Will Mergers Slow Credit-Card Solicitations?

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Industry watchers are divided over the effects that two proposed bank mergers will have on the volume of credit-card solicitations appearing in the mail.


The same the day the mergers of Banc One Corp. with First Chicago NBD Corp. and of BankAmerica with NationsBank were announced, a report cited consumer advocates' predictions that mail volumes would decrease. But, said Christopher Staab, an associate with the Auriemma Consulting Group, Westbury, NY, solicitations will grow in at least one case.


"First USA, they are the largest direct mail credit-card issuer, and it will only increase the amount of direct mail they send,'' Staab said. "They will further solicit programs First Chicago has -- like the United Airlines card and gold cards. The combined entity gives them more clout, and they will be more aggressive than they would be alone.''


Company spokesman Dave Webster confirmed that First USA, the credit-card division of Banc One, Columbus, OH, has been invited to lead the credit-card marketing operations of the merged banks. Upon completion of the merger, Banc One-First Chicago will rank as the second-largest Visa and MasterCard issuer in the world, behind Citigroup.


"We don't see competition being reduced through this consolidation,'' Webster said.


Mike Geppert, with First Data Solutions, Naperville, IL, said he prefers to take a wait-and-see approach on the question of mail volumes. But the mergers will fundamentally alter the way credit cards are marketed, he said.


"There are fewer companies with larger portfolios that still need to grow and offer benefits and value to cardholders,'' Geppert said. "These guys are smart marketers. They need to find new value propositions to increase response rates without mailing so much.''


Lisa Itzkowitz, director of marketing at BAIGlobal, Tarrytown, NY, said mail volumes will be affected by the way the merged banks decide to treat their credit-card operations. Nationsbank, Charlotte, NC, and BankAmerica, San Francisco, are not big mailers and should operations be folded into one, Itzkowitz said she expects some mail reduction. But First USA's strategy of going after new and different markets should increase volumes.


"When Banc One acquired First USA [in 1997], their mail volume soared,'' Itzkowitz said.
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