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Credit card issuance will emerge from the recession less profitable but more efficient than before the economic downturn, an industry analyst tells CardLine sister publication Cards&Payments. For starters, credit card lending and use will remain flat or contract while alternatives, such as debit, pull ahead, predicts Joakim Mellander, senior executive in the banking practice of Accenture Ltd. of New York. "There has been a 5% to 10% growth in credit cards on the transaction level but double-digit growth for debit cards and [automated clearinghouse transactions]," he notes "Credit card is going to go down even more." The cycle of high profitability from credit card fees and interest will not return any time soon, partly because of tighter regulation and legislation that will "change the credit card landscape," Mellander adds. Meanwhile, tighter budgets will drive financial institutions to seek more-efficient ways to manage a variety of banking products, and that will create the nudge many issuers need to break down walls separating business units and to build unified platforms and services, he says. "Right now, credit cards are [managed] by the card units of banks, and debit card is run by the retail units of banks," Mellander says. "Those need to come together."
