Women are in control of 79.2% of all private purchase decisions in Europe and 80% in the US – key reasons why many banks have women-specific credit card options. As Louise Naughton reports, specialised card benefits can attract female customers and may help credit card issuers reduce NPLs.
What do women want? It is the age-old question that has plagued mankind since time began, and a challenge the financial industry is now setting itself to answer.
Modern women lead busy, demanding lives and are faced with very specific needs. They often have to juggle their private lives with motherhood and full-time jobs. As a result of their lifestyles, women engage with finance in a very different way to men; an idea that seems to be becoming more apparent to the financial services industry.
Twenty years ago, Singapore’s United Overseas Bank (UOB) developed a women-only product called Lady’s Card and became the first financial institution to recognise women’s specific needs in financial products.
Despite statistics showing women’s spending power across the globe increasing at a rapid rate, financial products tailored specifically to women in other regions still remain sparse.
So which banks and card issuers have identified opportunities to market to women, and dared to enter the female mind?
The report Women’s Card Concepts: Developing Products to Meet the Needs of Women in Europe, by Isabelle Lodde, head of consumer credit core products for MasterCard, identifies significant opportunities for new card acquisition, upgrades, and incremental volumes.
Lodde says that in order for banks to take full advantage of these opportunities, they need to forget about the notion of being “pink and cute” in order to appeal to female card users.
MasterCard notes in the report that credit card penetration seems to be low considering that more than 79.2% of all private purchase decisions in Europe are made by women. European females also make up more than 82% of mass consumption spending.
In Switzerland 52% of women eligible for a gold product do not own a credit card in their own name, and in Germany, only 22% of women own a credit card.
Just 37% of Belgium’s credit cards are owned by women, and their credit card usage is lower than men’s.
“Women are not serial shoppers, and manage the family budget more closely as informed consumers,” said the report.
“As the buyer for the family, they have a very pragmatic attitude, and the benefits of proposed services are evaluated not only on their quality and price, but also on their expected level and ease of use. For women, money doesn’t mean ‘power’ but freedom. All security and budget control features are highly ranked.
“Women must be offered serious, tangible and innovative services, useful and ready to use.”
During focus groups undertaken in France in 2006, Lodde told CI that she saw a trend emerging among women that between juggling being a good mother, wife and worker, women are recognising more and more that they are deserving of self-indulgence.
Lodde identified three high-level concepts that banks and issuers must recognise to meet women’s needs.
“The first is that women are busy and never have time to relax,” Lodde said.
“Even when they are sitting on the tube, they are still planning their day, so time saving features would be welcomed by women. Women also work to a tight budget and most check their account using online banking every day. Lastly, security and benefits to assist women in the protection of their family are of great value.”
Although French women were the focus for this research, the concepts can be extended out to incorporate most European women, with varying intensities. For example, French women want products that are overtly designed for them as they celebrate their differences and embrace the fact that their presence creates diversity in the business world. However German women are uncomfortable with this idea, and do not want products that make an obvious separation of the genders.
“German women found the initial concept of creating a credit card tailored specifically to them patronising,” said Lodde.
“But once we had explained that we wanted to address their needs, they warmed to the product. The German LautitiaCard was developed with this in mind. Its design is very muted and security features have been made a priority to appeal to the security-conscious market.”
The La Bred Affinity credit card launched by France’s Bred bank in December 2007 became the first credit card specifically designed for women in Europe.
Standard Bank’s MyCard in South Africa and TEB Bank’s She Card in Turkey are the latest products designed specifically for women to come on to the market. To understand their benefits and places in the financial market and women’s purses, thorough research has been undertaken.
Turkish women analysed
The MasterCard MasterIndex Survey conducted by market researching company Yontem Research, together with Lodde’s report, shed further light on women’s credit card habits in Turkey.
The survey has been conducted once every six months since 1998 in Turkey, and uses a sample size of 1,000 respondents, made up equally of men and women. The results show that Turkish women have one debit card and one credit card on average, compared to men who have two credit cards and one debit card.
Women also use their credit cards more often for smaller purchases and have more recently obtained their credit card, suggesting that they are becoming more interested in the credit card market.
More women made the decision to choose the credit card with the best discounts and higher limits, compared to men who focused on the credit cards with the most instalments and most reward points available.
MasterCard also carried out focus groups in which the aim was to understand the target audience’s expectations from a card designed for women, their feelings and ideas about the card to be launched, and the choice of concept for the communication of the card. Qualitative research and group discussion techniques were used.
The results of the focus group showed the following expectations:
• It should be a bank that women know, trust and has widespread ATMs;
• It should have privileged offers and opportunities only for women;
• It should have programme partners in sectors of women’s interests;
• It should offer advantages and benefits related to health, personal care and cosmetics;
• It should have insurance against purse snatching; and,
• It should have a feminine, elegant, creative, different, silvery, stony design.
The She Card is a MasterCard credit card which was launched with TEB Bank in June 2010. It was marketed as “a specially designed credit card for ladies only, which offers discounts, extra bonuses and special services for certain sectors and brands”.
Examples of the benefits offered by the She Card include offers and privileges in sectors such as beauty, health care and children; and assistance and concierge services where cardholders can call a tow truck, windscreen replacer, plumber or locksmith free of charge.
South African spending power
Standard Bank also researched South African women’s spending power through surveys and organised focus groups in order to determine what appealed to women in preparation for the launch of its MyCard credit card last month.
Research in 2008 by Standard Bank found that 62% of South African women contributed half or more to the household income. Seventy percent revealed that they were financially independent, with 49% contributing more than their partner. Fifty-four percent also said that they controlled the family’s money, with a further 29% sharing control with their partner.
A study by South African marketing institute Black Diamond in 2008 showed that black middle-class women were becoming an economic force in their own right in South Africa. They represented a tenth of the country’s entire adult population and their annual spending power was ZAR120bn ($16.2bn), more than 40% of the annual spend of all South African women.
Leila Fourie, head of the card division for Standard Bank, told Cards International that research into women’s needs and expectations of credit cards had been underway for the past year, but on a more comprehensive and intense basis over the last six months.
Fourie said that after the first round of focus groups, in which the primary source of feedback was collated, Standard Bank realised that it had not understood the market properly.
“An important lesson we learned, which most financial institutions just assume, is that women live demanding and busy lives and above all else need freedom and simplicity from their credit cards,” said Fourie.
“Initially, we planned to put cash rewards straight back into the card holder’s credit account. However once this was announced we got a clear message back from the women who participated in our focus groups. Women want somewhere to save their money to give them some ‘me’ time, and they want to be able to purchase products just for themselves.”
Using this information, Standard Bank developed MyGift, a MasterCard prepaid loyalty card which is directly linked to the MyCard credit card.
“Women have multiple roles and therefore need freedom as to where they shop,” Fourie said.
“Other credit cards limit where you can shop, but MyGift allows consumers to redeem their cashback at the shop of their choice. This hits the mark for women.
“From our focus groups, Standard Bank found that women have a fundamental problem with credit cards that are designed for women, but have no substance.”
Examples of the MyCard benefits include, on diagnosis of one of the seven types of female cancer, R10,000 ($1,367)being paid into the cardholder’s account. It also provides access to roadside assistance and a handyman service, although the client is responsible for all costs involved.
“The bank would have liked to have got the product off the ground sooner, but we felt that now was the right time as there has been an increase in the buoyancy of consumers,” said Fourie.
She claims that the product is unique as no other credit card offers the full package of MyCard benefits.
Fourie told CI that the interest in MyCard had been both positive and heartening. As the first designed-for-women product launched by Standard Bank, MyCard will act as a test product and – depending on its success – Standard Bank will look to make it the first of many female-orientated products, creating a female credit card portfolio.
Once the pilot phase is over in around six months, and the research has been gathered, it will then be decided whether the MyCard product will be rolled out internationally.
“One of the reasons why the female population is so attractive to banks is that, based on statistics, they are 30% more likely to pay bills, which means bad debt costs are lower for banks,” said Fourie.
“Due to these figures, Standard Bank has an affinity with women and wants to continue to engage with them.”
According to Fourie, m-banking, online and social media are key drivers, and are entrenched in the female market. Standard Bank is currently in the midst of researching the different ways in which both men and women engage with different payment methods, and has told CI that it will report its findings in due course.
The report A World of Difference: Build Sales and Share by Tapping into the Buying Power of Women shows that US women’s spending power has also increased in a similar way to European women. Yet there are no credit cards available in the US market tailored specifically to women.
The report cites figures from US financial publication The Wall Street Journal which reported in November 2007 that women brought in half or more of the household income in 55% of US households.
The US Bureau of Labor Statistics has also found that over the last 20 years women’s income has climbed 63%, while men’s has stayed steady at 0.6%. More recently, in the last five years, working women’s median income has risen 4% while men’s has fallen 3%.
The report found that women were the chief financial decision-makers in 80% of US households, made 53% of investments, and influenced more than 60% of new car purchases.
Women are also driving the new entrepreneurial surge in the US. Financial website CNNMoney also reported in July 2004 that two thirds of all new business start-ups were being driven by women. Consequently women start up 424 new enterprises every day; twice as many as men.
US magazine Newsweek revealed in an article published in June this year that the financial crisis had accelerated the trend of increasing spending power in women. American men have lost more jobs and women have started up more companies, and the pay gap between the sexes has also started to diminish. Assuming that this trend continues, it is predicted that the average woman will make more than the average man by 2024.
Michael J Silverstein, a partner at the management consulting firm Boston Consulting Group, told Newsweek that “the financial services industry should take note of these figures, as this is the number one area where women say business isn’t meeting their needs”.
Although there are no credit cards specifically designed for the US female market, US financial services group Citi launched Woman & Co a decade ago with the aim of creating a financial service dedicated to women and their financial needs. It provides a community-based approach to financial education for women’s personal wealth management.
“Companies will often market traditional financial services ‘wrapped in pink’, but Women & Co is different because we provide a comprehensive financial service created specifically for women,” said Linda Descano, president of Women & Co.
All the credit cards tailored to women that are available in the market today have very distinct designs. An examples of this is TEB’s She Card, which has a feminine look with a pink background and the word ‘She’ written in letters bearing what appear to be encrusted diamonds in the foreground.
Société Générale was the first bank to offer a range of credit card designs, but a common theme of feminine pastel colours and flowers flows through the options available. The Bonus credit card tailored to women and launched by Garanti Bank in Turkey features a mirror as its focal design.
Caxia Women, a women’s credit card launched by Portugal’s Caxia Geral de Depositos comes as a ‘mini card’ to appeal to women, and again has a floral design.
Designer Roberto Cavalli launched his own credit card tailored for women in Italy back in February last year, in partnership with MasterCard. It features a snakeskin design and Cavalli’s name and logo as the main ‘luxury’ selling point.
Are pretty designs and a designer logo all it takes to appeal to the female market? Yes and no, says Marti Barletta, author of the book Marketing to Women and president and CEO of marketing consultancy company The Trendsight Group.
“Women see credit cards as an extension of themselves,” she said.
“The benefits of the card definitely do outweigh its design, but women would much rather carry a card that was aesthetically pleasing.
“I agree with everything that Standard Bank is doing with the MyCard credit card. The roadside and handyman assistance are exactly the benefits that women need. They add substance to the card and it seems that they have really listened to women and carried out thorough research,” Barletta concludes.
Lodde told CI that she believed women were probably still underserved in the financial services industry, but that the demand and interest shown by banks in Eastern Europe in tailoring their products to women was a positive step forward.
Women are a spending force to be reckoned with, and a market that offers many opportunities for financial institutions to target. The research already undertaken and the products that are currently available provide a basis for others to follow, but how many others dare to enter the female financial services arena remains to be seen.