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97% of consumers prefer traditional banks for top-of-wallet credit card: report

However, most respondents said they opt for other lenders for additional credit products.

A study conducted by TransUnion showed that most consumers in Hong Kong choose traditional banks for their top-of-wallet credit card.

The report noted this is reflected by younger consumers, where credit cards offered by traditional banks are the primary choice of 93% of people aged 20-30 years.

However, there is also a strong preference for alternative sources when it comes to availing other credit products. The report said 96% of consumers tend to go for other providers when getting services like mortgages, revolving loans and personal loans.

“Of those that do take out additional credit products with their top-of-wallet credit card provider, 75% choose that same provider should they take out a loan on card. Just 12% have historically turned to the same lender for a mortgage, 5% for a revolving loan and 2% for a personal loan,” TransUnion said. 

Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion, noted that the credit market in Hong Kong remains highly competitive. He said lenders should implement strategies to maintain top-of-wallet status and increase multiple credit product holdings. 

“With a resurgence in economic activity following the ease of pandemic-related restrictions since the beginning of last year, lenders are encouraged to leverage these opportunities to drive further growth and expansion,” he added.

The TransUnion report also emphasized the need for lenders to be able to predict and address possible loyalty shifts.

According to the study, 20% of multi-card Hong Kong consumers switched to another lender within a year. On average, these consumers switched about 51% of their balances from the previous top-of-wallet card to another to a new preferred top-of-wallet lender.

TransUnion said this indicates a significant loss for the previous preferred lender.

According to the report, there are some indicators that can help in predicting switch in loyalty.

Retention strategies may focus on consumers who revolve a higher ratio of card balances as they are less likely to switch. Moreover, the higher a consumer’s average card balance and line utilisation, the less the likelihood that they will switch loyalty, TransUnion said. 

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“In a highly competitive environment where different lenders proactively target consumers, fostering strong loyalty through effective credit limit assignment strategies, monitoring revolving trade frequency and constantly assessing consumers’ leveraging behaviour are crucial,” Sun said. 

“Monitoring consumers’ changing characteristics helps card issuers to identify and understand what prompts consumers to switch between cards, enabling them to develop effective retention strategies. Losing top-of-wallet status can result in a silent balance sheet erosion of up to 51%, underscoring the significance of proactive portfolio management through data-driven insights,” Sun added. 

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