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Clare Francis: Many of us rely on plastic, whether it's daily spending or to reduce the cost of other debts - credit cards can be extremely useful.
But the credit card market is changing. Lenders are more choosy about who'll they'll offer credit to, and they're also seeking to widen their profit margins to give themselves extra protection having been hit hard by rising levels of bad debt in the last year or two.
We're also seeing providers put greater emphasis on long-term value, as they seek to deter customers from jumping from one card to another, as many have got used to doing in the last few years. As a result, that means that consumers like you and I are going to have to change the way that we view credit cards
I've come to talk to Amer Sajed, to ask him for his views on the future of the credit card market here in the UK, and also to talk about a new service they've launched, called 'My Barclaycard'.
Q1: Amer, thank you for spending some time to talk to us today. You've launched this new service called My Barclaycard - can you just explain exactly what it is and how it works?
Amer Sajed: Yes, sure. My Barclaycard is actually the next generation of internet service sites. Consumers have been telling us that they want transparency, they want choice, and they want control over their spend. And so what My Barclaycard attempts to do is give customers all of that in a very simple and easy to use site.
What it allows, for example, them to do is look at their spend, and look at it in many different ways, and do a whole bunch of stuff online that they previously had to call in for.
Q2: Because having looked at it myself, it is very clear and it does take the monthly statement a step forward, and you can clearly see what you've spent, where you've spent it and certainly with some of the graph functionality that's on there you can see (it's perhaps a bit scary for some people!) exactly where your money is going, how much is going on shoes or essential items - or non-essential items in the case of shoes!
But why are you doing this? Is this to help people actually realise what they're spending on?
AS: Yes, and you're absolutely right, the functionality in there appeals to different people in different ways. When I went on myself, I was sort of stunned to see that I'd spent £900 on my vet bills - I have an old cat(!). So, this is all about providing customers choice, and control. This is all about making it transparent for them, because we really do believe that if we have customers, whose lives we make simple, they will stay loyal to us.
Q3: Why do you think people would spend the time to use the site?
AS: I certainly hope they do spend the time. I think customers will use it for different ways - for some - looking for all the information, pictorially, looking at it in graphs, looking at it over a period of time, gives them a sense of where they are spending and puts them in control.
For others they may like the ability to do things online, so for example, you can go and ask for a credit limit increase online, you can ask for a balance transfer online, set up a direct debt etc. And I think the most encouraging fact so far is that we have had 5,000 customers that we used to test this for us, and about 18% of those who looked at this thing had signed up for paperless statements, so I think customers are using it, they are appreciating it. And as more and more customers get onto paperless statements they are going to use this more.
Q4: One of the things you are doing as well at Barclaycard is you're very clearly differentiating different products for different types of people, and I think it's quite indicative of the credit card market as a whole that awareness of what you card and product you are likely to qualify for is becoming increasingly important and consumers can't just assume that they see a card and they'll get it. Can you just explain your different product proposition and what type of people you aim them at?
AS: Yes, we believe strongly that to treat all of the UK's customers as one big customer segment is flawed. People are different and people behave in different ways and they use their credit cards differently. So for example, we have the OnePulse card, which is as you know contact-less and has the ability to travel on TFL...
Q5: TFL is Transport for London?
AS: That's right, yes.
Q6: I think for a lot of people, unless you live in London or have used the Oyster Card system, it's very different isn't it, the concept of a contact-less card?
AS: Absolutely, and that card in particular is geared towards London only. We do have a heavy thrust into contact-less, which we believe is going to be an important part of how we use credit cards in the future. By the end of this year Barclays - Barclaycard and Barclays together - will have about 6 million contactless cards in the marketplace.
We also have Simplicity, which is a low rate product we offer, and we have a slew of rewards cards. Goldfish Rewards is a product that we have in the marketplace as well, so we have different cards for different people.
Q7: And those cards are very much geared towards people who have good credit ratings, but you've also got some cards that are aimed at those that perhaps have got a less than perfect credit history, or haven't got a credit history and want to try and build one up. Which cards are those?
AS: We have the low and grow plastics, they're the Barclaycard Classic and the Barclaycard Initial which are essentially targeted towards those customers who either don't have credit like you said, or have had credit mishaps in the past and they want to re-build their history. So in those cases we start off at low credit limits and as we build experience with these customers, we are able to increase their credit limit as well.
Q8: What do people need to be aware of if they want to use credit cards, and we going to have to change all our behaviour?
AS: I think credit cards are going to evolve, like many financial instruments. One of the things that we believe will happen is we will see more and more innovation into this space. We will see mobile credit cards, mobile payments - we will see innovation. We have a rewards programme that will be going to be launching next year.
And institutions like Barclaycard are going to continue to become more and more transparent to the customer.
Q9: And I guess again that ties back to the MyBarclaycard proposition in that we as customers are going to have to become a lot more aware of how we use credit cards and why we use them in order to identify the right product for our needs.
AS: Absolutely, I think it's a joint responsibility at both the consumer level and at the credit card company level to make sure that we as a credit card company, have good products out there and as a consumer we also have to make sure that we select the right products.
Q10: Do you think the days of sort of interest-free credit and that sort of thing are numbered?
AS: I think that over a period of time we will see those offers becoming fewer and fewer in the marketplace. I think we will see credit card companies innovate and come up with value propositions which are unique and distinct for themselves.
Q11: So, credit will still be available even though there's been a sort of, its harder to come by. We're not going to see the end of credit cards?
AS: I think its absolutely going to be available.
CF: Great, thank you Amer.
AS: Thank you