9-595-026
REV: OCTOBER 2, 2002

V. KASTURI RANGAN

Citibank: Launching the Credit Card in Asia Pacific (A)
On a rainy afternoon in 1989, Rana Talwar, head of Citibank's Asia Pacific Consumer Bank, reflected upon the 11 years that had gone by since the Consumer Bank had established its consumer business in Asia. The branch banking business operations in 15 countries throughout Asia Pacific and the Middle East projected Citibank as a prestigious, consumer-oriented international bank and as the undisputed leader in most marketplaces. With earnings of $69.7 million in 1988, and a goal of $100 million in 1990, Talwar considered the launch of a new product (credit cards) as a way of growing future revenues. (See Exhibit 1 for 1988 performance.) Cards could prove to be an excellent way to overcome distribution limitations imposed on foreign banks in the Asia-Pacific region: first, by acquiring card members, by targeting customers outside its branch business and, then, by actively cross-selling other Citibank products and services to these customers. In the past, the credit card idea had met with skepticism from Citibank's New York headquarters as well as its country managers. Many in New York considered it a risky investment. Senior credit managers questioned the wisdom of issuing cards in markets with annual per capita income of $350 and also in markets with little credit experience and hardly any infrastructure. The Citibank management recognized that the economies of most Asia-Pacific countries were relatively underdeveloped compared with the United States and Europe; consumers' attitudes and credit card usage patterns differed country by country. In this context, several country managers were unsure whether the success of Citibank's U.S. card business could be projected onto Asia-Pacific. Further, they wondered whether Citibank could adopt a mass-market