Credit card issuers could do themselves a favour and jump in to
e-business. But it's customer trust rather than technology that is
the obstacle to e-trade, writes Jerry Mulle.
Think of a financial services product that comes with great
customer service. I bet you weren't thinking of a credit card!
Building strong and lasting relationships with customers is not
something you readily associate with credit card firms.
Yet according to recent research on both sides of the Atlantic,
the credit card is set to become the pivotal financial product on
the Internet - a rival or perhaps even the successor to the bank
account.
If this seems unlikely, remember that not only is the credit
card the main payment vehicle for goods and services online: the
sites associated with credit cards have been proven to be among the
stickiest (those most likely to get frequent repeat visits) on the
Web.
Here's another question: what's the difference between a credit
card and a bank account? In the real world, the answer is many
thousands of tons of bricks and mortar, otherwise known as bank
branches. Plus of course the one-dimensional service offered by
card issuers versus the multi-faceted services offered by banks:
current and deposit accounts, investments, pensions, mortgages and
insurance.
But on the Internet it's much harder to tell the difference - or
it soon will be.
Faced with mounting competition for APRs, which are now hovering
dangerously close to zero, card issuers are honing new competitive
weapons. Many are looking to offer some or all of the services
currently offered by the banks - not on the high street but on the
Internet.
Not only is it cheaper to service customers online, but once the
card issuer has got them there they are sitting targets for the
cross sell. At the basic level this could be nothing more than an
offer of a cheap case of wine. But the real prize will be to offer
the customer a range of services - some free, some paid for - from
automatic bill payment (online equivalent of direct debits) to
investment advice.
Sell enough of them, and your Web site becomes the centre of the
customer's world, the only resource they ever need to manage their
financial affairs. Not unlike a bank, in fact.
Building such a relationship with the customer is vital, if only
to prevent them switching brands every time a better offer comes
along.
Can the card issuers do it? One thing in their favour is the
strong wave of disaffection with the high street banks - the fact
that these are usually the same institutions behind the popular
card brands has largely escaped the attention of customers.
Expect to see more and more card companies luring customers
online to take advantage of functionally-rich Web sites laden with
features, product offers and other goodies.
Whether or not these initiatives succeed depends on how fast
they can build not just technology platforms but the trust of
customers. On the plus side, they have powerful brand names to
trade on and recognition is one of the keys to trust.
But, with a few notable exceptions, card issuers have lagged
behind the banks in pitching their stalls online. The credit card
could be at the centre of the online revolution in financial
services, but only if card issuers have the courage of their
convictions - and get stuck in, fast.
Jerry Mulle is e-business director at iE: www.ie.com