From 'joining forces' to' breaking up ', are bank co branded credit cards no longer' fragrant '?
2024-07-22
From popular IPs such as Honor of Kings and Hello Kitty to offline scenes such as Sam's Bazaar and Jinjiang WeHotel, everything was once available on the card, and co branded credit cards have become an essential tool for banks to seize the market. Since the beginning of this year, the joint credit card front of many banks has begun to shrink. Recently, the trend of slimming down co branded credit cards has been accelerating. According to incomplete statistics from reporters, in July, credit card centers of several large commercial banks such as CITIC Bank and Agricultural Bank of China announced the suspension of some joint credit card products. Why do bank co branded credit cards disappear in bulk from "joining forces" to "breaking up"? Industry insiders believe that on the one hand, this is due to the low activity of some co branded credit cards in the past. Once the agreement expires and both parties have no intention of renewing it, the issuance will naturally stop. On the other hand, it is also related to regulatory guidance. Under the new regulations on credit cards, credit cards have entered an era of competition for existing stocks. Compared to low-quality "acquisition", banks are beginning to value high-quality "retention". On July 15th, the Credit Card Center of China CITIC Bank announced that the bank will cease issuing the "China CITIC Bank Jinjiang WeHotel Joint Credit Card" starting from September 1st. Previously, China CITIC Bank also announced that it would stop issuing the "China CITIC Bank Xiaomi Co branded Credit Card Black Technology Edition" from August 31st. The original cardholder who reported the loss, replacement, or renewal of the card will be replaced with the China CITIC Bank Xiaomi Co branded Credit Card Exploration Edition. Coincidentally, Bank of Communications has recently suspended the issuance of card faces for multiple co branded cards under its umbrella. According to the official website announcement, the Pacific Credit Card Center of Bank of Communications will cease issuing card faces such as the King of Glory KPL Dream Tears Han Xin Card and King of Glory KPL Clear Li Xin Card, which are part of the King of Glory Professional League themed credit card series, starting from August 31st. It is reported that since July, several large commercial banks such as Agricultural Bank of China, Postal Savings Bank of China, and China CITIC Bank have announced the suspension of issuing their joint credit cards or card faces, involving joint partners such as King of Glory, Swan Home, and Jinjiang WeHotel. These soon to be discontinued co branded credit cards are mostly credit cards with relatively low activity, and some of their rights have been reduced multiple times. For example, the above-mentioned CITIC Bank Jinjiang WeHotel co branded credit card, which has been suspended, underwent a round of adjustment in the points redemption ratio at the end of 2022. The points redemption ratio for gold credit cards has been adjusted from 15:1 to 18:1, and the points redemption ratio for platinum and premium platinum has been adjusted from 15:1 to 10:1. Equivalent to indirectly reducing equity. In the past few years, the issuance of co branded credit cards was large and the homogenization was severe, so survival of the fittest was normal A person from a joint-stock bank card center told reporters that banks are keen on promoting co branded credit cards mainly because they are easier to "gain popularity", especially for platforms with traffic advantages or IPs that have become popular in a short period of time, which are more efficient in promotion. However, in this model, some institutions collaborate with multiple banks simultaneously, resulting in highly similar rights and interests. This "assembly line" style co branded card often has a short lifecycle. On the one hand, after a large number of "new customers" are recruited in the short term, it is difficult for the rights and subsequent supporting services to keep up; On the other hand, after the popularity of some popular IPs cooled down, co branded credit cards also cooled down. In addition to the above reasons, according to a credit card industry researcher, cooperation agreements between banks and joint units generally have a fixed term, and some cooperation agreements expire naturally when both parties have no intention of continuing to cooperate. This is also a common situation in the industry. In the field of co branded credit cards, cards that can last forever are not common. The researcher believes that this does not mean that future co branded cards will completely lose their appeal. Some bank credit card institutions have certain strategies, on the one hand, they stop issuing cards with low activity, and on the other hand, they are constantly trying to launch new co branded cards, by switching hotspots and innovating to attract more customers. Behind the mass suspension of co branded credit cards in the "stock era" competition, credit cards have entered the era of stock competition. The "Notice on Further Promoting the Standardized and Healthy Development of Credit Card Business" (hereinafter referred to as the "New Credit Card Regulations") issued by the former China Banking and Insurance Regulatory Commission and the People's Bank of China in July 2022 has ended its two-year transition period and was fully implemented on July 1 this year. The new credit card regulations emphasize that banks shall not directly or indirectly use the number of cards issued as a single or main assessment indicator, set a limit on the number of cards issued by the institution for a single customer, and the proportion of long-term dormant credit cards with no active transactions from customers for more than 18 consecutive months and zero current overdraft balance or overpayment to the total number of cards issued by the institution shall not exceed 20% at any time. In addition to suspending the issuance of co branded credit cards, banks have also taken the initiative to "limit" the increment. The reporter noticed that after the release of the new credit card regulations, multiple banks have taken the initiative to clearly limit the maximum number of cards issued to a single customer, ranging from 5 to 20 cards. For example, in the case of a certain stock company, the credit card center of the bank stipulates that the total number of valid credit cards held by the same customer in the bank, including the main and supplementary cards, shall not exceed 20 (including 20). Among them, the number of valid main cards held under the customer's name shall not exceed 10 (including 10). In addition, in the past year, "sleeping credit cards" have also become a key focus of various banks' efforts to rectify them. According to incomplete analysis by reporters, in 2023, multiple banks including Bank of China, Ping An Bank, Hengfeng Bank, and Beijing Rural Commercial Bank issued notices to restrict credit cards under customers' names that have not had active transactions for nearly 18 months or more. Under management measures such as limiting incremental credit cards and clearing existing credit cards, the growth rate of the credit card market has gradually slowed down. According to data from the central bank, as of the end of the first quarter of 2024, there were a total of 760 million credit cards and integrated lending cards, a decrease of 0.85% compared to the previous quarter. As of the end of 2023, there were 767 million credit cards and combined debit and credit cards, a year-on-year decrease of 3.89%. In addition, according to the annual reports of multiple banks, the issuance of credit cards has also declined. Taking state-owned enterprises as an example, the annual report of Industrial and Commercial Bank of China disclosed that by the end of 2023, the number of bank cards issued was 1.23 billion, including 153 million credit cards, a decrease from the end of 2022. The number of registered credit cards of domestic banking institutions of Bank of Communications has decreased from 74.5083 million at the end of last year to 71.3242 million at the end of 2023; The balance of Postal Savings Bank cards has decreased from 42.8233 million at the end of 2022 to 42.3994 million at the end of 2023. Behind the slowdown in the growth rate of card issuance and the emergence of signs of the "stock era", some banks have begun to adjust their structure. According to the official website of the State Administration of Financial Supervision and Administration, since the beginning of this year, several branches of Bank of Communications Pacific Credit Card Center Guilin Branch, Huaxia Bank Credit Card Center Tianjin Branch, and Huaxia Bank Credit Card Center Guangzhou Branch have ceased operations. Some banks also adjusted their departmental structure at the end of last year, shifting the first level retail department from the retail finance department and credit card department to the retail finance headquarters, wealth management and private banking department, personal loan business department, and basic customer group operation department. Many banks have also shifted their focus from emphasizing new acquisition indicators to activating existing ones. The above-mentioned personnel from the Credit Card Center told reporters that in the past two years, funds for credit card "acquisition" and the development of new products have begun to shift towards the activation of existing stocks. On the one hand, due to regulatory requirements, it is no longer realistic to expand on a large scale through "horse racing and enclosure"; On the other hand, due to the high proportion of "sleeping" credit cards in the past, it is necessary to activate existing ones. The "Blue Book on the Development of China's Bank Card Industry 2022" shows that the active card rate of credit cards in 2021 was only 55%, a year-on-year decrease of 10.8 percentage points. In 2018, this data was 73.2%. Looking ahead, industry insiders believe that the credit card industry will face more challenges. The above-mentioned credit card industry researchers believe that the "stock era" is approaching, and the slowdown in the growth of the credit card market and the clearance of "sleep cards" are the trend. In the subsequent development process, the credit card market will become more segmented, and simple co branding is far from enough. Creating products with distinctive characteristics and meeting specific customer needs is the key to product success. At the same time, "attracting new customers" is just the beginning. For credit card institutions, what is more important is whether there is a differentiated path to increase user stickiness and create more convenient and user-friendly credit card services for users, in addition to the same preferential incentives. (New Society)
Edit：NingChangRun Responsible editor：LiaoXin
Source：China Business Network
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