credit card asia pacific
Transcript of credit card asia pacific
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Citibank: Launching the
Credit Card in Asia PacificErica Baumann
Paul Davis
Nathan HahnRebecca LeedsLauren Lettieri
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Overview:
Geography of Asia Pacific
The Nature Conservancy: http://nature.org/wherewework/asiapacific/
http://nature.org/wherewework/asiapacific/http://nature.org/wherewework/asiapacific/ -
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Overview:The Pacific Oceans Eleven
Hong Kong (1902)
Taiwan (1964)
Australia (1965)
The Philippines (1902)
Guam (1969)
Singapore (1902)
India (1902)
Malaysia (1904)
Indonesia (1918)
Thailand (1967)
Korea (1967)
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Overview:Citibanks Mission Statement
Citibanks mission in the Asia Pacific
region was to be the most profitable
provider of a wide array of financialservices to an increasingly affluent andmiddle-income market, and to reach
the rapidly growing middle-incomehouseholds in this region.
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Overview:Citibank in Asia Pacific
1978-1989
1986: Begins aperiod of growth
in Thailand and
the Philippines
1982: Acquired
Diners Club in
Thailand
1978: Citibanks
Asia Pacific
Consumer Bank
had established
its consumer
business in Asia
1981: First foreign bank to
enter the local trade finance
market in Taiwan
1983: Citibank enters
the credit card market
in Hong Kong
1989: Malaysia
and Australia have
saturated credit
card market
1989: Talwar
reintroduces the idea of
a credit card launch in
Asia-Pacific
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Overview:
Keys Questions in Asia Pacific
Should Citibank launch a credit card in
the Asia Pacific region, and in whichcountries?
How should the particular cardlaunches be tailored to each specificcountry?
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Business Problems Citibank wondered whether they could adopt a
mass-market positioning to acquire enough creditcard customers and still maintain its up-marketpositioning with the current upscale branch banking
customers
Pricing the card too low would conflict withCitibanks stated positioning however pricing it too
high might mean low customer acceptance
Citibanks management were concerned thatconsumers attitudes and credit card usage patterns
differed by country
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SWOT Analysis:Strengths
Undisputed leader of the marketplace
Australia: customers see the credit card as an importantshopping tool
Hong Kong: people are used to credit cards- relativelyaffluent population
India: strong economic development in late 80s
Malaysia: large successful business population
Singapore: one of the worlds largest center oftraditional trade and services
Thailand: rapidly growing nation (foreign investment)
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SWOT Analysis:Weaknesses
India: consumers do not like to use revolving credit
Indonesia: relatively poor country with small upper class;
not many qualified for membershipAustralia/Singapore: saturated market
Taiwan: before 1989, laws restricted credit card business
Taiwan: culturally not acceptable to owe people money
Korea: financial problems in credit card business coupledwith stringent local restrictions
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SWOT Analysis:Opportunities
Australia: credit card in conjunction with their bankingservices
Hong Kong: want to target customers outside branchbusiness
India: credit card penetration is low
Indonesia: upper class growing fast
Malaysia: culturally acceptable to revolve credit
Philippines: credit card penetration very low
Singapore: society prides on innovation and technology andsee credit card as convenient
Taiwan: most wealthy and best educated country in region
Thailand: strong economy = consumer spending
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SWOT Analysis:Threats
Australia: AMEX and Diners Club seen as symbol ofstatus
Malaysia: many other options to choose from in 1989(MasterCard and Visa)
Singapore: high-tech mecca has attracted manymultinational corporations
Taiwan: restrictive laws prohibited thus industry is inearly stages
Taiwan: AMEX and Diners Club worldwide respectedreputation
Citibanks undifferentiated view of one marketplace
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Most Likely Case Scenario
Citibank will enter the market
''Sometimes, when an economy is under the
most stress, you get presented with the biggestopportunities,'' says Citigroup Vice-ChairmanWilliam R. Rhodes
Cross selling products
Market will accept new credit cardpenetration (except for few countries)
Targeting growing upper class market
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Most Likely Case Scenario
Australia: More services will be offered tomaximize financial management
Hong Kong: Reach customers outsidebusiness segment by cross selling
India: Increase merchant acceptance
Indonesia: Incentives and higher creditlimits opportunities
Malaysia: Build up credit for future uses
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Most Likely Case Scenario
The Philippines: Market program gearedtowards gaining acceptance
Singapore: Highlight conveniences of
Citibank Taiwan: Promote awareness of the
emerging credit card industry Thailand: Two card approach to attract all
customer bases Korea: Will not enter due to government
regulations
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Worst Case Scenario
Established competition beats Citibank
Population too poor to qualify (Indonesia)
Government regulation and culture limits
acceptance Failure of customers to fulfill payments- large debt
Different countries not accepting of consistentmultinational strategy
Rejection due to national pride and culture(Taiwan)
Saturated markets not accepting of another creditcard (Singapore)
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Best Case Scenario
Citibank adjusts strategy for specific countriesneeds (including options)
OR All countries accept Citibanks multinational plan
Become a penetration leader (Philippines) Utilize Singapore for latest technology
Government law changes opens doors (Taiwan)
Take advantage of some countries growing
economy and affluence Make money off of late payments and interest
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Strategy: Market Entry
Greenfield Market Development
Direct marketing program
Direct mail
Take-ones
Direct sales force
Bind-ins
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Strategy: Pricing
Low joining fee to induce morecustomers
Higher annual fee to provide a steadyrecurring revenue
Premium pricing for the Citigold card
to attract affluent cardholders
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Strategy: Options
$USD as standard currency for allcards
Regional Card Center Lower costs because of economies of
scale
Capability to do quick work productlaunches in Asia Pacific
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Strategy: Business
SegmentsNon-Resident Indian Business (NRI)
Special offering for Indian customers who
did not reside in India
International Personal Banking (IPB)
To service the growing group of affluent
Asian clients with global financial needs
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Strategy: Core Products
Citi-One
Mortgage Power
Auto loans
Ready Credit
Citigold
CitiPhone
ATMs
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Go Decisions:Taiwan, India, Indonesia, Malaysia, the
Philippines, Singapore and Thailand
Reasons
Countries growing along with infrastructure
Rapidly growing upper and middle class
Recommendations:
Two card approach- middle class and upscalecustomers targeted individually
Create status for credit card
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Go Decisions:
Australia and Hong Kong Reasons:
Most developed Westernized nations
Strong credit card and financial infrastructure On average, 2 cards per person
Wide variety of usagesshopping travel
Recommendations:
Two card approach
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No Go Decision: Korea
Reasons: Regulations do not allow banks to issue cards
with revolving credit
Only local currency credit cards allowed
Poor diplomatic relations
Infrastructure and legislation are not conduciveto credit card usage
Recommendations: To risky to enter the market
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Population Breakdown by
Income: Asia PacificCountries Above 25000 12500-25000 6000-12500 2000-6000 < 2000
% of Population 2% 4% 5% 8% 81%% of Cards 27% 35% 31% 7% 0%
# of People 23,757,500 42,145,000 58,157,500 88,000,000 933,240,000
# of Cards 3,929,250 5,011,250 4,498,000 1,021,500 0
Cards Per Capita 0.165 0.119 0.077 0.012 0.000
Population 1,145,300,000
# of Cards 14,460,000
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Break Even: Asia Pacific
Advertising Budget 2,500,000.00$
Overhead 61,000,000.00$
Direct Costs 22,500,000.00$
TOTAL COSTS 86,000,000.00$
# of Cards 900,000
Average Annual Fee 56.13$Average Joining Fee 39.75$
Revenue 86,292,000.00$
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Population Breakdown by
Income: Malaysia
Malaysia Above 25000 12500-25000 6000-12500 2000-6000 < 2000
% of Population 5% 10% 20% 45% 20%
% of Cards 10% 45% 45% 0% 0%
# of People 850,000 1,700,000 3,400,000 7,650,000 3,400,000
# of Cards 38,000 171,000 171,000 0 0
Cards Per Capita 0.045 0.101 0.050 0.000 0.000
Population 17,000,000# of Credit Cards 380,000
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Break Even: Malaysia
# of Cards 900,000
Average Annual Fee 64.00$Average Joining Fee 34.00$
Revenue 88,200,000.00$
Advertising Budget 2,500,000.00$
Overhead 61,000,000.00$
Direct Costs 22,500,000.00$
TOTAL 86,000,000.00$
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ANY QUESTIONS?