Many brands win new customers

As UAE retail banks are forced to respond to increasingly picky credit card users demanding greater perks for using their plastic, branded credit cards are now among the most popular customer requests.

Co-branded cards are jointly sponsored by banks and retail merchants, which reward consumers with in-store points or Air Miles on every purchase.

As banks find it more difficult to convince account holders to sign up for an additional credit card in the wake of the growing tide of bad debt, they are looking at creative solutions to offer a more extensive range of savings on their company-branded credit cards. Among their new partners are travel service firms, telecom providers and even the health sector, in addition to traditional retailers and airlines.

Mashreq's branded credit card, for instance, lets cardholders earn free talk time for every dirham they spend. Under etisalat's More programme, they can earn additional points if they use the card to pay for etisalat products and services.

The bank said the response to the etisalat Mashreq Card has been "overwhelming" with 200,000 etisalat users showing interest in the card within the first week of launch and 60,000 customers enrolled in six months.

Vimal Kumar, head of Cards Business at Mashreq, says more than 60 per cent of new credit card acquisitions at the bank are customers who have signed up for the Etisalat Mashreq Credit Card. "As of December 2008, co-branded card accounts make up about 40 per cent of the total cards portfolio, while etisalat Mashreq Cards account for close to 30 per cent of Mashreq cards," he says.

The card taps into a new trend of consumers preferring instant rewards rather than the delayed gratification that often comes in the form of Air Miles, for example. "What most people find is that they want some sort of additional reward or gratification, so when they make a choice of how they're going to spend, co-branded cards seem to be a preferred method," says William Keliehor, Credit Cards Head at Citibank for Middle East, Africa and Pakistan.

Based on the bank's findings, Keliehor says, people mainly use their cards to pay for shopping, eating out, electronics purchases, entertainment and travel.

And co-branded cards are trying to tie in to these spending habits with tailormade products.

Despite the downturn in the economy, there are pockets of customers who are still travelling and economically active," Keliehor says. With solo co-branded cards you alienate yourself from a certain percentage of the market. We find that Abu Dhabi has been much more economically active in comparison to Dubai over the past two months. But try to sell an Emirates co-branded card to Abu Dhabi and it doesn't happen."

To sidestep this and reach this important new differential market in what was once seen as a homogeneous area, Citibank introduced its Travel Pass credit card. It gives customers access to about 15 different companies in a bid to offer wider coverage and more flexibility than just a single company card.

"It's like a 15-company-branded card. Not everyone in the UAE finds the value of a Skyward Mile," he says, referring to the Emirates airline frequent flyer programme. Citibank is among a number of banks offering co-branded Skywards cards and Skywards-linked rewards on its credit card products.

Keliehor says the bank sells more Travel Pass cards in Abu Dhabi, Al Ain and other emirates due to airline promotions and mile redemption schemes on Egypt Air, Gulf Air, Jet Airways and Sri Lankan Airlines. In the current economic situation, he says, such a card works well purely because of its reach. "You would have to spend Dh25,000 in a year to get a free ticket, and how many people do you know spend that kind of money on a card?"

However, he says, the Skywards-linked cards are still a big draw because they offer customers a broad range of solutions. "You have to give people an opportunity to earn miles in creative ways. Skywards lets you to earn miles at different locations and to burn those miles at merchant locations like Wild Wadi. There are many options that you can employ to use those miles."

Keliehor says co-branded cards represent more than 50 per cent of its UAE presence. "Behaviourally speaking, we tend to see about 20 or 30 per cent more activity and spend on these cards than we do on our other branded cards."

Also taking the innovative approach is Emirates NBD's Emirates Business Credit Card, which offers Skywards miles but is targeted at small and medium enterprises looking to manage business expenses. Its 1.49 per cent monthly interest rate makes it the lowest among UAE banks – Citibanks' Emirates card has a 2.59 per cent rate while HSBC's Etihad card is 2.5 per cent. The bank also offers travel and lifestyle reward points on its NBD-Dnata credit card, which forms about 15 per cent of the bank's credit card base.

Suvo Sarkar, General Manager of Retail Banking at Emirates NBD, says the most attractive benefit on this card is that customers don't need to accumulate a pre-defined amount. "They can redeem any number of points they wish towards part payment for any ticket purchased at Dnata. What's more, the cardholder has the choice of using his reward for redemption at over 140 airlines."

And as more banks offer all kinds of solutions, banks are continuing to look at ways to stand out.

Catering to the different UAE markets is one solution. HSBC has teamed up with Abu Dhabi-based Etihad to offer free enrollment into the airline's loyalty programme that earns cardholders miles towards free flights and holidays. "While typically all frequent flyer programmes have a threshold for redemption, the Etihad Guest programme is unique in this respect that cardholders can choose to redeem their miles with as little as one mile using the one-mile redemption feature and settle the difference in cash using the Miles+Cash feature of the Guest programme," says Thimal Perera, Head of Cards at HSBC Middle East.

A newer product is Barclays' co-branded British Airways card that was launched in November. The two British brands have joined up to offer travel benefits like free flights with BA as well as other travel-linked benefits for more infrequent travellers, including complimentary membership to BA Executive Club.

"Even if the customer never took a single flight, the restaurant discounts alone would be worth Dh5,400 per year," says Zeeshan Salim, head of credit cards at Barclays. He says Barclays sees the co-brand scheme growing rapidly and becoming a significant portion of its card business by the end of this year.

But banks are not the only ones offering new retail payment solutions to stay ahead in the downturn. Retail, leisure and entertainment company Majid Al Futtaim (MAF) in October launched its Najm credit card draw on the demand for more tangible credit card perks.

The card offers discounts at selected MAF outlets, including Carrefour, Mexx, Lucky Brand Jeans, and Liz Claiborne, as well as Ski Dubai and Kempinski Hotel Mall of the Emirates.

The new joint venture company – with Japanese credit card firm JCB and financial conglomerate ORIX – has said its first credit card is finding many takers despite the world financial crisis. Majid Al Futtaim JCB Finance CEO Rasool Hujair told Emirates Business the company has received "thousands" of enquiries into the new card, which he put down to its offer of more savings and cash-back opportunities. (With inputs by Manisha Koshy)

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