When American Banker published its first Leaders of the Bank Card Business supplement in 1993, the credit card industry looked much like it does today. Only its scale was different.
Then, as now, Citibank was the largest bank card issuer. But its $36 billion of card loans was roughly half what the Citigroup subsidiary has today.
MBNA Corp.'s collection of relationships with 3,000 affinity groups was considered staggering in 1993. The adjective still applies, though the number has grown to 4,600.
Cobranding was all the rage back then. Household Bank's MasterCard program with General Motors Corp. had just "taken the crowded credit card field by storm," according to our first edition. Today, though the GM card is still a force for competitors to reckon with, it is Internet cobranding deals that make headlines, along with the multimillion-dollar price tags they carry.
The cobranding business "had gotten a little bit stale" for a few years, until the Internet came along, said Warren Wilcox, executive vice president at Fleet Financial Group's credit card business. He was an executive at Household when the GM card was launched. The World Wide Web and the myriad businesses it has spawned constitute an "entire new world with all of these new companies that are unpartnered."
The word Internet did not appear in our 1993 magazine. It did not show up until last year. Today, the Internet is taken for granted as a way to communicate with customers and attract prospects. A little company that has been offering cards for two years - NextCard Inc. - is now routinely named on lists of significant Internet issuers, and referred to in conversational shorthand as "Next."
First USA, the Bank One Corp. division that wants to "own'' the Internet in various ways, is considered the first name on the virtual bank card list. In an interview for this year's supplement, Richard Vague, First USA's chairman and chief executive officer, said his competition was "going to be more and more defined by who is fast, who has full Internet capabilities, and who has an overall relationship with the customer."
First USA did not appear in our 1993 supplement, but the company that bought it in 1997, Bank One, did. In that magazine, then-senior vice president Mark K. Tonnesen (now cards chief at Royal Bank of Canada) discussed a nascent deployment of smart cards, which Bank One thought would catch on at supermarkets and then at other retail outlets.
Little came of that experiment, typical of American smart card trials that followed, but some banks are undaunted in their explorations of chip technology. The emphasis is on systems for discrete, closed communities such as college campuses, military bases, government agencies, and office complexes.
Some business ideas have survived relatively intact. In 1993, agent banking was spotlighted as a way for small and midsize banks to keep their names on customers' cards but leave the receivables management and processing to others. Profiled as a leader in agent banking in 1993 was Marine Midland Bank, the HSBC Group subsidiary, which is no longer in the business. But the field is hot enough to have recently attracted Citibank, among others.
The 1993 Leaders issue also reflected an interest in merchant processing, which many banks shied away from in prior years. It continues to enrich companies like Bank of America Corp. and Chase Manhattan Corp. One that we profiled back then, CoreStates Financial Corp., has been taken over by First Union Corp., which at least indirectly keeps its toes in the merchant waters.
The Internet aside, some trends that grew popular this year were scarcely on the radar screen in 1993. Issuing cards in foreign countries, once only a concern to Citibank and American Express Co., has spread to several of the biggest U.S. issuers. Offering products to the subprime market, once considered a niche business for a few small specialists, has gone mainstream.
Bill Clinton is still president, the economy has not stopped growing, and people are still wondering how long industry consolidation can continue and how far it might go. But this year the format of the Leaders of the Bank Card Business takes a different turn.
Previous supplements have profiled individual banks and top executives, in each case delving into why the chosen institution exemplifies a specific trend or strategy, and hence industry leadership. This year we are taking a more broad-brush approach, with the leaders often grouped together, in appropriate context, in articles that go beyond credit cards to focus also on such things as debit cards, automated teller machines, smart cards, and the Internet phenomenon.
There was at least one practical reason for the change: Because the business has become highly concentrated, most senior card executives at leading banks have already been highlighted in these pages, often more than once. But this new format will also give readers more context and side-by- side analysis of the changes and evolution in the industry. We hope it is helpful, lively, and informative, and would welcome any feedback.
- Jennifer Kingson Bloom