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Adani enters Into Retail Finance

ICICIdirect 9 Mins 05 Jul 2024

India's financial sector is experiencing phenomenal growth, fueled by a combination of factors like rising disposable incomes, demographic dividends, and government initiatives, among others. In the coming years, the continued digitization of the financial sector will make financial products and services more accessible and convenient for customers. It will further drive financial inclusion and product innovation.

No one wants to miss the train, and everyone wants to be part of the journey. We have already seen Reliance entering this space. Adani Group has now made a foray into the retail finance sector. Let us look at the details.

Adani Group's entry to retail finance

Adani Group has introduced a co-branded card (more on this later). The group has partnered with ICICI Bank to launch co-branded credit cards offering benefits and reward points for spending across the Adani Group's consumer ecosystem. It includes online shopping platforms, utility bill payments, airport purchases, and other Adani-affiliated services. The co-branded card will have two variants:

  • Adani One ICICI Bank Signature Credit Card
  • Adani One ICICI Bank Platinum Credit Card.

Once you avail of these cards and make transactions/spend across the Adani group consumer ecosystem like the Adani One app, you can get up to 7% Adani reward points. For those not aware of the Adani One app - it is an app that aims to be a one-stop shop for various travel-related needs and potentially expand into other services in the future. Here's a breakdown of its current functionalities:

  • Travel Booking Services: Flight, train, hotel and bus booking
  • Additional features like pre-order duty-free at Adani-managed airports, cab booking for airports, and local travel and bill payments.

What are Co-Branded Credit Cards?

You may be using a credit card issued by your bank. But it could be possible that your card has the name of some other big brand - like Indian oil or some other non-financial business. If you have such a card, then it is a co-branded card.

In case you don't, let us talk about them. A co-branded credit card is a credit card issued by a financial institution (like a bank) in partnership with a non-financial business (like a retailer, airline, hotel chain, etc.). The card carries the logos of the issuing bank and the partnering business. The card has benefits for the businesses and the consumers. Let us look at the benefits for both separately.

Benefits for businesses

  • Increased Customer Loyalty: Co-branded cards incentivize cardholders to spend more with the partnering business by offering attractive rewards programs. This can lead to increased customer loyalty and repeat business.
  • Enhanced Brand Awareness: The co-branded card serves as a constant reminder of the partnering business every time a cardholder uses it. This can increase brand awareness and reach new customer segments.
  • Data Sharing (with consent): Financial institutions might share anonymized spending data with the business partner, providing valuable insights into customer behavior and spending patterns. This can help businesses tailor their marketing strategies and product offerings more effectively.

Benefits for customers

  • Rewards Tailored to Specific Spending: Co-branded cards typically offer rewards programs, specifically tied to the partner business. This could include cashback, points, miles, or discounts on purchases made with the co-branded card at the partner's stores, services, or online platforms.
  • Exclusive Perks: Cardholders might enjoy additional benefits beyond standard rewards programs. These could include exclusive discounts, early access to sales, free shipping on online orders, or special financing options for the partner's products or services.

Why are co-brands launched?

Both financial institutions and non-financial businesses find co-branded cards to be a strategic marketing tool. We will take the example of MakeMyTrip ICICI Bank Signature Credit Card to understand the need for its launch. Here's a breakdown of their motivations:

Financial Institutions: Issuing banks (ICICI Bank in our example) benefit by attracting new customers or encouraging existing customers to spend more on their cards. Co-branded cards can also be a way to differentiate themselves from competitors in a crowded market. Frequent travelers using MakeMyTrip (MMT) for hotel and flight booking, would be attracted to this card, which gives more customers to the bank.

Non-Financial Businesses: Partnering with a reputable financial institution allows businesses (MMT, in this case) to leverage the bank's existing customer base and credit card infrastructure. It provides a cost-effective way to reach a wider audience and incentivize them to spend more with their brand.

How to avail of the credit card?

You can visit the nearest ICICI Bank branch or apply the Adani's co-branded cards online. These cards come with a joining fee. Adani One ICICI Bank Signature Credit Card has a joining fee (first year) of Rs 5,000 (plus taxes). The annual fee is the same as the joining fee. However, if you spend Rs 6,00,000 or more in a year, the annual fee is waived. The platinum card has a joining fee of Rs 750 (plus taxes). The fee is waived if the spend is Rs 3,00,000 or more.

Benefits of these cobranded cards

The benefits of both the cards are different. Here is the overview of the benefits of each card:

ADANI ONE ICICI CO-BRANDED CARD BENEFITS

PLATINUM CARD

SIGNATURE CARD

3% Reward points on Adani One ecosystem Adani managed Airports#, Trainman, Gas, Electricity and more

7% Reward points on Adani One ecosystem Adani managed Airports#, Trainman, Gas, Electricity and more

Earn 1% as Adani Reward points on all other domestic spends categories (excluding fuel and rent payment)

Earn 1.5% as Adani Reward points on other domestic spend categories (excluding fuel and rent payment)

Earn 1.5% as Adani Reward points on international spends category

Earn 2% as Adani Reward points on international spend category

Earn 0.5% as Adani Reward points on utility and insurance spends

Earn 0.5% as Adani Reward points on utility and insurance spends

Before you go

Adani's entry into retail finance marks a significant development for the Indian financial sector. Whether they succeed in becoming a major player or not, their presence is bound to stir competition and potentially benefit consumers. As the story unfolds, it will be interesting to see how the Adani Group leverages its vast resources and existing customer base to navigate the Indian retail finance ecosystem.

*Card benefits/charges are subject to periodic change

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