Smaller Card Issuers Can Out-Compete the Giants, New Study Finds

§ 01 Executive Snapshot

• What: A study reveals that smaller card issuers are increasingly outperforming larger banks in customer lifetime value metrics.
• Who: The study was conducted by PYMNTS Intelligence in collaboration with Visa Issuing Solutions, surveying 500 U.S. executives in payments roles.
• Why it matters: The findings highlight a shift in competitive dynamics within the card issuing industry, suggesting that smaller institutions can leverage customer relationships to gain market share despite having fewer resources.

§ 02 Key Developments

• The share of issuers generating high customer lifetime value dropped to 17% in 2025 from 21% the previous year.
• Large national banks' share of high customer lifetime value performance decreased from 57% to 42%.
• Smaller banks with less than $1 billion in assets increased their high-value share from 5% to 17%.
• Instant issuance to digital wallets grew 85% year over year and is now offered by approximately two-thirds of high-value issuers.
• High-value issuers generated more than $2,000 in customer lifetime value across card types, exceeding $3,000 in direct and embedded card issuance models.

§ 03 Strategic Context

• The study reflects a changing landscape in the card issuing market, where smaller institutions are leveraging deep customer relationships and community trust against larger competitors with significant structural advantages.
• The emphasis on customer lifetime value as an operating discipline indicates a broader trend towards relationship-focused strategies in financial services, contrasting with traditional product-centric approaches.

§ 04 Strategic Implications

• The shift towards smaller issuers gaining market share may lead larger banks to rethink their customer engagement and retention strategies, prioritizing relationship-building over sheer scale.
• Institutions focusing on trust and operational efficiency are likely to succeed in retaining customers, impacting the competitive landscape in the card issuing industry.

§ 05 Risks & Constraints

• Larger issuers may respond with aggressive marketing and promotional strategies that could temporarily disrupt smaller issuers' gains.
• Regulatory challenges and technological barriers could hinder smaller institutions' ability to scale their successful practices effectively.

§ 06 Watchlist / Forward Signals

• Monitor the performance metrics of smaller banks and their customer lifetime value growth in the coming years to assess the sustainability of this trend.
• Watch for potential regulatory changes affecting digital wallet capabilities and card issuance practices that could impact competitive dynamics in the industry.