SUGGESTION FROM SECOND YEAR: Turn the 5Cs into a fact—impact excel document and include as an exhibit. Focus on the impact more than just stating facts.

Consumers: Consumer spending has been increasing due to strong GDP growth, urbanization, consumer awareness, changes in attitudes towards consumption, increased literacy, and growth in disposable income among younger consumers. The majority (75%) of affluent Indian consumers are concentrated in the top eight Indian cities. Consumers in cities are focused on cards for “need state” usage while in rural areas the focus is on merchant acceptance. Consumers are holding lower average balances as they have become more aware of the dangers of debt. Consequently, consumers are relatively price inelastic regarding interest rates, which has put pressure on the interest revenue business model. Customer motivations to obtain a credit card have shifted to a value seeking approach rather than just being happy to have one. The types of values that consumers consider include discounts on fuel and groceries, air miles, cash-back, reward points, or access to premium facilities. Card users often have a primary card that is for convenience, service quality, and banking services like standing instructions. Subsequent cards are held to separate official and personal use, travel and lifestyle, or internet vs. swipe. High income individuals largely use cards for travel and lifestyle while lower income individuals spend more on groceries and department stores. Spending on fuel is important for both segments.

Competitors: While Citi was the first to market, competitors have begun to rapidly gain market share. The branch footprint of domestic institutions far eclipses Citibank by orders of magnitude (even in metropolitan areas) and local marketing budgets are much larger (2.5:1). Local private banks including ICICI Bank and HDFC Bank have aggressive marketing tactics and are Citi’s strongest competition. These banks employed “free for life” cards (no annual fee/rewards benefits) which became an industry standard and allowed them to capture market share across affluent and emerging segments. ICICI Bank’s Rubyx Card and HDFC Bank’s Regalia and Superia cards are examples of affluent offerings. HDFC, like Citi, has also developed strong cross-selling to existing customers, while Axis bank (another local private bank) has a vigorous network of merchants. Domestic competitors have also created strategic partnerships with retailers, oil companies, airlines, and Indian Railways. Domestic public banks have a large distribution network and focused marketing on financial inclusion for rural consumers, but these banks are generally more conservative in credit issuance. SBI, for instance, outsources card operations to GE Capital. Foreign banks such as HSBC, American Express, and Standard Chartered Bank attempt to cater to the (super) affluent segments through “aspirational” branding. Standard Chartered has even more branches than Citibank. International banks, including Citibank, are disadvantaged by the high regulatory licensing costs imposed by the Indian government. While competitors also cut back on issuance during the crisis, they have now vastly eclipsed Citibank in terms of growth. Local banks have an edge over Citibank in terms of marketing budget, local infrastructure/knowledge, distribution, lower licensing/regulatory costs, and strategic positioning relative to population growth.

Company: Citibank is 50% of Citicorp’s corporate portfolio. Citibank was the first to distribute credit cards (Diners Club) to the Indian market in 1964 and developed a local presence in 1902. The company operates branches out of 30 different cities with a strong direct sales force in the top eight metros. The distribution network is limited due regulatory restrictions on new branch licenses and the company does not currently target the rural population. Citi has been very innovative, brining