HDFC Bank Aims To Dominate Credit Card Market Via Premium Trend

HDFC Bank, India's biggest private lender, is strategically positioning itself to capture a substantial portion of the credit card market by capitalising on the trend towards premium services. In recent months, HDFC Bank has partnered with various entities such as Swiggy, Retailio, and IRCTC to introduce co-branded credit cards, thereby expanding its footprint in the credit card sector. These cards are designed for both the mass-affluent and middle-income segments.

During the launch of its inaugural co-branded credit card in the hospitality sector, in collaboration with Marriott Bonvoy, HDFC Bank's Cards Chief, Parag Rao, attributed the move to Indians engaging in "revenge spending" on travel, both domestically and internationally, following the COVID-19 pandemic. 

However, industry analysts suggest that the trend of increased consumer spending on premium products has now superseded the initial burst of "revenge spending" across various income groups. Asutosh Mishra, lead BFSI analyst at Ashika Stock Broking, noted an economic upturn and increased earnings, allowing banks to capitalise on the populace's openness towards credit. Mishra stated, "Premiumisation is happening across the chain and India, as a society, is more open to taking credit."

After the Reserve Bank of India prohibited HDFC Bank from issuing new credit cards or digital launches due to online network disruptions in December 2020, the bank experienced a decline in market share. This figure decreased from 25.6 per cent to 20.7 per cent in June, continuing to impact the bank. Nevertheless, HDFC Bank outperformed its competitors in credit card transactions, both in terms of value and volume, in the Indian banking industry in June, according to recent RBI data. 

In terms of credit card transaction volume at point-of-sale terminals, e-commerce, and other channels, HDFC Bank led the way with an impressive 6.55 crore transactions, followed by ICICI Bank and SBI with 4.99 crore and 4.49 crore transactions respectively. The bank's outstanding credit cards amounted to 1.83 crore in June.

Rao emphasised the bank's commitment to identifying customer spending patterns and forming valuable partnerships that enhance customer value, thus strengthening its hold on the market.