Instant issue cards are becoming more common at financial institutions, as they can maximize card usage and even attract customers. But another option, digital issuance, combines that speed with increasingly popular digital services.
By Colleen Morrison
In the world of payments, convenience and speed drive adoption. Look no further than digital card issuance for proof.
Digital issuance allows a community bank to deliver payment card credentials directly to a customer’s account. That means they can push their new card to their mobile wallet immediately via their bank’s mobile app, rather than waiting for the physical card to arrive.
Seventy percent of cards pushed to digital wallets are used within five days, according to Ondot, Fiserv’s digital experience platform. This instant gratification satisfies the expectations of today’s customers.
“Seventy-five percent of our app users are Apple customers, and within 15 minutes [of receiving a digitally issued card], they push their card to Apple Pay and start using it,” says Todd Wood, assistant vice president, digital banking at $2 billion-asset Avidia Bank in Hudson, Mass. “They can open an account, fund an account, order a card, push it to their Apple Pay and go to Dunkin’ Donuts and buy coffee.”
What it takes to get started
In most cases, getting started with digital issuance is a simple process for community banks. Many solutions integrate with existing bank applications, making enrollment and activation straightforward. Implementation complexity, timing and costs vary depending on a bank’s infrastructure, however.
“[Community banks] need a place for that digitally issued card to land. It can be a bank’s mobile banking solution,” says Rebecca Kruse, executive vice president of operations for ICBA Bancard. “They may incur some development costs and, potentially, additional integration costs. It really depends on what they already have set up today.”
For those willing to make the investment, digital issuance can help them achieve top-of-wallet status. In Avidia Bank’s case, its digital card feeds into its mobile app with a “fast path” to Apple Pay, where it immediately becomes the automatic option.
“[Our vendor] wrote the coding so when we push our cards, if you have multiple cards in your Apple Pay, ours becomes the default card at top of wallet,” Wood says. “The only one we can’t jump is Apple Card.”
Instant vs. digital card issuance
Digital issuance is the latest card technology to address immediacy, following on the heels of instant issuance, the real-time fabrication of physical cards at a bank branch.
Instant issuance was gaining traction before the pandemic took hold. Independent Banker’s 2020 Community Bank CEO Outlook survey reported that 17% of community bank CEOs were considering implementing it. In our 2021 survey, 8% said they were planning to implement or upgrade their community bank’s instant issuance capabilities. So, where does digital issuance fit in?
“Instant issuance requires significant investment and ongoing cost,” Kruse says. “For banks that would like that instant experience without all of the physical machine costs, digital issuance is a good option.”
Wood agrees. “That was the big thing in the evaluation between instant issue versus digital,” he says. “That cost of card production was a big barrier and still continues to be.”
What about security and fraud?
Along with cost efficiencies, the speed of digital issuance brings other benefits. For example, if a card is lost or stolen or if a customer is a victim of card fraud, community banks can immediately reissue a digital card with new credentials and put a physical card in the mail. This cuts back on call center questions about when the new card will arrive and also alleviates priority mail pressures, because the customer has an option in lieu of the physical card. Digital cards also offer security with in-app authentication, customer control and alert functionality, and behind-the-scenes fraud monitoring.
That said, says Kruse, “education is the biggest defense against fraud no matter what we’re talking about. When a bank is talking to a customer about how to use [a digital issued card], fraud and security are always a part of the conversation.”
While digital issuance begins to pick up speed and core providers increase their offerings, this technology and its opportunities will grow and evolve. Community banks will need to explore how it aligns with their customers’ needs and their ongoing card strategy. As Wood says, “[Digital issuance] is not going to sit stagnant once you roll it out.”
Colleen Morrison is a writer in Maryland.