Alpen Bank

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Alpen Bank: Launching the Credit Card in Romania

Alpen Bank: Launching the Credit Card in Romania

2011

Western Washington University

12/9/2011

2011

By Karen Garcia

Western Washington University

12/9/2011

Alpen Bank: Launching the Credit Card in Romania

Executive Summary

In 2006, as a result of Romania’s imminent entry to the European Union, Gregory Carle, the country president of Alpen Bank in Romania wondered whether he should launch a credit card in the domestic market. Although, income per capita was low, infrastructure was limited, and the country in general lacked experience in consumer credit, marketing research showed there was potential to launch a profitable credit card in Romania.

In addition to economic concerns regarding profitability of a credit card program in a small country with a total population of 7.7 million households`. Gregory Carle also faced general lack of trust from the corporate office since launching the card had failed in the past, in large part due to the economic recession at the end of the 1990’s.

Problem

Alpen Bank operated in Romania as a premier class financial institution. The Bank ran a profitable business for the wealthy. It had a market share of 200,000 customers. As of 2006, the top 10% of households by income had nearly 24% of the wealth. Although the size of middle class income earners was increasing, Alpen Bank faced the challenge to create brand dissonance by serving a new consumer segment considered less prestigious than its premier clientele. In addition, most businesses preferred cash as a method of payment rather than credit.

However, market research of total financial cards in 2006 showed that credit and debit card usage had grown over 35% compared to the previous year. Data also showed that there were about 9.5 million cards circulating in the country and that automated teller machines (ATM’s) and credit card terminals were becoming more popular.

Thus, Gregory Carle, in order to...