These days, credit cards are being offered by all manner of companies in SA. Discovery Health has one. Even low-cost airline kulula.com introduced one last week. It`s not really worthy of front-page coverage.
That is to say, it never used to be the stuff of front-page news, but this week, a credit card launch by Virgin boss Richard Branson attracted about 80 journalists and made more than one front page. It was a clear victory for celebrity hype over news sense.
The press conference was preceded by Sir Richard performing an impressive stunt, travelling via "foofie slide" from the roof of a Sandton hotel to the parking lot of the new Virgin Money offices - reportedly breaking a South African record. Branson admitted at the news briefing that such stunts were useful in attracting the interest of the press.
Well, once Branson had our attention, John Maxwell, Virgin Money SA`s MD, proceeded to outline the benefits of a Virgin Money credit card: no annual or loyalty fees, a simpler structure, a better interest rate and so on, all in the context of bashing local banks and referring to a "R1.5 billion credit card rip-off".
Certainly there is a feeling among South Africans that our banks are ripping us off, and bank charges have come under fire recently. Some competition, especially from the likes of Virgin, which seldom does anything by the book, is without a doubt to be welcomed. But, at the same time, before we break out the champagne and call the end of banking as we know it (to use a previous virtual bank`s slogan) let`s recognise that much of the hype around the launch remains to be proven in this country.
It`s just a card
It was a clear victory for celebrity hype over news sense.
Iain Scott
Virgin Money SA, which is a joint venture with Absa Bank, is essentially just a low-cost credit card. Nothing more. It`s reminiscent of 20Twenty, the erstwhile virtual bank that also offered a credit card. 20Twenty built up a small, but extremely loyal client base. It was small, because it was not a full-fledged financial services provider that could offer insurance products, mobile banking, investment accounts, home loans and others, but it was loyal because of high service standards.
Despite the recent fuss over bank charges, it seems that many, if not most, South Africans don`t really know what they are paying for various banking products. Even journalists at the Branson presser were not too sure about the various fees they pay. Most people I have polled indicate they are not aware of what banks are charging them. Those who are dissatisfied with their banks complain about poor service. We don`t seem to mind paying more if the service is decent.
This is where Virgin Money will have to prove itself. No amount of hype will create a long-lasting reputation for customer service. Only consistently good customer service over a long period can do that.
We`ve had virtual banks before, we`ve had credit cards before, we`ve had lower prices before. It`s all great, but none of that is earth-shattering news of the "hold the presses" variety. A virtual bank may certainly take a slice of the lucrative credit card pie, but until it offers a full range of services, the established banks, which are able to cross-sell and up-sell thanks to a large range of offerings, are unlikely to be trembling too significantly.
Personally, I hope Virgin Money SA does shake things up. The industry needs it. But until it does, let`s keep the front page for real news.
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