The report, "Affinity Relationships in the UK Financial Services," reveals credit cards are by far the most popular product distributed through affinity schemes, with 62.8 per cent of the 94 affinity groups surveyed endorsing the products.

Financial services instititions have found credit cards easy to market to affinity groups as they display a visible link between the consumer and the affinity group in the form of a plastic card. The relationship between the consumer and the credit card provider/distributor is less involved than in other areas of financial services.

Other products in the retail banking market have far lower penetration levels among affinity groups. The report shows 13.8 per cent and 9.6 per cent of affinity groups, respectively, have personal loans and mortgages schemes in place. This is because of the long-tail nature of these products, where personal loan agreements generally last between 6 months and 5 years, and mortgages last up to 25 years, says Datamonitor. Consumers are far more wary of straying from a traditional bank or building society to purchase these products and as such, it is predicted that mortgages, investments and pensions will demonstrate very slow growth.

Datamonitor predicts that affinity credit cards will still demonstrate the greatest growth of financial services products in the short-term, with new players entering the credit card market from abroard, especially the US. However, the market analyst firm warns that the affinity credit card market is nearing saturation as the majority of big partnerships have already been tied up.

Competition will increasingly be at renewal of contract, although with only 9.3 per cent of affinity groups having changed credit card provider in the last five years, this may prove tough for players in the market, says the report. Affinity credit card providers will need to concentrate on increasing usage on existing affinity cards, targeting new customer segments and making existing deals work.