(Yicai) July 14 -- Bank of Guangzhou has become the first Chinese commercial lender to shut its head office credit card center, with all related businesses transferred to the office's newly established credit card department. 

Due to the continuous shrinkage of the credit card business, Bank of Guangzhou closed seven regional credit card centers in January. The balance of its credit cards fell to CNY70.4 billion (USD10.4 billion) at the end of 2024 from CNY86 billion at the end of 2023, with the year-on-year decline increasing to 18 percent from 15 percent, it said in its latest earnings report, without disclosing the figure for the end of last year.

Chinese commercial banks closed 66 regional credit card centers last year, with related businesses either merged into local branches or ceased. China's outstanding credit-card debt fell by over CNY1 trillion (USD147.4 billion) from a peak of CNY8.7 trillion (USD1.28 trillion) at the end of last year from a year earlier, according to institutional estimates.

The commercial bank credit card business monolithic system with independent accounting, independent assessment, and centralized operation has existed for 22 years and effectively promoted the rapid growth of the credit card business in its expansion stage, Zeng Gang, deputy director of the National Institution for Finance and Development, told Yicai.

But as the credit card business enters the stage of stock competition, the inherent drawbacks of the monolithic system gradually become prominent, Zeng said. The disconnection from other businesses of the head office leads to low cross-sell rates for customers and redundant personnel expenses, Zeng added.

In addition, the short-term profit orientation of the credit card center has exacerbated the accumulation of long-term risks, forming an inherent conflict with the comprehensive business strategy of the head office, Zeng stressed.

The fall of the monolithic system will impact the organizational structure adjustment of the credit card business and profoundly affect the transformation of banks' customer management philosophy, Zeng noted. Under the new business model, credit cards will again become an important entry point for lenders to reach clients and cement their relationships, while the business goal will shift from the profitability of a single product to transforming the comprehensive customer value, Zeng added.

Such a move requires banks to reconstruct the full-chain business logic from customer access and product design to service delivery, break down the data and process barriers between credit cards and businesses such as savings, wealth management, and loans, and truly achieve "customer-oriented" integrated operation, according to Zeng.

The number of valid credit cards in China stood at 696 million at the end of last year, down from 767 million at the end of 2023 and 727 million at the end of 2024, with credit card issuance falling for 13 straight quarters, according to data from the People's Bank of China.

Editors: Tang Shihua, Martin Kadiev