STANDARD CHARTERED

CREDIT CARDS

Group II
SMBA-04
Churchgate
 Group Members
Jaspreet S Nagi 05

Ruturaj Oulkar 08

Kumar Sathe 24

Viksheth Shetty 26

Vijay Nimbalkar 34

Sujal Shah 35
 Introduction to Credit Cards
A credit card is a plastic card with a magnetic strip
containing data, and is a financial instrument allowing
the holder for pay for goods or services on credit and in
lieu of cash.
Credit cards allow customers to buy goods and
services immediately and then settle the bill for the
transactions at a later date.
 The Credit Card History
First Credit card was circulated by Franklin National
Bank, USA in 1951.
Bank of America introduced its own card in 1960,
called as BankAmericard.
In 1966, 14 US Banks formed INTERBANK to exchange
information on credit card transactions.
In 1967, 4 California banks changed their name to
Western States Bankcard Association (WSCA) and
opened membership to other financial institutions.
Their product was called as Mastercharge.
 The Credit Card History
In 1977, BankAmericard became VisaUSA /
VisaInternational.
Mastercharge was rechristened as MasterCard in 1979.
The credit card business started in India with Diners
Charge Card, followed by BOBCARD, CANCARD and
Citibank.
Standard Chartered entered the Indian market in
1992.
 The Players
Cardholder – End user of the credit card

Issuer – The financial institution issuing the credit card

(e.g., Standard Chartered)

Agent Bank – Small time financial institutions

Acquirer – Member of MasterCard or Visa

Merchant – Any company which accepts credit cards in

lieu of cash (e.g. ITM)

 SYNOPSIS OF THE CASE
Standard Chartered entered the Indian credit card
market in 1992.
Growing Indian middle class and higher spending
power were the key factors in the growth of the
market.
They estimated the card market to be approx 10
million by 2000.
It started its operations at a low key, however the
competition was far ahead due to which it had to
resort to aggressive marketing & promotions.
 SYNOPSIS OF THE CASE
Challenges faced by Standard Chartered on
Entering the Market:
It is a volume driven business with marginal returns.
Gestation period is very high.
Acquisition of new customers is very difficult.
Market was dominated by Citibank.
Communications systems very poor compared to the
developed countries.
 SYNOPSIS OF THE CASE
How Standard Chartered countered the
challenges?
Extensive market research prior to and after entering the
market.
Estimated 400,000 cards as the break-even point.
Concluded Hygiene and Differentiator as the two major
factors affecting purchase of credit cards.
Hygiene – Credit, Convenience, Confidence.
Target Market – MIDDLE CLASS URBAN
POPULATION
 Marketing Mix
PRODUCT
Cards for 3 different segments – Gold, Executive &
Classic.
An innovative concept – PHOTO CARD.
Cricket Card launched during World Cup 1996.
PLACE
Remained only in the urban market and had offices in
10 major cities of India.
However, the sales force got customers from every
nook and corner of the country.
 Marketing Mix - Price
Inter-Change Fee

Annual Fee

Credit Card Fee

Marketing Mix - Promotion
It did whatever it could to promote its cards.
Launch of photo cards, cricket cards and reduction of
cash advance fee helped in increasing its card
membership.
Promotional activities revolved around providing
maximum benefits to the customers.
Widest acceptance
Enhanced cash advance limit & longer credit period.
Free insurance, teledraft, access to airport lounges, etc
were some of the sales promotion strategies.
 OTHER MEASURES…
Standard Chartered invested over Rs 5 crore in
technology to speed up service.
It also invested Rs 2 crore in AT & T
telecommunications systems which helped customers
to get machine reponses in 24 hours.
Banglore division upgraded its technology for credit
and behaviour scoring which helped reduce its TAT
from 21 days to 10 days.
Relied more on sales force than on advertising.
“Member for member” scheme.
 NET RESULT
As on March 2000, their credit card base was 680,000
customers.
Standard Chartered grew by 37% vis-à-vis the industry
growth rate of 33%
It had a 42% market share of Visa International Gold
cards.
 OBJECTIVE

To become the market leader in the

credit card business in INDIA.
 THREATS
Government policies.
Internet Frauds.
Data Leaks.
 OPPORTUNITIES
Changing consumer dynamics
Competition
Corporate Cards
Co-Branded cards
Enter the premium segment with a differentiated
product (e.g Platinum Cards)
Untapped Markets
 WEAKNESSES
Fewer Branches compared to other banks.
 STRENGTHS
Strong Customer Base
Brand Name
Variety of Cards Offered
Emphasis on Technology
Right Marketing Strategy
Highly Trained and Motivated Sales Force
Stringent Quality checks
Reduced Turn Around Time.
 Question & Answers
Q1) Assuming the role of customer, merchant and banker,
discuss the advantages and disadvantages of Credit Cards.
Advantages Disadvantages
Customers
Revolving Credit Chance of Misuse

Status Symbol Overspending leading to bad credit history

Convenience in Shopping High interest charges

Minimum amount to be paid every month  

Merchant
Increased sales Minimum charges to be paid to the banks
Zero Liability  

Banks
Increased profits Increase in Non Performing Assets

Opportunities for cross-sell of other Lower Margin on credit cards compared to other
products products

Increased stickability  
 Question & Answers
Q2) How do you justify the heavy investment of SCB in
technology upgradation?
A)Volume business is required to generate substantial
revenues.
Performance in the Credit Card business is highly
dependent upon the services provided.
Investment in technology has reduced the TAT by more
than half.
3 C’s
Business has increased two-fold post upgradation of
technology.
Hence, the heavy investment in technology is
JUSTIFIED
 Question & Answers
Q3) Is the card membership of Standard Chartered
growing at a higher rate that the growth of total card
market, a good indicator for SCB to expand its
operation? SCB is now moving towards rural
markets? Justify.
A) SCB enjoys a very good brand image and is already an
established player in the credit card market.
It’s business is currently outperforming the credit card
market. (37% vis-à-vis 33%)
It wants to be the market leader in the credit card
business.
Hence considering their objective and the strengths
of their product it is imperative that they expand.
 Question & Answers
A3) The rural markets have their own pros and cons like:
Poor infrastruture
Lower disposable income
Lack of awareness
However, if Standard Chartered Bank can leverage
its vast strengths to overcome these weaknesses,
then its foray into rural markets is Justified.
 Question & Answers
Q4) If the government policy is to make the rupee
fully convertible, what will be the effect of the
same on the credit card market? Are there any
special benefits for Standard Chartered Bank?
A) Govt.’s policy on full convertibility will help expand
the credit card market in India as:
Travellers would prefer to carry credit cards in lieu of
cash or Traveller’s cheques.
It will open up a whole new segment for the credit
card market to tap.
 Question & Answers
A4) Standard Chartered being a multi-national bank, it
has its offices in different countries.
Standard Chartered Bank Credit Card customers can
access any of the Cirrus & Plus’ 150,000 strong ATM
network.
Hence, the government’s decision will definitely
have a positive impact on Standard Chartered
Bank.
THANK YOU