Citibank:%20Launching%20the%20Credit%20Card%20in%20Asia%20Pacific

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Citibank Launching the Credit Card in Asia
Pacific

• Erica Baumann
• Paul Davis
• Nathan Hahn
• Rebecca Leeds
• Lauren Lettieri

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OverviewGeography of Asia Pacific
The Nature Conservancy http//nature.org/wherewew
ork/asiapacific/
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OverviewThe 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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OverviewCitibanks Mission Statement

• Citibanks mission in the Asia Pacific region was
  to be the most profitable provider of a wide
  array of financial services to an increasingly
  affluent and middle-income market, and to reach
  the rapidly growing middle-income households in
  this region.

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OverviewCitibank in Asia Pacific1978-1989
1989 Talwar reintroduces the idea of a credit
card launch in Asia-Pacific
1983 Citibank enters the credit card market in
Hong Kong
1981 First foreign bank to enter the local trade
finance market in Taiwan
1986 Begins a period 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
1989 Malaysia and Australia have saturated
credit card market
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OverviewKeys Questions in Asia Pacific

• Should Citibank launch a credit card in the Asia
  Pacific region, and in which countries?
• How should the particular card launches be
  tailored to each specific country?

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Business Problems

• Citibank wondered whether they could adopt a
  mass-market positioning to acquire enough credit
  card customers and still maintain its up-market
  positioning with the current upscale branch
  banking customers
• Pricing the card too low would conflict with
  Citibanks stated positioning however pricing it
  too high might mean low customer acceptance
• Citibanks management were concerned that
  consumers 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
  important shopping tool
• Hong Kong people are used to credit cards-
  relatively affluent population
• India strong economic development in late 80s
• Malaysia large successful business population
• Singapore one of the worlds largest center of
  traditional 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 membership
• Australia/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
  coupled with stringent local restrictions

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SWOT Analysis Opportunities

• Australia credit card in conjunction with their
  banking services
• Hong Kong want to target customers outside
  branch business
• 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 and see 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
  of status
• Malaysia many other options to choose from in
  1989 (MasterCard and Visa)
• Singapore high-tech mecca has attracted many
  multinational corporations
• Taiwan restrictive laws prohibited thus industry
  is in early stages
• Taiwan AMEX and Diners Club worldwide respected
  reputation
• 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 biggest
  opportunities,'' says Citigroup Vice-Chairman
  William R. Rhodes
• Cross selling products
• Market will accept new credit card penetration
  (except for few countries)
• Targeting growing upper class market

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Most Likely Case Scenario

• Citibanks credit cards as symbols of status
• Citibanks customer base in Asia Pacific region
  will increase and expand
• Customers will use their cards for a wide variety
  of purchases

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Most Likely Case Scenario

• Australia More services will be offered to
  maximize financial management
• Hong Kong Reach customers outside business
  segment by cross selling
• India Increase merchant acceptance
• Indonesia Incentives and higher credit limits
  opportunities
• Malaysia Build up credit for future uses

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Most Likely Case Scenario

• The Philippines Market program geared towards
  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 consistent
  multinational strategy
• Rejection due to national pride and culture
  (Taiwan)
• Saturated markets not accepting of another credit
  card (Singapore)

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Best Case Scenario

• Citibank adjusts strategy for specific countries
  needs (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 more customers
• Higher annual fee to provide a steady recurring
  revenue
• Premium pricing for the Citigold card to attract
  affluent cardholders

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Strategy Options

• USD as standard currency for all cards
• Regional Card Center
• Lower costs because of economies of scale
• Capability to do quick work product launches in
  Asia Pacific

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Strategy Business Segments

• Non-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 upscale
  customers 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 usages shopping ? 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 conducive
  to credit card usage
• Recommendations
• To risky to enter the market

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Population Breakdown by Income Asia Pacific
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Break Even Asia Pacific
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Population Breakdown by Income Malaysia
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Break Even Malaysia
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ANY QUESTIONS?