Introduction

Bankinter, a small independent national bank, has a large presence as an Internet

financial services provider. It was the first Spanish bank to offer telephone,

electronic and virtual banking. Bankinter’s positioning as a multichannel, online

banking gave Bankinter a major competitive advantage over larger and more

established Spanish banks (see SWOT analysis: Appendix A). However, Ann Peralta,

director of Internet network at Bankinter, needs to evaluate which customer

segments are most profitable for the bank and develop a plan for new customer

acquisition while balancing costs with rate of growth and profitability.

Current Marketing Strategy

Bankinter’s current marketing strategy involves developing alliances with portals,

partnering with e-collaborators, and maintaining brick and mortar branches. Some

of the strengths and weaknesses of each of these strategies are illustrated in table

below:

Alliances E-collaborators Brick and Mortar

Strengths

High traffic portals Co-branding

High traffic sites Low acquisition

cost Hard to duplicate Dramatic results

More loyal customers

Easier to cross-sell to

Less price-oriented

Weaknesses

High acquisition costs

Staff Shortage High upfront annual

fee Easy to duplicate

High non-formalization rates

Not very loyal Lack of targeting

High cost acquisition

High operating costs

Based on the customer lifetime value of each of the following strategies (see

Appendix B & C), 8700 seems to be the most profitable and advantageous client base

08 Fall

for Bankinter, as it has the highest customer lifetime value for the profitable clients

with €267. In addition, its ratio of non-profitable to profitable clients is significantly

lower in comparison to the other two strategies.

Iberianwines.com Strategy

As noted in the table above, e-collaborators program has dramatic and immediate

results. However, on average only 76% of the clients from this program complete

the online registration process. Therefore, to estimate the lifetime value of an

average customer from IberianWines.com, we need to account for this lack of

customer loyalty.

Based on other assumptions about the clients from this stream of e-collaborators,

we estimate that the customer lifetime value will be about €82, which accounts for

the €100 referral fee that IberianWines.com is demanding. (see Appendix D)

Bankinter should agree to pay an additional €100 referral fee for every customer

that clicks on a Bankinter banner at Iberianwines.com website, as based on our

assumptions the CLV is positive. Bankinter should however insist on paying €60,

similar to what they are currently paying other e-collaborators or should structure

their contract such that they pay €100 for every customer that clicks and completes

the registration process. This way, Bankinter can ensure that they are only bearing

additional costs for the profitable customers. Moreover, Bankinter can incentivize

customers from this channel to use Bankinter for the wine transactions.

Future Strategy & Recommendation

Bankinter should place a primary focus on their profitable segments, Branch 8700

products, and build relationship with Iberianwines.com. Furthermore, they should

emphasize on cross-selling products to eMortgage and eBrockerage customers since

they are active as well as significantly profitable in comparison to other 8700

customers. With respect to ecollaborators and Alliances, Bankinter needs to

increase profitability by:

1. Increasing retention rate of profitable segment

2. Increase volume of profitable segment

3. Decrease ratio of non-profitable to profitable

The above three dimensions had the greatest impact on the expected value based on

sensitivity analysis performed.

Bankinter can also utilize CRM and other tools to do more focused and targeted

marketing by placing banner ads on sites that cater to affluent clientele. In addition,

Ana can leverage Bankinter’s deep client knowledge to maximize client potential

through cross selling. They should also introduce referral and loyalty programs for

customers. Combining these strategies will help the bank increase profitability by

increasing retention rate of profitable segment while decreasing ratio of non-

profitable to profitable clients.

Appendix A: SWOT analysis of Bankinter

Strengths

•Multichannel banking and customer interaction

•Early mover into online banking- well positioned to take advantage of internet boom

•Offers diverse and innovative services

•Used CRM system to store and track customer information

•Customer centric approach

Weakness

•Difficult to cross-sell products online

•High number of non-formalized clients

•Fast-cycle industry •low online customer retention •high customer acquisition costs

Opportunity

•Diversification •Increase its presence in Spain and

other neighboring countries •Partnering up with other financial

services

Threats

•Online customers are not as loyal •Low barrier to entry •Internet bubble burst

Appendix B: CLV calculations of each of the strategies

Appendix C: Expected Profit

Appendix D: Iberianwines.com Analysis