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OCBC has turned one-stop tour agency with its latest credit card offering, as it aims for 30 per cent growth in card spending this year. To hit this, it will break down an age-old system of air miles redemption for consumers who have an insatiable need to get out of the country.
The move comes amid slowing growth momentum for credit card spending in Singapore, and as banks must now be wary of non-lenders that are inching into the banking space.
OCBC on Monday launched Singapore's first air miles card for its high net worth and affluent customers, which lets card-holders redeem flights on all airlines, and at any time.
In tackling this mature S$10 billion market, OCBC is targeting roughly 300,000 residents here who earn at least S$100,000 a year, and who prefer rewards perks over cash rebates.
Holders of the new Voyage card - made of a metal used in aircraft construction called duralumin - can redeem flights with reward points directly through the bank within hours. This is unlike existing systems, where miles redemption can take weeks, and card-owners are not guaranteed a seat by the airline that the miles are tied to. On top of that, the miles - which are based on card spend - will not expire, and there will be no fee charged for conversion.
"In the world of Harvards and Stanfords, they are teaching their students how to intermediate business," Desmond Tan, head of group lifestyle financing at OCBC, said at a media briefing. "People like Paypal and Alipay are thinking about how to take a chunk (of business) from the bank. We have also reverse engineered to think, how can we take a chunk off our competition, and not only from banks ... we're thinking about how we can do better than a tour agency, and how do we do better than a KrisFlyer."
To implement this, OCBC will effectively buy the airline tickets on the customers' behalf, and take the miles as a form of currency, said Mr Tan. The miles can also be used to exchange for hotel stays and transport services. Travel-related spending made up 40 per cent of all purchases by OCBC customers last year.
OCBC's cards business grew 23 per cent in 2014, ahead of the industry average of 7 per cent - though Mr Tan noted the bank has gone in later in the game than the competition.
But this also comes as overall growth has been declining from 8 per cent in 2012, to an expected 5 per cent this year. Singapore's credit card market had ramped up quite quickly in the post-Lehman period, as the number of white-collar expats was quite sizeable then, said Mr Tan.
The move reflects how banks are reviewing customers' spending habits to develop relevant products, said Jeff Price, managing director, decision analytics, at data analytics firm Experian Asia Pacific.
Notably, ANZ on Monday also launched a credit card that allows customers to customise their rebates. This followed a survey by the bank that showed consumers wanted such flexibility. Sanjoy Sen, managing director for ANZ Retail, Asia Pacific, said in a statement: "Customers are driving banks to provide solutions on their terms instead of the banks'."