Credit-card reward programmes needed to keep spending despite lower margins, StanChart says

Executive vice president Auraratana Jutimitta said lenders were continuing to offer these attractive programmes despite the lower margins because credit cards are the main driver of cross-selling of other retail-banking products.

The bank has joined with Thai Airways International to launch the “Fly Faster with a Standard Chartered Card” promotion, whereby cardholders can gain points and redeem miles for air tickets to Japan. Such campaigns are essential amid the high competition to keep credit-card customers loyal, she said.

However, each bank has different strategies to manage its costs, she added. StanChart believes cross-selling can help compensate for the lower margins of credit cards.

Like most other banks, 60 per cent of StanChart’s cardholders fail to pay their full monthly balance, and the bank collects interest on the outstanding amount. Its customers hold an average of three products.The bank expects the Thai Airways campaign to boost average monthly credit-card spending from Bt6,000 to Bt9,000, moving its ranking in this segment into the top five this year, Auraratana said. It was only No 7 last year.

It also hopes to expand the number of credit cards by 30 per cent to a total of 300,000.

She said that the bank did not pin its hopes on the number of cards as this business in Thailand is mature, with each person owning four credit cards on average. Therefore, the bank has focused on real spenders through loyalty programmes. Its target customer group is those with monthly incomes of Bt30,000 and up.

“That is why we have an approval rate of 50 per cent [of applicants]. Our criteria have not changed even though the economic situation will be changing. Our approvals are based on the outstanding debt of the applicant and the ability to repay,” she noted.