Lateral Thinking: How to become leader in Credit Card issuing

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It is good to drink RED WINE with cheeze. RED WINE taken with bankers are always special as it taste much bitter to tongue but few of the false boasting by bankers. Few of the leading bankers and card issuers are boasting about their achivements and they are right. Data captured for the period 1997 to 2004 quoted by them clearly reflect the boasting that, Credit Card business in India has outperformed most asian countries.

Good effort but, at what cost ???? Few questions and RED WINE started becoming bitter for these bankers.

Does it sound profitable to top management ? Does customer being happy being serviced ?
Is customer happy with product offerings ? What makes this growth sustaniable?

Few more thinking ? ?
Why product mushroom every season and perish like morning dew?

Market Pie for credit card issuance:
The Indian credit card market is still largely untapped, given only 2.4 % of the working population owned a credit card in 2004. Analysts predict that 35 million credit cards will be issued by 2010 with an outstanding balance of over $7 billion.

Two main market segment yet to be tapped
1. Middle portion of Pyramid - Asia's second largest developing country - Middle class :
Reason being high percentage of educated mass and opting for It is driven , where consumer spending is concentrated on lifestyle and luxury goods,

2. Bottom of the Pyramid : Rural Portion of rural areas mainly covers occupational expenditures in agribusiness.

Present Performance Blues:

Present market players are rarely seen working towards sustained grwoth. Mostly there is a sporadic impluse marketing has been observed. They miss the train of basic thumb rule such as increasing low ticket transactions and generating opportunities in increasing such transaction volume. Merchant also plays important role in boosting low ticket transactions.

Customer on the other hand has his own issues and paramount major portion of the customer base seen uneducated about credit card or personal debt/financial management. Either customer falls into trap of high interest rate OR Customer is not able to utilise for small value transactions.

Regulators like RBI - Central Bank need to intervene and propose code of conduct and provide guidelines so that, customer service can be standardise. Customer will be made well worsed with terms and conditions of using credit card products and better understand their liabilities. Bankers and issuers will better understand balancing assets and liabilities to handle credit card more effectively as Loan product.

What is the Penacea for such dilemma?

Credit card issuer need to move up in their Customer service initiative (From mere CRM to CEM).

• Once a critical customer base is reached, existing customers need to be provided personalised products atleast creating sub category. It can be done using proper customer data analysis and profiling based on transaction pattern.
  
• Second, developing a strong value of franchise and branding strategy of differentiation.
• Third most important things to be considered highest standards of customer service and integrity in the face of massive acquisition.

Successful card issuers have focused their resources on retention and usage strategies. Sub-segmentation has to go beyond the standard categories, including behavioral, geographic, transactional, lifestyle and lifecycle monitoring. The best credit card issuers in the region have more than 200 sub-segments in its analytical scorecard tailoring cards to programs specifically to certain customer groups, a factor which contributes to high retention levels.

Since the credit card brand is the single most important factor in owning a card for the Indian middle class, developing a strong value of franchise and a branding strategy of differentiation right from the beginning is of paramount importance.

In fact, this implies that banks should have a separate marketing strategy based on a repeated integrated multimedia campaign to keep the brand on top of the mind of the consumer who is becoming more sophisticated and demanding in their use of financial payment systems.

Ultimately, issuers which are able to maintain high post acquisition service standards by delivering the convenience of payment and services around the card can create a long-term service franchise and a pool of satisfied customers. As card issuers have been experiencing more than 100 percent in growth rates in terms of cards issued in the last years, the ability to manage volume growth qualitatively at its earliest stage becomes of paramount importance in 2005.

Munch and Byte: ING Direct ahead in valuechain

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New Report Takes Issue With Common Notions On ID Fraud

Contrary to conventional wisdom, most cases occur through offline channels like paper statements instead of the Internet, according to the 2005 Identity Fraud Survey Report from the Better Business Bureau and Javelin Strategy and Research.

The survey found that computer crimes accounted for just 11.6 percent of all identity fraud in 2004. Conversely, most cases stem from a lost or stolen wallet or checkbook.

It also found that in half the cases where a perpetrator is caught, it is somebody known by the victim: a friend, relative, neighbor or in-home employee.

Finally, the report found that the problem is not worsening: the number of victims fell to 9.3 million last year from 10.1 million in 2003.

ING Direct Implements Informatica ’s PowerCenter

ING Direct is using Informatica Corp.’s data integration platform to help manage its recently launched UK operations. By using Informatica’s PowerCenter product, the direct savings bank will be able to integrate all of its customer-related information.

Specifically, ING will be better able to target customers and prospects and reduce customer-acquisition costs and quickly respond to market changes, according to Informatica.

ING officials say that ING Direct has grown so quickly that it is virtually impossible to set the information architecture requirements in stone and PowerCenter gives it the flexibility to change easily within a data warehouse, enabling the bank to maintain close relationships with customers.

Diebold To Restructure European Operations

Ohio-based ATM maker Diebold Inc. plans to “take aggressive actions” to restructure its European operations in 2005. Company officials were forthright about their disappointment in the company’s margins from Western Europe.

Its Opteva ATM has not fully completed the customer certification process and even though the company expects to make key advances in that area by the end of the first quarter, it also expects to see continued pricing pressures.

Without providing details on the restructuring, Diebold says it will take aggressive actions to better align its global resources and cost structures.

The company announced its restructuring plans along with its quarterly performance for the fourth quarter 2004. Total quarterly revenue was $717 million, up 10.6 percent from the same time period last year.

TRITON - Competitior of Diebold has shown largest increase in quarterly revenue of $850 million and NCR coming closer with improved profitability $124 million posting quarterly revenue of $ 1.6 billion.

Lateral Thinking - Fifth Third selecting WeatherMaster ATMs against biggies NCR,Diebold, WINCOR

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I hope all of you must have been purchaser one or the other time. I spend my professional life's first 5 years being a IT Vendor. I learned that, purchasing is difficult than sales. I use to sale my products and often desale my competitiros. Then I became Purchaser for a known bank. I went through the same blues and pinks of purchasing. I consider purchase job more as Marriage. In my last job, I have played three roles - Evaluator and Recommender, Facilitator Manager for Outsourced services, project management. - I think that's like Mariage Planners :>)

It's complex role but, played successfully for Four years and closely looked at decision maker, influncers(Biz. Users) for making decisions. Difficult part in decision making is always being corporate legacy which influence mapping of business requirements against product feature, vendor performance criteria and post sale implementation and sustainance services.

Unhappy Husband: Few ignore the mapping and engage with vendor/product, smile and sign the purchase contract and often seen dejected and avoid eye to eye contact with vendor within first month of enagement.
Run Away Lovers: Others make vendor so unhappy to accept the deal that, either vendor runs away or accepts and deploys sub standard delivery team.

PS: Both of above guys must not marry as marriage results in sure divorce.

Very often, you see a perfect "MADE FOR EACH OTHER" purchase enagement. I come across one recently - Fifth Third purchasing ATMs from Qualtex.

Fifth Third Bank Processing Solutions has certified Qualtex Corporation's through-the-wall, weather-resistant WeatherMaster for processing on its network.

For 145 years, Fifth Third has been providing quality financial products and services to its customers. Based on its rich history of performance and customer service, the Bank has received numerous accolades for the way it operates over 1,000 locations in eight states throughout the Midwest and Florida.

Intresting History of Fifth Third Name:
Fifth Third traces its origins to the Bank of the Ohio Valley, which opened its doors in Cincinnati in 1858. In 1871, that bank was purchased by the Third National Bank. With the turn of the century came the union of the Third National Bank and the Fifth National Bank, and eventually the organization became known as "Fifth Third Bank." Since its beginning, Fifth Third has provided superior customer service and followed sound banking principles.

When such a large bank decides to purchase ATM machine form relatively new company founded in 2001 is little surprise. Answer for the same can be available from gazing at Fifth Third's transaction services and Qualtex's journey through innovative way of product management. Qualtex's leader CEO and Founder - Brad Zerman has interesting pedigree before reaching here.

Let us first gaze at 5/3rd's legacy - Fifth Third Bank Processing Solutions processes more than 9 billion ATM and point-of-sale transactions per year for more than 1,500 financial institutions and 198,000 retail locations. Annually, Fifth Third processes $83 billion in credit card sales.

It is clear that, 5/3 has captured major market share and wants to go deeper by attracting more retailers and low transaction outlets. It is popular to see Rear load model - TTH (Through the Wall) model being famous for such segment of such outlets. Why Qualtex? and why Weather Master? compared to other bigger player's product offering similar models offered by Qualtex.

I can see channel managers, IT procurment Managers and CIO at Fifth Third thinking out of the box.

What are their priorities at present of leading such a mammoth processing services?

Low Cap - Ex (Capital Expenditure)

Low Sustance expanses (Low Opp. Ex.).

• Qualtex ATM has all the features that is required for Retail outlet of ATM and they are in par with what bigger players are providing.
  
• Best feature that can be approciated from product manager's point of view is the WeatherMaster's Highly Modularised and scalable product.
  
• It matches that of typical WINCOR product and can run best terminal softwares like APTRA and Diebold's Aptiva. Why ? Sinple it runs on XP with standard device driver modules which are compatible to any such software.
  
• WeatherMaster has all the three models - Table Top, Lobby as well as TTH with option of add on similar to biggies product line.

Whatelse is needed more than above (for successful marriage) to deploy at typical merchant or retail outlet. This predicts the next wave of expansion coming up from Fifth Third.

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