Loyalty is a theme which runs through this edition of Cards
, and it is hard to think of a time when the
subject has been more of an industry focus.

Two in five consumers surveyed by
Groupe Aeroplan, the group which owns the UK’s Nectar loyalty
programme, feel the schemes are more relevant to them this year
than last. There has also been a notable uptick in cards businesses
implementing the programmes.

In this edition alone there are
several examples. Alpha Bank, Greece’s third-largest bank by
assets, is upping its rewards initiative following a 26% increase
in card usage after introducing a programme in 2009.

Many card issuers are looking at
starting to expand their credit businesses again and find offering
rewards programmes to customers a conservative way of doing

They can encourage card spending
through reactivation of existing customers and also selectively add
customers to their portfolio, without engaging in aggressive
competition for market share which led many to elevated levels of
credit losses during the financial crisis.

HSBC’s cards business in Mexico is
a case in point. It doubled its market share from around 5% to 10%
between 2008 and 2009, partly through a packaged account it offered
with a current account, debit card and credit card.

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The product, called Tu Cuenta,
helped the bank expand rapidly but contributed significantly to
increased defaults in the last 18 months.

HSBC has now refined the strategy
for expanding its portfolio with the use of more sophisticated
credit loss management tools, a greater focus on more affluent
customers and the offer of rewards packages to customers.

MasterCard has cottoned on to this
trend too, announcing a tie-up with loyalty scheme Next Jump – an
initiative which highlights another important benefit of loyalty
programmes, namely the value of the data gathered through them.

Clearly, there is a huge profit potential here is if the card
associations start to unlock this data. This opportunity is over
and above the obvious benefits well-executed rewards schemes can
deliver to banks – increased card spending and reduced portfolio