Home ›› 17 Oct 2021 ›› Corporate
“Credit card is a convenience and freedom which fulfills one future needs, we will be targeting the lower income group because most of the time this group seems out of focuses,” Md. Minhaz Uddin, Head of Cards, LankaBangla Finance, told The Business Post’s Ibrahim Hossain Ovi in an interview
The Business Post: Tell us about the present status of credit card business in Bangladesh?
Minhaz Uddin: Credit card usage in our country has gone up sharply in the last couple of years. Due to its convenient nature, the number of users, as well as usages, is increasing day by day.
The usage of credit cards increased sharply during the pandemic period as people carried out their shopping and banking transactions without visiting bank branches. Not to mention that the pandemic has given it extra leverage during shutdowns when people stayed home and ordered their necessities through credit cards.
In the last couple of years, we have seen that digital payment and e-Commerce has boomed. According to the Bangladesh Competition Commission, the size of e-commerce in Bangladesh soared to Tk 166.16 billion until August 2021, which is roughly 29.67 times higher than the amount in 2016.
Now, from paying utilities to tuition fees, everything is in your palm.
Credit card transactions collectively stood at Tk 1,934 crore in June, up 13.25% from a month earlier and 115.46% year-on-year. In the last fiscal year, credit card transactions totaled about Tk. 18,450 crore, up 45.84% year-on-year, according to the Bangladesh Bank.
Digitalisation and an increased tendency to do online transactions rather than handle cash are pushing card transitions higher. This is a good sign for the economy, as people are consuming more, which would play a role in growing the country’s economy and help us recover from the massive Covid-19 economic shock.
TBP: Do you think the use of credit cards is increasing in line with people’s income? If not, please explain?
Minhaz Uddin: Credit card is a convenience and freedom which fulfills your future needs, and the usage is not dependent on the country’s per capita income. Think about the EMI facility of credit cards. The spending you make today can be returned in up to three years’ time.
This facility will give you an ease on spending a big amount which may not affect your income. But increase in per capita income gives us the opportunity to extend our business, thus making the credit card industry bigger.
And of course, in many cases, you may have little choice. If you simply do not have enough cash in your pocket that day, or if you encounter a sudden emergency or change in your financial situation, a credit card may be your only option.
Some businesses do not even accept cash anymore, for a variety of reasons including customer and employee safety.
But ultimately, responsible credit card spending is a good thing. If you treat it like “real” cash and swipe only what you know, you can pay back in full and on time, and you can reap many benefits.
TBP: Which class of people currently uses credit cards the most in Bangladesh?
Minhaz Uddin: A credit card may just seem like a plastic card, but its benefits far outshine its humble outer form. It is not only secure and easier to carry, but it also gives you a sense of status. With each new generation of banking customers comes a more innate understanding of technology and, as a result, an increased expectation of digitised experiences.
Millennials have led the charge to digitisation, with five out of six reporting that they prefer to interact with brands via social media; when surveyed, millennials were also found to make up the largest percentage of mobile banking users, at 47%.
Based on this trend, we can expect future generations, starting with Gen Z, to be even more invested in omnichannel banking and attuned to technology.
Hence, we are moving forward towards cashless society, most of us tend to have credit card for its lucrative discount benefits and facilities. We have seen during our sales campaign, people of every class are very much keen to avail a credit card.
TBP: Covid-19 pandemic has badly impacted economic activities. What are the impacts you faced in credit card business?
Minhaz Uddin: The income of many customers was affected by the Covid-19 pandemic. But they needed to buy necessary items during that time. During the pandemic, credit cards became more popular.
From some statistics it has been found that the average daily transactions have increased by almost 35% then previous months. During lockdown, customers took advantage of cashless pay through credit cards, and ordered their necessities from e-commerce markets while staying at home.
Customers became aware of the possible spread of the virus through paper money, so they began using credit cards more.
TBP: What kind of challenges the sector is facing?
Minhaz Uddin: The credit card business presents banks and credit unions with a unique challenge – how can we satisfy older generations and younger generations of banking customers at the same time? The answer is a hybrid banking model that integrates digital experiences into traditional bank branches.
In an Accenture Financial Services global study of nearly 33,000 banking customers spanning 18 markets, 49% of respondents indicated that customer service drives loyalty.
Therefore, by knowing the customers and engaging with them accordingly, financial institutions can optimise interactions that result in increased customer satisfaction and wallet share, and a subsequent decrease in customer churn.
This is vital for us as you may be aware that a major amount of people are still not very concerned about Credit History. To my opinion, the most challenging issues are customer financial knowledge, and sound understanding of card security and usages.
I also believe that the credit card market can grow more if the policy obstacles are reduced. Availing a credit card is still followed by a number of financial documents which are not always readily available to the customers.
It has also been witnessed that the govt made policies without considering financial consequences of credit card issuers. Government policy and regulations, insufficient knowledge about credit cards among vendors and customers, trustworthiness and fraudulent activities are the main challenges for doing business in this sector.
TBP: Why does a customer use your card? What are the extra benefits of your card compared to others?
Minhaz Uddin: In this competitive industry, to keep pace with the market, we offer what makes our credit card attractive in terms of benefits. Every year we offer exclusive discount offers from the country’s top notch brands.
We let our customers use our cards without any annual charges for a certain number of years. We have the biggest payment network in the whole industry. We have also partnered with most of the brands available in the country.
You may remember that a few years earlier it was beyond anyone’s imagination to become a partner without acquiring a business. We have proved it is possible through partnerships.
We have made an enormous partnership network with most of the business entities, allowing us to offer several benefits to our customers.
As a LankaBangla Credit card customer - we believe making you feel exclusive and important is our number one goal.
With the Rewards Programme you can accumulate reward points every time you spend – and it gives you the freedom of redeeming your points from our large range of tie-up partners with our Mobile App facility “FinSmart” from Google play store. Our customers also receive SMS and e-statement services.
We have Credit Shield Insurance Coverage with Accidental death. Our 24/7 Call Centre assistance is always here to assist you and guide the way so you do not have to worry about a thing!
With a Lanka Bangla Credit card you will be getting a complimentary card for the first year, up to 45 days of interest free period, and cash withdrawal facility up to 50% of the credit limit. You will also be getting nine free supplementary cards and access to all MasterCard & VISA POS and ATMs nationwide – convenience is right in your pocket.
LankaBangla Titanium MasterCard gives you free access to the Balaka Executive Lounge managed by the InterContinental Dhaka.
Our Card member can enjoy convenience and easy access to cash withdrawal at all ATMs displaying VISA and Master logo only Bangladesh, and at all merchant establishments including groceries, hotels, restaurants, airline & travel agents, hospitals and diagnostic centers, jewelry shops, electronics and computer shops, fashion and Lifestyle stores, and whatnot! In addition, with Lanka Bangla credit cards ezypay program, you can make your dream purchases at our ezypay partner outlets, and pay at your own pace with installments spread up to 24 months.
TBP: What is your future plan to expand the customer base?
Minhaz Uddin: Covid-19 has been a live stress test for financial institutions. The pandemic put a spotlight on challenges already faced by the banks’ operating models, as well as their technological and digital capabilities.
The pandemic has accelerated the banks’ digital agendas and has prompted financial organisations to rethink their transformation journeys with the goal of capturing new growth opportunities and creating more intelligent customer experiences. Growing our customer base is a vital part of building the success of our business, as we constantly need new and existing customers patronising our brand. At LankaBangla, we are focusing on building a great relationship with our loyal customers.
If you provide great customer service to your current customers, you will be able to reap the benefits by retaining them as loyal customers, gaining referrals for new customers, and even improving your current products and services to attract more customers. One way to implement this strategy is investing in a team who specializes in customer service.
Today’s consumers are increasingly more and more self-reliant. We have been conditioned by digital services like Netflix, Amazon, and Google to find what we want, whenever we want – so much so that we yearn for and expect it.
This is all-the-more true with the impact the novel coronavirus pandemic has had on the consumer banking industry, limiting in-person and in-branch service so much so that customers were left with no other option but to adopt digital and mobile banking.
We will be targeting the lower income group because most of the time this group seems out of focus. The concept of educating potential and current customers on financial literacy is not necessarily new.
At a time when competition in retail banking is fierce, targeted financial education programmes can open new roads into untapped populations.
