Citibank: Launching the Credit Card in Asia Pacific


By: Kamalnath Jai Kumar

performance of Asia-Pacific branches is not bad.EXECUTIVE SUMMARY The rapid growth of Asia-Pacific economy was incredible in several years. and it is an attractive service for customers. However. so Citibank started branch banking business since 1978. Citibank launched the most innovative service such as telephone banking service. Deposits. Citibank earned $69. For this goal. Citibank provides customers some services that none of its competitors could reproduce. Acquiring card customers means that Citibank has more opportunities to cross-sell product line: Auto Loans. Citibank is planning to launch a new product credit card. Opportunities  The growth rate in Asia-pacific countries is increasing higher and higher recently. Threats  Economics in Asia-pacific countries are not as developed as United States and Europe. and the market is undeveloped yet. Ready Credit. Citibank’s core products. SWOT Analysis Strengths • • Citibank pioneered telephone banking in much of Asia. there are most people with little credit experience.  There are very large population potential customers in some countries. But many of Citibank headquarters have doubts about the success of credit card service in Asia-Pacific. It could be a good chance for Citibank’s growth. Weakness • Citibank imposed relatively high deposit requirements of its checking/saving customers. Citibank’s goal is $100 million until 1990. Actually. we are sure that Citibank’s credit card can succeed if they have good strategies. Because there are many regulations that prevent foreign companies with entering credit card service. In addition. but Citibank does not satisfy with its performance. .  Government’s regulations of some countries make barriers for Citibank. and Mortgage Power. In 1988.7 million. And now.

Citibank need to watch the situation of Philippines. Therefore.6 million and the average annual income is $8. they did not achieve high growth rate. Furthermore. it makes harder for Citibank to launch the credit card in India. In addition. However. credit card service is not attractive to Indian people. Credit cards served as status symbols for Indian upper-middle-class consumers and consumers prefer to pay on time and not use the card.8% growth rate. Credit cards issued in India can be used only for local transactions in local currency and not for foreign-exchange transactions. Thus. and Citibank should obtain authority from NCCC. the card market of Singapore is already saturated. Furthermore. Taiwan people have to obtain the card in Hong Kong. Indonesia . Therefore. 70% of distributed cards were used by lower-middle-class consumers whose annual income was from $2. In 1988. Visas and Master Cards by local Hong Kong Bank and Standard Chartered Bank. Because of unstable political situation. so they would not use card very often. The condition of Hong Kong is good for Citibank. The population is 5. Hence. Taiwan Again it is not appropriate to launch credit card services in Taiwan. Hong Kong The competitors of Citibank’s credit card are American Express.ANALYSIS OF NON TARGETED COUNTRIES Philippines We think that this is not the time to launch credit card service. many local banks.000 and that amount of people almost uses bank cards. 80% of the Indians live in rural areas and the majority of the country's wealth is concentrated among a small group of urban households. there are already many competitors like AMEX. they got 6. India In India. Their political and economical situations are quite good. there are still powerful regulations. Although Singaporean people earn much money and regulation is not very high.158. it is too late to enter the market.7% share of the credit card market and they remain many possible customers for Citibank.000 to $6. It is not good for launching credit card. Hong Kong bank. and etc. many people are qualified. Singapore In Singapore. Citibank's Classic and Gold Visas' had 140. Taiwan is cash-oriented country.000 users and held an 8. Even though Taiwan government removed some regulation for credit card.

Malaysia Malaysia regulates that only customers whose income is more than $9.In Indonesia. 25% of Malaysian people have above $12. Citibank is enough serves the credit card. We guess half of them earn $9. Furthermore.500 are 20% of the total population. It implies that Citibank’s card service has competitive power. So. but 80% of Indonesian live in rural areas. Citibank has some unique services that can make their customers manage their finance more comfortable like telephone banking. some countries are still poor countries. Thailand . These all make hard for Citibank to launch the credit card in Indonesia.000 to $12. In addition. Therefore.500 per year. It implies that Malaysia has a wonderful future for the credit card service.000 annually.000 to $12. Different people are living in different countries. some of them are desirable to start card service immediately and others later. Malaysian people have open mind to credit cards. the latest Malaysian growth rate is 8% higher than the average value of latest 5 years. Therefore. American Express. So. 90% of people earn less than $2. the top company which serves the credit card. Hence. Although competitors such as American Express exist already. some countries are similar with the western countries. a high deposit requirement to use the services might not be a big problem. Indonesians perceive card ownership as a measure of high social standing. Therefore. Because of low income levels. many people are not qualified for membership. has only 15% of market share. Furthermore.000 can have credit cards. TARGETING Australia In Australia people want convenient services. and it limits the size of the customer severely. and each country has their own market characteristics compared with other countries. RECOMMENDATIONS SEGMENTATION There are many countries in Asia Pacific region. has only 15% of market share. are assuming some countries as a segment. average customers’ bank balance of Australian people is also high ie $24000. People whose annual income is from $6.500 as an income. Some countries have strict regulation of government.

Citibank's Classic and Gold Visas' had 140. Thus. so Citibank needs to operate 3 branches and many ATMs continuously.25 per customer] and Direct-mail[$112. but it shows very small amount of 462.5]).7% share of the credit card market and they remain many possible customers for Citibank. POSITIONING There are 4 countries have high possibility to launch credit card service among the 10 countries.000 users and held an 8.000 earn over $23.6 million and the average annual income is $8. many people are qualified.In Thailand 20% of Thai whose income is over $6.158. acquiring other card service bank will be better.000. so telephone banking service can be successful in Hong Kong. so Citibank needs to concern more about these kinds of service’s cards.840 customers from total customer 5.320. Naturally. The proportion is higher than other countries.5% of overall population. Therefore. Moreover. Each country has different position. Hong Kong The competitors of Citibank’s credit card are American Express. Australia: the card market is already saturated. Visas and Master Cards by local Hong Kong Bank and Standard Chartered Bank. lower joining and annual fee than AMEX and Diners Club will be needed.7% share of the credit card market. regulation and using of credit card. In addition. Credit Card customers use their cards for a variety occasions from daily trips to the grocery store to business travel to family vacations. Malaysia. The population is 5. because if Citibank enter the market by acquiring an already existing card portfolio. (India [10%] and Malaysia [10%] are countries that have lower proportion than Thailand) Also the literacy rate of Thailand is low 89%. (Except Indonesia [43%] and Singapore [25%]) and the proportion of owing cards of that group is just 12. and Thailand. Hong Kong. if Citibank starts Greenfield market development. there will be very intensive competition. Consumers usually use their credit card for personal and family retail purchases. Furthermore. Hong Kong: there already have Citibank’s Classic and Gold Visas that hold an 8. Malaysia: most people live in rural areas and the most important reasons for owning credit cards are convenience and extra credit (Exhibit 10). and with . Half of the population use telephone. (Australia [99%] and Taiwan [90%] have higher rate) It means that Citibank can use the bind-ins that have lowest customer acquisition cost. (Bind-ins [$56. which are Australia. The condition of Hong Kong is good for Citibank. Citibank need to choose Greenfield market development. These figures show that Thailand is a good market for Citibank. Because there is 60% of the population living in rural areas. Australian people have negative attitudes toward joining and annual membership fee.200 a year. the 5 bank could consider leveraging off an already developed operations infrastructure and trained human resources in the acquired company to consolidate the market share. Therefore.

advertising should be focused only in rural areas. Thailand: Citibank need to be concentrated on the structure of Thailand industry. It might be a problem to launch credit card service. the service needs to focus on family and traveller mainly.000). and Thai’s savings are relatively and absolutely low. In addition. .small group of corporate customers who used the cards for business travel and entertainment. Therefore. In addition. we think that US dollar should be the standard currency for these credit cards. We think that Citibank should focus on foreigners (tourists) and high-income customers (over $23. providing high limit for using card is important. By competing with American Express. Most profit of Thailand comes from tourists.

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