New credit card battle assists in upgrading retail experience

        In recent years, with the tightening of budget control by financial institutions, credit card rewards have gradually shifted from cash refunds to more flexible point rewards, indicating that banks are actively adjusting their competitive strategies in response to changes in the market environment. In addition, with the evolution of co branded card strategies, some banks have begun to introduce new models of single card and multiple rights switching. This article will analyze the benefits and changes in consumer behavior brought about by the transformation of credit card strategies from the perspective of consumers, and further explore the service potential of credit cards in the retail field.

                Observing the credit card market, the overall trend of card swiping consumption continues to rise. According to the Financial Supervisory Commission, from January to August 2024, the card swiping volume exceeded the NTD 3 trillion mark, with an annual growth rate of 11.7%, reaching a new high for the same period in previous years. The annual card swiping amount will have the opportunity to exceed NTD 4.6 trillion, surpassing last year's NTD 4.18 trillion, indicating that the credit card payment habits of Taiwanese people have formed.

        Consumers usually have four or five credit cards in their wallets, each with a different purpose; Some offer airport transfers and VIP lounge services for international travel; Some focus on a high proportion of feedback for overseas consumption; There are also discounts specifically provided for department stores or e-commerce channels; Or a credit card that can accumulate points for consumption. However, when credit card benefits change, budget conscious consumers are bound to seek cards that better fit their consumption habits, which leads to multiple bills and complicated payment procedures. In view of this, more and more consumers choose not to change their cards frequently, but to flexibly switch their benefits through the app and enjoy discounts in different scenarios.

        The feedback model for shifting the focus of card issuance is more important than co branding

        In the past operating model, banks often collaborated with various channels such as retailers, e-commerce platforms, airlines, gaming and delivery platforms to issue co branded credit cards, attracting target customers with specific consumption discounts and related services. This not only helps to increase the frequency of consumption and repurchase rate of channels, but also enables banks to more accurately reach customers who meet the characteristics of channels. The cash feedback directly offset against consumption is popular due to its immediacy and meets the needs of channels or brands to increase customer unit price and repurchase, in order to enhance customer loyalty.

        The cash reward model is attractive to consumers, but it limits the flexibility of bank fund utilization and marketing operations. Due to consumers' tendency to fully offset, it actually reduces the effect of stimulating consumption and increases the cost burden on banks. Therefore, in recent years, banks have reactivated point feedback applications, which not only amplify the value and convertibility of points, but also increase the feedback intensity from the previous 0.3% to more than 3%. In addition, with limited activities, it may even reach up to 5%. After accumulating points, consumers can also increase their willingness to use their credit card by converting other points, miles, or redeeming goods with bonus points. In addition, banks are gradually converting high-value benefits such as airport transfers into point based models, which actually enhances the practicality of cards for consumers who do not frequently travel abroad.

        Opportunities and Challenges of Choosing Credit Cards with Equity

        After experiencing a fierce competition in the credit card market, the issuance model of banks has gradually changed. The issuance of co branded cards requires individual negotiations for cooperation, with high costs and limited growth rates, making it difficult to balance investment returns. The rapid development of digital finance has prompted banks to shift towards cross industry cooperation and strengthen integrated marketing and digital ecosystem operations, thereby optimizing targeted positioning and resource allocation.

        Some banks have begun to experiment with the switching mode of single card and multiple benefits. Consumers can choose high reward discounts through different channels according to their needs through the app. For banks, it not only reduces the cost of new card production and marketing expenses, but also helps to penetrate into daily consumption scenarios and rapidly expand the number of users and card swiping amounts.

        However, compared to the precise customer strategy of co branded cards, the diversified discount switching mode poses challenges in terms of resource concentration. Due to the dispersed target customer base, banks need to attract users with high returns, but it is difficult to implement financial products targeted at specific customer groups, which cannot increase other sales revenue; Consumers who rely on profit may also lose out due to more discounts from competitors. In addition, due to the concentration of resources on discounts and promotions, it is difficult to consider in-depth customer services such as parking discounts or concierge services, which also increases the challenge of maintaining customer loyalty.

        Co Prosperity and Mutual Benefit Retail Should Innovate Digital Experience

        At present, over 80% of Happy Go members have used the mobile app to make purchases through Far Eastern Group's retail channels. Retail companies should actively use the app to provide functions such as one click payment, point and amount deduction, etc., so that consumers can complete services, discounts, and payments in their fingertips, creating a more complete and convenient customer experience.

        In the future, retail channels can also utilize marketing resources from banks to subsidize and leverage, forming a mutually beneficial ecosystem that connects customers Cardholders and members stay within the group, extending customers' lifetime value and creating consumer value A three win situation for Far Eastern Group's corporate and banking partners. The group's comprehensive efficiency and retail planning headquarters will also collaborate with retail related enterprises to continuously optimize digital mechanisms, deepen customer management, provide thoughtful and customized OMO experiences, create more value for consumers, and strive for the sustainable operation of the group.

        Image source: freepik

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