Cashless Europe? A New Report by Arthur D. Little Identifies Card Payments as a Huge Growth Opportunity for Europe's Financial Services Industry.LONDON -- A new report released today by management consultancy Arthur D. Little Arthur D. Little, Inc. is the world's first management consulting firm. Founded in 1886 by Arthur Dehon Little, an MIT chemist who discovered acetate, and co-worker Roger Griffin, in Cambridge, Massachusetts, Arthur D. Little pioneered the concept of contracted technology research. entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: "Tapping potential in Europe's card market" has identified a huge opportunity for the European financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industry. While the number and volume of card transactions have increased globally at an annual rate of over 13%, cash payments still constitute 80% of total payments made in Europe. As such, there is clearly great potential for the continued expansion of the European card market - however, the report also emphasizes that the card business has to address challenges arising from changing customer needs. In its new report Arthur D. Little advises that for European card providers seeking further growth, maximizing the value they derive from customers and expanding the customer base will be key issues. Card providers can pursue increased customer value in three ways: 1. By retaining existing customers 2. By acquiring new customers 3. By targeting high-value customers Retention top priority Given the current economic situation and European consumers' current strong preference for cash, Arthur D. Little recommends that card providers should make customer retention their prime focus. "Cards are set to become the most important type of non-cash payment - in fact, card could soon overtake o·ver·take tr.v. o·ver·took , o·ver·tak·en , o·ver·tak·ing, o·ver·takes 1. a. To catch up with; draw even or level with. b. To pass after catching up with. 2. cash as the most widely used form of payment globally," said Dr. Gerrit Seidel sei·del n. A beer mug. [German, from Middle High German s  del, from Latin situla, bucket.]Noun 1. , Managing Director and Global Head of Arthur D. Little's Financial Services Practice. "However, while there is clearly a vast untapped card market out there, the industry in Europe must continue to innovate in order to also retain existing customers. That means expanding popular reward programs, developing stronger links to banking services, and learning best practice from markets around the world." The reward route The report cites a number of examples of reward programs that have combined with banking services to provide benefits to customers beyond traditional points schemes. The Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. , for instance, has recruited over 5 million customers since the launch of its 'Keep the Change' card in October 2005, which enables cardholders to automatically transfer to a savings account Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: the difference between the price of a purchase and the price rounded up to the nearest dollar. Innovate to grow The report also looks at ways in which card usage can be increased, and examines the growing convergence of credit and debit cards debit card, card that allows the cost of goods or services that are purchased to be deducted directly from the purchaser's checking account. They can also be used at automated teller machines for withdrawing cash from the user's checking account. . It cites the emergence of 'check cards' in South Korea, one of the most advanced credit card markets in the world. Check cards differ from credit cards in that payment is drawn directly from the cardholder's checking account (like a debit card), but are similar in that they offer benefits such as discounts, air miles Air Miles Noun, pl Brit points awarded on buying flight tickets and certain other products which can be used to pay for other flights , cash back and monthly bill payment. As a result, South Korea has seen a rapid growth in the adoption of this type of card. Finally, the report identifies some of the challenges that the European card industry faces. For example, card issuers need to manage profitability effectively and build strong, professional relationships with merchants, requiring effective cooperation with operating companies operating company A business that engages in transactions with outsiders. such as VISA and MasterCard. In order to convert more cash payments into card payments, issuers must also continue to persuade consumers that cards are secure and convenient. Tapping potential in Europe's card market is now available for download at www.adlittle.com/Card_Market - Ends - About Arthur D. Little Arthur D. Little (ADL), founded in 1886, is a leading global management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business service industry - an industry that provides services rather than tangible objects firm that links strategy, innovation and technology to master complex business challenges while delivering sustainable results to our clients. Arthur D. Little has a collaborative client engagement style, exceptional people and a firm-wide commitment to quality and integrity. ADL is proud to serve many of the Fortune 100 companies globally in addition to many other leading firms and public sector organizations. If you would like additional information on the firm, please visit www.adl.com. |
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