1| Revolver rate has come down as many startups have started offering facilities for card customers to transfer money from their card to their landlord for paying house rent. While some customers are using this facility to earn more rewards, there are also many customers who are taking this money into their own account and spending it on shopping or maybe doing option/stock trading (which can be correlated) and then rotating this money.
2| Also, there is not a strong portfolio team for credit cards in most banks. Just reporting hygiene numbers will not suddenly improve your portfolio, but doing periodic checks, analyzing movements across cohorts, using predictive analysis etc. can be useful for foreseeing any good/bad events. Credit card is engagement products and hence periodic monitoring & nudging is needed to get the most out of the customer.
3| Credit card customers are typically salaried individuals which are mostly dominated by the top 4 private banks. I don't think SBI is acquiring many private companies for issuing their salary accounts (Not very sure on this point) hence the cards get issued to self-employed individuals those with low salaries, near to retirement etc and as a result the transaction frequency might take a hit.
1. Agreed that some amount of reduction in revolver % is because of people rotating the money but that isn't likely the only reason else EMI % would not have increased ideally. Further, now that banks have started charging people for rent payments or removing rewards, the misuse should likely come down.
2. I disagree here, most top players have dedicated credit card teams for acquisition, engagement as well as monetization. The new players like AU might not have it but even that is unlikely.
3. Very valid point about SBI Card's dependence on SBI for selling credit cards
Good article. Couple of points from my end:
1| Revolver rate has come down as many startups have started offering facilities for card customers to transfer money from their card to their landlord for paying house rent. While some customers are using this facility to earn more rewards, there are also many customers who are taking this money into their own account and spending it on shopping or maybe doing option/stock trading (which can be correlated) and then rotating this money.
2| Also, there is not a strong portfolio team for credit cards in most banks. Just reporting hygiene numbers will not suddenly improve your portfolio, but doing periodic checks, analyzing movements across cohorts, using predictive analysis etc. can be useful for foreseeing any good/bad events. Credit card is engagement products and hence periodic monitoring & nudging is needed to get the most out of the customer.
3| Credit card customers are typically salaried individuals which are mostly dominated by the top 4 private banks. I don't think SBI is acquiring many private companies for issuing their salary accounts (Not very sure on this point) hence the cards get issued to self-employed individuals those with low salaries, near to retirement etc and as a result the transaction frequency might take a hit.
Thanks Arjun.
1. Agreed that some amount of reduction in revolver % is because of people rotating the money but that isn't likely the only reason else EMI % would not have increased ideally. Further, now that banks have started charging people for rent payments or removing rewards, the misuse should likely come down.
2. I disagree here, most top players have dedicated credit card teams for acquisition, engagement as well as monetization. The new players like AU might not have it but even that is unlikely.
3. Very valid point about SBI Card's dependence on SBI for selling credit cards