SAN DIEGO - A Major Credit card industry conference here last week turned into a celebration of apparently boundless growth and profitability.

Marketing consultant K. Shelly Porges, serving as chairman of the Faulkner & Gray Credit Card Forum, launched the feast of optimism by pointing to three favorable trends: less regulation, an increased capacity to customize products, and a return of banking's sex appeal.

Illustrating the last point, the chief executive officer of San Francisco-based Porges/Hudson Marketing Inc. referred to a recent Forbes magazine cover story, "Banking: Suddenly It's Sexy." Sex appeal in this case is defined by the ability to turn a profit consistently.

"The future sex appeal of this business will ride on developing major new markets such as the $400 billion, barely tapped purchasing card market or in delivering new value in the card through the use of technology," said Ms. Porges.

She also said there are many indications that "the next few years will be remembered as a time of regulatory revolution in our industry." For example, with the impending end of the Glass-Steagall Act, Ms. Porges said it won't be long before consumers can get airline mileage with insurance payments or brokerage transactions.

Within 10 years, Ms. Porges added, the credit card cobranding craze will give way to "me-branding."

This new wave, she believes, will ensure a future for photo cards, as more consumers will want cards reflecting their individuality. As the aging magnetic-stripe encoding technology gives way to smart cards with computer chips, service packages and benefits can be further tailored to meet a specific cardholder's needs and desires."

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Economic indicators may not have much sex appeal, but card issuers were heartened by Michael E. Staten's nuts-and-bolts trend analysis.

Mr. Staten, director of the Credit Research Center at Purdue University in Indiana, said 1994 was so favorable that "it really doesn't get much better than this."

While estimates for 1995 don't match last year's for consumer spending, disposable income, auto sales, and housing starts, the numbers are still quite positive, despite the recent series of hikes in the prime rate.

But Mr. Staten cautioned consumer lenders to watch how cardholders react to the rate hikes as they filter their way into what they pay on credit card balances.

"The industry spent the last four to five years telling people the interest rate they pay on the card matters," he pointed out. Now, he said, the industry will have to add product features and innovative marketing techniques to attract rate-sensitive customers.

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Ruth Susswein, executive director of Bankcard Holders of America, was the only consumer advocate who spoke at the seventh annual forum sponsored by Faulkner & Gray and its Chicago-based card publications group.

She said consumers feel "nickel-and-dimed" by the more than 200 types of fees banks charge. "Some bankers are unintentionally fostering mistrust," Ms. Susswein said in a fiery speech.

She was followed by a decidedly pro-industry and pro-fee consultant, James L. Accomando, who jokingly asked if anyone in the audience would like to trade places with him.

Mr. Accomando, who helped design the GE Rewards cobranded MasterCard program, advocated the return of annual fees.

"If the card adds value," he argued, then consumers should be willing to pay a fair price.

Mr. Accomando suggested that a more rational system of annual fees could allow issuers to eliminate the "more controversial fees" that have earned some a bad reputation.

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A couple of months into this year, the conference organizers decided to change their theme from one extolling the industry's profit-seeking to a more guarded "How the Squeeze on Spreads is Changing the Card Business."

Kurt T. Peters, vice president of Faulkner & Gray Inc., said a number of attendees didn't think the original title, "Higher Profits Without Higher Card Rates," reflected the breadth of the sessions or their concerns.

"There's so much pressure on the card industry," he said. "It's such a competitive market, issuers are going to find it hard to raise rates." So they will have to look to new fees and ways to cut expenses.

The forum attracted 1,000 people, about 5% more than in 1994, Mr. Peters said. And it drew a few new sponsors, including MCI Telecommunications Corp., which is making a run at the card processing business, and some new exhibitors, notably Discover Card Services.

Among a bevy of telemarketers, direct marketers, and college marketers in the exhibit hall was a growing group of event marketers. Len Pravada, a marketing consultant with the Bauman Group Inc., Deerfield Beach, Fla., said his firm offers an alternative to traditional marketing efforts.

The company said that working for banks, it generated 8,000 credit card applicants from a New York State Fair, 1,800 at a festival in Tennessee, and 5,000 at a fair in Washington State. In six years, it claims to have generated more than two million credit card applications.

Bauman offers gifts that rewards people who complete the applications correctly at fairs, auto shows, dog shows, conventions, and the like.

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First Data Corp. built on the splashy marketing reputation it earned last September at the industry's other big annual show, the American Bankers Association's bank card conference in Chicago.

America's Cup skipper Dennis Conner put in an appearance Thursday at First Data's well-placed booth near the entrance of the exhibit hall. As the crowds converged, he posed for pictures and signed 300 free copies of his book.

The Hackensack, N.J.-based payment services company also enticed more than 200 conference-goers with instant giveaways and other freebies to participate in an interactive survey. They entered responses on such issues as interest rates, card fees, and the economy. Results were posted on a computer screen.

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