Fintechs have been disrupting as well as dis/ intermediating every step in the credit card value chain. It is imperative to understand how issuance, activation/ usage, experience and acceptance is evolving, writes Ai’s Ritesh Gupta
No country can match the scale of digital payments processed by non-banks in China, but other Asian countries, too, are making steady progress on this count. And this along with other areas in which financial technology (fintech) is foraying into the financial services arena is forcing co-brand and loyalty specialists to delve deep into the situation.
“We have had a deep look at how fintech is disrupting credit cards and therefore our co-brand cards. How should we, rather than fighting that, participate in the entire ecosystem and boost our customer value proposition,” shared Vikas Chandak, SVP and Head of Strategic Businesses, Financial Products, Partnerships & Alliances, Intermiles during the recently held Ai’s Co-brand & Travel Reward Cards Virtual Conference 2020.
Chandak pointed out that impact of the financial technology varies across different regions. And Asia remains a hub for innovative offerings, spanning across payments, investment products and overall finance management at this juncture. For instance, new credit cards are designed to put customers in control of their borrowing. “We are seeing a tremendous change in how the Indian market responds to these innovations,” said Mumbai-based Chandak.
Referring to some of the elements that pave way for innovation to happen, including the external factors, he referred to the role of regulatory bodies/ government, capital availability, emerging technology and consumer adoption.
“Countries like India and China, their banking regulation is acknowledging the need for different models and place for different types of players around payments specifically and overall around financial services,” he said. This means the introduction of payment bank licence in India, which didn’t exist earlier.
Fintechs have been disrupting as well as dis/ intermediating every step in the credit card value chain.
“(Fintechs have scrutinized) every aspect of the credit card value chain – issuance, activation/ usage, experience and acceptance. Different fintechs have picked up different aspects of the value chain elements in credit cards and they have disrupted each one of them,” said Chandak.
For instance, on the issuance aspect, Chandak referred to a card by Amazon Pay and ICICI Bank in India. The two entities have shared that their credit card has become the fastest in India to cross the milestone of one million, in less than 20 months of its launch. Highlights include issuance of reward points directly into Amazon Pay balance and contactless feature embedded in all cards. The convenience aspect has stood out, for e.g., being the first to introduce ‘Video KYC’ facility for new applications in June this year.
There is a promise of instant issuance of cards in less than one minute and 100% digital video KYC-enabled issuance. Referring to credit risk innovation, Chandak said there is only coverage for 15-20% of the population in India in terms of actual verified credit scores and accordingly the credit card penetration is relatively low.
“Merchant data is often extremely handy here and there co-brands in India are beginning take off where merchant data adds value to the underwriting models of these banks,” he said. This is where a number of regtech companies are enabling a paperless, remote on-boarding for end-users.
All of these developments underlined that loyalty and co-brand specialists need to make the most of the situation by looking at the value chain and the overall customer experience.
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