Bank Credit Card Business Shrinks; Banks Explore Digital, Scenario-based Operations
In the first half of the year, the credit card business of several banks has "shrunk".
Experts interviewed suggest that banks need to continuously focus on product innovation and operational methods to create an integrated credit card operation service system. In the future, they will not only need to enhance marketing capabilities from aspects such as scenarios, convenience, functional differences, and personalized needs, but more importantly, improve service innovation, value-added, and risk control capabilities.
Credit card business scale declines
Looking at the disclosed semi-annual reports of A-share listed banks, the top five credit card loan balances are currently held by CITIC Bank, Bank of Communications, Ping An Bank, Industrial Bank, and Shanghai Pudong Development Bank. Except for the credit card loan balance of Bank of Communications, which increased by 6.572 billion yuan to 496.178 billion yuan compared to the end of last year, the other four have experienced varying degrees of "shrinking". Among them, Ping An Bank's credit card receivables balance is 470.999 billion yuan, a reduction of about 4.3093 billion yuan compared to the end of last year, a year-on-year decrease of about 8.4%.
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In addition, some banks have also seen a downward trend in the number of credit card circulation households, credit card transaction volume, and business income. For example, CITIC Bank achieved a credit card transaction volume of 1,241.072 billion yuan in the first half of the year, a decrease of 8.44% compared to the same period last year, and achieved a credit card business income of 28.677 billion yuan, a year-on-year decrease of 3.37%. Industrial Bank's credit card transaction amount is 984.984 billion yuan, a year-on-year decrease of 18.17%. Although Bank of Communications maintained its ranking in the cumulative consumption amount, it shrank by nearly 200 billion yuan compared to 1,432.923 billion yuan last year. The number of credit cards on file in domestic banks also experienced a three-peat decline, from 74.5598 million last year to 71.3242 million at the end of last year, and further to 64.8883 million at the end of June this year.
According to the overall situation of the payment system operation released by the central bank in the first quarter of 2024, as of the end of the first quarter, there were 760 million credit cards and loan cards, a quarter-on-quarter decrease of 0.85%. The total credit limit of bank cards was 22.76 trillion yuan, a quarter-on-quarter increase of 0.42%, and the credit balance payable by bank cards was 8.54 trillion yuan, a quarter-on-quarter decrease of 1.74%.
Su Xiaoli, a senior researcher at Su Xi Zhi Research, said in an interview that the "shrinking" of credit card business of several banks in the first half of the year is mainly based on two factors: one is that the consumer credit market represented by credit cards has seen a decline in overall business quality since the second half of last year, and the repayment ability of cardholders has decreased, pushing up the non-performing rate of credit cards, making institutions more cautious in credit granting; the other is that under the influence of policy activities such as the "card cutting action", institutions have accelerated the refined management of existing cards, which may lead to a reduction in overdrafts of existing cards.
"The general slowdown in credit card business is affected by many factors. At present, credit cards are in a stage of stock competition, and the trend of incremental growth has slowed down. Domestic consumption is still in a recovery stage, and the demand for consumer loans by residents is yet to be released." Zhou Maohua, a macro researcher at the financial market department of China Everbright Bank, said.
Scenario-based operation becomes a key word
At present, credit cards have entered the era of stock competition. In the past two years, various banks have made frequent moves in the credit card business, showing the banks' thinking on higher-quality customer groups, better product structures, and higher levels of refined management after the "race for land" era.On one side, there is a continuous renewal of co-branded cards. Since last year, many banks have密集ly issued announcements to stop issuing multiple co-branded credit cards. At the same time, new co-branded IPs are being introduced continuously, including social, e-commerce, gaming, and other fields, to reach a more precise customer base. On the other side, by cleaning up dormant cards, adjusting the rights rules and benefits thresholds of some credit cards, and other means, the management of credit cards is strengthened to achieve the purpose of reducing costs and increasing efficiency.
It is worth noting that in the semi-annual report, the digitalization and scenario-based operation of credit cards have become key business terms for many banks. For example, CITIC Bank stated in its semi-annual report that the bank continuously strengthens technological innovation and intelligent services, launched the "Card Space" APP and the "Xin Collection and Payment" that supports multi-terminal linkage payment needs for watches and mobile phones, and creates a warm credit card service through multimodal AI (artificial intelligence). Industrial Bank and Qingdao Bank also mentioned the construction of automotive ecosystems and the enrichment of car owner rights.
"At this stage, the credit card business is gradually entering the era of 'meticulous cultivation'. In addition to the basic card issuance, banks will also pay close attention to card usage and transaction amounts. At the same time, they will pay more attention to key scenarios, such as the frequency and transaction amount of domestic consumers using cards abroad, and the transaction situation of automotive credit cards in car purchase and maintenance scenarios," Su Xiaorui pointed out.
In Zhou Maohua's view, the current product design still cannot fully match the market's diversified, personalized, and high-quality demands, and there are problems such as intense industry competition, some institutions' rough business expansion, and a few institutions' unstandardized operation of related businesses. "From the perspective of the annual number of credit card business complaints, there is still a lot of room for improvement, optimization, and innovation in credit card business in the future," Zhou Maohua said directly.
"Enhancing user experience and increasing user stickiness will be the core competitiveness of future credit card business. Banks need to balance the marketing effect, profit benefits, and user satisfaction of credit cards. They can start from expanding usage scenarios, creating differentiated functions, innovating products and services, and strengthening risk control capabilities," Zhou Maohua suggested, "In the future, efforts still need to be made in scenarios, convenience, functional differences, and meeting personalized needs. At the same time, the competitiveness of institutional credit card business should not only enhance marketing capabilities but more importantly, enhance service innovation, value-added, and risk control capabilities."
Finally, Su Xiaorui suggested that credit card institutions need to continuously strive for product innovation and operational methods, take "card + credit card mobile application + scenario + rights" as the anchor, and create an integrated credit card operation service system. In addition, it is also possible to consider optimizing the payment convenience for foreigners coming to China, aiming at the card opening and usage needs of this group of people, seeking differentiated innovation, and creating a breakthrough path.
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