BUSINESS CASE: LATIN AMERICA
Tracked value of 6.30 USD recurrent every year per active credit card
REGION: LATIN AMERICA
CLIENT: RETAILER, TOP 8 CREDIT CARD ISSUER IN ITS MARKET
MODULE: REVENUE ENHANCEMENT
SCOPE: CREDIT CARDS
ACTIVE CREDIT CARD PORTFOLIO: > 400 K
PROJECT EXECUTION: 13 WEEKS
+ 6.30 USD
tracked per active credit card
In total 39 strategies have been presented.
The tracked value is at 6.30 USD recurrent every year per active Credit Card.
First implementation was 1 week after being presented and before the projects end.
Implementation ratio to presented value is at 25%.
75% of the value implemented was parametric implementation.
The tracked value in total is 10% over the initial impact estimations.
The client, a leading retailer issuing credit cards, was in the process of strong growth and expansion. The year prior to the arrival of the execution team, the bank made a great effort to launch a new range of products, with an extremely aggressive pricing policy. The campaign had been successful in terms of issuing and activating cards, but extremely costly in terms of profitability due to low prices and the abundance of promotions.
The project was executed on the client's premises within 13 weeks. The team was composed of two consultants and a full-time Project Manager supervised by a Managing Director.
The client was fully committed to the project from the day one, assigning contact persons in the different areas and providing direct access to key people of the financial area and product area. A junior product manager from the bank was defined as project manager from the banks side facilitating team access to the stakeholders in the bank and providing key information.
During the 13 week time period, 2 presentations were held to the steering committee, composed by the directors of the different areas: Legal, Business, Marketing, Risk, etc. In total, 38 recommendations were presented. Each recommendation was presented as a sole standing business case, analyzing the potential strategies from all aspects, to facilitate the banks decision process as much as possible.
The main challenge for the execution team was generating recommendations that did not affect the guidelines defined by the marketing area, whose sales campaigns revolved strongly around the accessibility and low prices of their products.
Recurrent annual value presented vs. accepted per active unit (in USD)
Presented value per unit
Accepted value per unit
We managed to surpass our client’s expectations of the accepted value by 91%. Due to the nature of the client’s business (low pricing and low usage) our initial impact estimation potential was significantly lower.
All accepted strategies have been prioritized for implementation based on their impact and implementation complexity.
Implementation complexity by value
As you can see above 75% of the value implemented was parametric. Before the end of our projects, 4 strategies with parametric implementation were implemented with an immediate impact on the banks bottom line.
In terms of value distribution of the accepted value looking, the majority of the impact is coming from interest related strategies:
Value distribution by income lever of accepted strategies
UPITE managed to obtain additional results for the client despite its low pricing and high incentive strategy combined with overall low credit card usage by their customers. Within two weeks of our first presentation additional income was already being generated for the client.
We have reached a tracked recurring value per year of:
6.30 USD per active Credit Card thereby surpassing the expectations of our client significantly.
The overall tracked impact is 10 % above original estimations.
Income evolution per card
UPITE's strategies generated an additional 5.29% of income for the credit card segment. As our strategies do not generate any additional cost effects, the effect on the net income level is much higher.
The willingness of the bank to allocate resources to the project and to move quickly was a key success factor for this project.