What factors are contributing to the sudden 30% drop in new credit card applications for BMO Financial Group's CashBack Mastercard?

Introduction

The sudden 30% drop in new credit card applications for BMO Financial Group's CashBack Mastercard is a critical issue that demands immediate attention. This analysis will systematically identify, validate, and address the root cause while considering both short-term and long-term implications for the product and business.

To tackle this problem, I'll follow a structured approach that covers issue identification, hypothesis generation, validation, and solution development. My goal is to provide a comprehensive analysis that not only pinpoints the cause of the application decline but also outlines actionable steps to reverse the trend and prevent similar issues in the future.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a recent change in the product offering or marketing strategy. Has there been any significant modification to the CashBack Mastercard's features or promotional campaigns in the last 3-6 months?

Why it matters: Recent changes could directly impact application rates. Expected answer: Yes, there was a reduction in cashback percentage. Impact on approach: If confirmed, we'd focus on analyzing the impact of this change on customer perception and value proposition.

• Considering the specificity of the 30% drop, I'm curious about the timeframe. Over what period did we observe this 30% decrease in new credit card applications?

Why it matters: The timeframe helps identify potential correlations with external events or internal changes. Expected answer: The drop occurred over the last month. Impact on approach: A sudden drop would suggest an acute issue rather than a gradual decline, narrowing our focus to recent events or changes.

• Given the competitive nature of the credit card market, I'm wondering about our competitors' actions. Have any major competitors launched new products or aggressive promotions recently?

Why it matters: Competitor actions could be drawing potential customers away from BMO's offering. Expected answer: A competitor launched a new cashback card with higher rewards. Impact on approach: This would shift our focus to competitive analysis and value proposition reassessment.

• Considering potential technical issues, I'm curious about the application process itself. Have there been any reported problems or changes in the online or in-branch application systems?

Why it matters: Technical issues could be creating friction in the application process, deterring potential customers. Expected answer: No significant technical issues reported. Impact on approach: If confirmed, we'd likely focus more on product offering and market factors rather than technical barriers.