SAN FRANCISCO -- K. Shelly Porges, the credit card marketing consultant, isn't giving in to at least two pieces of conventional wisdom.

She refuses to believe that the credit card market is saturated, and she sees no end -- but perhaps different twists -- to the cobranding phenomenon.

In a presentation last week to Fair, Isaac & Co.'s 1994 conference, Ms. Porges dismissed the market-saturation "myth" simply by citing statistics. And she called on banks to turn inward in their search for cobranding or cross-marketing opportunities, taking a lesson from Wells Fargo & Co.'s California Advantage card, which provides rebates to the bank's mortgage borrowers.

"There is still room for growth," she said. "Outstandings are up overall. And with lower interest rates, credit cards compete with other forms of credit."

Indeed, the Federal Reserve Board said consumer installment loans grew in March at an 11% annual rate. At $808 billion, they were 8% higher than in March 1993. Revolving debt, mainly credit cards, which accounted for 35% of the total, grew in March by 5% and averaged a 10.2% annual growth rate for the first three months of 1994.

"Half of those without credit cards are employed and have at least the minimum income threshold of $15,000," Ms. Porges said. "And that's not to mention the secured-card opportunity."

Industry Slow to React

"Value-added cards," she continued, referring to the cobranding phenomenon and bank issuers' competitive rebate and benefit offers, "have changed the way people use cards."

She suggested that the industry is only now coming to grips with the way cardholder expectations have changed, noting that only two nonbank efforts -- Synovus Financial Corp.'s AT&T Universal Card and Household Bank's General Motors MasterCard -- have been true blockbusters.

Among the top 10 bank card companies in 1993, the fastest growers were MBNA America Bank, which concentrates on affinity programs, at 26%; AT&T Universal Card Services, at 38%; and Household Credit Services, the issuer of GM and Ameritech cards, at 54%.

Chemical Banking Corp., the eight-largest issuing bank according to RAM Research Corp., had a vastly improved 18% growth rate, spurred by its alliance with Shell Oil Co.

Ms. Porges and Patricia Hudson, her partner in San Francisco-based Porges/Hudson Marketing Inc., said they recommend that clients consider "a new type of cobranding with their own retail banks."

Wells Fargo's credit card-mortgage tie-in is the best known example. Also, NationsBank has linked cards to annuity products through Start Inc. of Herndon, Va.

Ms. Porges and Ms. Hudson said similar programs are in the works. Ms. Porges said they can have the advantage of producing income for the bank and cementing customer relationships, neither of which may be easy as traditional, interindustry cobranding programs mature.

At the Fair Isaac conference, which covered a wide range of credit marketing and information technology issues, the consultants took attendees through a mock brainstorming session to demonstrate how different areas of a bank can find mutual benefits in a "cobranding" venture.

One popular idea was to connect a home equity line of credit with a credit card. Some bankers have explored the idea -- cardholders could deduct the interest payments on their tax returns -- but few have implemented it.

Some cite regulatory complications -- Texas, for example, does not permit second mortgages -- and others say the systems of the relevant bank departments are incompatible.

Larry Rosenberger, the president of Fair Isaac, said the lack of home equity tie-ins reflects historical cultural barriers within banks. "The credit card people usually don't talk to the mortgage people," he said.

Porges/Hudson Marketing had several cobranding ideas of its own, including a frequent-usage program modeled after airline mileage plans; a reverse mortgage card that lets elderly customers turn home equity into cash; and a homeowners card that provides rebates on loans, discounts on insurance, and discounts from Home Depot or similar stores.

Ms. Hudson urged the marketers to base their innovations on an understanding of their banks' business issues and problems, keep the product concept simple, and provide sales incentives to branch personnel.

"We are trying to break down the barriers between credit cards and the retail bank," she said. "This should not be like a direct marketing program that does not touch the branches."

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