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Maximizing Value from U.S. Affluent Consumers

By Kim Purcell

Affluent consumers appeal to financial institutions because they have higher credit and debit card spend than their non-affluent counterparts, and those who revolve do so with higher balances.

But this is only part of the picture: Interest earned on transaction account balances is the largest source of revenue in the payments business. Because affluent consumers account for the majority of funds in transaction accounts, attracting their deposits can significantly increase financial institution profitability.

Affluent consumers’ spend, deposit levels, and risk profiles make competition for this segment particularly fierce. Focusing on the total customer relationship—and winning deposits by offering credit cards that provide generous benefits—can enable financial institutions to increase deposits and drive credit cards to top of wallet at the same time. The first step is for financial institutions to understand and maximize the drivers of their own profitability. The second is to use personalized rewards and superior customer service to attract and retain affluent relationships that optimize profitability. The third is to design product bundles that maximize profitable relationships across the deposit and credit sides of the business.

1. The Federal Reserve Board, Changes in U.S. Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances, 2007, and Lightspeed Research, 4Q 2009; MasterCard analysis.

Affluent Consumers provide 47 percent of all payments revenue
Payments Revenue (Billions)

Sources: Federal Reserve Board, Survey of Consumer Finances, 2007, and Lightspeed Research, 4Q 2009.
Analysis: MasterCard.