So y’day, when newspapers started reporting “CC Spends Cross ₹1 lac crore for first time in Oct”, I probed further – Anirudha Basak
1. Optically, even tho it feels like HDFC never lost its #1 position despite the 8mo ban, it has indeed lost its “speed”. Both SBI & ICICI have issued <2x the number of cards since May, so they’ve gained in incremental market share. HDFC will take some time to regain lost ground
2. Citi card holders are loyal. Even though the bank announced early this year that it would wrap up retail ops, it has not lost much customers. In fact, spends in PoS terminals are still higher than RBL Bank, which has a good 1% lead over it.
3. ATM usage of Canara Bank & SBM Bank (India) credit card holders are unusually high, curious to understand why.
4. AU SFB continues to offer an impressive show for a small finance bank. Recall that it is the only Small Finance Bank to issue credit cards. Would love to see how this changes now that Unity Small Finance Bank (BharatPe-Centrum) has started operations.
5. An even greater show is being put together by IDFC FIRST Bank, which has grown its credit card portfolio by 10x in less than a year. This is one bank to watch out for. I wouldn’t be surprised at all if it enters the elusive Top 10 club within another year.
6. South Indian Bank is a new entry in October. Exchange filings show it is co-branding credit cards with OneCard. In fact, OneCard is a beast to be reckoned with. It has exclusive partnerships with Federal Bank and SBM Bank (India) as well which are solely growing through it.
7. Other smaller banks such as DCB Bank and City Union Bank Ltd. seem to have shifted focus away from credit cards. With over 70% of the market cornered by the top four banks, very interested to understand who is going to be the next disruptor.
8. An important thing to understand here is that there are pros and cons of partnering with FinTechs in this space. Credit card usually is a high upfront cost business and it takes considerable time to recoup the investment through interest and fees…
…so it makes sense for these small banks to partner with OneCard who take all the headache. However, three banks partnering with the same guy eventually means your growth is tied to it.
9. Take IDFC FIRST Bank for example. Even though they are making losses of 75 crore per quarter on this business now, doing it in-house allows them to scale up quickly, innovate with offers and cards custom to their customer base.