Credit Card Services and Comparative Analysis of One Bank Ltd - Assignment Point
Credit Card Services and Comparative Analysis of One Bank Ltd
Subject: Banking | Topics:

  Introduction

There are a number of issuers that have already strengthened their positions in the Credit Card Market in Bangladesh. One Bank Ltd. (OBL), as one of the country’s leading bank in the backdrop of the growing demand and positive response in the market and considering the potentiality to enter into Credit Card Business. In this attempt, I am going to attempt to study the customer satisfaction in terms of the credit card attributes, fees and interest charges and issues regarding ATM booths. This section devotes to the analysis of OBL’s existing Credit Card and performance comparison of services with other market leaders based on a survey data.

 Credit Card of One Bank

One Bank Limited (OBL) launched MasterCard Credit Card business back in April 14, 2004. Presently it has only 8,500 cards in market whereas other contemporary competitors have grabbed a remarkable market share. Lack of dynamic product features, proper marketing effort, structured credit process, supervision of delinquency etc. is behind this miserable situation. Hence, One Bank Limited has re-launch its One Card shortly with all dynamic features, proper marketing strategy, smooth distribution channels (Direct Sales Team), structured collection team and above all with a best Credit Process for Cards Division. There are 4 packages in the “One Card”. Information regarding those 4 packages are mentioned below according to their website, leaflets and brochures. One of the participants inCredit Card Services is the Cardholder who is solicited, screened and approved by the issuer. The letter establishes a line of credit for the customer and issues the credit card. The Cardholder uses the credit card either to purchase goods and services from a merchant or obtain a cash advance from a member for which the cardholder receives a monthly bill from the issuer.

MasterCard  Silver

This is a local MasterCard Credit Card which is valid only in Bangladesh. It can only be used in local currency (BDT) within the country. This type of credit card has a limit ranging from BDT 10,000 to BDT 49,999. This type of card has designed for medium earner category customers.

Usage

Limit

Local Classic/Silver Card (Domestic use only)

 

Local Classic/Silver Card  Tk. 10,000- Tk. 49,999

 MasterCard  Silver Dual

This is basically one plastic that has dual options to make transaction in two currencies. Its acceptance jurisdiction is in country and outside country in BDT and USD respectively. Classic dual is for the medium earner category customers. Its credit limit is USD 100 to 1000 and BDT 10,000 to BDT 49,999.

Usage

Limit

Dual Classic/Silver Card (For both Domestic and International use)

 

 

 

Dual Classic/Silver Card  Tk. 10,000- Tk. 49,999 + US$ 500 – USS$ 1,999

 MasterCard  Gold

This type of card is taka card of which acceptance jurisdiction is only in Bangladesh and transaction currency is BDT. The differences between these two cards are higher credit limit than classic card. Credit limit of MasterCard Gold card is ranging from BDT 50,000 to BDT 5, 00,000. This type of card has been designed for the higher earner category customers.

Usage

Limit

Local Gold Card (For Domestic use only)

 

Local Gold Card BDT 50,000 – BDT 500,000

 

 MasterCard  Gold Dual

This is a high value dual card remaining other features same with classic dual. Gold dual is also for the higher earner category customers and its credit limit is USD 1,001 to 4000 and BDT 50,000 to BDT 500,000. A secured dual card’s limit will be maximum USD 28,000 against lien on RFCD or ERQ account.

Usage

Limit

Dual Gold Card (International/Domestic use)

 

Dual Gold Card BDT 50,000 – BDT 500,000 + US$ 2,000 – US$ 3,000

 

 Credit Card Application Process

 Service Offerings

All the service offerings of different issuers are listed at the following page in Table 1. The following are the highlights of them.

Facility

OBL

BAL

DBBL

EBL

Average Card Processing

& Delivery Time

 

5 Days

5 Days

5 Days

2 Days

Average Fund & Disbursement Time

 

2 Day

2 Days

3 Days

3 Days

Grace Period

50 Days

45 Days

45 Days

45 Days

Payment Due Date

from Statement Date

 

20 Days

15 Days

15 Days

15 Days

Cash Withdrawal/

Advance Facility

Available

(50%)

Available (40%)

Available (50%)

Available (50%)

ATM Facility

18

6

234

27

 Table 1: Service offerings/facilities of different issuers’ cards

1)      Card Processing & Delivery Time

The average time for processing the card and delivery is 5 Days for OBL. EBL takes only 2 days for processing the card and delivery.

2)     Grace Period/Interest Free Period

OBL is enjoying a competitive edge by providing the maximum grace period of 50 days, comparing to 45 days provided by the other issuers.

3)     Payment Due Date from Statement Date

OBL is also the provider of the maximum time in the market for payment due date from statement date with 20 days comparing to the same of 15 days provided by the other issuers. All the other issuers provide cash advance facility of 50% of the credit limit, except Bank Asia, which provides only 40% of the same.

4)     ATM Facility

Cash advance facility has a close relation with ATM (Automated Teller Machine) facility for credit card, which is very convenient for the cardholders to draw cash from ATM rather than going to the bank. Here DBBL is in a leading position with 234 ATM booths all around the country. Currently OBL is on their way to an agreement with DBBL to Share their ATM facility.

5)     Fund Disbursement Time

The average time for the disbursement of fund (through cheque or pay order) to the merchants is 2 day of OBL, 1-2 day(s) of BAL, and 3 days of DBBL and EBL. Being aware of the importance of this matter, OBL is now trying to provide the fastest service in the market.

 Charges, Fees & Attractive Features of Different Issuers

The schedule of different charges and fees of various cards of different issuers are given in the next two pages in Table 2 (local) the focus of this study is primarily on the local cardholders; so, the best offers in cases of all the local charges are listed below:

  • The Lowest annual fee for Basic card local classic is Tk. 1000 (offered by OBL, DBBL & EBL) and local gold is Tk. 1500 (offered by DBBL).
  • The Lowest annual fee for supplementary card local gold is Tk. 750 (offered by OBL) and local gold is Tk. 500 (offered by OBL).
  • No renewal charge for Basic & Supplementary Card this feature is provided by EBL.
  • Late payment fee for local gold is Tk. 300 (offered by OBL) and local gold is Tk. 200 (offered by OBL& DBBL) which is low comparing to other banks.
  • The lowest return cheque fee is Tk. 100 both for local gold and classic offered by OBL.
  • The sales slip retrieval fee is Tk. 100 both for local gold and classic offered by OBL
  • The monthly interest rate of OBL is lowest with 2.5% comparing to 3% of others.

Table 2: Schedule of Charges of Different Issuers’ Local Cards

 

Fees & Charges

 

One Bank Ltd

Bank Asia (Visa)

 

DBBL

Eastern Bank (Visa)

Gold

Silver

Gold

Classic

Gold

Silver

Gold

Classic

Annual Fee Basic Card

2000

1000

2000

1000

1500

1000

2500

1300

Annual Fee [Supplementary Card]

750

500

1500

1000

2000

1000

2500

1300

Renewal Fee Basic Card

2000

1000

2000

1000

1900

1000

0*

0*

Renewal Fee [Supplementary Card]

750

500

1000

500

900

600

0*

0*

Replacement Card Fee

400

200

500

500

700

500

300

150

Late Payment Penalty

300

200

500

250

350

200

500

300

EOL Charge

500

200

500

300

400

300

nil

nil

Pin Re-issue Fee

500

500

500

500

200

200

300

150

 

Cash Advance Fee

2% or TK.75

2% or TK.75

2% or

TK.150

2% or TK 150

2% or TK.100

2% or

TK. 100

3% or TK.100

3% or TK.100

Return Cheque Fee

100

100

350

250

350

250

200

200

Statement Retrieval Fee

50

50

50

50

50

50

50

50

Sales Slip Retrieval Fee

100

100

250

200

250

200

200

200

Out Station Cheque Collection Fee

100

100

100

100

100

100

250

250

Cash Advance Limit

50%

50%

50%

50%

50%

50%

50%

50%

 

Cash Advance Interest

2% P/M

2% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

 

Debit Interest

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

2.5% P/M

Advance Income Tax

NIL

NIL

3%

3%

 

Minimum Payments

5%

5%

5%

5%

5%

5%

5% or 500 H

5% or 500 H

Special Features

NIL

Spouse Card Free

Nil

*No renewal charge for Basic
& Supplementary Card

 SWAT Analysis

SWOT is an acronym for an organization’s Strengths, Weaknesses, Opportunities and Threats. The underlying assumption of a SWOT analysis is that managers can better formulate a successful strategy after they have carefully reviewed the organization’s strengths and weaknesses in the light of the threats and opportunities presented by the environments.

The SWOT analysis of ONE Bank Credit Card Division

S (Strength)

W (Weakness)

24 hours services are being providedFew personal ATM machines
The bank has goodwill in the market as a Leading Private Bank 

Shortage of Manpower

Uses latest technologyLack of perfect monitoring
Better advertising campaignsScarcity of telephone and Computer
The working environment is very cooperative and friendlyLack of space in the office, which is not well decorated
 

Insurance of ‘Credit Card’ through branch

Operation process for producing & delivering cards sometimes delays & creates bad reputation

 

 

Having competitive advantages in Bangladesh

The system is connected with the BTTB & sometime the line remains down for which the cardholder cannot charge

O (Opportunity)

T (Threat)

The Card market has been growing with the increasing acceptability of plastic money in many outlets

 

 

High cash advance charge can reduce the card base

Most of the people now days prefer credit card for security purpose 

Always rush because of shortage of manpower.

The bank has several types MasterCard with attractive features, which can easily grab the market

 

Political instability hampers the environment of the business society
Expanding product lines, some of which is associated with card facilityAs the card base grows high, the number of delinquent cardholder’s increases as well

 Credit Card Services

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