Cards on the table...

Credit card issuers could do themselves a favour and jump in to e-business. But it's customer trust rather than technology that...

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:

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