Rizal Commercial Banking Corporation (RCBC) is one of the Philippines largest private universal banks, but its primarily perceived as a business bank with only 6% of its deposit clientele base in the 21-35 age group. Its RCBC Bankard subsidiary offered a way to partner and increase younger users via a new credit card and linked bank account, which is aimed at millennials who have traditionally been underserved in the market due to fears about a lack of savings and credit history. This drive to attract new, younger users is why RCBC won Best Credit Card Initiative at the Retail Banker International (RBI): Asia Trailblazer Awards 2020.
The CASA and Credit Card Bundle is a combined product that offers a RCBC Bankard card without the need for the usual deposit documents. There is no hold-out agreement either, whereby 80% of the deposit is assigned as a credit limit making it inaccessible in most other offerings.
RCBC didn’t want to go down this traditional route. Instead applicants can open a deposit account with PHP10,000 peso (US$200) obtaining a starter limit of PHP5,000 peso (US$100) on their linked card. This can be increased further if income documents are supplied. Limits can also rise as card and payment behaviour are monitored, automatically triggering limit rises to reward good behaviour and thereby develop a credit history.
Opening the door for uncarded, un- or underbanked millennials to enter the financial services (FS) arena offers risks but also significant rewards. As millennials income increases they are likely to remain loyal to their starter bank and card provider, widening the base of the bank. To cut the risks rollout was undertaken on a phased test and graduated pilot basis and a number of financial management tools were provided to users, such as:
- A spend monitor: that texts if monthly preset budgets for the card are exceeded.
- A spend analyser: that tells users where they’re spending their money on what goods each money, provides yearly breakdowns and so on.
- Purchase payment schemes: can also be set, eliminating or reducing interest, if monthly installment plans ranging from 3-36 months are specified.
The rollout last year began in five carefully selected branches in central business districts where millennials are employed. It was allied to a geo-targeted social media marketing campaign on Facebook that targeted 21-35 year old consumers within a 1-mile radius of participating branches. Walk-in or online application are possible. The ease and free nature of the card, with a deposit account, were emphasized, and the fact you get higher limits when you save.
An expanded pilot was launched in August 2019 to an additional 11 branches with the associated geo-located social media marketing extended to a 2-mile radius. The second revised phase of the campaign generated a higher conversion at 13.32%, with a cost per led figure of PHP51.58 peso (US$1), and these people were the desired new to bank millennials. A third phase expanded to 103 branches nationwide and linked to the bonus season to encourage people to invest in a bank account and develop their credit history. The conversion rate lowered to 4.78%, still above the 3% benchmark, maintained the same lead cost, and most importantly widened lead generation by 750% v the smaller second phase, increasing uptake.
The campaign garnered 14.41% of new credit cards issued to previously uncarded customers and the delinquency rate was 3.11%, which is better than the allowed 4.15% threshold. The CASA and Credit Card Bundle is now available everywhere.
General Card Services (GCS), a separate standalone subsidiary of the Bank of Ayudhya Plc, commonly known as Krungsri, achieved Highly Commended status in the Best Credit Card Initiative category at the popular Retail Banker International (RBI): Asia Trailblazer Awards 2020 (see separate write-up). This category garnered a lot of entries, so more than one project has been entered into this ‘winners’ book’.