Learning from BCA and Citibank

Learning from BCA and Citibank

Jonminofri Nazir, The Jakarta Post, Contributor, Jakarta

What advertisements have stood-out in Indonesia's newspapers
this past year? Among others, they are advertisements for banks
and their wide range of products. Such advertisements, usually
full color and one page in size, were attractively created.

The giant-size advertisements appeared every time the bank's
launched a new product or a new service. Every bank seemed to be
doing the same thing. The only difference was the timing of the
campaign. For example, when Bank Mandiri was in the midst of a
major campaign, the other banks would lie low for a while. When
one bank had completed its blitz, another came along with another
campaign of a similar size, along with promotional activities at
the malls and other relevant activities.

What do they want to acquire? Obviously to increase their
share of the market. For example, in the case of Citibank, which
was anxious about the stagnant number of credit card holders in
Indonesia, it created several products to increase its share of
the pie. This was what Th Wiryawan at Citibank did.

Compared with other banks, Citibank's campaign contained quite
a number of new aspects.

First, Citibank created a credit card without a plastic card
and called it a "refillable loan" - a term easily understood by
everyone. Their clients would easily comprehend the product's
function by associating it with a feature of cellular phones: a
refill voucher.

This product made it possible for Citibank to increase the
number of cardholders, because comparably it had fewer and easier
prerequisites, such as an employer's reference, salary slip and
so forth, which private business people or civil servants could
not make available.

Second, Citibank embarked on a major campaign in leading print
media and television stations to educate the public on the use of
credit cards. The objective was to change the public's payment
habit of using cash to using credit cards. The positive impact of
these programs for other banks was that they become "free riders"
as they do not have to campaign on the same theme, just advertise
their products.

However before starting a major campaign, one has to observe
how the banking industry goes about it, especially from the
aspects of human resources and product development. One has to be
aware that banking products basically comprise savings, deposits
and credit. The rest are variations on the same theme.

Observing today's condition, one of the keys of a successful
campaign lies in the hands of skilled people. Previously, skilled
bankers were produced by Citibank. Most of the young bankers, who
reached the vice president level, decided to leave this bank
because that was the highest rung of the career ladder ever to be
achieved by local staff. New banks and local banks then vied for
these former vice presidents to further develop their products
and manage their banks. The end result was not disappointing, the
Indonesian banking industry had seen the rapid growth of numerous
banks along with their wide-range of products.

Today the situation has changed. The school for bankers is now
BCA, a bank with the highest number of clients in Indonesia. Even
the high-ranking executives at Citibank come from BCA. Bank
Mandiri also recruits BCA's senior managers to handle its
customer banking.

The question is why BCA? Some of the reasons proven by the
bank creating major news about its divestment programs are:
expertise in creating consumer banking products, educating the
public, acquiring their trust and the excellent advertisement
campaigns. The banking industry should actually be grateful to
BCA as it has made the public feel safe in using debit cards for
payments, withdrawing cash at supermarket cashiers as well as
phone banking - though for this last item BCA was not the
pioneer.

It means that when a bank wishes to develop a consumer banking
product, it would be easier to head-hunt an experienced manager
from BCA than start at the beginning or to gamble with a new
manager.

In the years to come it seems that more BCA executives will be
recruited by other banks. In a way, this situation is beneficial
to every party concerned, including BCA, as they have a well
coordinated promotion system, so that the vacant positions can be
easily filled by their employees working their way up. The head-
hunting banks, on the other hand, also obviously enjoy the other
benefits of not having to educate their employees to reach such a
high standard.

Therefore, nowadays one can easily forecast the products and
strategies of any bank which enters and focuses on consumer
banking. It will be more or less similar to BCA's.

Citibank's refillable loan is an extraordinary banking product
in Indonesia as a new product generally goes through a lengthy
process, such as research and surveys, before being launched onto
the market. Yet, this product developed by such a foreign bank
was an overnight success.

One can consider this success an advantage of foreign banks
because any of their products that have succeeded in overseas
markets can be introduced in Indonesia with modifications to suit
the local culture and conditions.

Citibank generally implements this method here to ensure that
the risk factor of its new products is minimized.

In the past year or two, Citibank has brought in many products
and programs, for example Easy Pay and products offering various
prizes such as VW Beetles.

BCA and other banks in Indonesia do it quite differently,
giving the impression of extra caution. It may take at least four
years for a domestic bank to launch a product.

Take for example, BCA-ProXL Phone Banking. The launching of
this product was delayed for more than a year from its original
schedule. BCA also spent four years just to introduce its product
for buying train tickets via ATM.

Other banks have a greater advantage if they develop products
similar to those of Citibank or BCA as they could easily adapt or
modify these products to ensure that they are different from
existing products, like those already introduced by the two
banks.

Much more, it would be easier for the other banks if they
recruit experts from, for instance, BCA and Citibank, to develop
products.

Promoting a sophisticated product should be a simple matter.
Ads in major newspapers, television and radio stations as well as
exhibitions are common promotional practices.

BCA has used the same method to introduce all of its banking
products, including BCA passport, Internet banking, phone
banking, etc. The sequence of its campaigning pattern is more or
less as follows: after going through lengthy trials to ensure
product acceptability, BCA announces it to the public via the
Gebyar BCA program on Indosiar, places advertisements in several
print media, stages seminars in several cities, holds talk shows
on radio stations, etc.

BCA's method has proved effective. Perhaps it explains why
other banks are interested in hiring its executives.

Many mass communications experts have been hired to devise
programs and implement them. However, it is a bank's strategy to
reduce its advertising costs that makes all the difference.