The UK consumer credit card industry has experienced positive growth in recent years, but regulatory pressure and increases in consumer losses have put pressure on issuers to improve their customer management strategies and risk performance. In addition, many issuers are also diversifying product offerings and crafting ever-more sophisticated strategies for managing existing portfolios and evaluating risk. Simply put, a great deal is changing in the UK credit card market.

However, it is difficult for UK banks to understand their competitive position. Publicly-available financials provide little (if not inaccurate) comparisons, and virtually no sources of competitive intelligence are available. Further, given that any significant growth must necessarily come from soliciting competitiors’ customers, an understanding of the competitive landscape is critical.

In response to these trends, Argus launched its UK Credit Card Payments Study in the summer of 2006. The study, modeled after Argus’ successful and long running US consumer card study, provides unique insight into the UK competitive environment. Today, ten issuers provide full file information, including account-level data for over 40mm accounts, enabling Argus to create relevant and actionable benchmarking comparisons for each participating issuer.

Participants use Argus’ benchmarking data to evaluate their programs relative to customised benchmarks of similar programs and vintage. The richness of the Argus UK CCPS dataset enables issuers to understand their performance relative to their peers in several areas, including:

• Initial line assignment, initial pricing, and use of promotional offers
• Ongoing pricing strategies, including re-pricing activity, use of promotional APRs in mature customer segments, and use of high-rate APRs among higher-risk accounts
• Ongoing line management, including line increases and decreases, utilisation, and line assignment among mature customers across various risk segments
• Balance generation strategies, including spending, balance transfer and cash frequency, revolving behaviour, and payment trends
• Risk management, including delinquent balance growth, balance control ratios, collections effectiveness, and chargeoff performance

The launch of the UK CCPS has provided each participant with a keen understanding of its competitive position and enabled it to make informed judgments and refinements to its strategies. Several UK issuers have initiated substantive changes in response to Argus’ benchmarking comparisons and are realising significant benefits in performance.

Each participant in UK CCPS receives:

• Quarterly benchmarking binders that compare issuer performance to a customized benchmark, including summary performance metrics, full income statements, and drill-down tables detailing profitability, customer behavior, risk, and pricing
• Quarterly executive summaries that describe key benchmarking comparisons identify opportunities for improving performance
• Semi-annual senior management presentations that provide an in-depth review of benchmarking results
• Additional ad-hoc analytic support in which issuers may request customized analyses

Issuers interested in joining the UK Credit Card Payments Study typically begin with one year of participation. For more information, please contact Michael Grillo at (914) 307-3147 or mgrillo@argusinformation.com