Starting from 2010, ICBC embarked aggressive innovation on credit card products and business in the wake of the quick adoption of credit card payment in the market. Credit card services have been improved continuously with good balanced growth in scale, benefit and quality of the business. ICBC has issued 63.
71 million credit cards as of the end of November, 2010, said Luan Jiansheng, President of ICBC Credit Card Center. Total value of transactions using ICBC credit cards reached RMB 564.2 billion, RMB 82.8 billion in overdraft volume. ICBC remains first place in the overall ranking of Chinese credit card banks by staying way ahead of the peers in all key business indexes.
The Bank's control and management of credit card risk has been significantly improved. Currently, ICBC's bad loan ratio on credit card is a meagre 1.06%, less than half of the average standard of the domestic peers and far below the average of major European and U.S. banks.
Luan Jiansheng said, credit card is a bank business that calls for economies of scale. Card issuance volume, cardholder expenditure volume, overdraft volume, asset quality and income are key indexes to measure the competitive edge of a bank's credit card business. Judging on these indexes up to end-November, 2010, ICBC's card issuance volume and overdraft volume surged 22.
5% and 123.1% respectively from the beginning of the year, and 40.7% jump on the same period a year ago in cardholder expenditure volume. The good result reflects not only the bank s leading edge among peers by substantial margin in terms of total volume, but also the faster growth of cardholder expenditure volume than card issuance volume, faster growth of overdraft volume than card expenditure volume, and the continuous drop in bad loan rate.
Leading the Way by Innovation
Credit card is an innovative payment tool. This shows one inherent feature of credit card - innovation. Hence, ICBC embraces innovation as the basic approach to help drive the growth of its credit card business. The Bank takes the driver seat in credit card market by employing innovation for products, services, channels and technology.
In terms of marketing and credit granting when issuing new credit cards, accurate positioning on the customers and accurate approval on credit limit allow ICBC to take active role instead of passive, said Luan Jiansheng. Less credit approval steps means higher efficiency. ICBC also makes another innovative move through online marketing in order to reduce cost.
In May, 2010, ICBC was the first bank in China to launch the online service for whoever wishes to apply for a credit card. Customer reaction to the new service was very positive. More than 1 million credit card applications were submitted online up to end of November. Customers desire to use credit card, 100% new credit cards are activated, average spending on the cards applied online was also far higher than the credit cards issued through conventional channel.
Speaking of credit card products and services, beginning from 2010 ICBC put more focus on the research and development of credit card functions to widen the application of credit card. An example is the credit card installment service, a service with strong demand in the market. ICBC deploys special POS at selective top merchants of comparatively large scale for installment service.
Promotional campaigns are launched jointly with well-known automobile manufacturers, large telecom operators and digital product suppliers for ICBC cardholders to repay card spending by installment. Balance of installment payments from cardholders jumped RMB 31.4 billion or 232% from the beginning of the year to RMB 44.
9 billion by end-November, 2010. Installment service is a service most welcomed by the customers, also one of the fastest growing credit card businesses in ICBC.
When it comes to innovation in credit card technology, ICBC is the all-time pioneer. ICBC was the first bank in the country to launch chip card, a high-security smart card in 2009. Subsequent to this, in 2010 ICBC and China Unicom launched the first credit card for mobile phones, where functions of chip card and SIM card are all included.
The card is designed for customers to pay small sum of money easily and fast on the spot. Again, this is another latest round of ICBC technological leadership in credit card in China. The new card adds impetus of using mobile phone credit card for fast payment in the country.
Improved Card Acceptance Environment
Luan Jiansheng commented that fast and convenient card acceptance environment is fundamental in pushing ahead credit card business. In light of this, ICBC leverages its nationwide service network to provide the widest geographical coverage and most convenient environment for cardholders to use their cards.
This move is an important competitive advantage of the Bank to serve the customers, to win the customers. Today, ICBC has more than 40,000 ATMs and 45,000 POS, representing a large network of credit card acceptance terminals. Meanwhile, the increasing number of value-added services and exclusive service channels offered to high-end customers are supported by 130 VIP customer service centers in the country and 4 VIP customer service centers in overseas countries.
Besides, ICBC gathers pace to partner with discount merchants, up to 517,000 discount merchants have signed with ICBC by end-October 2010. Type of merchants covers most of the retail spending areas: clothing, food, shelter, transportation and entertainment.
ICBC works in top gear to set up its credit card network in overseas while upgrading its domestic card acceptance environment. ICBC Credit Card Center (International) was opened in Hong Kong on October 12, 2010. This is a major business platform for ICBC to push ahead its credit card business in overseas areas, and marks the one important step of the Bank's drive in the internationalization of its credit card business.
Before this, credit cards with ICBC logo have stridden boldly to the world stage, along with the footprint of ICBC overseas affiliates. ICBC credit cards are a "golden key" for ICBC overseas subsidiaries to offer retail banking services in the countries they located. By the end of November, 2010, ICBC has issued over 175,000 credit cards outside China.
ICBC credit card VIP customer service centers have been set up in Hong Kong, Macau, Indonesia and Frankfurt. Today, ICBC has secured an international customer base of loyal cardholders. This paves the way for ICBC to move forward its credit card business overseas.
