Card Chasm

One of the misperceptions perpetuated by the mainstream media is that banking is a pretty simple business to be in – it’s just a matter of obtaining a banking licence and then waiting for people to turn up and give you money.

In truth it’s a tough business to be in. Legislation effectively mandates that all of the products should be the same and the wholesale finance markets dictate how much you can charge and therefore pay for your services.  In reality retail banking is a tough, disciplined, tight margin business.

This means that the banks also all compete at the margin; they know that they can’t compete on price over the long term.

The fight at the margins is especially true in the bits of the business which are highly commoditised, like home loans or credit cards or retail accounts, where price reward and the belief in service construct the offer.

This blog is about credit cards – in particular about credit card service – by the big four retail banks.

Here’s the scenario. As a business, CoreData takes out a credit card in each of the four big retail banks and runs them without any issues for three months, then destroys them, reports them as destroyed and makes a map of how hard it is to cancel them, how hard it is to get them reissued and how long after they are called the replacement cards actually show up.

To add some spice to this we throw in the airline cards – Qantas Frequent Flyer and Virgin Velocity Lounge and Rewards Cards.

So here’s what was cancelled:

At 10 am on Monday 7th of February each of the above-mentioned cards were reported as lost and replacement cards requested.

The good news is that this took almost no time at all – all cards had been cancelled and re-ordered in less than half an hour.

Each of the businesses, without exception, when contacted required a brief wait on the phone, asked some privacy questions and cancelled and reissued the cards.

But here’s the bad news. It’s now been two weeks since the cards were cancelled and re-issued and only two replacement cards have turned up.

Both the Amex Gold and the CBA black business card showed up on the same day – the Friday morning of the week they were cancelled – a neat and competent service.

None of the others have arrived. What’s curious about this is that one of the two CBA cards has arrived, suggesting that there is a serious disconnect in the business.

This week we plan to go back into the fray – in the interests of research – to find out what is happening and when we can expect the cards to show up.

We’ll keep you posted as to what is happening in two weeks time.

On another note, when this burningpants correspondent applied for the NAB Card (in order to gain the Frequent Flyer Points), the process of applying was very smooth. The account was approved and the card arrived in a week. CitiBank – with the same data – refused me which is interesting in itself.

The NAB card arrived quickly but on the card it said ‘Mrs’ rather than ‘Mr’. To be fair, my writing is pretty messy.

The service centre was called and told of the error. They laughed and promised to reissue the card immediately.

No card has ever arrived.

So I tried using the card. It worked. In fact it worked all over the world.

It’s been used in Manila, China and New Zealand and no one ever questioned why I was using a card made out to ‘Mrs’, or if I was a six foot three inch, 18 stone, 46 year old transvestite.

The second thing worth noting is that I applied for my Virgin card in October. I’ve used the lounge several times since then by quoting my membership number – but no card has ever arrived.

Despite what Virgin says about wanting business customers, the company’s actions say otherwise.