In the 1990s, upwards of 500 banks issued their own credit cards and many more acted as agent banks, recalls William Kroll, ABA executive vice-president. Today, he estimates the number of direct-issuer banks to be approximately 200. The decline, Kroll explains, was due, in part, to large issuers offering premiums to acquire community and regional bank credit card portfolios. Banks and issuers were happy-for a time-since the credit card issuers stuck to their own knitting and didn't directly compete with community and regional banks for loans and deposits. That changed when Bank of America purchased card issuer MBNA in 2006. Matthew Wagner, director of consumer finance at First Niagara, a $37 billion-assets bank headquartered in Buffalo, N.Y., calls that acquisition a tipping point and catalyst for banks to rethink their card strategies.
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