High-frequency scene payment discounts are increased, and credit cards are changed to "fine battles"

Our reporter Qin Yufang reports from Guangzhou

With the approach of the "May Day" holiday, various credit card consumption promotion measures such as card binding discounts, repayment cashbacks, and consumption discounts have been launched across the board. Banks have focused on tourism, travel, catering and other consumption scenarios to increase payment discounts to stimulate cardholders' enthusiasm for card transactions.

In this regard, consumer responses have been significantly different. Many consumers believe that most of the dazzling discounts recently are aimed at the consumption content of holiday travel, and the preferential promotions have stimulated the increase in the willingness to use cards. There are also consumers who believe that the actual discount is getting smaller and smaller, and the attraction is weakening.

Industry insiders believe that this year, the pressure on bank interest margins has increased, the requirements for cost reduction and efficiency control are getting higher and higher, and reducing equity investment and optimizing the customer group structure are becoming the inevitable choice for the credit card industry to shift from an incremental business model to a stock business model. At present, commercial banks are increasingly emphasizing the refined operation of existing customer groups, and accurately identifying and responding to the needs of existing customers through the improvement of digital capabilities, so as to reduce the cost of active customers and improve operational efficiency.

Holiday promotions come in a variety of ways

During the "May Day" holiday, the popularity of domestic tourism is expected to reach a new high. Banks have launched holiday promotions and actively deployed holiday consumption. According to the preferential information officially released by various banks, the rigid consumption areas of clothing, food, housing and transportation, such as refueling, air tickets, scenic spot tickets, catering, and shopping, have become the focus of the bank's credit card consumption payment preferential promotion.

Mr. Chen, from Guangzhou, said that he has credit cards from three banks, and the content of the preferential activities of each one is different, but they are all discounts or cashbacks for daily consumption, but the scene of the activity is different from that of the cooperative merchants. "I've now gotten into the habit of paying by credit card, and I have to look at which credit card has the latest offer before I pay. ”

"However, compared with the past, generally speaking, the preferential activities of credit cards of various banks have weakened this year. Not only have cashbacks and discounts been reduced, but even the ability of some credit cards to redeem points for the same amount of spending has also decreased. In the past, many credit cards had several times the number of points at every turn, but now it is rare. Mr. Chan said.

A person from the credit card center business of a joint-stock bank told the "China Business Daily" reporter that on the whole, this year's credit card marketing efforts and equity investment are not as good as in previous years, mainly because the retail business revenue has weakened, coupled with the pressure on interest margins, the bank has to reduce costs and increase efficiency, and reduce costs.

Dong Ximiao, chief researcher of Zhaolian and part-time researcher of the Institute of Financial Research of Fudan University, said that in recent years, bank interest rate spreads have narrowed significantly, and there is an urgent need to reduce costs. The recent reduction of deposit interest rates and credit card entitlements are also ways for banks to "control" costs, which is conducive to easing the pressure on interest margins.

Dong Zheng, a senior credit card research expert, believes that in the past, under the business model of incremental development of credit cards, product competitiveness was lacking, and the stimulation of rights and interests such as points and activity discounts was the main means of credit card customer acquisition. However, with the limited space for incremental development and the decline in consumers' willingness to consume under the current environmental impact, the cost burden of banks is high but the efficiency is low, which forces banks to take the initiative to adjust.

In the view of Huang Dazhi, a researcher at the Xingtu Financial Research Institute, when credit cards were developing rapidly in the past, banks were able to better increase customer acquisition by expanding the rights and interests of credit card points. "With the reduction or even shrinkage of incremental space, bank credit cards have entered the stage of existing customer operation, and high-value customers will become the main customer group for credit card business development. For these key customer groups, the value of the equity system is waning. Huang Dazhi said.

"In fact, in the past two years, more and more banks have been actively adjusting, gradually shrinking equity investment, and the stimulus of consumer payment is also more inclined to the consumption areas of 'clothing, food, housing and transportation', which are the rigid needs of consumers. This year, the situation is even more severe, judging from the recently released annual report data, credit card growth, transaction volume and other indicators are declining, coupled with the expectation of interest rate cuts, so banks are tightening their belts and preparing for a hard life. In this context, many banks have taken the opportunity to adjust their equity systems and customer structure, which is also the trend of the times. Dong Zheng said.

He further emphasized that at present, banks are paying more and more attention to the operation of existing customer groups, and the investment in equity construction is also tilting towards high-quality customers.

Dong Ximiao also believes that since the announcement of the new credit card regulations in July 2023, the rapid development stage of credit cards has come to an end, which also forces institutions to adjust their equity allocation and marketing models and enter the stage of refined management.

Dong Ximiao emphasized that when banks adjust credit card rights, they also need to actively optimize services, inform customers of adjustment trends in a timely manner and strive for customer understanding, so as to gain the initiative to transform in the current fierce market competition.

Accurately tap the needs of existing customer groups

While reducing costs and increasing efficiency, we cannot ignore business development. With the transformation of credit card business from incremental model to stock model, bank credit cards are paying more and more attention to refined operations.

Dong Zheng pointed out that the reduction of equity is an inevitable painful stage for credit cards after more than 20 years of rapid development, and the industry is facing the problem of optimizing the customer group structure, and it is also accompanied by the structural adjustment of the equity system. In Dong Zheng's view, during this period, bank credit card products need to be more refined, and more in-depth and accurate research should be done on product and consumer research, and product adjustments should be made around the rigid needs of consumers to achieve sustainable business development.

Analysys also pointed out in the previously released Research Report on the Digital Development of Credit Cards of Commercial Banks in China (2023) that under the pull of expanding domestic demand and promoting consumption, banking institutions have actively deployed consumption scenarios that have taken the lead in recovery, accelerated the integration of scenarios to explore operations, and used consumption momentum to boost users' consumption activity.

The industry generally believes that the big data model is the key to the refined operation of bank credit cards to achieve customer base. Bank of China (601988. Li Yifan, a postdoctoral fellow at SH) Research Institute, said that recently, banks have been increasing their digitalization and accelerating the digital transformation of consumer finance business with the help of digital development trends. For example, with the help of big data technology, we can accurately portray the differentiated financial needs of customers in order to carry out targeted marketing.

According to Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, through the use of data and technology, banks can carry out more accurate portraits of customers, strengthen the hierarchical management of customers, and provide more accurate and personalized consumer financial products and services for customers at different levels.

Huang Dazhi emphasized that in particular, the integration and application of artificial intelligence and big data models has opened up a new direction for the refined operation of customer groups in the field of consumer finance of banks, and many banks have begun to apply AI large model technology to explore new business opportunities.

Analysys also pointed out that the future credit card market has broad prospects, and with the in-depth development of the digital economy, more financial institutions will enter the credit card market, and the market competition will become more intense. Therefore, commercial banks should seize the opportunity of digital transformation, accelerate the pace of innovation, and improve service quality to meet the challenges of the future.

At present, with the deepening of the transformation of the existing business model, the refined operation of the bank's credit card business to the existing customer group is also showing new characteristics and trends. In Li Yifan's view, banks are becoming more and more refined in their business around customer groups, and more and more banks are closely combining the actual situation of different groups such as new citizens and young people to find the entry point of consumer financial products and services to support the consumption needs of relevant groups.

Li Yifan also pointed out that the bank's consumer finance business is also increasingly strengthening the construction of scenarios. "At present, financial institutions are focusing more on the financial needs of key livelihood areas and high-frequency life scenarios such as catering and shopping, home decoration, cultural tourism and entertainment, and integrating consumer financial services into daily life. ”

Li Yifan believes that in the future, in terms of deepening and expanding customers, banks can rely on technology empowerment to continue to cover customer blind spots that may exist in the past and continue to tap potential customers. We will continue to explore the construction of credit reporting mechanisms, promote the construction of credit whitelists for long-tail customer groups, increase the availability and convenience of financial services for such customers, and give consumer finance greater inclusiveness.

On the basis of exploring the growth points of traditional consumer business, Li Yifan also emphasized that financial institutions need to steadily develop new consumption such as digital consumption, green consumption, and healthy consumption, especially for new consumption growth points such as smart home, entertainment and tourism, sports events, and domestic "trendy products", so as to provide customers with higher quality consumer financial products and services, continuously meet the diversified consumption needs of customers, and achieve the goal of focusing on supporting the expansion of consumption.

However, compared with the leading banks in the credit card industry, the credit card business of small and medium-sized regional banks still faces new challenges in the operation of existing customer groups. According to the analysis of PwC in the report released a few days ago, the credit card business of regional banks faces four major challenges: unclear business strategic positioning and planning, increasing operating pressure, urgent transformation and upgrading of financial services, lack of specialized products, and relatively weak technology foundation.

In this regard, PwC's analysis pointed out that domestic regional banks can seize the opportunity to take advantage of the opportunity of digital transformation to better promote credit card business to regional and even sinking markets, make up for the gap in financial products and services, and help improve the balance, coordination and inclusiveness of regional development. Through the layout of key business ecological scenarios and the layout of private and public domain operation systems, regional banks can innovatively and comprehensively build credit card customer management systems, strengthen marketing and customer service capabilities, and improve asset quality assurance capabilities.