Meituan, which has never been able to compete head-on with Alibaba and JD.com in the financial field, has teamed up with a number of small banks to issue Meituan co-branded credit cards, making unexpected use of the credit card business to maximize the value of platform traffic. At the same time, it is also quietly expanding the B-side territory of financial technology.

Unlike other Internet platforms that only provide partial traffic, Meituan uses almost all traffic to help regional banks acquire customers accurately and on a large scale.

At this point, with the number of cards reaching tens of millions, where will the counterattack of Meituan and small banks lead?

Use technology to level the gap in "standards"

In my country, only commercial banks holding credit card licenses approved by the China Banking and Insurance Regulatory Commission are legal credit card issuers. As an Internet company, Meituan is not included in this list, but after more than two years of accumulation, Meituan’s name has appeared on at least 10 million credit cards.

Currently, China Merchants Bank is firmly at the top of the list of joint-stock banks in terms of credit card issuance volume. According to the 2020 semi-annual report data, the number of cards in circulation has approached the 100 million mark. Followed by Ping An Bank, with nearly 70 million cards in circulation.

However, logically only standardized products can be quickly "copied and pasted". However, city commercial banks and rural commercial banks distributed across the country first face the "unrestrained" restrictions in the card issuance cities during the card issuance process. standard".

According to regulatory requirements, even if a bank obtains a credit card license, it can only issue cards in the cities where it has opened branches. For example, if a commercial bank in a southern city does not have a branch in Beijing, people who live or work in Beijing cannot apply for the bank's credit card.

This requires Meituan to configure sufficiently sophisticated LBS (Location Based Services) logic on the credit card promotion and application entry pages displayed on the front end so that users in each city can "just" see it. to the credit card he can apply for to avoid deviations in user experience and ineffective waste of platform traffic.

The person in charge of Meituan’s co-branded credit card business said that Meituan exports sophisticated LBS technology and algorithms to banks to help banks implement grid operations, which greatly improves the efficiency of bank personnel’s activation operations.

Although the application of LBS technology is just a small detail, using technology to smooth out the efficiency loss caused by differentiated needs, thereby achieving the efficiency and quality improvement of "standardized" production, is what Meituan Basis of cooperation with 12 regional banks.

In September 2018, based on preliminary testing, Meituan’s co-branded credit card business was officially launched. It abandoned the pure diversion mode of cooperation and began to help banks build risk control capabilities and operational capabilities, so that the front-end has the ability to acquire customers so that it can exert real value. This in-depth cooperation model helps regional banks complete the digitalization process of credit card business by providing product and service support for the entire business process and the entire customer life cycle.

At present, after Meituan reaches cooperation with regional banks, it can help city commercial banks complete the establishment of credit card business systems in an average of three months. It generally takes 6 months for peers to build the same system.

A different financial landscape

Although there are strict geographical restrictions in the card issuance process, when it comes to card use, any credit card with the UnionPay logo can be used unimpeded. For purchases on the UnionPay network, no matter whether the card issuing bank is a large state-owned bank, a joint-stock bank, a city commercial bank, or a rural commercial bank. Because of this, many regional banks that are interested in transforming their retail business use the credit card business as a breakthrough. It is the general trend to cooperate with Internet platforms with large traffic to issue cards, not only Meituan, but also e-commerce, taxis, news browsing, and social networking. , and even the “application for credit card” section has appeared in the financial section of tool software platforms.

But unlike other Internet platforms that only provide partial traffic, Meituan uses almost all traffic to help regional banks acquire customers accurately and on a large scale.

In Meituan’s financial landscape, the proportion of credit cards is much larger than that of other Internet platforms. A few months ago, Meituan launched the "monthly payment" function. The market exclaimed that Meituan, a credit payment tool, launched a head-on challenge to Alipay's "Huabei" and JD.com's "Baidiao".

The above-mentioned credit card industry observers believe that Meituan has chosen a different path from other Internet platforms. Meituan hopes to use this method of cooperation to break away from the traditional simple diversion model of cooperation between the Internet and banks and achieve a true financial technology output. "Transition from making money from traffic to making money from technology."

Take the Bank of Shanghai as an example. It was one of the first regional banks to get involved in the credit card business. In the early days, it took the bank 7 days to issue 1 million credit cards. About 20 years ago, and now, through in-depth cooperation with the Internet platform, the time for issuing 1 million cards has been shortened to only 7 months.

The number of cards issued by Bank of Jiangsu in 2019 was six times that of the previous year, among which the number of Meituan cards issued exceeded one million. The financial report of Bank of Tianjin also shows that as of June 30, 2020, Bank of Tianjin had issued 132,300 new credit cards this year, a year-on-year increase of 1,956, of which Meituan co-branded credit card issuance accounted for 99.2%.

In-depth understanding of credit card operations

Through in-depth alliances with Internet platforms, and with the help of Internet traffic, scenarios, technology, brands and other advantages, more and more regional banks will be more effective in Young customers who have stayed away from banks are returning to the bank account system.

After crossing the threshold of tens of millions of credit cards, Meituan and its partner banks are faced with another question: How to improve the profitability of credit cards?

Industry data shows that due to the impact of the epidemic in 2020, many banks slowed down the issuance of cards in the first half of the year, and instead focused their business on the operation of existing cards, making good use of large installments, Bill installment, card loan cash withdrawal functions, increasing intermediary business income, and improving the profitability of interest-earning assets are the current focus. At this stage, Meituan’s small and frequent consumption orders cannot continue to bring advantages - the amount of a single order is small and the overall consumption bill is not thick enough. How to attract users to pay more installments?

The person in charge of Meituan’s co-branded card business did not shy away from this issue during the interview. "Meituan has spent a lot of effort on stock operations this year. The overall idea is to drive the frequency of transactions through scenes within Meituan, and to drive the amount of transactions in scenes outside Meituan through WeChat and Alipay card binding. Because the bill is thick enough, interest-earning assets can be generated. The Meituan scenario is a very important starting point for customers to use this card and establish a connection between the bank, Meituan and customers, but it is only regarded as a card by customers within the scenario. It’s not what we want to use as a takeaway card.” He said that by reaching customers through multiple channels, including offline and offline, we hope to make this card a “main card” used in more scenarios in users’ lives. .

The foothold of credit card operation capabilities lies in refinement, backed by an efficient team that understands the business.

According to general industry rules, a single bank's issuance of 1 million cards is the break-even point threshold, and reaching 3 million cards can truly achieve profitability. In this process, banks must continue to invest in human and capital costs, and the benefits are relatively delayed. Although using Internet platform channels to issue cards can shorten this investment cycle, it still requires banks to have firm confidence in this business and solid financial resources. foundation and the ability to work intensively in the region.

The person in charge of Meituan’s co-branded card business said that when looking for a cooperative bank, they will screen the above items. More importantly, Meituan and the bank will use a financial card that has been verified by other bank data. model to calculate the process of this card from cost investment to profit realization. Both parties will review this model regularly and will be more confident in the prospects of cooperation.

In addition to transaction and fee income, the credit card business can also feed back retail sales. Based on daily consumption scenarios, it can help banks accumulate massive data such as customer consumption preferences and card usage habits. When cross-selling with other businesses, it also has Helps improve customer information, thereby providing a foundation for banks to mine data value and achieve differentiated operations.

Take Bank of Qingdao as an example. It was the first city commercial bank to cooperate with Meituan in issuing credit cards. As of September 17 this year, the bank had issued a total of 1.81 million Meituan co-branded credit cards, and its users had an average monthly transaction volume of 1.81 million. The number is close to 10; on average, among every 100 Meituan co-branded credit card users, 26 users become the bank’s dual card (i.e. debit card and credit card) customers, and 13 users become the bank’s financial management customers.

On the way forward for Meituan and cooperative banks, there is another obstacle that cannot be overcome by humans. Credit cards must be interviewed at offline outlets - it takes two minutes to fill out the application form online, and the bank will return the review results in a few dozen seconds at the fastest. All this efficiency that satisfies young people in the Internet age often makes the final interview take several hours to go back and forth. The bank fell short on the road. “The proportion of traffic leakage during the interview process is very high.” The person in charge of Meituan’s co-branded card business also admitted this.

The industry generally believes that from a technical point of view, there is no obstacle to using remote interview methods. The key lies in the supervision's consideration of risks. The above-mentioned credit card industry observers believe that once regulations allow remote and online credit card signatures, the advantages of Meituan's co-branded cards will be further released, and the compliance risks will be lower than cash loans and joint loan models.

Will Meituan Finance take a different path from other Internet platforms to monetize traffic? The market will wait and see.