Lateral Thinking: How to become leader in Credit Card issuing

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It is good to drink RED WINE with cheeze. RED WINE taken with bankers are always special as it taste much bitter to tongue but few of the false boasting by bankers. Few of the leading bankers and card issuers are boasting about their achivements and they are right. Data captured for the period 1997 to 2004 quoted by them clearly reflect the boasting that, Credit Card business in India has outperformed most asian countries.

Good effort but, at what cost ???? Few questions and RED WINE started becoming bitter for these bankers.

Does it sound profitable to top management ? Does customer being happy being serviced ?
Is customer happy with product offerings ? What makes this growth sustaniable?

Few more thinking ? ?
Why product mushroom every season and perish like morning dew?

Market Pie for credit card issuance:
The Indian credit card market is still largely untapped, given only 2.4 % of the working population owned a credit card in 2004. Analysts predict that 35 million credit cards will be issued by 2010 with an outstanding balance of over $7 billion.

Two main market segment yet to be tapped
1. Middle portion of Pyramid - Asia's second largest developing country - Middle class :
Reason being high percentage of educated mass and opting for It is driven , where consumer spending is concentrated on lifestyle and luxury goods,

2. Bottom of the Pyramid : Rural Portion of rural areas mainly covers occupational expenditures in agribusiness.

Present Performance Blues:

Present market players are rarely seen working towards sustained grwoth. Mostly there is a sporadic impluse marketing has been observed. They miss the train of basic thumb rule such as increasing low ticket transactions and generating opportunities in increasing such transaction volume. Merchant also plays important role in boosting low ticket transactions.

Customer on the other hand has his own issues and paramount major portion of the customer base seen uneducated about credit card or personal debt/financial management. Either customer falls into trap of high interest rate OR Customer is not able to utilise for small value transactions.

Regulators like RBI - Central Bank need to intervene and propose code of conduct and provide guidelines so that, customer service can be standardise. Customer will be made well worsed with terms and conditions of using credit card products and better understand their liabilities. Bankers and issuers will better understand balancing assets and liabilities to handle credit card more effectively as Loan product.

What is the Penacea for such dilemma?

Credit card issuer need to move up in their Customer service initiative (From mere CRM to CEM).

• Once a critical customer base is reached, existing customers need to be provided personalised products atleast creating sub category. It can be done using proper customer data analysis and profiling based on transaction pattern.
  
• Second, developing a strong value of franchise and branding strategy of differentiation.
• Third most important things to be considered highest standards of customer service and integrity in the face of massive acquisition.

Successful card issuers have focused their resources on retention and usage strategies. Sub-segmentation has to go beyond the standard categories, including behavioral, geographic, transactional, lifestyle and lifecycle monitoring. The best credit card issuers in the region have more than 200 sub-segments in its analytical scorecard tailoring cards to programs specifically to certain customer groups, a factor which contributes to high retention levels.

Since the credit card brand is the single most important factor in owning a card for the Indian middle class, developing a strong value of franchise and a branding strategy of differentiation right from the beginning is of paramount importance.

In fact, this implies that banks should have a separate marketing strategy based on a repeated integrated multimedia campaign to keep the brand on top of the mind of the consumer who is becoming more sophisticated and demanding in their use of financial payment systems.

Ultimately, issuers which are able to maintain high post acquisition service standards by delivering the convenience of payment and services around the card can create a long-term service franchise and a pool of satisfied customers. As card issuers have been experiencing more than 100 percent in growth rates in terms of cards issued in the last years, the ability to manage volume growth qualitatively at its earliest stage becomes of paramount importance in 2005.