China UnionPay (CUP) has one of the largest card portfolios in the world, with hundreds of millions of cards in circulation, the majority of which are held in China. National Australia Bank (NAB) has sought out a relationship with CUP in order to capture some of the potential profits of China's economic boom.
In Australia, this economic growth is expected to increase the number of students attending Australian universities, the number of inbound travelers to Australia and also the number of corporate clients that will be traveling between the two countries. With the CUP agreement, NAB is hoping to generate profits from these three customer segments.
The market that is expected to be the most significant is the corporate client market. A great number of business relationships are expected to develop and strengthen in the near future, meaning travel between the two countries will increase. Increasing the ease at which corporate clients can access cash in both countries will be invaluable, and thus represents an attractive attribute for China-focused organizations. In addition, the agreement will further strengthen NAB's image as a business bank that understands the needs of organizations and provides services designed with commercial entities in mind.
While NAB has not yet introduced its own CUP schemed credit card, other CUP cards can be used at any of NAB's 1,300 automatic teller machines and 100,000 point of sale terminals. This allows NAB to develop its brand with current CUP cardholders while it develops its own card. Therefore, other issuers that follow NAB in establishing a relationship with CUP will have to work to distinguish themselves to overcome NAB's first to market advantage.
Overall, developing a relationship with CUP is likely to strengthen NAB's image as an expert in meeting the needs of Australian and Chinese businesses, boosting the bank's bottom line while satisfying a key consumer demand. 'End Intelliext
Sign up to our weekly newsletters for the latest industry news & comment.