Unveiling Hidden Insights: Leveraging Competitor Card Behavior to Drive Deposit Growth

Author Erin Petro
Read time 5 minutes read time

Discover the untapped potential within consumers spending patterns on competitor cards, and how these insights can reshape marketing and boost overall growth and profitability.

Community banks and credit unions put in a lot of time to better serve their consumers.  I know this because I work with them daily.  Our clients want to better understand their consumers so that they can match them with the right products at the right time.  

Unfortunately, discretionary spending on credit cards represents a large gap in their understanding of their own consumers. This falls outside the scope of most banking relationships because the 15 largest card providers control a staggering 90% of the credit card market.  This means that most credit unions and banks have little insight into how their consumers spend their money on competitor cards. 

Our History Identifying Revolvers

Nickels has long been committed to empowering community banks and credit unions.  We do this by helping them understand their consumers’ credit card behavior.  Our focus to date has been identifying consumers that are revolving (i.e. not paying their statement balances in full) on competitor cards.  This provides our clients with the power to make faster decisions for which consumers will be better served by taking on a balance transfer or a personal loan. To date, we’ve helped consumers refinance millions of dollars in competitor credit card debt. But that’s not the only insight that our checking account analysis yields.

The Opportunity with Transactors

As banks’ and credit unions’ focus has shifted to growing deposits, understanding competitor credit card spending reveals tremendous insight into who can save.

Our data shows that, on average, approximately 16% of a community bank or credit unions’ account-holders use competitor cards solely to transact. And what’s intriguing about this segment is that their total payments to competitor cards can offer valuable insight into their overall spending habits. In a recent analysis of an existing client, we found that nearly 10% of their overall competitor card paying membership spent greater than $1,000 per month on average over the past year. These high spenders are primarily engaging with major banks like Citi, Capital One, Chase, and Bank of America. 

From Insight to Action

Using transaction data to accurately identify these spenders can hold the key to driving your institution’s growth. Below are several approaches that can help yield positive outcomes:  

  1. Increasing Interchange on Your Own Cards: If your bank or credit union boasts a credit card program, using checking account data to identify consumers who use competitor cards elsewhere can provide crucial insights for effective marketing campaigns.
    • For consumers who do not already have a card with you, marketing that targets reward offers and other perks that are personalized to the amounts they’re already spending with competitor credit cards becomes compelling.  You can set target thresholds to ensure that they’re shifting their spend to your cards. 
    • For Consumers who already have a card with you, successful marketing around activation can involve bonuses for shifting that spend amount on competitor credit cards to your card.  Again, personalizing the offers to target the spend you now know that they’re already making elsewhere. 
  1. Building Deposits: Transactors who consistently pay off their credit card balance in full are great candidates for savings products (such as high-yield savings accounts).  These consumers are showing that they’re able to consistently make high volume payments, meaning that they likely have financial surplus for savings.  There are also opportunities to connect the high volume spending with higher volume saving, like how Apple Card cash back is automatically saved in a high yield account. Offering higher interest rates based on institutional card spend can further incentivize spending that helps to foster savings for this specific consumer segment.

Unlock the Insights of Competitor Card Behavior

Marketers know that the key formula for successful marketing is getting the right product in front of the right consumer at the right time.  Most institutions are doing this with a hand tied behind their back because they have no visibility into their consumers’ discretionary spend behavior. Nickels allows banks and credit unions to understand this crucial information and leverage it to build campaigns aligned with their institution’s goals.  By being able to understand how their consumers use competitor credit cards, banks and credit unions will be able to target their products much more effectively, empowering campaigns from growing deposits to refinancing debt to cross selling their own credit cards.

About Nickels

Nickels is a CUSO that helps banks and credit unions take control over their consumers’ third-party credit card debt. Founded in Ann Arbor, MI, their mission is to improve consumers’ credit card health. They do this, in part, by identifying those that are credit card revolvers with the major banks and helping credit unions refinance that third-party credit card debt into their own lower interest products.  Nickels also offers Credit Card Coach, a white-label web app that redesigns the credit card experience to improve members credit card health, regardless of which credit cards they choose to use.  For more information, please visit nickels.us.