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SINGAPORE : Consolidation is in the cards for the saturated credit card industry here in Singapore.
And DBS Bank predicts that smaller players will be marginalised.
The bank says weaker players are likely to ease off on marketing efforts and stop acquiring new card members.
And the big players are increasingly eyeing overseas markets.
The big three local banks are all key players in the credit card business here.
UOB is the top card issuer with more than 1 million cards, followed closely by DBS with 900,000 and OCBC with 750,000.
And statistics show that each eligible customer, on average, carries 5.5 credit cards in his wallet.
Amid the keen competition, industry players say only the big players will be able to hold their turf.
"Only the big players will survive. The rest of the fringe players will have to cut back on spending substantially. They will move into a maintenance mode, but they won't drop out," said Edmund Koh, managing director and head of DBS' Regional Consumer Banking Group.
They point out that the real game is not about issuing cards, but getting the customers to use them.
And the key to that is to give card members unique consumer benefits that best meet their requirements.
Meantime, industry players are looking overseas for greater growth potential.
The big three banks are either eyeing or already have credit card or consumer finance businesses elsewhere in the region such as Thailand, Malaysia, Indonesia and Hong Kong.
DBS is the third biggest card issuer in Hong Kong with 1.1 million cards.
China is also seen as an important emerging market where the use of credit cards still very much a novelty.
"China is still looking at credit cards more as a functional use, not as a marketing thrust, which is quite different. So the next leap of growth for credit card business in China would be how you market the proposition as a benefit, rather than as a function," said Koh.
"But China being China, the pickup of that sophistication will come very fast, once you achieve that scale."
Singapore could see another 400,000 to 600,000 new credit card holders, if the authorities decide to lower the qualifying income bracket, from the current $30,000 per annum to $18,000.
- CNA /ls
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