Today, Barclaycard has grown from its relatively humble beginnings in 1966 to become one of the leading credit card companies in the United Kingdom with more than 10,000,000 cardholders as well as almost nine million cardholders abroad. Although the company has enjoyed a steady increase in the number of cardholders and Barclaycard has been a first mover in introducing new technologies into its business plan in recent years, this growth has not been without some problems and many of its customers are loudly complaining about poor or nonexistent customer service, exorbitant fees and faulty security measures. Taken together, it is clear that Barclaycard has done a few things right while managing to stumble over its success at others. To identify what the company has done right and wrong, this study provides a review of the relevant peer-reviewed and scholarly literature as well as various online sources including blogs and customer forums concerning Barclaycard. A description of the data collection methodology is followed by salient findings, with a summary of the research and strategic implications of these findings being provided in the concluding section. A representative sampling of customer complaints concerning Barclaycards is provided at the appendix.
Competitive Intelligence Report: Barclaycard
In less than half a century, Barclaycard has become one of the leading financial institutions in the United Kingdom and around the world. From a relatively humble beginning in 1966 with slightly more than 1,000,000 cardholders in the United Kingdom, Barclaycard is one of the predominant credit card and consumer lending businesses in Europe today with more than 10 million cardholders in the U.K. And almost 9,000,000 cards issued in 50 other countries on four continents (Barclaycard company profile 2009). Barclaycards are accepted in almost 30,000,000 establishments around the world and can be used to access cash from more than 600,000 automatic teller machines at home and abroad, making it one of the most recognizable credit card brands in use today (Barclaycard company profile 2009). Moreover, Barclaycard (hereafter "Barclaycard" or "the company") was a first mover with the introduction of mobile banking services a few years ago, but the company has become penny-wise and pound foolish when it comes to the provision of customer service and other administrative matters, and these issues are discussed further below.
The data collection method used for this competitive intelligence report consisted entirely of open source information, including secondary data derived from peer-reviewed journal articles and scholarly sources as well as the popular press to obtain trustworthy and authoritative information about Barclaycard, as well as primary data consisting of online information derived from anecdotal accounts and empirical observations from blogs and industry analysts that were deemed relevant to the study focus. This approach is both congruent with the need to use open source material only as well as a number of social researchers who emphasize the need to review the relevant literature to gain insights into what had been published about a given company as well as what remains unknown (Neuman, 2003). This approach is also congruent with other social researchers who emphasize the need to incorporate both primary and secondary data in research efforts whenever possible. In this regard, Gratton and Jones advise, "Primary data are information that is being collected for the first time in order to address a specific research problem. This means that it is likely to be directly relevant to the research, unlike secondary data, which may be out of date or collected for a totally different purpose. Ideally, an effective research project should incorporate both primary and secondary data" (2002, p. 39). The primary and secondary findings are reviewed further below, followed by an analysis of the strategic implications of these findings in the concluding section.
The findings of the research contain both positive and negative reports about the company's performance in recent years. On the one hand, Barclaycard has been aggressive in forming strategic partnerships and joint ventures with other financial institutions to broaden its customer base and expand its services in cost-effective ways. For example, the company's profile notes that Barclaycard provides card products through a partnership with Sky, and has entered into joint ventures with Thomas Cook and Argos, Virgin Group in South Africa, Manchester United in the Asia-Pacific region, SpanAir in Spain, and almost 50 card partnerships in the United States, including major corporations such as U.S. Airways and Barnes and Noble as well (Barclaycard company profile 2009). Moreover, the company has emerged from the credit card wars as Europe's leading issuer of Visa Commercial Cards and currently enjoys more than 152,000 corporate customers (Barclaycard company profile 2009). Further, Barclaycard has continued its effort to expand its operations into the international arena as well, and is active throughout Europe, the United States, Asia-Pacific, and Africa (Barclaycard company profile 2009). In fact, by 2006, fully 66% of all new credit cards issued by the company were in its markets abroad (Barclaycard company profile 2009).
The company's customers are certainly not reluctant to use their credit and debit cards and in 2006, they made almost two billion purchases with Barclaycard credit and debit cards through 192,000 Barclaycard Business customer outlets located in the UK (Barclaycard company profile 2009). Another positive report concerning Barclaycard was the fact that the company was a first mover in mobile banking which helped it attract almost a half a million new customers. In this regard, Maude, Raghunath, Sahay and Sands report, "The Barclaycard -- BT Cellnet joint venture, offering a customized handset and mobile access to account information, has acquired about 500,000 customers since 1997 -- 50% of them new to Barclaycard (2000, p. 87).
On the other hand, though, according to Nilson (2003), Barclaycard is not above making some administrative mistakes that reflect poorly on the organization's ability to manage people's money. For example, Nilson writes that, "Barclaycard runs an extensive direct marketing programme for its credit card in the UK. Like most companies they have a range of different types of card. To increase the penetration of Barclaycard Gold a promotion was planned and executed - the proposition was fairly standard with offers of no fee, insurance, purchase cover, etc. And with the mailing came an application form" (p. 148). This marketing initiative might have been successful had it not been for that fact that the promotional material was all mailed to holders of Barclaycard Platinum, the next higher tier of credit cards available from the company. As Nilson emphasizes, "By sending this mailing to a person definitely outside the largest group, the effect of the promotion was of course zero. However, the effect on the brand perception was negative because making mistakes with mailing lists did not inspire confidence in Barclaycard being able to 'take good care of my money'. Would anyone feel comfortable trusting their money with a company who can't even get a mailing list right?" (2003, p. 148). Likewise, Parish (2000) reports that one entrepreneur in Africa used his Barclaycard to transfer funds from an account in the UK to his bank in Accra, only to have the money vanish, never to be found. Although the entrepreneur came to believe that witchcraft was at work, Parish points out that the staff at Barclaycard was unable to be of any assistance in tracing these funds (Parish 2000). In addition, Barclaycard has even been the brunt of some sharp criticism for its use of American celebrities such as Jennifer Aniston to promote its credit card brand with the understanding the audiences in the United States would never see these advertisements (Blake 2004).
The company is also highly usurious in its credit card administration. According to Baird (2001), "Barclaycard rejects at least half of all applicants for its popular standard credit card at 19.4 APR) and is testing a higher-interest credit card (with an APR of 19.4 to 24.9) for the sub-prime credit market" (Baird 2001, p. 37). Indeed, during hearings before the House of Commons Treasury select committee concerning misleading credit offers and high rates of interest by various UK-based financial institutions, the CEO for Barclays, Matt Barrett, admitted that he even advised his own children against borrowing on Barclaycard because it was "too expensive" (quoted in O'Keefe 2003 at p. 27). Likewise, other consumer advocates emphasize, "Look, you're paying through the nose on your Barclaycard -- really high interest rates. You're being charged 17 or 18 per cent, which is dire" (Edwards & Glover 2001, p. 73).
All of the foregoing could perhaps be forgiven or at least mediated to some degree if the company provided timely and informative customer service for its overcharged customers, but here especially Barclaycard has sought to save money by outsourcing the majority of its customer service function to India where the communication levels are not only poor, they are frequently nonexistent. According to a report from McDonough (2006), the company realized a modest improvement in its profitability through such cost-savings initiatives. In this regard, McDonough notes that, "At the core UK retail business,…