Customer Relationship Management
at
20P057 – Shubham Kumar
20P082 – Gaurav Jain
20P093 – Nikhil
20P094 – Siddharth Bokaria
20P096 – Parth Goswami
20P190 – Anto Thomas
What is
Capital One Financial Corporation is a bank
holding company specializing in credit cards, home loans, auto loans,
banking and savings products headquartered in McLean, Virginia.
The Company was
founded in the year 1988 by Richard Fairbank
and Nigel Morris
History
Late 1980s, Founders had a vision of creating an information-based
company rather than a financial services company when they worked
in the consulting business.
1988, Signet Bank brought Fairbank and Morris concept and the
concept was “Credit cards are not banking, they are information It’s all
about collecting information on millions of people that you’ve never
met, and on the basis of that information, making a series of critical
decisions about lending money to them and hoping they back you.”
Signet Bank used information based strategy
• 1994, Signet’s executive management made decision to float the credit
card business separately where Capital One Financial Corporation
was born in November 1994, with Richard Fairbank as Chairman and
CEO, and Nigel Morris as President and COO.
• 2000, The stock price of the company has increased by 1,000% and
the company has grown at an average annual rate of 40%, excluding
mergers and acquisitions.
• 2001, The company handled more than US$45 billion in loans and
43.8 million customers worldwide, serviced by more than 20,000
employees
What is Credit card?
A credit card is a payment card issued to users (cardholders) to enable
the cardholder to pay a merchant for goods and services, based on
the cardholder's promise to the card issuer to pay them for the
amounts so paid plus other agreed charges.
Main forms of income:
Interchange
Interest charge
Annual card fees.
Other fees
Transactors
Customers
Revolvers
Credit Card Market (UK)
1970’s and Market was dominated by two card
1980’s brands Barclaycard, Access
MasterCard bought out the Access brand and compelled
1996 UK members to use the MasterCard brand itself
Major British banks dominated the market in the
1990’s early 1990s, including Barclays, Lloyds, The Midland,
NatWest and The Royal Bank of Scotland
New entrants from the US. Banks such as Capital
MID -
One, Morgan Stanley Dean Witter and MBNA,
1990’s
Current Market Situation (2002)
Market Share – All
The major share is held by Barclaycard (24%) followed by Lloyds TSB,
NatWest, HSBC. Where Capital One held with 7% which ranks 5th.
Market Share – New
The major share is held by Capital One (14%) followed by Barclaycard,
Lloyds TSB, NatWest, HSBC.
Standard Rate:
The Average rate followed by bank is 17.9% where Capital One offers
12.9% which is lowest.
Balance Transfer Rate:
Capital One offers 6.9% rate which is highest compare to other banks.
Market Size:
There is +96.8% change in the issue of new Credit cards in
the market.
Advertising and Promotion:
1998 - £53 million advertising expenditure.
2000 - £70 million where due to competition increase.
2001 - £52 million (-23%), due to the cutting back of spending's by
big Advertisers.
Capital One did not spend money on campaign’s but concentrated its marketing
expenditure on building up a customer base.
Business Model
• The business model of Capital One is founded on the simple, that each
customer requires a different product and service benefits from a
credit card provider.
• Each customer carries a specific and unique credit risk and potential
revenue profile, based mainly on their previous credit history it can
analyzed.
Information Based Strategy
• In order to understand the customers, the company uses information
technology to accumulate and manage large amounts of data on its
customers.
• Capital One’s Marketing and Analysis teams develop ideas,
design products and select segments based on the Test and learn
strategy (where it carries out scientific tests to identify differences in
potential customer behavior. )
• All test results are then analyzed and integrated into databases
and can be referenced later to initiate further ideas development
and product design.
Departments
Marketing and Analysis
(M&A)
Account acquisition – the activity of attracting customers to Capital
One.
Account management – managing the customer relationship in a
profitable manner if the applicant become as a customer.
Operations: There are over 1,000 people working in Capital One’s call-
center, which handles more than 10,000 calls per day on an incoming
basis
Operations
Operations Processing
Customer Relations
Sales
Inbound
Outbound
Retention
New business
Collections
Payment Assistance
Recoveries
Fraud
Information Technology (IT)
• The IT department offers a full-service capability to the
business (Operations and M&A), covering the spectrum of
products and processes through their genesis and complete life
cycle.
• IT also provides the tools through which IBS is enabled – including
the query tools, the batch updates, and the summary and
transactional data.
Human Resources
Hiring/Training
Evaluation
Compensation
Future Challenges
Short Half Life of Products
Access to Cheap Funds
Advent of new Competition and the Internet
Loss of Entrepreneurial Structure
Recommendations -
1. Focus on Online domain – a) Portal b) Venture Capital c) IBS joint ventures
2. Leverage your capabilities in diverse segment in the credit card industry and into other industries
3. Retail banking with online presence
4. Partner with a big retail chain
5. Data Analytics for other businesses
THANK
YOU!!
