AU2005204292B2 - Integrated financial service product - Google Patents

Description

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AUSTRALIA

Patents Act 1990 COMPLETE SPECIFICATION Invention title: Integrated financial service product The invention is described in the following statement: 7960628_2.DOC INTEGRATED FINANCIAL SERVICES PRODUCT Field of the invention The invention relates to an integrated financial service product, particularly a financial service product of the type typically provided by banks and associated with a rewards scheme.

Background of the invention In this specification where a document, act or item of knowledge is referred to or discussed, this reference or discussion is not an admission that the document, act or item of knowledge or any combination thereof was at the priority date, publicly available, known to the public, part of common general knowledge; or known to be relevant to an attempt to solve any problem with which this specification is concerned.

Traditionally, the credit market is polarised with reward based card programs being 'premium' offerings which can earn customers attractive rewards, but only if they are willing to pay high interest rates or high annual fees. At the other end of the market customers can have 'no frills' offerings that typically include low interest rate cards with low or no annual fees, but these cards are not associated with rewards programs.

Some schemes have challenged this polarised view to give customers more latitude. For example, the high profile 'Create Card' (http://create.co.uk) product from Lloyds TSB in the UK allows the customer to design their own card and trade off features such as interest rate, rewards and service features e.g. online or paper statements. While this scheme has been received positively by customers and the market at large, on closer inspection, the price setting mechanisms still operate within the accepted paradigm. If a customer selects higher rewards they pay higher interest. If a customer selects lower interest they pay higher fees, so the customer is still required to make trade offs.

While the credit market has a multitude of individual financial service products, customer benefits such as reward schemes and low interest rates are typically provided in a piecemeal fashion. The majority of customers have at least two credit cards, the cards having different interest rates and are associated with different loyalty programs. There is also typically a bank or building society account attached to each credit card, the account and credit card having different interest rates for credit/debit. The credit cards may also be associated with a rewards scheme whereby the customer accrues reward currency either upon taking up the card, or upon usage or other event. The rewards currency is usually accounted for in terms of points that can be redeemed for rewards.

Customers currently do not use financial products that are fully integrated and which escape the established paradigm. There is therefore a need for a new type of product that balances the economic requirements of the service provider and the customer.

Summary of the invention The present invention provides a computerised system for providing a customer with an integrated financial service product comprising a facility having: a loan account, a credit card account, a transaction database, the transaction database including records of transactions resulting from transfer and apportionment of credit between the loan account and the credit card account, and (ii) the balances of the loan account and credit card account, and a rewards database in which is recorded reward currency allocated in accordance with a set of reward program rules, the rules including allocations based on the transactions in the transaction database and the balance in the loan account, wherein the customer has a credit limit that can be apportioned by the customer between the loan account and credit card account.

Typically the credit card account is associated with at least one credit card, or sometimes with at least two credit cards.

The loan account is typically an unsecured lending facility. The unsecured lending facility may comprise preferably the credit card account and a loan account.

In a preferred embodiment the system of the present invention includes at least one further account such as a savings account or any one or more of the many products well known in the finance industry. These may include mortgage facilities, insurance facilities, superannuation accounts and accounts with providers of goods or services. The operator of a service according to the present invention may choose to 'partner' with other service providers to thus offer customers a wide range of further accounts.

The present invention further provides a method of providing a customer with an integrated financial service product comprising: recording in a transaction database, balances and transactions for: a loan account, and a credit card account, the transaction database including records of transactions resulting from transfer of funds and apportionment of credit between the loan account and credit card account, and (ii) the balances for the loan account and credit card account, allocating reward currency in accordance with a set of reward program rules, the rules including allocations based on the transactions in the transaction database and the balance in the loan account, recording in a rewards database, the allocations and balance of reward currency, and providing the customer with a statement of balances or transactions from and wherein the customer has a credit limit that can be apportioned by the customer between the loan account and the credit card account.

Again, the credit card account is associated with at least one credit card, or more preferably at least two credit cards.

In a further embodiment the present invention provides a computer system for providing a customer with an integrated financial service product, the system comprising a server supporting: a transaction database for recording customer transactions, the transaction database including (ia) records of transactions resulting from transfer and apportionment of credit between a customer loan account and customer credit card account, and (ib) records of the balances of the loan account and credit card account, and (ii) a rewards database for recording reward currency allocated to the customer, the reward currency being allocated in accordance with a set of reward program rules, the rules including allocation based on the transactions in the transaction database and the balance in the customer loan account, wherein the customer has a credit limit that can be apportioned between the customer loan account and customer credit card account.

In a further embodiment the present invention provides a computer system for providing a customer with an integrated financial service product, the system comprising: a server, comprising a transaction database, and (ii) a rewards database, a customer credit card account, one or more remote service provider terminals located in service provider locations which communicate customer transactions involving the credit card to the server, and one or more remote customer terminals located in a customer location which communicate customer instructions to the server, including customer instructions regarding apportionment of a customer credit limit between a customer loan account and credit card account, wherein the server, stores in the transaction database, records of customer transactions involving the credit card, transactions resulting from transfer and apportionment of credit between the loan account and credit card account, and balances for the loan account and credit card account, and (ii) stores in the rewards database, records of reward currency allocated to the customer, the reward currency being allocated in accordance with a set of reward program rules, the rules including allocations based on the transactions in the transaction database and the balance in the loan account.

The existence of a single transaction database provides the customer with the convenience of a single statement of the transactions for both the loan account and credit card account, typically through credit cards. Furthermore, the integration of accounts facilitates allocation of reward currency based on both the customer's spending (ie per dollar spent) and on the balance of the loan account, thus providing a unique financial product. Conventional financial products deny the customer any control on earning reward currency, beyond how much they spend on their credit card.

In one embodiment the system of the present invention allows customers to make purchases and cash advances on their credit card account, typically through a credit card transaction, and then transfer the outstanding balance to a loan account, preferably at a lower interest. For example, when the customer receives their statement they can decide how much of their credit card debts they want to pay off. For example, a customer having a $1 OK credit limit may decide to partition this between a $5K spend limit on their credit cards, and a $5K loan limit on their loan account. Upon receiving a statement notifying them they have $5K of spend transactions on their credit cards, they could, for example, either choose to pay off the $5K in full, or (ii) pay $3K by drawing from their savings account and $2K from their loan account, or (iii) draw down the full $5K on their loan account. This loan account is linked to the transaction account allowing the simple transfer of funds to pay off some or all of the closing balance.

When the next statement is received, the customer again has the option of deciding how much of their credit card debit and loan debit they wish to pay off, and have the flexibility to choose whether to draw further on their loan account or transfer debt between the loan account and credit card account.

Thus the present system satisfies the needs of two distinct customer segments, namely: Transactors customers that regularly pay their outstanding balance in full and who typically value the interest free period offered on credit card account and the convenience of transacting on their credit card. By paying the closing balance of the credit card account in full, the cardholder continues to get full access to their credit limit and continues to access interest free credit on purchases.

Borrowers customers that do not pay in full and carry a balance forward. These customers value the ability to borrow and manage their month to month cash flow.

In order to control the monthly level of their debt, borrowers tend to reduce their level of spend on the card. When consciously borrowing these cardholders are also increasingly sensitive to the rate of interest charged.

Customers create unique financial constructs for managing their finances. They mix and match products and services and typically adopt the 'jam jar' approach to money management. By separating the 'spend' jar from the 'borrowing' jar the present system provides customers with the ability to compartmentalise balances in a convenient, integrated system.

Rewards system The system of the present invention therefore allows customers to earn reward currency for a diverse range of products including flights, credit card, home loans, mortgage, car loans, insurance products and even day-to-day savings and transaction banking. The advantages for the financial services include improved customer loyalty and the ability to acquire new customers.

Typically each account balance or transaction earns reward currency at a predetermined rate. Using the previous example, a customer having a $1 OK credit limit may decide to partition this between a $5K spend limit on their credit cards, and a $5K loan limit on their loan account. Upon recording $5K of spend transactions on their credit cards they receive a certain amount of reward currency. If they choose to pay some, or all from their loan account, they receive the benefit of the lower interest rate of the loan account, and earn reward currency based on the balance of the loan account. Typically the reward currency is calculated once per month on the loan account. Typically the reward currency is calculated as a percentage (in reward currency) of the balance of the loan account.

The system of the present invention can include different customer service levels, for example the system can include Bronze, Silver and Gold levels aligned to the applicant's financial position. These different levels can provide customers with different credit limits, different award currency rules and value added features. These may include: e access to "special lounge room" of an airline for $x per year, overseas travel insurance for $x per year, and credit card payment protection for x cents per $100 outstanding.

Customers could move between levels based on, for example, the amount or reward currency accumulated over a given time period.

The reward currency can be allocated according to any convenient rules that include provision for allocations based on the transactions in the transaction database and the balance in the loan account. Preferably, the customer's ability to earn reward currency is not capped at a particular value per unit of time per annum) and the currency earned does not have an expiry date.

The reward currency can be redeemed, for example, to buy goods or services. The reward currency may be expressed, for example, in terms of points that have a dollar value, or vouchers. Typically the currency can be redeemed at the financial service company operating the invention of the present application. For example, if the system of the present invention is operated by a bank customers could redeem reward currency at the bank for things such as fee waivers, lower interest rates, free insurance and so forth. The redemption of reward currency at a bank will depend on what financial products are offered by the bank.

The reward currency may also, for example, be redeemed with the organisations with whom the customer maintains an account according to the present invention. These may include, for example, retailers, department stores, telecommunication providers, and other providers of customer goods and services. If the service provider is an airline, the customer may be able to redeem their reward currency for flights or travel discounts.

Credit Cards and Loan account facility Typically, the system of the present invention includes a competitively priced borrowing facility, that is a loan account having low interest rate a rate that typically aligns well with personal loan rates. Specifically it includes: a loan account having a first interest rate structure, and (ii) a credit card account having a second interest rate structure.

The first and second interest rate structures may, for example, be fixed rates or tiered rates.

Typically the loan account has a tiered interest rate structure. Typically the credit card account has a fixed interest rate structure. Typically the first interest rate structure is generally more competitive than the second interest rate structure.

This allows the separation of short-term debt into the competitively priced borrowing facility and also provides a very important mental separation. Debt structured in this way is more 'responsible' than maintaining a balance on a credit card.

Typically, the system of the present invention will include credit cards operating on a revolving credit account or a personal loan to thus provide an unsecured lending facility.

With a revolving credit account, customers are typically required to pay a minimum monthly repayment 2% on the outstanding balance). With a personal loan, customers must make a set payment periodically over a set period of time.

In one embodiment the system of the present invention allows customers to make purchases/cash advances on a revolving credit account, and then transfer the outstanding balance to a line of credit account, preferably at a lower interest rate. Customers can also make cash advances on their line of credit.

This allows customers to earn rewards currency based on their purchases in the revolving credit account and rewards currency based on the outstanding balance in the line of credit account. For example, reward currency can be x% of outstanding monthly loan balance for the life of the loan. Reward currency may also be earned when a customer takes up the product.

Typically a loan account has no separate annual fee which is additional to the fee for the facility comprising the loan account and the credit card account and is competitively priced, thus going against the systems of the prior art which only provided rewards in response to high fees and high interest rate.

Preferably the system of the present invention also provides customers with a choice of credit cards. Typically, financial products of the prior art have linked a single credit card to a single account, with separate statements being issued by the bank for the account and the credit card company for the credit card. The system of the present invention offers the convenience of a choice of credit cards without the inconvenience of separately issued statements. For example, a customer may choose to combine credit card A (which offers high rewards per dollar spent) with credit card B (which has superior worldwide acceptance).

Other accounts As previously mentioned, the system of the present invention may include other types of facilities such as insurance facilities (including personal, trauma, vehicle, medical and life insurance), superannuation accounts and accounts with service providers such as airlines.

Customer accounts, such as accounts with department stores, telecommunication providers, service providers could also be included. These can be added or removed from the customer's account portfolio as appropriate at relevant points in the customer's life-cycle.

This provides the customer with extensive flexibility for payment and management of many aspects of their life. For example, when insurance accounts are included, the customer can transfer credit from their savings account, credit card account or loan account to address insurance premiums as they fall due. When accounts with airlines are included,

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the customer can transfer credit from their savings account, credit card account or loan account to pay for airline flights.

The additional account may, for example, be a mortgage. Reward currency could typically be calculated as x% of outstanding annual balance for the life of the loan.

When the additional account relates to insurance, it could include credit card repayment protection, travel insurance, home and contents insurance and card insurance. Customers would typically receive x points for every $x spent on premiums.

When the additional account relates to an airline, customers can earn reward currency by using their Frequent Flyer card for the airline. For example when the card is presented, customers can earn points on flights (based on the distance travelled) and other products/services (based on amount spent).

Advantages Principal advantages of the present invention include: S a fully integrated set of financial service products in a reward program, each product earning reward currency on either take-up, usage or relevant times during the customer or product lifecycle, rewards currency earned on revolving credit card balances (low interest rates for revolving balances), the ability to keep the usage of interest free days even if you don't pay off your full balance at the end of the month, and S the ability to transfer amounts between a loan account and a credit card account and earn rewards currency on both.

Examples Various embodiments/aspects of the invention will now be described with reference to the following drawings in which: Figure 1 is a drawing of the unsecured lending facility, and Figure 2 is a drawing of the unsecured lending facility reward currency program.

Figure 1 Figure 1 depicts an unsecured lending facility that can be used in the system and method of the present invention comprising two or more credit cards and a loan account. The unsecured lending facility is made up of the credit card account and the line of credit account. Typically a customer must always have the credit card account and line of credit account, but can use the credit card account without using the line of credit account within the facility.

Customers will have the ability to purchase on the credit card account with, for example, credit card A or credit card B, earn reward currency, and then elect to move the balance to their line of credit account within the system of the present invention. This provides access to a lower "tiered interest" rate that can revolve on and earn reward currency at the same time.

While the unsecured lending facility has 2 accounts, it will typically have: a single combined statement for the facility which separately shows the credit card line of credit transactions as well as a summary of both accounts, a single credit limit allocated to the customer which can be split between the credit card and line of credit account (based on business rules applying at the time the account is set up then subsequently according to the customer's instruction via a call centre or customer service representative), two balances from the two separate accounts, a single reward program for the facility that offers reward currency for purchases on the credit card account and also on the balance of the line of credit account, a single minimum payment for the facility. This will be a percentage of the closing balance of the credit card account, a single annual fee for the facility comprising the loan account and the credit card account, a single additional cardholder fee (if customer chooses), and the option of earning reward currency on the two accounts in addition to other accounts linked to the system.

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Typically, when the customer account is initially set up, the customer is issued a membership number and credit limits are allocated as per system parameters 75:25) and can be changed at a later stage at the customer's request.

Typically the facility (comprising the loan account and credit card account) will: enable the customer to be issued with a statement of the transaction history, S have a facility credit limit, and S enable the customer to make payments to the facility.

Typically the credit card account attached to the loan account will have: 0 an interest rate of x% for purchases and y% for cash advances with interest calculated daily, 0 minimum repayment of z% of outstanding balance, 0 a set number of interest free days, access to internet and telephone banking, option of credit card repayment protection, e over limit, late, currency conversion and cash advance fees, and set credit limits available at all times.

Typically the loan account has interest rate tiered according to: 9 x% for balances, xl% for $a $b balances, e x 2 for $b $c balances, and 0 x 3 for balances.

With tiered interest rates, when an individual account balance is reached, the entire balance will incur the new rate of interest depending on the interest tier. Typically in this type of system: interest is calculated daily, S there may be a minimum repayment amount,

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0 there are no interest free days, 0 access is provided to internet and telephone banking, there is an option of repayment protection for the facility comprising the loan account and the credit card account, e cash advances are available at no cost, 0 BPay payments cannot be made from this account, 0 there is an over limit fee, and 0 when a customer does a balance transfer from another financial institution, it is transferred to the line of credit account.

In this embodiment of the system and method of the present invention the customers can initiate the transfer of balances from the revolving credit account to the line of credit account. This may be done, for example, via telephone banking, internet banking or at a branch office of the provider. This ensures that the balance will be revolving at a lower interest rate while earning reward currency.

Figure 2 Figure 2 depicts the generation of reward currency according to the embodiment of the invention depicted in Figure 1. When customers apply for an account according to the present invention they will have the option of being either a base earner or (ii) a high earner. They can also choose to switch between the two options at a later stage. Typically, when customers are approved they will earn a pre-determined amount of reward currency.

For example, a customer choosing to be a base earner does not pay an annual fee, but earns a certain amount of reward currency per spent on purchases. If the customer agrees, for example, to credit card A in combination with credit card B the reward currency earning is x points or reward currency per $x spent on purchases with credit card A and y points of reward currency per $x spent on purchases with credit card B.

They will earn reward currency based on z% on balances in the line of credit account, calculated monthly. Once customers have made their purchases on credit card A and credit card B, they can maximise the reward currency earned by transferring balances from the credit card account to the loan account.

13 Customers can choose to be high earners by paying an annual fee of The fee will be applied to the credit card account when the first purchase has been applied to the credit card account. Customers who choose to be a high earner, will earn a certain amount of reward currency per spent on purchases. The reward currency earned is x points per $x spent on purchases with credit card B and y points or reward currency per $x spent on purchases with credit card A.

Customers will earn reward currency based on x% on balances in the loan account, calculated daily.

Once customers have made their purchases on credit card A and credit card B, they can maximise their earnings or reward currency by transferring balances from the credit card account to the loan account.

The word 'comprising' and forms of the word 'comprising' as used in this description does not limit the invention claimed to exclude any variants or additions.

Modifications and improvements to the invention will be readily apparent to those skilled in the art. Such modifications and improvements are intended to be within the scope of this invention.

Claims (19)

1. A computerised system for providing a customer with an integrated financial service product comprising a facility having: a loan account, a credit card account, a transaction database, the transaction database including records of transactions resulting from transfer and apportionment of credit between the loan account and credit card account, and (ii) the balances of the loan account and credit card account, and a rewards database in which is recorded reward currency allocated in accordance with a set of reward program rules, the rules including allocation based on the transactions in the transaction database and the balance in the loan account, wherein the customer has a credit limit that can be apportioned by the customer between the loan account and credit card account.

2. A computerised system according to claim 1 wherein the loan account and credit card account constitute an unsecured lending facility.

3. A computerised system according to claim 1 or claim 2 wherein the credit card account is associated with at least one credit card.

4. A computerised system according to claim 1 or claim 2 wherein the credit card account is associated with at least two credit cards.

A computerised system according to any one of the preceding claims which includes at least one further account chosen from a selected group of products comprising a mortgage account, insurance account, superannuation account, service provider account and goods supply account.

6. A computerised system for providing a customer with an integrated financial service product, the system comprising a server supporting: a transaction database for recording customer transactions, the transaction database including (ia) records of transactions resulting O 0 from transfer and apportionment of credit between a customer loan account and customer credit card account, and (ib) records of the balances of the loan account and credit card amount, and (ii) a rewards database for recording reward currency allocated to the customer, the reward currency being allocated in accordance with a set Sof reward program rules, the rules including allocation based on the transactions in the transaction database and the balance in the customer loan account, wherein the customer has a credit limit that can be apportioned between the customer loan account and customer credit card account.

7. A computerised system for providing a customer with an integrated financial service product, the system comprising: a server, comprising a transaction database, and (ii) a rewards database, a customer credit card associated with a customer credit card account, one or more remote service provider terminals located in service provider locations which communicate customer transactions involving the credit card to the server, and one or more remote customer terminals located in a customer location which communicate customer instructions to the server, including customer instructions regarding apportionment of the customer credit limit between a customer loan account and the customer credit card account, wherein the server, stores in the transaction database, records of customer transactions involving the credit card account, transactions resulting from transfer and apportionment of credit between the loan account and credit card account, and balances for the loan account and credit card account, and (ii) stores in the rewards database, records of reward currency allocated to the customer, the reward currency being allocated in accordance with a 8609213 1.doc r set of reward program rules, the rules including allocation based on the transactions in the transaction database and the balance in the loan account.

8. A computerised system according to claims 6 or 7 wherein the loan account and a credit card account constitute an unsecured lending facility.

9. A computerised system according to any one of claims 6 to 8 wherein the credit card account is associated with at least one credit card.

A computerised system according to any one of claims 6 to 9 which includes at least one further account chosen from the selected group of products comprising a mortgage account, insurance account, superannuation account, service provider account and goods supply account.

11. A computerised system according to any one of the preceding claims wherein the loan account has a first interest rate structure and the credit card account has a second interest rate structure.

12. A method of providing a customer with an integrated financial service product comprising: recording in a transaction database, balances and transactions for a facility with: a loan account, and a credit card account, the transaction database including records of transactions resulting from transfer of funds and apportionment of credit between the loan account and credit card account, and (ii) the balances for the loan account and credit card account, allocating reward currency in accordance with a set of reward program rules, the rules including allocations based on the transactions in the transaction database and the balance in the loan account, recording in a rewards database, the allocations and balance of reward currency, and providing the customer with a statement of balances or transactions from and wherein the customer has a credit limit that can be apportioned by the customer between the loan account and the credit card account.

13. A method according to claim 12 wherein the credit card account is associated with at least one credit card.

14. A method according to claim 12 wherein the credit card account is associated with at least two credit cards.

A method for providing a customer with an integrated financial service product comprising a facility with: a loan account, a credit card account, a transaction database, the transaction database including records of transactions resulting from transfer and apportionment of credit between the loan account and credit account, and (ii) the balances of the loan account and credit account, and a rewards database in which is recorded reward currency allocated in accordance with a set of reward program rules, the rules including allocation based on the transactions in the transaction database and the balance in the loan account, wherein the customer has a credit limit that can be apportioned by the customer between the loan account and credit card account.

16. A method according to claim 15 wherein at least part of the method is carried out using a computer.

17. A method according to claim 15 or claim 16 wherein the loan account and credit card account constitute an unsecured lending facility.

18. A method according to any one of claims 15 to 17 wherein the credit card account is associated with at least one credit card. 18

19. A method according to any one of claims 15 to 18 wherein the credit card account is associated with at least two credit cards. A method according to any one of claims 15 to 19 which includes at least one further account chosen from a selected group of products comprising a mortgage account, insurance account, superannuation account, service provider account and goods supply account. Westpac Banking Corporation 26 August 2005