29 July 2014

Paul Love

Paul Love - Compass Plus

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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Does One Size Fit All ?

14 March 2014  |  2018 views  |  3

I have just received a letter from Barclaycard telling me that they are not just withdrawing their innovative OnePulse card but are also simplifying their range of credit cards.

While the withdrawal of a very useful (despite the lack of joined up thinking) and truly multi-application card is annoying, the simplification is more disturbing.

We have spent the last few years discussing the merits of customer centricity, using big data for a better knowledge of customer behaviour and preferences, and the panacea of “the segment of one”. This has been borne out by numerous case studies which have shown that when a cardholder has a “relationship” with his card then usage increases.

One of the main advantage of modern card platforms is the ability to manage a highly segmented and differentiated portfolios of card products, and provide a range of compelling propositions that can be targeted at discrete segments of the market, which can be  defined by such factors as demographics, behaviour, risk, affinity, profitability, etc.

At a time when I see many innovate issuers looking to exploit such capabilities to launch new product, attract new customers and drive card transactions, I wonder why Barclaycard have decided to take the opposite approach.

 

TagsCardsInnovation

Comments: (5)

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 17 March, 2014, 14:34

While they're enabled by modern technology, highly targeted products in regulated industries like banking face business challenges related to customer privacy concerns, overdiscrimination charges from customers and regulators, high marketing costs, fulfillment difficulties, and so on. Not sure why BarclayCard took this decision but I'm guessing that one or more of the aforementioned issues played a role.

Paul Love - Compass Plus - Nottingham | 18 March, 2014, 11:17

Ketharaman,

I agree that relentless pressure of regulation and compliance poses many problems for card issuers,  but it does not prevent them from creating attractive propositions targeted to meet customer needs. Indeed the most interesting session at most conferences are usually case studies by issuers showcasing the success of their latest innovative products.

High marketing costs are usually a result of the poor conversion rates (and subsequent high churn) from over marketing such “one-size-fits-all” generic card products, rather than creating a more relevant and attractive proposition in the first place.

It is interesting to see that Barclays (not Barclaycard) are promoting  personalised photo card for their debit card customers.

 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 18 March, 2014, 13:31

@PaulL:

You've probably misunderstood me. 

I wasn't talking about regulation in general. I was referring to the charge of discrimination arising specifically from over-personalization of a product or service in a regulated industry like banking. As you can see from this post by Ron Shevlinthis is a real and present danger in front of banks.

Just as marketing campaigns for undifferentiated products result in low conversion and hence result in high marketing costs, overpersonalized products demand multiple campaigns and therefore have the same effect. I'm not against personalization to a certain degree. But, as I've highlighted in my company blog post To Personalize Or Not To Personalize Is The Question, 'segment of one' and such forms of personalization are neither sustainable for providers nor universally desired by customers.

At one point around 15-20 years ago, all payment cards issued in India used to have the cardholder's photo on them. Not sure when this practice stopped but, when I just checked, none of my current debit or credit cards has any picture. Not sure how many customers miss them. I for one didn't even notice it until I specifically looked them up before posting this comment. 

Paul Love - Compass Plus - Nottingham | 19 March, 2014, 11:41

Ketharaman,

Thanks for the clarification.

I looked up the post by Ron Shevlin, you cited, but only found the quote below relating to regulation and discriminatory servicing – which I do agree with. 

"Second, the banking industry is highly regulated. Even if a bank wanted to personalize the mortgage application for every individual customer, it can’t. I can just see the headlines where some consumer claims discrimination because their mortgage application process was different from someone else’s." 

However the main point of that post is to degree with the proposition quoted from the white paper Beyond Products and Services in Banking that post discusses:

“Mass customizing a service can be a sure route to staging a positive experience. If you design a service that is so appropriate for each particular person, a service that is exactly what the customer wants and needs at this moment in time, then you cannot help but make him go “Wow!” and turn it into a memorable experience.”

This proposition is more in line with my original article but I was referring to products not services, and there are many successful card programs based on this approach to prove the theory.

The fact that a few enormous banks held back by legacy systems and bureaucracy cannot make this approach work but still survive, shows that dominant  players with deep pockets can rely on inertia and great marketing alone.

In Europe some banks put photographs on the back of cards to help fight fraud. But merchants never checked them, and they have now been superseded by the security of Chip & PIN. The new photocards from Barclays are all about mass personalisation and building the relationship with the cardholder.

 

Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 19 March, 2014, 12:37

@PaulL: I'm aware of the Pine white paper but I subscribe to Ron Shevlin's conclusion: "...not all consumers need experiences or transformations."

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Paul Love

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Principal Product Manager

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Compass Plus

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Nottingham

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Ketharaman Swaminathan