It could be lost when running a mass market credit card program. Citibank, moving forward will have to implement a two-sided approach in these launches. The first product, a Citibank classic card can be geared toward the emerging middle class. The features and benefits of this product can include wide acceptance in the country without carrying cash and payment options. The second effort would be geared to the upscale customers that the Citibank is already doing business with. The features and benefits of a "preferred card option" would include: no pre-set spending limits, gold option (with 100,000 minimum relationship balance). This two-sided effort differentiates the cardholders by status and doesn't turn the card into an everyday commodity. This must be kept in mind in the Asia Pacific markets, as credit cards are status symbols. .
Australia and Hong Kong, being more developed markets with westernized infrastructures and similarities to the U.S. credit card marketplace, the products offered in these countries must have more diversification. .
In all countries we are issuing the option of U.S. dollars and the local currency. If we issue U.S. dollar cards we will not face any foreign exchange risk. If we issue local currency cards we will face foreign exchange risk. We could hedge this risk. But since Citibank is recognized as the leader in the foreign exchange market we will ask our Citibank FX specialists what is the best scenario. In fact Citibank currency dealers can make some extra money (since they deal with large amounts and have the best information and are behind a dealing screen all the time).
Country managers were not comfortable with an unsecured credit product such as credit cards and did not want to take the large losses of a card business, in the initial years, that their projections seemed to indicate. We have got to resolve this via organizational architecture solution (decision rights, reward system and performance measurement).
