The Asian Credit Card Market
This is a fast growing market as we have discussed previously regarding China, but China is not the only country which is falling in love with the credit card.
In Malaysia the number of people who hold cards has increased dramatically over the last 5 years. The reason for this growth is European and American banks who see it as an ideal way of expanding. Corporate loans make smaller profits and are therefore a higher risk. Even other types of consumer lending are less profitable than credit cards.
Therefore the big international banks are using credit cards to lend money to the Asian market which is fast becoming much wealthier.
To make sure this expansion into Asia is profitable they need to make sure that they do ample risk assessment and keep the level of cards given out to dead beats to a minimum. If they can do this mixed with getting to heavy credit card users rather than people who pay at the end of each month they will be in the money.
It is likely though that many lenders may over extend themselves in their bid to increase the number of cards they issue. What they will do is lend to riskier customers. In times of financial difficulty this will cause these banks to fall on hard times as many debts are not paid. This can lower profits considerably or even send banks into the red. It has been seen in other parts of the world and could happen here.
It is big business and will not be easy to get right in the early years, but once they have nailed it, they will be on a road to big profits.
Credit cards are not only here to stay, but are going to spread through the world.