Citibank in Asia Pacific. Introduction. Citibank’s branch banking business conducted operations in 15 countries throughout Asia Pacific and the Middle East in 1989
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Break Even Analysis
Break Even - Sensitivity Analysis
Source: Demisch, McGarry, Mukhtar, Rajbansi; Feb 2008
Build ideal mix of product attributes
Determine customer segmentation
Identify cannibalization & competitive response
Success selling auto loans through car dealers
Greater potential with Citi cardholders
Opportunity for cross-sell of products such as Auto Loans, Ready Credit, Deposits, Mortgages
Enables virtual presence in countries restricting number of foreign bank branches
Bundle with bank services for lower combined fees
How calculate cross-sell value?
Take Hong Kong Citibank example where 6% of account holders also have Citi credit card and assume same opportunity in reverse…
Total Relative Yr 1 value for all 9 Asia markets would be $29M
Assumes 1.7 cards per customer and 6% of card holders will purchase 2nd Citi product as result of cross-sell efforts. Percentage based on 6% of Hong Kong’s Citibank customers also owning Citi card.
Sample Exchange Rates
US $1 = HK $1.13
US $1 = Australian $1.33
HK $1 = Australian $1.18
Buy HK $11.3M with US $10M
Buy Aus $13.334M with HK $11.3M
Buy US $10.025M with Aus $13.334M
Triangular Arbitrage Example = US $25K Profit!
Across Citibank’s Asia-Pacific customer accounts = $1.5M+ per turn.
Low Risk, Safe Return - Australia, Singapore, Taiwan
Moderate Risk, Moderate Return- Thailand, Malaysia
High Risk, High Return - India, Indonesia, Philippines
Source: CLV Calculator- HBR http://hbswk.hbs.edu/archive/1436.html
Coordinate finance & marketing functions to select appropriate discount rate, marketing policies and resource allocations after analyzing the risks and returns from different marketing policies.
Reference: Sharan Jagpal (2008) “Fusion for Profit” pp 26