[Opinion] Card Companies Taking Flight with MyData Business

by Lee Kwangho

Published 23 Feb.2021 10:58(KST)

Seo Ji-yong, Professor, Department of Business Administration, Sangmyung University

Recently, credit card companies that have received full approval for the MyData business are making busy moves. They seem ready to immediately incorporate the accumulated customer sales information and big data analysis capabilities into their business. For now, credit card companies are forming data alliances to secure consumer information across various industries. Their alliance partners are diverse as well. They are quickly signing partnerships for data exchange with telecommunications companies, credit information agencies, and retailers. In line with expectations for credit card companies, which have received the most full approvals for MyData in the financial sector, the creation of innovative financial services by these companies is drawing attention.

The financial industry will undergo many changes due to the MyData business in the future. First, the transition to a data-centric value chain will accelerate. Credit card companies are expected to reduce their general public-oriented mass advertising expenses. Instead, they will focus on strengthening feedback with loyal customers through the launch of customized services.

It is important to pay attention to the case of Monzo, a UK company that started as a prepaid card service provider in 2015. Monzo adopted a no-advertising strategy and used the marketing cost savings to announce a roadmap for an upcoming innovative service called Trello to consumers. Through this, they gather service ideas from loyal customers and strive to reflect them as much as possible in their services. Based on joint account services and Dutch pay services, Monzo’s customer base increased more than fivefold over about a year after 2018. This was the result of shifting from universal services for the general public to customized financial services focused on loyal customers.

Next, sales methods that increase customer touchpoints are expected to become prominent. With the widespread adoption of non-face-to-face financial transactions, contact points through platforms are expanding more than offline sales channels. In particular, the competition to secure competitive platforms is likely to accelerate. Securing advanced platforms to obtain customer information and transaction history has become a necessity rather than a choice.

Bank Lemi, a leading financial institution in Israel, launched Pepper, a mobile-only platform, as a separate organization independent from Lemi. This was to respond quickly to diverse customer demands and new technological innovation trends. Pepper’s business motto is to provide fast and accurate service like Amazon, rich content like Google, and enjoyable services like Facebook. Pepper’s contextual AI system aims to realize personalized finance by developing content tailored to customer characteristics. As a result, the number of young consumers, digital natives using Pepper, has rapidly increased.

Pepper’s platform advancement is still ongoing. Pepper is focusing on platform enhancement by launching an investment platform that allows participation in fractional shares trading on the US stock market. This is to prevent customer churn to similar service providers by upgrading the platform with various service functions and to avoid a reduction in customer touchpoints.

For the time being, credit card companies are expected to focus on developing new products that meet financial consumers’ high interest in high-yield financial products amid the continued low-interest-rate environment. The assets targeted for investment are also expected to diversify to include cryptocurrencies and US stocks. In conclusion, inducing rationalization of financial consumer spending and developing personalized services that invest surplus funds in various assets with expected high returns are projected to guarantee the business success of credit card companies.