What Are Modern Card Issuing Platforms?
With the advent of digital payments, the ability to facilitate payments quickly became a vital element in the current technology- and convenience-driven landscape.
Payment cards have been a part of the financial lives of individuals and businesses as end products of complex payment systems over the years - instrumental in advancing the underlying payments technology and answering customer preferences and needs, constituting the cornerstone of a fully functioning payments ecosystem. Regardless of their evolution and popularity, cards now stand at a crossroad, and increasingly face competition from purely digital platforms.
Consequently, card issuers are increasingly turning to modern card issuing platforms, leveraging their capabilities to offer a digital-first card proposition to their customers. In doing so, issuers can instantly push virtual cards to digital wallets, with the option to follow on with a physical card. This not only eliminates the wait that many customers face when cards are needed to be cancelled and replaced (ie, in card fraud cases) immediately, but also enables customers to activate and use their cards much quicker, which in turn boosts conversion. Modern card issuing also presents an opportunity to replace instant card issuance, where physical cards are printed in bank/FI branches with typically very expensive hardware to facilitate.
From the issuers’ perspective, having the ability to offer a virtual, as well as a physical card, fosters customer engagement and usage in different verticals (ie, physical outlets, online shops), and reinforces brand loyalty. From the customers’ perspective, digital cards and card issuance can be viewed as a more secure and environmentally friendly alternative to traditional cards and the issuance process. As such, tangible and intangible benefits of modern card issuing make it a sustainable service offering, poised for further growth as mobile wallet uptake continues to surge globally.
In its
new modern card issing platforms research, Juniper Research anticipates that by 2027, the number of credit cards issued via modern card issuing platforms is set to rise to over 311 million globally. This is especially important in the emerging markets’ context, where mobile wallet usage is a dominant payment medium and therefore, digital issuance can contribute to cashless societies while enabling better and fairer accessibility to financial products.
Trend #1: Branch Closures and the Shift to Digital
As the shift to remote customer onboarding and digital banking services continues, card issuance remains an important channel to serve customers amidst of branch closures and further digitisation of services.
Digital issuance not only eliminates the need for in-branch instant issuance, but it also provides another channel for banks/FIs to communicate with their customers through digital inserts (ie, card information, related communications), greater personalisation/customisation options, and post-issuance offers. Most importantly, it eliminates wait times for cards through app or wallet push provisioning that boosts usage and increases customer engagement.
Another aspect of modern card issuing is the enablement of card stock management for banks/FIs, offered by both established card manufacturers and fintechs, that involves project management and scaling of card operations. In this respect, demand and supply can be controlled more efficiently; lessening the burden on branches, and preventing short runs or stock overflows.
The digitisation of services through banking and/or designated card apps provides customers with the ability to activate their cards and change their PINs immediately, as well as raising disputes using apps. The convenience of these processes enabled by digital issuance drastically assists banks/FIs in using their workforce to focus more on creating better services and experiences. Digital card issuance solutions provide a means to not only modernise existing offers, but also to compete with digital-first rivals more effectively by tapping into a wider customer base that utilises mobile wallets. Digital cards can increase brand visibility and accelerate the roll-out new credit card-related products, offers and/or schemes at scale, while improving the overall customer onboarding and experience.
Trend #2: Rising Cost Pressures for Banks
The current economic climate and outlook shape banks/FIs and other issuers’ perceptions on the cost of their operations, pushing them to reconsider and reduce operational spend, as exemplified by branch closures and overhaul of legacy systems to achieve better efficiency.
In such a cost-cutting environment, card issuance-related expenditures (ie, instant issuance hardware and software such as in-branch terminals, physical card printing and transport from manufacturer to customers, etc) are considered coupled with concerns around the environmental impact of physical card issuance. Moreover, traditional banks/FIs and other issuers would also need to meet post-issuance costs to service cardholders (ie, managing customer relations, card-related marketing activities and offers) both in terms of carrying out relevant activities and allocating different teams to run comprehensive card programmes.
By digitising and centralising card management and providing a unified view of card operations, modern card issuing platforms can decrease operational costs drastically and increase efficiency. Card management features that involve digitised card controls (ie, funding, transaction authorisation), data, and analytics, and fraud protection ensure all processes are streamlined.
Furthermore, fintechs, payment companies, and established card manufacturers have offerings around card programme management that constitute another option for banks/FIs. These encompass all card operations from pre-issuance to post issuance including decisioning, compliance/risk, and account reconciliations as well as marketing and customer engagement for card acquisitions.
By transferring card issuance and lifecycle management operations to vendors, banks/FIs can offset their own card programme costs entirely, or at least significantly. Similarly, revamping existing card issuance and management programme infrastructure or setting up a new, digital one against the backdrop of a cost-cutting mindset can prove to be difficult for banks. Hence, modern card issuing platforms bridge this gap in a cost effective way through API integrations to their modular solutions; decreasing the go-to-market and time-to-serve.
Trend #3: Increased Competition for Cards
Digital card issuance democratises the offering of card programmes by levelling the playing field between large banks/FIs and smaller businesses and/or issuers. In addition, cards’ unique position, their endurance as viable payment instruments and role as gateways to financial services intensify the competition to issue cards by multiple players in the market such as banks, neobanks, card partners and mobile wallets, and business/brands which look to issue cards through digital issuance platforms and/or white labelling agreements.
Digital issuance can help issuers to stand out in an increasingly crowded and competitive market since they offer different models for diverse types of businesses and their needs. For instance, payment companies offer digital card issuance to eCommerce and on-demand delivery and travel businesses as part of their platform ecosystem, whereby companies can leverage multiple integrated services on a subscription-based model. These businesses often seek to issue cards to increase brand loyalty among their customers and employees or to simply track employee spending in a more efficient way.
On the other hand, card issuance practices of partners and/or mobile wallet providers (ie, Apple with Apple Card) put them in direct competition with traditional banks/FIs, as well as with neobanks. In this case, white-labelling agreements for co-branded digital and physical cards both leverage traditional issuers and set out the basis for competition simultaneously. Through card issuance, purely digital players can have a presence in the physical retail space (ie, by in-store contactless or NFC payments).
For traditional issuers such as banks, digital card issuance platforms can rapidly modernise existing card offerings and help place digitised cards on top of the (digital) wallet, while assisting in digitising and improving customer communication and experience.
For neobanks, being receivers of digital issuance services (ie, through partnerships with card issuance provider fintechs) opens possibilities to co-develop new features, and akin to digital businesses, embed different finance offerings (ie, lending, insurance, multi-currency support) to their cards.
For fintechs offering financial services (ie, international money transfers such as Wise), digital card issuance platforms represent opportunities to innovate other products and/or services through customer insights, while increasing brand visibility. Probably the largest impact and benefit of modern card issuing platforms, therefore, manifests itself in bank, neobank, and financial service fintech use cases where the ability to offer customers cards establishes trust and increases service engagement. Digital issuance platform vendors primarily aim to appeal to this particular aspect to differentiate their own product/service offerings.
Related Reading
Our complimentary whitepaper,
Modern Issuing ~ Innovation for Payment Cards, examines how modern card issuing is changing how issuers operate, and assesses key digital trends driving growth.
“Juniper Research’s new Modern Card Issuing Platforms research report provides an independent analysis of the future trajectory of this dynamic market, with digital platforms enabling banks and other financial institutions to issue cards to customers and personalise these cards in new and varied ways. It provides a comprehensive study of the growth expected in the use of digital card issuing platforms, how the systems will transform how card issuers operate and how issuers can reduce time to market. The report analyses how these systems will impact on physical card issuance, card product and card design.”