Credit cards have seen less innovation than other areas of banking. But as real-time data transforms banking, banks can reimagine their credit offerings to get closer to customers. 

Having run some of the world's biggest credit card businesses, the leadership team at 10x knows the credit card industry inside out. Earlier in his career, 10x CEO and Founder Antony Jenkins was responsible for the credit card divisions at both Barclays and Citigroup, while COO Curt Hess was responsible for Barclays' consumer bank – the ninth largest card issuer in the US.

The pair recently sat down to discuss the evolution of credit cards, how the market is likely to change–and how banks can get there faster. Here are the key takeaways from their conversation.

From dining in 1930s New York to virtual wallets

The origins of the credit card stretch back to the 1930s with Diners Club, a way for people to pay their restaurant bills in New York, explains Antony. The functionality of credit cards has evolved, even if the underlying principle—allowing people to spread out their payments—has stayed the same.

"We went from paper vouchers to machine based to contactless. Then we went from credit lines to ways people could consolidate their credit through balance transfers. And now Buy Now Pay Later—all these things are natural evolutions," says Antony.

Digital capabilities have also changed the customer journey significantly, adds Curt. That includes digital onboarding (no more paper applications), virtual cards, and contactless smartphone payments. There has also been a shift in customer segmentation and more focus on what different customers want from their credit cards, which has spurred growth in rewards offerings, says Curt.The pandemic also accelerated digitization, with greater use of digital wallets. "There was a period of time where a lot of card issuers were trying to adopt those, but it was not really taking off," says Curt. Covid forced banks to double down on those efforts, which has taken digital capabilities to another level.

The future of cards is in data, not plastic

While the credit card market has evolved since those early days in New York, we are still waiting to see true transformation in the credit card market. "Some innovations have been very useful, but arguably some have not," Antony says. For example, wearables that allow customers to make contactless payments are no faster than pulling out a card. So for Antony, the future of the credit card market is in data that's used to serve customers better rather than 'gimmicks' like wearables.

Banks are sitting on troves of valuable customer data, but the challenge they face is unlocking the value of their data in real time. Once banks achieve that, Antony adds that they can react faster to customer needs, ensuring they provide the right amount of credit to the right customers at the right time while also spotting the early signs of financial distress.

Taking credit card innovation to the next level

In a digital, on-demand economy, customers expect things quickly and seamlessly. As a result, banking products must be personalized and get into customers' hands fast. "That speed to market: being able to test it, to deploy it, to react to what's going on in the market—whether you want to alter a product or change your product—is beyond imperative," says Curt.

For personalization, such as real-time offers and contextual discounts, banks need to be capable of acting on data in real time to make suggestions that add value to the lives of customers. But, first, banks must transform their underlying systems, says Antony, to look at an individual customer in real time and respond to any positive or negative trends.

"That could be around marketing for offering new products, fraud, credit losses, or credit line increases," Antony says. "If you get the data in the right place, and you can access it in real time, you can do all sorts of wonderful things."

Open banking also allows banks to aggregate customer data from other service providers, enabling a 360 view of a customer's finances that's easy to digest and fast to action.

"That could bring great benefit to the customer in terms of peace of mind about their finances, great benefit around control of their finances, and great benefit around actually making their finances more cost-effective," he says.

So far, a lack of customer-centric data, clunky legacy technology, and real-time insight has hampered credit card innovation. Today, as cloud-native core banking platforms allow banks to centralize data and innovate faster, banks can overcome these historical challenges and bring credit cards into the 21st century.

To watch Antony and Curt's entire conversation, click here.