What are co-branded credit cards?!

Co-branded credit cards are special credit cards issued by a bank in collaboration with a company, organization or brand. They bear both the bank’s and the partner company’s logo and offer cardholders exclusive benefits such as discounts, bonus points or special services. These cards are designed to promote customer loyalty and create additional revenue streams for both the bank and the partner company.

Development in the Federal Republic of Germany

In recent decades, the co-branded credit card business in Germany has been a success story, bringing high profits to many banks. But the market has changed drastically

In recent decades, the market for co-branded credit cards in Germany has enjoyed enormous success, representing lucrative sources of income for many banks. But the market has changed, and what was once a reliable source of profit is now facing major challenges. This article describes the development of co-branded cards in Germany from the glorious early days to today’s difficulties.

The beginnings: innovative strength of a Berlin bank

One of the first banks in Germany to recognize the potential of co-branded credit cards was a leading Berlin bank. Back in the early 1990s, it partnered with large organizations to offer their members special credit cards. These early collaborations laid the foundation for the later boom in the co-branding model.

The success model: Big brands as the engine of growth

These partnerships gained momentum particularly in the 2000s, when the bank managed to win renowned trade and automotive associations as cooperation partners. The bank experienced strong growth with the integration of large retail chains and associations into its credit card offering. Revenues came primarily from transaction fees and interest income from installment options. The partner companies also benefited from high income from joint card marketing.

The turning point: new regulations and market conditions

However, the model came under increasing pressure in the 2010s. Regulatory changes led to a drastic reduction in the fees banks could earn from card transactions. These regulatory interventions caused banks’ margins to shrink significantly. At the same time, the requirements of partner companies became ever higher, which further intensified the competition for attractive collaborations.

Fintechs and digital change

While traditional banks struggled with these new challenges, innovative fintech companies emerged. These new providers, often with a focus on digital payment services and alternative financing methods, represented strong competition for the established banks. In particular, the offering of flexible payment options popularized by fintechs permanently changed customer consumption behavior.

The end of an era: banks are withdrawing

The withdrawal of some large banks from the co-branding business made it clear that the classic model had lost its appeal. The collaborations with important partners were handed over to new, specialized payment service providers that could operate with modern technology and lower costs. This realignment highlights the fundamental change in the credit card business.

Conclusion: A market in constant change

What was once considered a sure growth driver has changed significantly in recent years. The withdrawal of banks from the co-branding business and the rise of new digital providers reflect the dynamic development of the credit card sector. Adaptations to new regulatory framework conditions and technological changes determine the future of the business model.

Conclusion

Co-branded credit cards still have their right to exist, especially with shrinking margins it is all the more important to develop customers efficiently and intelligently in order to maximize sales! This works particularly well with the very extensive user data available. Transaction data in particular, when correctly interpreted, offers very deep insights into past and future customer behavior. An ideal basis for increasing sales, strengthening customer loyalty and reducing churn rates with targeted automated cases along the customer life cycle.

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