Alpen Bank: Launching the Credit

Card in Romania
20P057 – Shubham Kumar 20P094 – Siddharth Bokaria
20P082 – Gaurav Jain 20P096 – Parth Goswami Group - 1
20P093 – Nikhil 20P190 – Anto Thomas
Case Background
Problem statement
Can the launch of Credit Card
in Romania generate a profit of
5M Euros in a time span of 2
years?
Alpen Bank opened its first branch in Bucharest
1 in 2000 which coincided with Gregory Carle’s
appointment as the Country Manager for
Romania
Earlier, plans of this idea had been dropped
2 because of: low per capita income; Poor
infrastructure of PoS terminals; Populations
inexperience with consumer credit
Romania’s imminent entry into the European
3 Union has led to a reassessment of the idea
There are still certain doubts and skepticisms
4 such as which segment to target and what
promotion channels to use
 Romanian Credit Card Market
Encouraging Macroeconomic

1
Rapid rising income and
increased disposable income trends since 2000
for emerging middle class
and upper middle class

2
1.2 cards per household
and a growth of 35% for
both debit & credit cards

3
9.5M cards in circulation;
8,000 ATMs; 150,000 PoS
terminals

4
10% of the population controlled Consumers increasingly
24% of the wealth likely to use cards instead
of cash
Credit Card Industry

Card Networks: Keystone of the card

payment system. Enables transactions
by connecting the other 3 parties. Eg:
Visa and MasterCard

Merchant Acquirers: Distribution

and sales arm of the system. Sign up
merchants for card acceptance &
provide them support

Merchants: Organizations accepting

모바일 이미지 card payments like restaurants and
movie halls

Card Issuers: Typically the banks and

own the relationship with the card
holders themselves
PEST Analysis

Political Economical

P • Romania is about
to enter the
European Union
PEST
• Past the recessionary
phase
• Rise in disposable
income of middle class
E
Analysis

S T
Social Technological
• Preference of using cards
• Rise in the number of ATMs
instead of cash
• Rise in number of
• Consumer buying pattern
merchants with card swiping
shifting towards branded
machine
EU imports
SWOT Analysis

Strengths Weaknesses

S • Loyal base of affluent

customers
• Premium brand image

SWOT
• Client base limited
to Affluents W
Analysis

O T
Opportunities Threats

• Shift in consumer behaviour • Pre-existing market competition

• Technological advancements • Low penetration of merchants
• Entrance in EU accepting card payments
• Low credit card usage
Revenue Analysis

Annual Revenue
% of potential Potential card
Target Segment Annual Income (Interest +
card holders holders
Other)
Middle class €3000-4500 18.2% 3390000 €60.63

Affluent €4500-6000 15% 2790000 €123.38

Most affluent €6000+ 12.9% 2400000 €209.75

Total potential cardholder population – 18.6 M

€122.78
Average revenue per cardholder (Middle class + Affluent) –
Average revenue per cardholder (Affluent) – €163.31
Cost (Customer Acquisition) Analysis
Middle class +Affluent
Response Qualification
Tools Unit cost Prospects reached Conversion rate No. of customers Total cost Cost/Customer
rate rate

Direct mail €0.5 2,500,000 3% 60% 85% 38,250 €1,250,000 €32.68

Take one €0.1 2,000,000 2.5% 30% 85% 12,750 €200,000 €15.69
FSIs €0.05 3,500,000 1.5% 30% 85% 13,388 €175,000 €13.07
Direct sales €3000/rep 60,000 25% 60% 85% 7,650 €30,000 €3.92

Branch cross sell €1 50,000 50% 90% 85% 19,125 €50,000 €2.61

All channels 91,163 €1,710,000 €18.75

Affluent
Response Qualification
Tools Unit cost Prospects reached Conversion rate No. of customers Total cost Cost/Customer
rate rate

Direct mail €0.5 1,250,000 3% 60% 85% 19,125 €625,000 €32.68

Take one €0.1 2,000,000 2.5% 15% 85% 6,375 €200,000 €31.37

FSIs €0.05 3,500,000 1.5% 15% 85% 6,694 €175,000 €26.14

Direct sales €3000/rep 60,000 25% 60% 85% 7,650 €30,000 €3.92

Branch cross sell €1 50,000 50% 90% 85% 19,125 €50,000 €2.61

All channels 58,969 1,080,000 €18.31

Break Even Analysis
Middle Class +
Affluent

Customers for
€5M Profit

122.78 (Y+100,000) -
(6,500,000 + 2,000,000) -
(15*100,000 + 33.75*Y) =
5,000,000

Y = 30,574

Customers = 134,574
Break Even Analysis

Affluent

Customers for
€5M Profit

163.31 (Y+50,000) -
(5,750,000 + 2,000,000) -
(17.5*50,000+ 35.81*Y) =
5,000,000

Y = 42,820

Customers = 92,820
Alternatives

Market Product Target Affluent Middle class + affluent

Penetration Development
New product to New product to new
existing customers customers

Product
Diversification
Development
Market
Diversificatio
Development
n
Recommendations

Short Term Plan Long Term Plan

Target Affluent customers Target Middle Class +

Affluent
 Loyal customer base
 Lower income and more price
 Break even point and target focused behaviour
profit reached earlier
 Rope in the middle class with a
 Position the Credit Card as a credit card product with lower
High-End Premium Product interest rate

 Utilize all promotion/

communication channels
€5M Profit in 2 year time
Thank You !!