Trends in Affinity Partnerships and Co branding in the Datamonitor

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					A Datamonitor Brief




                                                                 timely



Trends in Affinity
Partnerships and
Co-branding in the UK                                            Reacting to the latest news
                                                                 breaking in your industry


Personal Lending                                                 focused


Market

Publication Date: Apr-07
Product Code: BFFS0447
                                                                 Hundreds of hours of analyst
                                                                 time distilled into a few pages

                                                                 primary research
    Affinity partnerships and co-branded credit cards are
    currently experiencing diverging trends. Affinity
    lending is stagnating at best, while co-branded credit
    cards seem to be a market on the rise. Indeed, what
    will their futures look like?
    Affinity and co-branding are two well-known types of
    partnership in the personal loan and credit card
                                                                 Unique survey data and
    markets. Both carry a range of advantages and                interview results
    disadvantages, for lenders as well as for partner
                                                                 thought-provoking
    groups. Yet, affinity partnerships and co-branded
    credit cards are currently experiencing divergent
    trends, with affinity lending in stagnation at best, while
    co-branded credit cards seem to be a market on the
    rise. What can lenders do and what does the future
    hold?

For details of all Datamonitor briefs, go to:                    Fresh opinions and
                                                                 out-of-the-box thinking
www.datamonitor.com/financial
                                                                                                                       timely
                                   Trends in Affinity Partnerships and Co-branding in the UK Personal Lending Market
                                                                                                         BFFS0447




                                                                                                                       Reacting to the latest news
                                                                                                                       breaking in your industry




Scope and coverage
                                       • Gain an understanding of how these markets are changing and what this means
                                           for lenders
                                       • Provides insight into how lenders can address the challenges they are facing
                                       • Incorporates primary interviews from industry experts




Key findings and highlights

                                       • Following in the footsteps of the US, co-branding in the UK developed rapidly
                                           during the 1990s as the credit card market became increasingly competitive. The
                                           market saw a surge in the number of co-branded cards during the decade as
                                           well as after.
                                       • Both affinity credit cards and personal loans are losing ground. Indeed, affinity
                                           partnerships in general are losing out because of their innate disadvantages,
                                           among which include threats of cannibalization, pressure on margins and higher
                                           costs.
                                        • As affinity personal loans continue to decline further, many wonder if there is a
                                           way to change the model. Going forward, lenders must make sure that every
                                           partnership they make has a particular selling point, and one that will result in an
                                           eventual profit, whether through lower acquisition costs or a greater number of
                                           customers.




Reasons to purchase
                                       • Assess the opportunities of affinity partnerships and co-branded credit cards
                                           and learn how these markets are changing
                                       • Understand the reasons that draw both lenders and non-financial organizations
                                           to affinity partnerships and co-branded credit cards
                                       • Evaluate any opportunities or weaknesses in your business plan




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From Asia Pacific: tel:    +61 2 8705 6900          fax:   +61 2 8705 6901        email:   apinfo@datamonitor.com
                                                                                                                        focused
                                   Trends in Affinity Partnerships and Co-branding in the UK Personal Lending Market
                                                                                                         BFFS0447




                                                                                                                       Hundreds of hours of analyst
                                                                                                                       time distilled into a few pages


Table of contents
  DATAMONITOR VIEW                                                    Table 2:    Number of cards and value of transactions for
   • CATALYST                                                                     affinity and co-branded credit cards, 2001-2005
   • SUMMARY

                                                                      LIST OF FIGURES
  ANALYSIS                                                            Figure 1: General characteristics of affinity partnerships
   • Affinity and co-branding are two types of                                  and co-branding, 2007
     partnership in the personal lending market                       Figure 2: Co-branded credit cards continue to expand
      - While sharing similarities, affinity marketing and                      while affinity credit cards have stagnated
         co-branding are separate business models                               recently, 2001-2005
      - Affinity partnerships took off during the 1990s
      - Co-branding also developed rapidly during the
         1990s
   • Yet each is experiencing diverging trends
      - Affinity partnerships are stagnating at best
      - While co-branded cards continue to expand
   • Such trends are likely to continue in the short to
     medium term
      - Affinity credit cards are likely to continue to
         stagnate
      - Moreover, the affinity personal loan model is in
         danger
      - Meanwhile, co-branded credit cards are likely to
         increase in popularity


  APPENDIX
   • Supplementary Data
   • Methodology
   • Definitions
      - Affinity partnership
      - CAGR
      - Co-branded card
      - Consumer credit
      - Gross advances
   • Further reading
      - European consumer credit reports
      - UK consumer credit reports
      - UK consumer credit briefings
      - Forthcoming UK consumer credit briefings
   • Relevant links
   • Ask the analyst
   • Datamonitor consulting
   • Disclaimer


  LIST OF TABLES
  Table 1: Credit cards in issue in the UK by type, 2001-
           2005



Contact us...
From Europe:        tel:   +44 20 7675 7000       fax:   +44 20 7675 7016         email:   ukinfo@datamonitor.com
From the US:        tel:   +1 212 686 7400        fax:   +1 646 365 3362          email:   usinfo@datamonitor.com
From Asia Pacific: tel:    +61 2 8705 6900        fax:   +61 2 8705 6901          email:   apinfo@datamonitor.com
primary research
                                                                                                                     thought-provoking
                       Trends in Affinity Partnerships and Co-branding in the UK Personal Lending Market
                                                                                                         BFFS0447




                                                                                                                     Fresh opinions and
                                                                                                                     out-of-the-box thinking


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                                             Trends in Affinity Partnerships and Co-branding in the UK Personal Lending Market
                                                                                                                                    BFFS0447




                                                                                                                                                           Hundreds of hours of analyst
                                                                                                                                                           time distilled into a few pages




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