Product Differentiation in Asia Pacific Credit Cards

Transcription

1 A Datamonitor Brief timely Product Differentiation in Asia Pacific Credit Cards Publication Date: Sep-04 Product Code: Reacting to the latest news breaking in your industry focused primary research In Asian card markets, issuers are using various strategies to achieve differentiation, including pricebased strategies such as risk-based and delinquency pricing, and non-price-based strategies such as premiumization and altering the appearance of cards. This briefing considers which of these strategies are likely to be the most successful and what else issuers can do to achieve differentiation. Unique survey data and interview results thought-provoking For details of all Datamonitor briefs, go to: services Fresh opinions and out-of-the-box thinking

2 timely timely Reacting to the latest news breaking in your industry Scope and coverage Coverage of major markets in Asia Pacific, including Australia, Hong Kong, New Zealand, Malaysia, India, Singapore, Taiwan and Thailand Focuses on strategies ranging from risk-based and delinquency pricing to premiumization and altering the appearance or shape of a card Benchmarks strategies and illustrates their effectiveness Key findings and highlights Historically, Australian consumers have not been overly rate-sensitive towards credit cards. Instead, they are choosing cards offered by their own bank or, failing that, cards that offer loyalty scheme access. Asian card issuers have been prevented from employing risk-based pricing by the absence of sufficient credit record information. Yet, going forward, as credit reference agencies become more entrenched and the regularity of their use increases, sophisticated risk-based pricing-based should become a reality. Datamonitor believes that platinum cards will lose more of their exclusivity over the next few years as card issuers continue to widen the eligibility criteria. Datamonitor therefore urges issuers seeking differentiation via premiumization to consider cards above platinum. Reasons to purchase Improve customer acquisition and retention levels in your cards business Learn from innovators from across the Asia Pacific region Consider the advantages of price and non-price based differentiation strategies Contact us...

3 focused Table of contents INTRODUCTION PRICE-BASED STRATEGIES Low rate pricing - The advantages of low rate pricing - Low rates aim to encourage cardholders to revolve a balance from month-to-month - Low rate pricing in action - Interchange reforms have contributed to the low rate trend - Virgin has raised awareness of the existence of low rates in the Australian market - Other players at the low rate end of the Australian market include St George, BankWest and HSBC - The Australian credit card has become more segmented in recent years - Competition at the low rate end of the Australian credit card market is about to become increasingly fierce - Zero per cent introductory rates will eventually emerge in the Australian market - Zero per cent offers also have a downside Other price-based strategies - Risk-based pricing strategies - Risk-based pricing explained - A viable strategy to penetrate the nonconforming market - Standard Chartered brings risk-based pricing to the Singaporean credit card market - The Manhattan Card has not sparked the rate war that some predicted - The Manhattan Card is now also available in India - Without Singapore's credit bureau the launch of the Manhattan Card would have been impossible - Differential pricing - Citibank brings differential pricing to India - Differential pricing breeds consumer confusion - Delinquency pricing - Delinquency pricing is common in the US - Maybank utilizes delinquency pricing in Singapore - Card issuers should not consider delinquency pricing as a viable strategy - Pricing on secured credit cards - ICICI Bank launches India's first secured credit card - Secured credit cards are hard to market Conclusion NON-PRICE-BASED STRATEGIES Premiumization - The features of a premium card - Why issue premium cards? - Premium cardholders are loyal and very profitable - A way to reward your most valued existing customers - A way to differentiate and stay away from price-based competition - Premium cards in Asia Pacific - UOB brings the Infinite card to Singapore - DBS Black Card: aimed at Singapore's upwardly mobile - American Express launches the Centurion card in Australia - Premium cards will be a growth area in Asian card markets over the next few years Targeting consumer segments - Cards for females - UOB: an established player in the female credit card market - DBS: challenges UOB for a slice of the Singaporean female credit card market - E. Sun Bank: the first credit card to incorporate a UV sensor - Why target ladies? - Why stop with females? - Cards for Generation X - Why target Generation X? Contact us...

4 thought-provoking Fresh opinions and out-of-the-box thinking - The mc² card: giving credit cards a new edge - The SideCard: facilitating quick payment at the point of sale - Colour changing and glow in the dark cards: a novelty that will appeal to some consumers - The Visa Mini: a smaller payment alternative - Visa Wave: making payment contactless Loyalty schemes - The aims of a loyalty scheme - Increase retention - Increase acquisition - Increase customer data - Loyalty schemes as differentiators in Asia Pacific - HSBC: boosting online spending in Hong Kong via the ican Card - UOB: helping members to have a SWELL time in Singapore - UOB Rewards Plus: rewarding customers for their relationship with the bank - Virgin Mates Rates: standing out in a climate of loyalty scheme uncertainty - Loyalty schemes as differentiators outside of Asia Pacific - Making better use of cash back - Using chip technology to increase the value and lower the cost of a scheme Flexible credit cards - Flexible credit cards explained - Flexible credit cards in Asia Pacific - Intech Direct launches its Titanium Visa - Additional flexibility is on the cards from Intech Direct - Intech only takes the flexible concept so far - More flexible credit cards will be launched in Asia Pacific Conclusion APPENDIX LIST OF TABLES Table 1: Low and high rate offerings in the Australian credit card market Table 2: A selection of balance transfer and introductory rates currently offered in the Australian credit card market Table 3: Pricing strategies examined in this section and issuers that employ them LIST OF FIGURES Figure 1: The characteristics of the Virgin Credit Card Figure 2: The Standard Chartered Manhattan Card Figure 3: Delinquency pricing as employed by Maybank in Singapore Figure 4: Citibank has launched mc² card in India as have other issuers elsewhere in the Asia Pacific region Figure 5: The Union Bank of Taiwan SideCard shaped to replicate the shape of Taiwan's coast Figure 6: UOB now issues the Visa Mini Card in Malaysia and Singapore. Other issuers of the Visa Mini Card include Standard Chartered and Citibank Figure 7: The loyalty scheme attached to the ican Card in Hong Kong offers bigger rewards to cardholders that spend online Figure 8: The conversion rates that apply between partners in the SWELL loyalty scheme Figure 9: Website interactivity allows Intech Titanium Visa applicants to determine the characteristics of their credit card Figure 10: Datamonitor's core consulting capabilities Contact us...

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