A tale of two cards

“Building a visionary company requires one percent vision and 99 percent alignment.” —Jim Collins and Jerry Porras, Built to Last

And I believe the alignment needs to show not in meetings but on the ground – in customer interactions, in every process and the decision making across all levels.

A recent experience drove home the point very clearly.

Background: Over the years, I have consolidated all my credit cards to just two – one from HDFC and another from a MNC bank. And yes both are Visa !

I have also been using my HDFC Credit card as the primary one, with reasonably high and regular monthly spends. And the bank’s team has followed up with me to increase my credit limit. But I didn’t as I didnt feel the need.

For those who of you who are not from the payments industry – a line increase is a key action to get a higher share of a customer’s spends while balancing the associated risks.

On my other card, I just have a standing instruction where a small amount is billed every month. That card has rarely been used beyond this singular, recurring transaction. And almost 90% of the available limit goes un-utilized each cycle.

Strategy Vs Execution - A tale of two cards

The story : Last month, I had to make a big payment and I was looking to split it across the two credit cards.

I used my other card first thinking that it has a significant limit available. My transaction got declined because I remembered my limit inaccurately and had attempted a transaction above the available limit.

I then checked my available limit on my HDFC card (in the last SMS notification) and decided to split my transaction on my HDFC card into two separate transactions – trying to avoid any risk-based decline.

Immediately got a call from the risk call-center of the bank – to confirm if these were genuine transactions. And post my confirmation, the lady at the other end mentioned that I have now exhausted almost 95% of my limit. She also asked if I wanted to double my limit in the next 1 minute – on the same call.

Given this is my primary credit card – I said yes and after responding to a few questions to verify/validate my identity my limit was doubled. Right there in the call.

I loved the contrast in the experience across the two banks:

  • Revenue focus – HDFC converted a cost center unit (the high value transaction confirmation call center) into a portfolio intervention team that helps drive positive revenue impact
  • Understanding consumer journey and needs – HDFC team knew that for a highly active card, a 95% limit utilization is probably when a customer needs line increase. One may argue that number of customers who may go through such a scenario is very low. But look at the efficiency and the high levels of conversion. Do you want to keep investing in emailers and calls/SMS for line enhancement but not look at specific instances in a customer’s journey where the conversion probability is highest. And friction is the least.
  • Lost Opportunity – The MNC bank missed a huge opportunity. For a customer who is not regular, it is tough to remember the total limit or track available limit. And here was a big ticket transaction attempt. A call-back/notification to confirm the limits, may have gotten them the transaction and may be higher spends in future.

These are the customer interactions that decide the winner in the hyper competitive world we operate in – how organizations understand and respond therein.

Migrating away from cash is intimidating – Stickiness of Cash Part 2

Ask any payment professional, and while they might disagree on what’s the best payment experience, they would all agree that Cash is sticky.

And one of the core reasons for the stickiness of cash is that the migration journey is intimidating for most cash-heavy users.

Too many choices

Here are some of the many questions the cash users who want to migrate away from cash, grapple with:

  • Is it safe to use a card for payments
  • Should I use a separate card for ATM withdrawals and purchases
  • What should I start using – prepaid, debit, credit , mobile wallets
  • If it’s a card, should I go for a basic, gold, platinum or some other variant
  • Should I get a product with shopping benefits or one with fuel? or the one with air-miles
  • Should I take a Visa or a MasterCard or a Rupay
  • I have accounts with multiple banks, whose product do I begin with
  • How do I apply for the card? Can I apply online, or do I go to the bank branch?
  • What is a UPI or IMPS payment? How do I do that? What is the fees on the transactions?

…….And it goes on and on.

The simple fact is that there are way too many products with different features, brands, offers,benefits and form-factors. It is a tough choice to make.

And post demonetization, most banks are  show-casing ALL their products in each of their ads. Leaving it to the consumer to pick and choose.

I have seen Mumbai buses covered with ads, that have all the digital payment instruments from that bank. Not sure if most consumers even know what those mean.

 

The famous Malcolm Gladwell research on choices, happiness and spaghetti sauce also harps on the risk of too many choices.

The migration away from cash, has to be made easier with fewer choices or a recommended path to walk on (recommendation itself coming from a trusted partner).

In the absence of this, most consumers prefer a wait-and-watch stance. And the product(s) with simpler choices and/or more brand-ambassadors will see higher adoption. No wonder, many a millennial adopted the mobile wallets. There were no variants of PayTM, Mobikwik etc.

And this brings us to the other point.

Hurdles in the migration

Ok, so you have a cash-user who is convinced about that one digital payment from your bank. How does she go about getting started?

Do you remember the forms you filled to get your first credit card.

I remember that during my Deal4Loans days, the card application forms used to have almost 50+ fields across some 4-5 stages of the online application for most banks.

While the consumer on-boarding has come a long way in the digital era, it still is complicated for many products/banks. Unless the consumer is really convinced about this migration, why would they jump through so many hoops to get the product.

The access and on-boarding has to be simpler. A convinced consumer should be active on Day 0 if not within Hour 1.

In my opinion, if we are serious about displacing cash, we need to make the transition a simpler choice for the consumers.

What do you think?


This is part 2 in a series of posts where I try to understand why Cash is sticky? What are the some of the obvious things, we may have overlooked in our zeal to digitize payments.

Here’s part 1 , where my humble submission is that Cash is not really the enemy. Atleast not in the eyes of the consumers.