An interview with a credit card industry pioneer, Luxury Card Head of Asia (Part 2)

FinTech is taking the financial industry by storm. As world-wide ubiquity of mobile payments take off, the credit card industry is also faced with new opportunities.

Luxury Card, which was first founded in America in 2008 as a credit card company targeting affluent customers, counting business executives and celebrities as cardholders, has now become a popular topic among American business executives.

In November 2016, the company launched its first international operations in Japan. Hamilton Hayashi, now Luxury Card Head of Asia, was appointed to lead this international expansion. The company introduced Japan’s only Mastercard top-tier card level, World Elite Mastercard, to the Japanese market, offering three options of premium credit cards: the Mastercard® Gold CardTM, the Mastercard® Black CardTM, and the Mastercard® Titanium CardTM.

What sort of challenges did Mr. Hayashi overcome while establishing the business in Japan? We asked him about his success behind establishing a brand from scratch, his thoughts on the future of the credit card industry, and his vision for Luxury Card. 

(Read Part 1 here)

How did you go about establishing a brand presence and awareness in Japan?

We focused on how to create loyal customers and how to exceed their expectations. When designing our website and advertisements, we looked to luxury brands for inspiration to develop a new image for credit card services. Instead of it just being a “payment method”, we wanted to convey it as a “service that enhances the quality of life”. We targeted our marketing towards the affluent population by identifying key areas with higher affluent traffic and by leveraging social media. Word of mouth also played an important role in gaining loyal customers and we believe all the combined efforts helped in establishing our brand presence in Japan.

Many credit cards out in the market offer enticing incentives, such as “$0 fee for the first year” or “earn up to X amount of points”; however, these promotions tend to have lower customer loyalty. At Luxury Card we used a different marketing strategy—we focused on treating our customers extremely well. We figured a customer who experiences great service first-hand will naturally want to share the product and services to their friends and families, leading to a solid fan base of loyal clients.

How did you come to understand and assess your target population’s needs (in this case the affluent population)?

What helped was thorough observation to understanding client behavior. How do they approach their work? How do they spend their weekends? What sort of problems do they face? For instance, a mindset unique to the Japanese was that they do not mind waiting in long lines when visiting museums. Families frequent museums as well. In many other countries, famous museums are filled with tourists, while visits by locals are rather low. This observation brought to our attention that Japanese people have a desire to learn, and they want to satisfy their intellectual curiosities with their families. Based on this, we added access to National Museums around Japan, including Tokyo National Museum of Modern Art to our membership benefits. I truly believe it is important to learn and understand the target population’s mentality and culture. In my case, I had an understanding of Japanese culture and possessed the drive to introduce an unusual service to Japan-- revolutionizing the credit card industry.

When developing a completely new service, market research through surveys are practically useless as people are answering with their pre-existing biases. So, it is difficult to obtain fresh insights. I also did not focus on our competitors and their strategies. I thought that the moment we look to others for reference, we would just become followers and never become the breakthrough we aspire to be.

With the ubiquity of FinTech, Bitcoin, and other financial services on the rise, how do you think the credit card industry will change? Also, what is an important quality in creating innovation in the credit card industry?

Digital payment has really established itself on a global scale. According to recent research, in 2012, the rate of credit card usage in Japan for individual use was 14%. This is much lower compared to Korea at 60% and America at 24~25%. The mobile economy is thriving in many other countries, with smartphone payments, such as Apple Pay and Square used for everyday transactions. In China for example, no matter how small a shop is, most use Alipay and customers can just scan their QR code to settle the payment.

As Japan prepares for the Olympic and Paralympic Games Tokyo 2020, the Japanese government has announced they will “utilize cashless payments to improve efficiency and increase convenience in settling payments”. Considering such trends, the credit card industry in Japan is bound to change.

However, there seems to be an underlying stigma that "Japanese financial services industry is closed,"   with many global financial companies still reluctant to enter the Japanese market or are unable to survive. If Japan does not ensure its global competitiveness and inspire further creativity and innovation, I believe it is a matter of time before Japan is left behind the rest of the world.

At Luxury Card, we hope to break down the barrier of difficulties associated with entering the Japanese market. If a foreign startup company like ours can be a success story, we hope others will think, “if a foreign startup can do it, so can we” and feel more inspired and open towards entering the Japanese market. The more companies in the market, the more competition and collaboration. This will lead to improving the financial service industry overall. This is beneficial for clients as well, as companies will strive to offer better experiences for them. With an open-minded perspective, we strive to continuously be at the forefront of change.