How Fintech Companies Are Helping The Failing Credit Card Sector
How can the fintech industry provide a better service? A good example here would be challenger bank Tandem, which launched a credit card that offers cashback on purchases, no exchange fees when spending abroad and real time updates on purchases after acquiring the banking arm of Harrods.
Tandem now has '100,000 happy customers spending freely abroad, nurturing nest eggs, and managing money across all of their bank accounts'. The challenger also said that it aims to make people ‘life-rich’.
As well as this, Tandem’s customers will benefit from what the company calls 'artificial intelligence driven highlights' - which flag rising bills, duplicate payments and other notable aspects of expenditure.
Something similar is happening in the US with the credit card startup Petal, which offers a credit card that is for those who are new to credit and are just establishing credit. Also, as the approval process is different from others (it does not consider lack of past credit history), Petal’s annual percentage rate is up to 50% lower than other entry-level credit cards.
In a similar way to Tandem, Petal also gives its card holders insights into their payment history and habits but goes a step further in helping its customers make sensible decisions. For example, the company helps them assess how much interest will be paid based on the payment plan the individual has set in place.
The latest of this new breed of credit card startups is Jaja, which is preparing to launch its first mobile-controlled credit cards on the back of £7 million in funding. Jaja is one fintech that has partnered with Visa, which also recently launched a 'FinTech fast-track program' to help early stage startups gain access to its global payments network. Others that have joined the program include Revolut and Wirecard.
Jaja CEO Neil Radley, previously CEO of Barclaycard Western Europe, believes the credit card industry needs to change. "The strategy of acquiring customers using balance transfer offers with hidden fees has been a race to the bottom.
The industry now needs a major upgrade - it's time to need to put the customer first, provide greater transparency and help consumers take control of their finances," said Radley. Jaja’s credit card is "far more simple, fair and transparent to use for busy people living modern lifestyles."
As well as removing FX charges and providing a real-time view of transactions to prevent any end of the month bill shocks, Jaja wants to help its customers save money by giving them the option to move their balance to lower rate products such as instalment loans.
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