White Paper: UK card issuers face new challenges

Revealing data and insights in latest white paper on Europe's most valuable cards market

The British credit cards market is showing what may be the first signs of meaningful shifts to come, according to a brand-new white paper on the UK credit cards market from Argus Advisory, a TransUnion company.

Credit cards issuers have come through the unprecedented mix of challenges that have marked this decade so far, but now face a very different phase: this data-supported white paper makes strategic recommendations on how issuers can best position themselves for the new economic environment.

Analysis of Argus data shows that activity on credit cards started to pick up as Covid restrictions were eased before the middle of 2021, although the number of active credit card accounts remains well below that seen in the last pre-Covid year of 2019.

Since bottoming out in early 2021, the journey back to more typical usage and balance levels has not been as direct as one might have expected, with pandemic-era savings (more on that below) the likeliest factor in that delay.

British householders are now feeling the pinch of rising bills – especially when it comes to energy supply – and price points. It may be that, as with the first Covid lockdown, government measures currently being finalised prove effective. Some economists however have expressed concerns that the blanket price-cap strategy for energy bills being pursued by the new prime minister may lead to further macroeconomic instability.

Either way, it is beyond doubt that issuers find themselves at a turning point with the country moving out of the pandemic and into an inflationary phase.

UK card issuers need to chart a careful course

The requirement now that the final quarter draws near is to return to market to build portfolios while paying particular attention to mitigating delinquency risk.

Among the unprecedented factors in play is the savings pot that was accumulated by British households between early 2020 and late 2021, a period during which cardholders also set about paying down their balances. The resulting cushion, as this new white paper explores, is proving vital for many as emergency government supports diminish and inflation has emerged as a dominant concern.

However, Britons are no longer in a position to fund a pandemic-era savings rate that at times far surpassed the ten-year average (see chart). Although still marginally higher than seen in 2019, that cushion is wearing away with the increased cost of living.

TransUnion 's second quarter Consumer Pulse Study for 2022 found that, among those surveyed, the largest plurality of credit-seekers, 38 percent, were planning to apply for a new credit card rather than other recourses that might be available. Issuers, with the help of Argus Advisory's expertise, have a clear opportunity to time and finesse their strategies accordingly.

Argus Advisory's new white paper, The UK Credit Card Market: Entering the Next Normal, is now available for download. No registration is required.

Leveraging a deep pool of credit card market data, Argus works closely with issuers to define and refine strategies for the best possible portfolio performance. Argus Advisory can help to optimise issuers' strategies across a range of activities, from customer acquisition to fraud reduction. Its market-wide view of the industry helps us to identify the customer segments that are key to maximising revenues and minimising charge-offs.

For more information, or if you would like to discuss how Argus Advisory can help your organisation grow, please contact research_enquiries@argusinformation.com.

Download white paper | About Argus Advisory | About Argus Advisory Research