Citi Bank India Credit

Cards : Strategy For

Profitable Growth
J Manoj Raj
Section B
PGP 22/080
  Issuing interchange component of the merchant
discount rate (MDR)
 Annual Renewal Fees from Cardholders, however many
How Money is credit cards were offered free
made in Credit  Interest Revenue from consumer opted to pay portion
of outstanding amount
Card Business?  Fees from merchants for electronic draft capture (EDC)
 Major revenue for associations was fee component of
the MDR
  Help Their Business Grow
Benefits/Value  Create a better sale experience to Customers
Proposition to  Improved Security and can maintain
Retailers transparency
 Super- Affluent and Affluent Segments
 Inherited Wealth, Self-Made Businessmen and small
group of salaried professionals
 Brand Conscious and tend to have strong brand loyalty
Possible
 Categories like travel, holidays, watches and jewellery
Segment of
Emerging Affluent and Mass Market Segments
Customers  Salaried Individuals and Self-employed professional,
retailers & traders
 Spend more on Fuel and in department stores, seeking
value for money
  Choice was between driving growth in new
geographical locations versus growth in
customer segments
Options for  Expanding to new location would involve
Citibank significant investment in Infrastructure
 Expanding to cover more segments in current
locations would lead to lower margin and
higher credit costs
   From an efficiency ratio perspective, Emerging
Affluent consumers in the top 8 cities will provide a
better ratio than super-affluent/affluent consumer in
other regions.
 The other alternative - expanding into other
geographic regions - is irreversible, comes with
significant upfront investment costs, may be opposed
Suggestion by the RBI, all in pursuit of a small group.
 Customers who live in areas where merchants are far
less likely to accept credit cards.
 Given these facts, launching a card for the Emerging
Affluent in the top eight cities is an attractive possibility
than expanding to new locations.
THANK YOU