Mayank Markanday, Head of Credit Cards, AU Small Finance Bank reveals the business & marketing strategy adopted by the bank to position their credit card products:
Ravi Lalwani: What customer response did your bank has received from the newly launched credit cards?
Mayank Markanday: Currently 33 banks in India provide credit cards. Among them, the top 4 banks including SBI cards contribute 72% of the total credit card business. The remaining credit card providers contribute 28% of the business, this makes the credit card business very competitive. In the last 3-4 years, internet users in the country have increased multi-fold and there is a rise in the demand for digital products. There are around 714 million internet users across the country, e-commerce portals have largely penetrated tier 2, 3, & 4 cities; so the demand for credit cards has increased in these cities. To purchase products from eCommerce portals one needs a digital product; earlier the credit card was limited to the metro cities, but suddenly its demands increased in tier 2 & 3 cities.
Today customers are not brand agnostic – they want credit card offers. We are 20-year-old organization and have a strong presence in tier 2, 3 & 4 markets. We are a bank from the last 5 years and have a consumer base of 2 million customers and we offer digital products to them. The most important thing is to maintain engagement and banking relationships with customers and our bank must provide all the products to our customers including credit cards, otherwise we will lose our customers.
We offer an entire bouquet of products to our customers which include business banking, MSME loans, franchise loan, credit cards and QR codes. In India, there is 3% credit card penetration; in comparison, in the US, 65% of its population have credit cards, indicating that there is plenty of space to grow. We must cater to the needs and requirements of our customers and offer good offerings to them. We have a strong credit collection process, and it is one of the key ingredients for a credit card business. These are the primary reasons for AU SFB to enter the credit card business.
From which Indian cities did your bank receives maximum requests for new credit card applications? How many AU Bank credit cards have been issued
Our bank has issued 1 lakh+ credit cards till date. In our first phase spanning April to June, 70% of the card have been issued to our existing customers. We have a customer base for credit cards in states like Maharashtra, Rajasthan, and Madhya Pradesh. Among them, 35% of our credit card business comes from Rajasthan and we are expanding in big cities like Bangalore and Hyderabad. 50% of the credit card issued by us are to first-time credit card users, who are using the credit card for the first time in their life. Some of them are the other bank’s customers, but their bank has not issued them credit cards and we have issued them the credit cards based on their credit scores, balances, and other credit parameters.
With the inclusion of fintech players, the credit card market has become more competitive. What is the USP of AU SFB credit cards compared to its competitors?
We have kept the customer onboarding journey very simple. Most of the banks offer airport lounges for their customers, while AU SFB also provides railway lounge along with airport lounge to the mass category of credit card customers. Our bank also provides 1-year insurance on the electronic products purchased by using our credit card, so these are our USP compared to our competitors.
Our credit card is not only for the set of customers, but it is for all the categories of the customers from 18 to 75 age group. We offer credit cards to businessmen, salaried class, retried professionals, and housewives. On the other hand, fintech’s offer credit cards for a particular segment of the customers, and they offer only through digital mode; it is limited to the tech-savvy and young generation customers, while we are available to our customers in all the physical and digital channels.
Share details about your partnership with Pine Labs for the credit card EMI facility. Who are your other technology partners for providing the smooth functioning of credit card transactions?
Pine Labs services are available in most of the large multiple stores and brand outlets like Croma, Reliance Digital and Vijay Sales. They have a good presence in the local and regional markets. We have done a tie-up with Pine labs to provide an EMI facility to our customers, the customer can visit these stores and apply for the EMI facility. AU SFB is also offering a low-cost EMI facility to its customers and there is no interest charged to them for purchasing the products of bands like Samsung, Lenovo, HP, Dell, Godrej and Haier as we have partnerships with these brands.
For expanding our online presence, we have tie-up with PayU to provide EMI offers to our customers on their online purchases. We have tied up with Fiserv for card management and we are also issuing Visa cards, so they are also providing technological solutions to us.
What is your marketing strategy to promote the sales of credit cards? Which marketing channels is the bank using for its promotional and sales activities?
We have started the credit card campaign in August 2021, with Bollywood actress Kiara Advani and actor Amir Khan as our brand ambassadors. The narrative of the credit card campaign is, ‘Why credit card is only for the khas people? Why it is not for everybody?’ We had launched the ‘Ek khas card aap sabke liye’ campaign to reach our customers. We have always been an organization that has believed in bringing the ‘badlav’ into the industry. So ‘Badlav humse hain’ was the theme of our campaign and the bank has promoted this campaign on television, outdoor, digital, radio, etc.
What is your bank strategy for the no credit score or low credit customers? And how the bank is handling them?
We are the new player in the industry, but we are a serious player. We have always served the retail needs of our customers and credit card is a consumer and lifestyle product. We want customer engagement to increase, so we should be able to fulfil the requirements of our customers particularly in tier 2 & 3 cities.
The problem is not low scores, the problem is no score. Low score is derogatory indicating that your score is low because you have defaulted. Nobody wants to give a card to a default customer; we will also not issue them the card.
In case of no score, customer identity is not known for creditworthiness. The problem is that no score customers, because they have not availed anything yet, they are not exposed to the bureaus, their creditworthiness is neither known nor tested. We have put certain scorecards for them and they are also called ‘new to credit’ customers. Normally credit card is issued to the customer who already has other loan products; they have taken loans and credit card comes afterward. I think this is going to change in the next 2 years and credit cards will be among the first, second, third product for the customers like car and home loans products because digital product penetrations will increase, and we are preparing for it.
Which new credit cards or features will be introduced for your customers
We will be not adding any new features to our credit cards products, but we will be bringing more variants in the cards to cater to the needs of the entire generation. We are trying to upgrade our card services to the existing cardholders, and we are bringing new products for Generation Z customers between18 to 25 age group. These customers are digital savvy, they want to have features on a real-time basis. They don’t want bank to fix features for them, they want the things as per their requirement.
AU SFB will also introduce credit cards for business class segments because 90% of the overall cards are issued only for the salaried class people. There is a big requirement for credit cards from the self-employment customer segment, and the bank will introduce cards for this segment of people as we are one of the largest lenders for the self-employed segment.
What technology are you sing to control fraud?
AU SFB has tied up with Falcon for fraud analysis and with Experian for scorecard modelling of its customers. It monitors the customers’ transactions to find out the pattern of fraud and has a 24×7 fraud risk management desk where an analytics team analyses the transaction on a real-time basis. It also has a mechanism to contact the customers, in case of any pattern of fraud on a real-time basis.