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11 August 2003
Barclays and Standard Bank have formed a new division to sell and distribute Barclaycards in South Africa, creating a major new player in the South African credit card market.
The Barclaycard division has launched "The Manchester United Barclaycard" as the first of four new credit card products to be introduced within the next six months. The new division will be jointly funded and all income generated will be equally shared by Barclaycard and Standard Bank.
After extensive international research, Barclays chose South Africa as a credit card market with considerable opportunity for increased penetration. Credit card balances currently account for just 7% of unsecured lending in South Africa compared with 18% in the UK and 32% in the USA. Only 5% of the black population use credit cards compared to 46% of the white population. Recognising this opportunity, Barclays has partnered with Standard Bank to form the new Barclaycard division.
"It's a powerful partnership which combines Standard Bank's established infrastructure and presence in South Africa with Barclaycard's risk management and customer acquisition skills," comments Barclaycard International's Managing Director, Barry Fergus. "Barclaycard also brings the Manchester United brand to the table which is a big plus for the South African market."
The initial launch of the Manchester United Barclaycard will target the 3.8 million registered Manchester United supporters in South Africa, offering tangible benefits in the form RedRewards, the cards official loyalty programme, offering money-can't-buy prizes such as trips to Old Trafford, the home ground of Manchester United.
Peter Wharton-Hood, Managing Director, Standard Bank Retail Banking, says: "We have been in discussions with Barclays to re-launch Barclaycard in South Africa for over two years, so are delighted that this deal has come to fruition. Both banks share a common vision for the South African market and compliment each other's strengths enormously. I believe that this partnership will provide considerable benefits for both Standard Bank and Barclaycard customers."
The two companies bring considerable strengths and skills to the collaboration: both Barclaycard and Standard Bank are able to share skills, learnings and resources to target segments of the market that are currently under-penetrated, while taking advantage of incremental cross-sell opportunities into a new customer base. Barclaycard offers access to global brands such as Manchester United and the Barclaycard Premiership, an unrivalled heritage of 30 years of experience within the international credit card arena, and advanced predictive risk skills - which will be essential in opening up the credit card market. Barclaycard also runs the most successful football credit card in the UK - The Premiership Barclaycard.
Standard Bank brings benefits such as transaction processing and customer service capabilities, extensive branch and ATM infrastructure, collection competencies, regulatory support and access to the football sponsorship properties of Kaiser Chiefs and Orlando Pirates. Barclaycard will leverage its products off Standard Bank's solid brand heritage, local market knowledge and reputation as a leading governance and regulatory bank in South Africa. Standard bank also brings its existing bluebean.com book to the partnership, which currently has 95 000 customers.
Barclays has granted Standard Bank preferential price access to Barclays ATM network for all Standard Bank and Stanbic cards issued in Africa under the Visa badge, as well as undertaking to issue cards on behalf of Standard Bank and Stanbic Bank in Botswana and Kenya.
The new Barclaycard division will be run by a locally based eight-person Barclaycard Executive Management Committee (Exco), comprising the Managing Director, Financial Manager, and 6 representatives (3 from each party). The Exco will appoint credit, audit and risk committee's, as well as a Management committee to ensure that the newly formed division's best interests are achieved.
Barclaycard will drive initial sales through a 0800 UNITED phone number, with no sales being done through the Standard Bank branches. However Standard Bank will provide the call centres, customer service centres and application processing, as well as the initial credit scoring process for a period of 12 months, following which, Barclaycard will introduce its proprietary credit scoring technology tailored to reflect local market conditions.
All payments will be effected through Standard Bank's ATM network, the local branches and electronic payment systems. Fraud management systems will be based on existing Standard Bank best practises, which are regulated by a service level agreement between Standard Bank and Barclaycard and comply with Financial Intelligence Centre Act (FICA) and Know Your Customer (KYC) requirements. The sharing of any customer information will be strictly regulated by law and customer consent. The Barclaycard division will issue only in local currency and only to South African residents and will be governed by normal association and exchange control rules.
Fact file
Barclaycard was set up in 1966 and was the UK's first credit card. Barclaycard is now Europe's leading issuer of credit cards with 10.4 million customers and 12 million cards in circulation worldwide. Barclaycard operates in 62 countries across Europe and Africa. In the UK, Barclaycard has over 9 million customers. Barclaycard can be used to pay for goods and services in more than 22 million places in over 200 countries and to withdraw cash from over 600 000 ATMs and banks worldwide.
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