Host: Zhao Meng, reporter of the Financial Times
Special guest: Li Peijia, senior researcher at the head level of the Bank of China Research Institute
Xue Hongyan, vice president of Suning Institute of Finance
In September this year, when the central bank released the overall operation of the payment system in the second quarter of 2021, it disclosed that as of the end of the second quarter of this year, there were 790 million credit cards and loan cards nationwide, an increase of 0.73% from the previous quarter. Although this figure is 0.26 percentage points lower than the same period last year, it has more than doubled from 2012 10 years ago (331 million cards issued in 2012), with an average annual growth rate of about 14%.
As a connection point between capital payment and consumer credit, credit cards are a natural platform for commercial banks to develop consumer credit and intermediate business, and at the same time, because bank cards connect thousands of households, they naturally become the "main battlefield" for banks to build a scientific and technological financial ecology and compete for retail business. This is also the reason why the credit card business has expanded rapidly in recent years.
However, along with the expansion of scale, the issue of consumer protection has become increasingly prominent. In September this year, the Consumer Rights and Interests Protection Bureau of the China Banking and Insurance Regulatory Commission issued the "Circular on Consumer Complaints in the Banking Industry in the Second Quarter of 2021", showing that in the second quarter of this year, there were 46,273 complaints involving credit card business, an increase of 37.2% year-on-year, accounting for 54.8% of the total number of complaints.
So, what are the main reasons for the high complaint rate in the credit card sector? At a time when fraud, theft and other phenomena are not uncommon, how should banking institutions enhance the sense of security of users? Where should the focus be placed on improving the quality and efficiency of consumer protection work? In response to these hot issues, a reporter from the Financial Times recently conducted an exclusive interview with Li Peijia, a senior researcher at the head level of the Bank of China Research Institute, and Xue Hongyan, vice president of suning Financial Research Institute.
Financial Times: What role do you think credit card business plays in the retail business of banks? How do you assess the developments in recent years?
Xue Hongyan: Credit cards have both credit attributes and payment attributes, respectively, credit attributes are reflected in the fact that consumers can enjoy interest-free periods when using credit cards, and payment attributes are reflected in credit cards that can widely connect various online and offline scenarios. It is precisely because of this compound attribute that credit cards have become the most competitive credit payment tools in the retail business of banks, and they are also one of the most powerful "weapons" for banks to obtain high-quality customers. At the same time, due to the cross-regional payment attributes of credit cards, national banks have a more dominant position in the market competition and have always been major players in the credit card market. It is worth mentioning that in recent years, with the help of cooperation with third-party platform enterprises, the credit card business of some local corporate banks has sprung up, and the number of cards issued has increased rapidly, and it is gradually becoming a new competitive force in the credit card market.
Li Peijia: At present, the credit card business accounts for about 10% to 40% of the bank's retail business. From the perspective of the proportion of banking business, the proportion of large banks is high, and the proportion of small and medium-sized banks is low. From the perspective of future trends, under the background of China's accelerated construction of a new development pattern of double circulation, the credit card business will usher in development opportunities such as resident income growth, consumption transformation and upgrading, and changes in residents' lending concepts, and at the same time, it is also facing challenges brought about by increasingly fierce cross-border competition, the decline in the number of working-age population, and the rise in industry risks. It is foreseeable that in the future, the credit card business of banks will enter the stage of "steady growth" from the past "staking ground".
Financial Times: Relevant data show that in the second quarter of this year, the number of complaints involving credit card business increased by 37.2% year-on-year, accounting for 54.8% of the total number of complaints, which can be said to be the "hardest hit area" of financial complaints. In your opinion, what are the main reasons for the high complaint rate in the credit card sector?
Li Peijia: The high number of credit card complaints is related to a variety of factors. Specifically, this is related to the downward pressure on the economy and the rise in the non-performing rate of credit cards, and also related to the illegal agent credit card complaints of black and gray industry intermediaries such as the "Anti-Collection Alliance". Of course, it is not excluded that the bank credit card business is improperly managed and operated in violation of regulations.
Relevant disclosure information shows that at present, cardholders' complaints about bank credit cards are mainly concentrated in the fields of "abuse of contact information for telemarketing", "improper collection", "default opening of charging business" and so on. At the same time, credit card interest rates are too high, point rules are unclear, full penalty interest, etc. are also high-frequency complaints.
It is worth mentioning that in recent years, agent complaints are becoming more and more common, and showing a trend of scale and organization, some "anti-collection alliances" and professional complaints and other black and ash industry intermediaries induce consumers to entrust "agent rights protection", instigating consumers to ignore the contract agreement, fabricate facts, in order to achieve the purpose of helping to evade personal debts, which not only leads to damage to consumer rights and interests, personal information is leaked, but also seriously interferes with the normal operation order of financial institutions, amplifying the risk of complaints in the credit card field. Therefore, the high complaint problem in the credit card field needs to be comprehensively dialectically looked at.
Xue Hongyan: Compared with other businesses, the credit card business is highly complex, and the interaction between banks and customers is continuous, the more interactions, the more potential conflict points there are, which is easy to cause more disputes and complaints. Specifically, in the credit card business, the interaction between banks and customers involves a series of matters such as card activation, limit increase or decrease, billkeeping, bill installment, regular repayment, member rights and interests, etc., and most of the processes are repeated on a regular basis, which is prone to disputes. In addition, because the credit card business involves third-party scenarios and money transactions, it is both the "hardest hit area" of over-marketing and the "hardest hit area" of financial fraud, and these problems will be reflected in the form of complaints.
The protection of financial consumer rights and interests in the credit card field is not only a problem between banks and cardholders, but also usually involves third-party institutions, such as merchants, payment institutions, etc., which leads to the complexity and multiplicity of consumer protection work, which must be incorporated into the business process to continue to exert efforts. At the same time, carrying out multi-faceted card knowledge popularization and anti-fraud education for cardholders can also fundamentally alleviate various problems in the field of credit cards.
Financial Times: At a time when credit card fraud, fraudulent brushing and other phenomena still exist, how should banking institutions enhance users' sense of security?
Xue Hongyan: The leakage of sensitive information such as the card number, validity period, security code and cardholder's identity of the credit card usually directly induces fraud, theft and other problems, so strengthening the protection of cardholder information, especially sensitive information, can reduce the probability of such problems from the root. From the perspective of banks, the leakage of sensitive information of cardholders not only infringes on the legitimate rights and interests of cardholders, but also increases the risk of litigation and reputation of banks, and pushes up the operating costs and non-performing rates of banks, so banks have a high incentive to actively intervene to ensure the information security and property security of cardholders.
However, the reason why such problems are still common is not in the bank's own will, but in the fact that sensitive information leakage involves multiple links, there are many participants, the bank itself can not build a closed loop of sensitive information protection, there is still a lot of work to be done in cardholder security card education, third-party payment institution supervision, payment merchant access management and so on.
As far as banking institutions are concerned, in addition to building a protective network in the sensitive information leakage link, they can also build a second safety net in the transaction link, that is, with the help of transaction big data and financial technology, they can continuously improve the monitoring ability of abnormal transactions and reduce the loss rate through active intervention. This work involves the continuous confrontation between banks and fraud gangs, and the continuous escalation of fraudulent methods requires banks to continue to invest in continuous anti-fraud capabilities.
Financial Times: Technology is a "double-edged sword", which seems to be particularly evident in the credit card business of banks. For banks, it is necessary to ensure the security of consumer information and to use good scientific and technological means for risk control, how to balance the two? In the current era of financial digital transformation, where should banks focus on improving the quality and efficiency of consumer protection work?
Li Peijia: In general, while digital finance brings consumers more convenient and diversified financial services, it also brings some new challenges and risks, such as transaction fraud, personal information leakage, irrational lending and other new problems. In the future, it is necessary to coordinate efforts from many aspects such as legislation, supervision, industry self-discipline, and subject responsibility to build a more accurate and efficient financial consumer rights protection mechanism.
First of all, strengthen financial consumer education and guide consumers to borrow rationally. Carry out consumer financial education to help the public learn modern financial knowledge, improve debt risk awareness, and avoid forming a social environment of excessive consumption.
Second, smooth complaint channels, and promptly resolve and correct deviations when complaints and problems occur. Financial institutions should take multiple measures at the same time to ensure the smooth flow of online and offline complaint channels such as telephones, letters and visits, and online platforms, to ensure the efficient and smooth operation of the complaint handling system, and to prevent and reduce contradictions and disputes from the source.
Finally, strengthen the obligation of information disclosure and notification, and reduce the probability of bad credit cards from the source. When handling credit card business for customers, banks should fully and thoroughly inform the calculation and collection methods of annual credit card fees, late fees, overdue penalty interest, etc., so that customers can understand their rights, obligations and risks, so as to avoid future customers who think that the bank's interest calculation (fee) is wrong or the interest fee is too high and complain.
Xue Hongyan: For banks, it is not a contradiction to ensure consumer information security and make good use of scientific and technological means for risk control. To do a good job in consumer protection, from an internal point of view, it is mainly to do a good job in internal control, control the use and diffusion of information within the minimum necessary range, and reduce the risk of user information leakage from the business process level, in this process, science and technology is an important means and help to achieve this goal. From an external point of view, it is necessary to do a good job in popularizing the education of cardholders' safe use of cards, and use scientific and technological means to continuously improve anti-fraud capabilities to escort cardholders' transactions.
This article originated from the Financial Times