Dear Banks, Do You Really Need a Separate Credit Card Application?

A bank customer holds her coffee with her left hand while performing banking transactions on their mobile phone with her right hand
Share Icon Share 20 Sep 2023
Authors: Tolga Ulutaş

Well, I think you do not! It is not easy to get into these discussions, because it would call into question the raison d’être of the structures within the banks.  But if we don’t discuss the matter, if we don’t talk based on data and facts then we’ll all be exhausted. So let me explain it in my own way, and you can do as you wish, of course.

As you know, with the rapid development of digital banking, banking services have been shifted to these “efficient” and “scalable” channels, first online and later via mobile applications. As you are aware, the economic model was quite straightforward. In comparison to the digital channel, serving customers at the branch or even the call center was more expensive. This calculation was fairly straightforward, at least for institutions that had achieved a specific number of customers. Furthermore, the traceability and standardization of the service process were taking place digitally, which was the most recent step of industrialization in banking.

Digital banking apps, on the other hand, began with the migration of an ATM version to PCs and eventually to mobile phones. In other terms, it is a machine made up of screens and functionalities. This rather simple machine, with an unappealing user experience in its early versions, seemed to credit card teams, which are the smartest marketing teams in the consumer business, as literally the mobile phone version of the ATM or the equivalent of a branch screen. There were no sales skills in it, the meticulously-created card campaigns could not be presented properly, and the carefully prepared images could not be displayed properly. When compared to a powerful visual medium like television, it was a freak of nature. In any case, the work was primarily left in the hands of “IT experts,” and as a result, it began life in a state that was technically acceptable but fell short of the appeal demanded by the consumer market. At the time, concerns like UX, UI, and design were not fully resolved.

The credit card teams undoubtedly looked at this monstrosity and thought, roughly, “If it’s going to save money, let’s go with it.” They didn’t look at it again for a long time after that until it became evident in the following years that customers no longer choose to go to the branch, they will largely use digital channels when the opportunity arises, and traditional marketing channels have ceded their throne to digital channels.

Although acceptance of this situation occurred at various times in different banks, it happened in a period when most banks had already assigned an owner for the digital banking field. These teams had prioritized digitalizing hundreds of products, processes, and applications in a way similar to trying to transform a tractor into a Ferrari. It was not until then that digital came to the sales and marketing-intense world of credit cards. The main objective here was to cut down service costs and migrate as many customers as possible to the digital channel. Furthermore, as with any new firm, talent in this industry was difficult to come by, and demand was growing by the day. During this time, marketing competencies in this channel were either non-existent or very elementary, and sales were merely hopeful.

I’m not sure who it was, but someone had the brilliant idea of creating a separate application for credit cards. Both the design of the bank’s monotonous application is unsuitable for our fashionable environment that thrives on marketing, and we have a superior understanding of what the customer wants. Also, if we have two different apps, we won’t have to wait for the bank’s app to be developed. This seemingly correct proposal was adopted since it created no organizational friction by allowing everyone to go their separate ways instead of requiring them to work together. What followed was a difficult voyage in which the two universes were run as distinct channels.

So, what factors were overlooked in this decision: 

– “A distinct application that does one thing and just that one thing very well is the best way” which was widely supported for a time, is truly appropriate for the realities of the start-up world, but it is not appropriate for the world of banking start-ups based on microservice innovation. You cannot remain small.

– As consumer traffic is divided in the digital environment, your upsell/cross-sell opportunities diminish. Even channel analytics, CRM connectors, and similar back-end aspects will disintegrate, and the bank will plainly leave money on the table and miss a sales opportunity.

– Two different apps, even if you promise you won’t do it, result in two separate code structures, and you have to code numerous functions twice to run these two separate structures, wasting your already limited technical resources. Alternatively, you can resort to the popular “app-to-app migration” which is akin to touching your right ear with your left hand and undermines heuristic design principles.

– Over time, the separate maintenance of the two applications leads to the separation of design aspects, and your brand language becomes muddled. User journeys become fragmented, making it difficult to respond swiftly to change. Your reaction times to the competition lengthen. You begin to accumulate “Design Debt” in the same way that you accumulate “Technical Debt.

– While it is already hard to convince the customers to use one app, you will try to convince them to use two apps.  You will start to spend more money to convince the customers to download these apps, activate them, encourage the customers to use the apps and retain the customers.

– The consumer is dissatisfied with a feature in one of the applications but not in the other; often, this is the card application because it contains card-specific features but other banking functions are limited. This sparks a lengthy debate regarding whether these functionalities should be included in the card app. Alternatively, vice versa.  The situation will start to look like this: You go to a restaurant and pick a starter from the menu.  The waiter will come and say they only serve the main dishes and you need to go to the other table for starters. If you want to have desserts, you need to go to the other restaurant which is our restaurant as well.  When articulated in this manner, it sounds absurd, but this is exactly what is happening.

As a consequence, the figures show the following: Card applications never achieved the desired penetration. Like the famous Turkish trickster, Nasreddin Hodja says in one of his tales, “I was going to get off the donkey here anyway”, you will be hearing similar arguments. Yet, at the end of the day, the desired result was not achieved. Even when digital penetration rates are normalized, the number of active users hovers around 30%. Based on our calculations and observations, this detour has resulted in at least a 20% inefficiency in card marketing expenditures and at least a 30% loss in resources in terms of design and technical personnel working on digital channels. Not to mention the confusion caused by the issue between different bank divisions and the friction in the eyes of clients. If we annualize these losses, we can see how much money banks lose in this process.

At this time, competencies in the areas of UX/UI have already addressed the problem of being able to provide you with numerous worlds through the same application. You might think that I am recommending a SuperApp. No, I do not suggest creating a “SuperApp.” This “SuperApp” craze is another example of the “getting lost in the woods”: It is highly likely that it will go into the “I don’t know what to do, let me do everything” kind of direction. Here’s the gist of what I am trying to say: Don’t sacrifice client journeys and habits for organizational convenience. Insisting on a separate application to offer and manage credit card campaigns in today’s world is against the digital sales and marketing dynamics.  Advancements in the areas of Analytics and UX now mark the end of this journey.

Here’s my recommendation for transitioning to a single app from two distinct ones: 

  1. Data: Begin by reviewing the data. Who is actually utilizing the card application, and how many consumers use only this application? What functions do these consumers employ that the banking application does not provide? Perform several parser analyses. When you look at the numbers, you will most likely be astonished.
  1. Design: Request that your UX/UI teams improve your “design system” to meet both behavioral requirements. It is possible to do that. Create a direction with more than one “face.”
  1. Analytics: In order to transition to a single channel, ask your channel analytics and customer analytics teams to build an analytics model. With a single channel, you will receive numerous extra benefits, particularly in the analytics area, and some formerly challenging configurations will become much easier.
  1. Content: Request a content management analysis that is fully integrated with campaign management and channel management from your content management teams. In this fragmented channel environment, content management is one of the most vulnerable areas
  1. Marketing: Your digital sales staff will need to adapt and capitalize on this new landscape as well. Card campaign marketing is normally something they are unfamiliar with and will need to learn quickly.
  1. Make it fluent: Finally, request that your technology teams investigate ways to streamline your burgeoning application code base. What appears to be a hassle at first is actually an excellent opportunity to build a strong code base.

There are numerous details to the problem…. However, make certain that it can be solved step by step.

Tolga Ulutaş All Insights