CPI Card Group: trump cards – Steve Montross
Over the past few years, there has been a change in the way financial institutions view bank cards. Once seen as purely functional, it has become clear that a card with the right design and functionality can be one of a bank's most powerful marketing tools. It is also an area where an institution can be innovative in a way that tangibly benefits the customer, making it a genuine driver of growth.
At the forefront of developments in card and payment technology is Colorado-based CPI Card Group. It is the largest provider of financial cards in North America and, with the acquisition of a secure card-manufacturing facility in the UK, is ready to take on the European market.
"We are already the market leader of closed-loop, pre-paid cards in the UK," explains Steve Montross, the company's CEO. "Now we have the secure financial card capability to complement that.
"A number of our North American customers with operations in Europe wanted our support, and our existing European customers have welcomed our broader capability to help them service new markets. It is a great opportunity for us and there is going to be a big push on this side of the business."
CPI Card Group enters Europe
CPI Card Group is the global leader in financial and commercial card production. The company's payment card shipments were up 55% between 2010 and 2011, with over 705 million produced across eight manufacturing facilities. The group's total card production, which includes non-payment cards such as loyalty and membership cards, reached over 1.3 billion in 2011. It handles the entire process, from manufacture, through personalisation, to packaging and fulfilment. Still, the company's move into the UK is not going to be easy.
"To be considered credible, you have to prove yourself," Montross explains. "It's the customer's brand and if the card doesn't look or function properly, this reflects poorly on that brand.
"But we have a long track record of serving major institutions in North America, major prepaid programme managers in the UK and select card issuers in Europe. It gives us a strong set of references to go back to when we speak to new customers in Europe. Certification by all the major card associations is also something that is critical in driving credibility within the industry, which we have."
Building these relationships requires a thorough understanding of how a financial institution operates and what part it sees card technology playing in its growth. When that is established, CPI Card Group can master and then recommend new technologies, with an eye to how they fit with a bank's objectives. In Montross's view, many banks are thinking about how they can take the benefits of chip and pin, and apply them more widely.
"In Europe and Canada, where EMV have been rolled out, we've seen fraud levels fall," he says. "But there has been an increase in fraud online and the industry is working hard to remedy this. The US has also seen rising fraud rates. Banks are asking, 'Are our fraud costs so high that we have to convert to EMV?' The expectation is that they will migrate their customers over the next few years."
Mobile is also a major consideration. Big pilot projects are ongoing on both sides of the Atlantic and impressive progress has already been made in emerging markets.
CPI Card Group is heavily involved in the development of mobile banking applications, though Montross believes it will be some time before the technology fully blossoms.
"There are still big questions around security and it's still unclear as to who really owns the customer," Montross says. "Also, there isn't yet the acceptance from a customer standpoint. Until you see that, you won't see the investment. Anything that expands the payments industry and gives more choice to the customer is good."
Building a future
In the next two years, CPI Card Group has the ambitious aim of quadrupling its business in the financial space. Montross will be busy building relationships and developing those already in place.
"We have real expertise and a strong focus on the sectors we are involved in," he says. "We understand the products that are needed by the financial services industry. Customers are looking for quality, security and robust capability: we have demonstrated that in North America and on the non-secure side in the UK, and we will demonstrate the same expertise in the secure card market in Europe."