish even in a healthy economy.
"Those with more competitive products, technology, cost structure, and a high level of reinvestment will continue to grow," he said.
Increasingly, Mr. Vague said, a small number of competitors will grow rapidly while a greater number don't.
This trend has emerged in the past decade. In 1986 the top 10 issuers controlled 40% of the market, he said, but they had 59% last year. In 10 more years, that concentration could reach 80%, he stated.
Someday, Mr. Vague added, Banc One Corp.'s pending acquisition of First USA, creating a card loan portfolio of $35 billion, may seem small. Mr. Vague will be in charge of the combined entity.
Not long ago, cobranding was the hot topic at any conference of this kind. But times have changed and so should strategies, said Leslie Dukker Doty, senior vice president and director of marketing for SunTrust BankCard in Orlando.
Issuers should take a defensive approach to cobranding, said the former Citibank card executive, especially with the introduction of platinum cards.
She cited increasing pressure on margins and profitability as more players have locked up the best marketing partners, response rates have declined, and acquisition and retention costs have risen. On the other hand, consumers are demanding more benefits and value at a better price.
Turning to niche markets is one way to counteract these forces. SunTrust has done this with its package of Cool Country Visa cards and the Daytona USA MasterCard.
Patricia Hudson, conference chairman and president of Porges/Hudson Marketing Inc., resurrected another old idea-photo cards.
She said a new reason for issuers to consider photo cards, beyond fraud reduction, is to increase loyalty. Cardholders spend more and stay longer when they hold customized cards with photos on them.
Issuers have been putting cardholder photos on plastic since the 1970s. More recently, pets and other things have cropped up on the cards.
MBNA Corp. recently introduced the Parents Advantage Card, Ms. Hudson noted, which is targeted to working mothers. Holding a card that pictured her family, she said, "This is a card I like to pull out of my wallet, and I don't think I'll cancel."
It would be even better, she said, if MBNA would add a benefit, for example, helping establish a college fund for her children. "I think that would earn my everlasting loyalty."
