With the full implementation of the new credit card regulations imminent, what is the situation of bank rectification?

The official account of Beijing Business Daily

2024-06-13 20:39Published on the official account of Beijing Business Daily in Beijing

In July 2022, the former China Banking and Insurance Regulatory Commission (CBIRC) and the People's Bank of China (PBoC) issued the Notice on Further Promoting the Standardized and Healthy Development of Credit Card Business (hereinafter referred to as the "Notice"), which put forward higher requirements for the management of credit card business. Now, the two-year transition period is coming to an end, and the new credit card regulations will be fully implemented from next month. Are there any new changes in the performance appraisal dimension? On June 13, a reporter from Beijing Business Daily learned that the credit card business of many banks has completed rectification before the transition period, and the credit card performance appraisal has also shifted from the previous re-issuance of cards to indicators such as re-activation rate and average card consumption.

Rectification will be completed during the transition period

The new credit card regulations have promoted the credit card business from "extensive operation" to "refined operation". The Notice clearly points out that banks shall not directly or indirectly use the number of cards issued as the single or main assessment index, and the long-term dormant card rate shall not exceed 20%; The cost of using funds for installment business is uniformly displayed in the form of interest. It also requires that the transition period is two years from the date of implementation of the Notice, and if the existing business does not meet the requirements, the rectification shall be completed within the transition period.

At the beginning of July this year, the new credit card regulations will be fully implemented, and on June 13, a reporter from Beijing Business Daily learned from the credit card centers of various banks that a number of bank credit card centers have completed the transformation of business processes in accordance with regulatory requirements to ensure that credit card applications, approvals, issuances, fee collection, information disclosure and other aspects are in line with the new regulations.

In an interview with a reporter from Beijing Business Daily, the relevant person in charge of the credit card center of Guangfa Bank pointed out that the credit card center of Guangfa Bank strictly implements the requirements of the rectification of the new regulatory regulations, and the various businesses involved have been rectified within the two-year transition period. In terms of dispute resolution mechanism, GF Credit Card Center has vigorously promoted the application of diversified resolution mechanisms, and collaborated with branches in various regions to build a territorial dispute mediation grid to promote local dispute resolution, and has developed post-complaint mediation resources for 29 branches as of May 2024.

Judging from the results, the scope of the rectification of each bank is focused on speeding up the clean-up of "long-term dormant credit cards", which refer to credit cards that have not had active transactions for more than 18 consecutive months and have zero current overdraft balance and overpayment. Such as Industrial and Commercial Bank of China, Bank of China, Postal Savings Bank and other large state-owned banks; Minsheng Bank, Guangfa Bank, Industrial Bank, Ping An Bank and other joint-stock banks; Bank of Chengdu, Bank of Ningbo, Bank of Guangzhou, Shanghai Rural Commercial Bank and other urban rural commercial banks have issued notices on the standardization of relevant businesses.

In the credit card marketing process, "we also strengthened communication with customers, explained changes to rules, fee adjustments, etc., and optimized customer service to improve the user experience," said one credit card salesperson.

In addition to cleaning up sleeping credit cards, strict control of the flow of funds is also a major business rectification direction, and the announcement issued by many banks to strengthen the control of the use of credit card funds also makes it clear that credit cards shall not be used for real estate transactions, such as buying real estate, paying down payment for house purchases, buying parking spaces, paying real estate taxes and fees, etc.

Interest and fee specifications are more transparent

Interest rates are a core element of all financial products. In the era of extensive management, the vague display of credit card interest is often criticized by cardholders.

In the Notice, the regulatory requirements of banking financial institutions should be on the home page of the installment business contract (agreement) and the business handling page to display in a conspicuous way all the interest items, annualized interest rate levels and interest calculation methods that may arise from the installment business. The two-year transition period will end, and a reporter from Beijing Business Daily noticed that under the requirements of supervision, the display of credit card interest fees is also more transparent.

Taking a joint-stock bank as an example, there are 48 options to choose from when cardholders apply for bill installments, and in the repayment plan, the bank not only indicates the amount to be repaid and the included installment interest, but also specifically indicates that the current approximate annualized interest rate is 14.31%. Similarly, another bank is also more transparent in the display of interest and fees, taking the installment amount of 5,000 yuan credit card as an example, based on 36 installments, the cardholder needs to repay 176.7 yuan in the first installment, and the bank marked that the approximate converted annualized interest rate (simple interest) is 16.24%.

The approximate annualized fee rate is usually present in the contract and is not displayed to the public, which is also an information that financial consumers have been ignoring for a long time. After the annualized interest rate of credit card installment and the corresponding amount are clearly indicated, consumers also have a clearer understanding.

The relevant person in charge of the credit card center of the above-mentioned China Guangfa Bank emphasized that in terms of interest and fee disclosure, the agreement text is prominently displayed in red fonts, black bold fonts and other methods to prominently display the charging standards and risk disclosure contents involving credit card overdraft interest rates, overdue repayment liquidated damages, etc.; Information such as the installment business agreement, annualized interest rate and related charging standards, principal and interest payable shall be prominently disclosed on the installment business handling interface, and the cost of capital use charged by the installment business shall be displayed in the form of interest.

Su Xiaorui, a senior researcher at Suxi Zhiyan, said that on the one hand, the measure of explicit rates can respond to the call of supervision, and on the other hand, it will be implemented in the standardization of financial marketing and publicity, which will help financial consumers better understand bank products and protect their right to know.

The era of personalized service has arrived

In the past year, under the background of strict supervision and market changes, some banks have stagnated the number of new card issuance, the scale of circulating cards, and the non-performing rate has risen. Banks have long recognized that the "old way" of taking the number of cards issued, the number of customers, and market share as a single or main assessment index is not feasible, and the key is to establish a scientific and reasonable credit card business performance evaluation index system and salary payment mechanism.

A person from the bank's credit card center revealed, "Before the new credit card regulations, banks mainly assessed the number of cards issued, and now they will focus on the transaction situation after card opening, such as the active rate of customers in the months after card opening, the average consumption of cards, the binding rate of third-party payment, etc." In general, there are more assessment dimensions, and more attention is paid to the quality of assessment cards."

From a business perspective, the credit card industry in the stock era needs to pay more attention to compliance and tap the potential of existing customers. Wang Pengbo, a senior analyst at Broadcom Consulting, said that from the perspective of more fierce competition in the current industry, how to do a good job in user service will be the key, and the era of customer segmentation and service personalization has arrived; The second is to pay attention to making good use of the online service system, accelerate the intelligence of the whole business process, break through business blockages, and improve convenience.

"The key to whether credit cards can play a leading role in the consumer finance market lies in whether banks can seize the opportunity of digital transformation, integrate and improve their various business lines, and build an open ecosystem while doing a good job in refined operations. In addition, the liberalization of credit card interest rates also puts forward higher requirements for banks' user stratification and risk pricing, which is not only an important test for banks' market-oriented operation, but also creates opportunities for steadily expanding the credit card customer base. Su Xiaorui said.

Beijing Business Daily reporter Song Yitong

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