The Bankwatch

Tracking the consumer evolution of financial services


There are times when I think Banks act with incredible stupidity, then somehow one manages to leap out of the pack and really display a fundamental lack of any grasp of how consumers think. Hat tip Javelin.

Barclaycard customers could soon be hit with an annual fee of up to £20 if they fail to use their cards “enough”. The UK’s largest credit card provider says it is considering an annual charge for its one million customers who rarely or never use their credit cards.

Source: The Guardian

I can just picture the salivation in the conference room, as the product folks outlined the upside for this approach. “this strategy will create GBP xxxx of new revenue, without any marketing effort …” or words to that effect.

Part of that analysis would have centred on the costs of maintaining cards on the system and technology would happily provide that cost, per card, that is sucking the Bank down the tank, and here is how we can recoup it. Product people would be ecstatic to produce revenue without marketing dollars.

So lets think about this, and the potential outcomes:

– x million card holders receive a credit card bill during a period when they never used the card. What percentage of them will call the call centre?
– how many of those customers will take a look in their wallet, and review the cards they have, prioritise them, realising all Banks will follow suit being the big bad oligopoly that they are, and in so doing where will Barclaycard fall …..
– total revenue gained, over next two year, vs revenue projected?
– ask the originator of this approach if he or she really believe that the revenue from the residuals who stay with Barcalycard is worth the downsides to this approach. (Maybe they just hired someone from a telecommunications company – that could explain it)

Some suggestions:
– stop sending statements to those customers – offer email or online banking. Costs are essentially eliminated, despite waht the cost allocation geeks in technology will tell you.
– Institute a rule that statements are for active cards only. (Watch the product people cringe over this … “how else can we communicate with our customers” )
– take a look at your CRM strategy – engage those customers; maybe they are nice people who might ne interested in other services.
– go elsewhere for revenue!!!!

Relevance to Bankwatch:
At a time when Banks are generally not liked by consumers, when you are moving your HQ out of Britain to Holland, you are embroiled in one of the largest mergers, ever, is this really the time to attack customers?

Written by Colin Henderson

May 29, 2007 at 15:06

One Response

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  1. […] makes money — Latteland is risking what’s made it successful. And it isn’t alone. Colin recently commented on Barclay’s decision to impose a fee on cardholders with inactive […]

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