Consolidation in the UK credit card industry appears inevitable, with fewer than six issuers forecast to survive in the medium-to-long term, according to this research note by PricewaterhouseCoopers (PwC).
Despite fierce competition and reductions in APRs, relatively few consumers are switching to better deals, notes the professional services firm in the report.
PwC says the resistance towards changing credit cards will result in smaller issuers selling out to the major banks and monoline card specialists. The focus of the dominant issuers will be to retain customers through loyalty programmes and convenience rather than to acquire new customers based on pricing.
Over the next 5 to 10 years - due to the microeconomics of the credit card product, the structure of the market and regulatory, competitive and technological pressure – size will matter, asserts PwC. Larger credit card issuers are likely to not merely survive but to outperform.
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