Introduction Bankinter, a small independent national bank, has a large presence p resence as an Internet financial services provider. provider. It was the first Spanish bank to offer telephone, electronic and virtual banking. Bankinter’s positioning as a multichannel, multichannel, online banking gave Bankinter a major competitive advantage over larger and more established Spanish banks (see SWOT analysis: Appendix A). However, Ann Peralta, director of Internet network at Bankinter, needs to evaluate which customer segments are most profitable for the bank and develop a plan for new customer acquisition while balancing costs with rate of growth and profitability. Current Marketing Strategy Bankinter’s current marketing strategy involves developing alliances with portals, partnering with e-collaborators, e-collaborators, and maintaining brick and mortar branches. Some of the strengths and weaknesses of each of these strategies are illustrated in table below:
Alliances High traffic portals Co-branding
Strengths
E-collaborators High traffic sites Low acquisition cost Hard to duplicate Dramatic results
Brick and Mortar Mortar More loyal customers Easier to crosssell to Less priceoriented High cost acquisition High operating costs
High acquisition High noncosts formalization Weaknesses rates Staff Shortage Not very loyal High upfront annual fee Lack of targeting Easy to duplicate Based on the customer lifetime value of each of the following strategies (see
Appendix B & C), 8700 seems to be the most profitable and advantageous client base
for Bankinter, as it has the highest customer lifetime value for the profitable clients with €267. In addition, its ratio of non-profitable to profitable clients is significantly lower in comparison to the other two strategies. Iberianwines.com Strategy As noted in the table above, e-collaborators program has dramatic and immediate results. However, on average only 76% of the clients from this program complete the online registration process. Therefore, to estimate the lifetime value of an average customer from IberianWines.com, we need to account for this lack of customer loyalty. Based on other assumptions about the clients from this stream of e-collaborators, we estimate that the customer lifetime value will be about €82, which accounts for the €100 referral fee that IberianWines.com is demanding. (see Appendix D) Bankinter should agree to pay an additional €100 referral fee for every customer that clicks on a Bankinter banner at Iberianwines.com website, as based on our assumptions the CLV is positive. Bankinter should however insist on paying €60, similar to what they are currently paying other e-collaborators or should structure their contract such that they pay €100 for every customer that clicks and completes the registration process. This way, Bankinter can ensure that they are only bearing additional costs for the profitable customers. Moreover, Bankinter can incentivize customers from this channel to use Bankinter for the wine transactions.
Future Strategy & Recommendation Bankinter should place a primary focus on their profitable segments, Branch 8700 products, and build relationship with Iberianwines.com. Furthermore, they should emphasize on cross-selling products to eMortgage and eBrockerage customers since they are active as well as significantly profitable in comparison to other 8700 customers. With respect to ecollaborators and Alliances, Bankinter needs to increase profitability by: 1. Increasing retention rate of profitable segment 2. Increase volume of profitable segment 3. Decrease ratio of non-profitable to profitable The above three dimensions had the greatest impact on the expected value based on sensitivity analysis performed. Bankinter can also utilize CRM and other tools to do more focused and targeted marketing by placing banner ads on sites that cater to affluent clientele. In addition, Ana can leverage Bankinter’s deep client knowledge to maximize client potential through cross selling. They should also introduce referral and loyalty programs for customers. Combining these strategies will help the bank increase profitability by increasing retention rate of profitable segment while decreasing ratio of nonprofitable to profitable clients.
Appendix A: SWOT analysis of Bankinter
Strengths
Weakness
•Multichannel banking and customer interaction •Early mover into online bankingwell positioned to take advantage of internet boom •Offers diverse and innovative services •Used CRM system to store and track customer information •Customer centric approach
•Difficult to cross-sell products online •High number of non-formalized clients •Fast-cycle industry •low online customer retention •high customer acquisition costs
Opportunity
Threats
•Diversification •Increase its presence in Spain and other neighboring countries •Partnering up with other financial services
•Online customers are not as loyal •Low barrier to entry •Internet bubble burst
Appendix B: CLV calculations of each of the strategies
Appendix C: Expected Profit
Appendix D: Iberianwines.com Analysis
