alpen bank case analysis
Post on 31-Dec-2015
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SERVICES AND CUSTOMER MANAGEMENT
PREPARED BY –
KRITHIKA G BHARADWAJ 12023
VIVEK G 12060
ABHISHEK SINGH 12122
SIDDHARTH R SHETTY 12168
Alpen Bank Case analysis
Case Background
Country Manager for Alpen Bank, Gregory Carle wants to launch credit cards in Romania
The objective is to decide whether its feasible to launch the services in the country and what should be the positioning strategy
Currently, the bank has over 200000 customers
Most of them are from upper middle class and rich background
Uncertainty is about the current market, potential customers, average income
Credit card industry
The credit card industry is divided into 4 sections
Card issuers are typically banks, and they own the relationship with the card holders themselves
Network or card associations such as Master Card or Visa and form the backbone of the payment system
Merchant acquirers are the distribution and sales arm of the payments industry and are frequently affiliated with banks
Merchants are the restaurants, retailers, gas stations etc
Romanian Credit card industry The macroeconomic trends during the first half of 2000’s are encouraging
Rapid economic growth and rising incomes, particularly among the emerging middle and upper middle class had dramatically increased total disposable income
Over one third of Romanian households were likely to purchase branded imports from the EU
Statistics show that Romania has 1.2 cards per household. Growth is 35% for both debit and credit cards
9.5 million cards in circulation in Romania, apart from 8000 ATM’s and 150000 point of sale terminals
Potential customers
Top 10% of the population by income controlled 24% of wealth
The potential customers of the affluent class had incomes of €500 per month where as those of the middle class €200 per month
The affluent base were the most attractive for the credit card issuers
Revenue to be derived from : joining/annual fees, penalty fees for late payments, interest payments and interchange
Delimma
Should Alpen Banks launch credit cards in the Romanian Market?
How quickly would the business generate profit beyond break-even?
What level of customer acquisition would be required to break-even
How should the new card be positioned, particularly given its current upscale customer base?
How would the credit card opportunity compare to focusing on the core business of banking services for the affluent?
Market Entry costs
Five options explored
Direct Mail
Take ones
FSI’s
Direct sales
Cross selling
SWOT Analysis
Strengths Loyal affluent customers
A premium banking service
Weakness Low customer base
Opportunities Increase in per capita income
People preferring luxury products
High disposable income with population
Threats Lower penetration of merchants accepting card payments
Already established players
Low awareness about card payments and more dependence on cash transactions
Alternatives
Target existing customer base - Product development
Target Middle class and Affluent customers - Diversification
Quantitative Analysis
Data Analysis Excel sheet
Some key figures
Average revenue per cardholder (all customers) : €122.78
Average revenue per cardholder (affluent) : €163.31
Acquisition cost (Middle and affluent customers) : €18.7
Acquisition cost (Affluent customers only) : €18.31
Break even (Middle and affluent customers) : 78713 customers
Break even (Affluent customers only) : 53604 customers
No of customers needed to reach ROI of €5 mn (Middle and affluent customers) : 130557 customers
No of customers needed to reach ROI of €5 mn (Affluent customers only) : 100971 customers
Recommendations
Target Affluent customers
The break even can be achieved with lesser customers and also can quickly reach the target of €5 million
The middle class segment can be targeted with lower interest rates later on, where although interest income could be lower, the bank should focus on volume based selling
Thank You
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