Study: Issuers Improve Returns by Solving the Next Customer Friction

The operating assumption in card issuing is that better technology should produce better economics. Card issuers have largely won the technology-access battle. Instant issuance, mobile wallet provisioning, real-time fraud controls and personalized offers are no longer reserved for the largest banks. However, broader access has not produced better economics.

“A Practical Guide to Growing Customer Lifetime Value: The High CLTV Issuer Framework,” a two-year PYMNTS Intelligence study covering nearly 1,000 issuers in the United States, found that only 17% now generate high customer lifetime value, defined in the research as self-reported CLTV of at least $2,500. The report, produced in collaboration with Visa DPS, revealed that the share was 21% a year earlier.

The decline came despite widespread investment in digital capabilities, mobile wallets and artificial intelligence tools. More technology entered the market. Fewer issuers emerged as high performers.

Features Do Not Compound Automatically

Most modernization programs are organized around individual projects. Digital teams improve onboarding. Fraud teams strengthen controls. Marketing teams add rewards. Product teams launch installments or premium cards. Each investment may work on its own terms. Yet CLTV depends on those capabilities working in a particular order.

First, issuers must remove friction by getting a usable card into the customer’s wallet immediately. Next, they must build trust through reliable processing, transparent pricing and fast dispute resolution. They must then create habit by embedding the card into recurring financial behavior, from groceries and transit to payroll and subscriptions. Only after those foundations are in place can cross-selling, subscriptions and AI-driven offers reliably deepen the relationship.

Many issuers reverse the sequence. They deploy sophisticated personalization against thin transaction histories. They offer rich acquisition incentives before establishing everyday utility. They introduce monetization products before the card has become the customer’s primary payment method.

The result is a modern stack attached to a shallow relationship.

Read the report: A Practical Guide to Growing Customer Lifetime Value: The High CLTV Issuer Framework

AI Cannot Personalize a Relationship That Does Not Exist

The sequencing problem is especially relevant to AI. Issuers often view AI as the tool that will unlock better segmentation, more relevant offers and stronger retention. But personalization requires customer behavior to analyze. An issuer cannot identify the right cross-sell moment when the card is rarely used.

The more immediate payoff may come from applying AI to operational bottlenecks such as identity verification, compliance reviews and quality assurance. Automating those processes frees employees and capital for the engagement work that more directly influences spending and retention.

That makes AI less of a standalone product feature and more of an operating layer. Its value depends on whether it removes the constraint preventing the customer relationship from advancing.

Modernization Needs a Customer Sequence

The implication for issuers is not that they should spend less on technology. It is that they need a different investment logic. Instead of asking which capability competitors have launched, executives should identify the next customer behavior they need to change. Is the problem activation, trust, habitual use or relationship depth?

That framing also makes restraint a competitive advantage. The newest feature may not address the portfolio’s most important constraint. A rewards platform cannot compensate for poor dispute handling. An AI engine cannot overcome low transaction frequency. A premium card cannot create loyalty when the institution has not earned primary card status.

Technology has become increasingly accessible. The harder advantage is orchestration, or knowing what to deploy, when to deploy it and which customer behavior should change as a result.

Issuers do not lack tools. Many lack the sequence that allows tools to compound.

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