Banks see spike in credit card applications as Covid-19 restrictions taper off

MORE people are heading to banks to get their hands on credit cards amid a confluence of factors relating to the easing of Covid-19 measures such as travel restrictions, banks polled by The Business Times said.

Jacquelyn Tan, head of group personal financial services at UOB, said that the bank has recorded a 44 per cent year-on-year increase in credit card applications for the first quarter of 2022.

Typically, UOB's "new-to-card customers" constitute anywhere from 40 to 50 per cent of applications. In Q1, such customers made up 55 per cent, said Tan. These customers might include those that have recently secured new jobs, or customers that have switched from debit cards to credit cards.

Overall spending has also improved, with figures for January to March this year for both credit and debit segments booking year-on-year growths between 10 and 20 per cent each month, she noted.

"If you look at Q1 and even towards Q4 last year, I would say that Singapore has gone back to pre-pandemic spending levels... which is very encouraging," said Tan.

Some factors that have drawn customers towards signing up for credit cards include the ease of the process, she observed. Customers - both new and existing - can apply digitally for credit cards and other banking products, and get them approved instantly.

Over at OCBC, head of cards business Vincent Tan said the lender's acquisition numbers for March came in 70 per cent higher than the average for January and February. Card spend for Q1 2022 also exceeded Q1 2019, or pre-Covid, figures by almost 20 per cent.

Citibank Singapore's head of credit cards and personal loans Regina Lim said the bank saw a "strong growth momentum" in Q1 with issuing sales surpassing pre-Covid times in Q1 2019. Domestic issuing sales have also been tracking higher since 2020 compared to 2019's figures.

Singapore recently did away with vaccinated travel lanes, and allowed all vaccinated travellers to enter the city-state without quarantine from Apr 1. Many countries around the world have also relaxed travel restrictions, albeit at varying levels, to allow more air travel.

This has prompted more people to pick credit cards that offer travel-related benefits.

Huong Tran, deputy head of cards at DBS Singapore, said there has been an increase in applications for cards since the start of this year, particularly those with "strong travel privileges" such as the DBS Altitude card, which gives customers discounts on travel insurance, rewards for hotel and flight bookings, as well as miles rewards for overseas expenditure.

"The growth is higher than for cashback cards that were more popular prior to Singapore's reopening. We believe that more customers are now actively planning for trips overseas, now that travel measures have eased, and therefore are looking to cards with strong travel propositions," she said.

"We believe that credit card spend will rise in the year ahead, compared to previous years, largely due to the recovery of the travel segment, the opening up of the economy, as well as relaxed restrictions for dining and large-scale events."

Natalia Goh, head of credit cards and personal loans at Standard Chartered Singapore, said the bank continues to see strong online acquisition numbers from March to early April this year. Clients are choosing the bank's Smart Card, which allows them to convert any purchase above S$150 into 3-month interest-free instalments with no processing fee.

"With the opening up of travel, this card benefit will allow clients to better manage their finances and pace the payment of any big ticket travel expense," she said.

OCBC's Tan said the bank has had an 80 per cent month-on-month increase in spend volume in March for air flights.

"We are positive that spend will grow in the months ahead, especially since many Singaporeans are eager to hop on a plane and scratch their travel itch," he added.

Citibank's Lim, however, said that she does not see a "significant correlation" between easing measures, although interest in the bank's miles cards has been "picking up progressively".

"With the easing of Covid-19 and travel restrictions, we noticed that customers are shifting their spending towards travel-related categories," she added.

There is also a notable interest in credit cards among the younger generation, banks observed. UOB's Tan noted that of the new applications in Q1, 40 per cent came from people aged 21 to 30 years old, and another 30 per cent were from 31- to 40 year-olds.

DBS's Tran said the majority of the bank's credit card applicants are in the range of 21 to 39 years old and this range has remained unchanged, while Citibank's Lim said there has been a "slight increase" in customers aged 30 years and below.

Looking ahead, UOB's Tan said consumer spending is coming back "quite strongly" as Singapore recovers from the pandemic. She noted that some behaviours that have displaced the use of cash are "here to stay", including e-commerce and contactless payments, which bode well for the credit-card space.

In order to capitalise on the shifts in consumer behaviour and new trends that emerge, banks need to "continuously innovate" and come up with product propositions that cater to their consumers, she added.