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Crowdsourcing Development of Financial Products: A New Path to Customer Engagement

Barclays has cut servicing costs and maintained great customer engagement with a new innovation: the social credit card.

At a time when banks are looking to increase customer engagement while at the same time cutting costs, Barclays may have an interesting new method for accomplishing both goals - outsource product development and management to the customers. Back in April the bank introduced its BarclayCard Ring MasterCard card, the first "social" credit card. Barclays engaged the card's users as an interactive online and social media community that make's decisions about the card's terms and benefits. At BAI Retail Delivery in Washington D.C., Paul Wilmore the Managing Director of Consumer Markets for Barclays U.S., shared some of the bank's experiences and lesson learned from its social card experiment.

Some of the benefits to the new approach that Wilmore shared included a 25 percent drop in the card's servicing cost compared to other Barcalys cards. Barclays is completely transparent in sharing the profits and losses associated with the project with the card users - or community members. This means the card members understand that they can save money for the project by using self-service options instead of dialing the call center. And the community members have an interest in boosting the project's profits - through the card's Giveback program the members get to share in the card's profits.

Barclays hired a dedicated associate for coordinating the community online and on its Facebook page, but the community tends to service itself. Wilmore said that the community has grown to the point where most of the questions that card members post are answered by other community members, turning the card holders into the banks customer service representatives.

Wilmore said that the community engagement has far exceeded Barclays' expectations. The community's dedicated website gets 1,000 page views a day, and community members get points for being more engaged in the community. Those points build a member's status within the community, with the highest status being a platinum member. Wilmore said he was surprised that four of the members had already reached platinum level. Members can also earn points by referring friends and signing up for paperless statements. Wilmore said that most of the members who were heavily engaged with the community were either intrigued by the innovative idea of the social card itself or very interested in gaining financial literacy.

That need to provide customer education in financial literacy is one of the project's biggest challenges, Wilmore added. Cardholders get to vote on a broad range of issues regarding the card's terms including how large late fees they can be charged and the card's APR, making educating them about the repercussions of their vote an imperative. The bank also faces an ongoing challenge in the credit underwriting area of the project and finding the right customers to fit the card's eight percent interest rate. But Wilmore is confident the banks can smooth out the wrinkles in the project. "This is a journey, and it will continue to evolve," he said.

Barcalys is looking to grow the social card experiments into new card types - such as rewards and debit cards - and into differentiated customer segments. Wilmore said that he could easily envision similar social cards targeting groups like single moms or generation Y consumers and building a social circle and card product around their lifestyles. And Wilmore is confident that the customers would like to share their ideas in the community: "They [customers] will tell you exactly what they want if you give them a forum to do it."

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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