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In a bid to capture first-time credit card users, banks are looking at tying up with e-commerce and other digital entities to offer instant credit cards to customers, based on their spending patterns.
HDFC Bank, which has the country’s largest credit card base, is one of the players mulling such tie-ups. “For instance, if a customer is using a particular taxi application every day and is spending about Rs 5,000 on it every month, we can tie up with the company and get an idea about how they spend. Since I already have the address, spending patterns etc., with a tie-up I can offer them an instant credit card with a limit of Rs 10,000. And, later once the customer is part of the system, we can look at upgrading them,” said a top official of the bank, requesting anonymity.
Bankers explain this is mainly aimed at targeting customers who are not yet credit card users and at the time of making a payment use either a debit card or pay in cash. By targeting such customers, banks are looking at expanding their credit card base in a market that has become fairly competitive. Also, by offering a credit card of a limited amount initially, banks believe the risk will be limited.
RBL Bank (formerly Ratnakar Bank) is also mulling at tying up with an online spending aggregator which can keep track of consumers’ spending patterns and give a credit card based on it. This step will necessarily skip checking the credit score, which has been one of the key parameters for giving credit cards in the aftermath of the 2008-09 crisis, when bad loans shot up in the this segment. However, bankers are now saying that a sneak peek into the monthly spend pattern can also be a good measure to understand the consumer.
“A credit score shows that a consumer hasn’t defaulted in the past. However, that doesn’t mean that he/she won’t in the future. However, if I know your monthly spend and buying patterns for the last 12 months and there is consistency in it, even that can be a good determinant to know the kind of customer you are and based on that I can offer you a card,” said a bank official from RBL.
In fact, now that bad loans in the retail segment have been limited in the past few years, banks are now increasingly trying out new ways to evaluate credit and risk for customers that involve aggressive play.
YES Bank, set to launch its credit card next month, is looking at increasingly offering credit cards for customers it doesn’t have a prior banking relationship with. Despite this, the lender is confident of containing delinquencies in the system.
