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Opportunities behind the crisis

Week 45, 2008

The World Card Summit, with the participation of Presidents and General Managers of the leaders in our industry is always a good opportunity to feel how our industry is doing. Of course, the ongoing financial and economic crisis is a major subject of concern for everyone in any economic activity. The smart card, semi conductor and payment terminal manufacturers told us our industry is almost immune to the crisis:

The presidents and GMs of leaders in our industry know they must be even more cautious than usual when making speeches: they  want to make sure they are not feeding the crisis by raising more alarms. Cartes speeches were definitely not raising alarms, maybe they were a bit too optimistic. All presenters did their best to demonstrate this crisis was actually triggering more opportunities for our industry.

Smart card vendors do not anticipate slowdown in demand for their products. Of course, end users will not stop to make phone calls nor to use payment cards, because of the crisis. Difficulties may even trigger more churn both for telecom operators and for banks. For our industry, more churn means more cards to manufacture and sell. Banks are facing difficulties in their investment activities, and are turning to retail activities where our industry is present: smart cards are more used in day to day transactions by households than in investment plans by a few financial managers. Banks are also facing mergers and restructuring, that triggers rebranding of their products, or, for us, more cards to reissue to cardholders. Even if in crisis times, end users spend less on each transaction, it does not affect the number of transactions, and definitely not the number of cards they need. Being is a difficult economic situation may also generate more fraud attempts, thus a demand for additional security from card issuers, another opportunity for our industry.

Not everything is so rosy: our banking customers are facing difficult times, and our telecom operators customers see their growth reduced. The result is undoubtedly that investment in new technologies is bound to be postponed, and maybe some innovative technologies may fail altogether. Banks which are not yet using smart cards may decide to delay their technology switch, mobile network operators may decide not to push 3G applications, as they believe their customers may be reluctant to adopt new costly value added services. All NFC stakeholders may become slower to develop and implement the technology as they'd fear a poor level of customer adoption.

Most analysts in the industry anticipate most of the 2009 growth will come from emerging economies rather than from mature markets, as first equipment with mobile phones and payment cards will mainly come from emerging economies.

Let's hope the presidents and general managers of our industry are right. We will, of course, pay even more attention than usual to their results.

Thierry Spanjaard
Chief Editor
Smart Insights