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Competitive response cases

Louay asked on Aug 22, 2018 - 1 answer
Solved more than 40+ cases offline

Any tips for these types of cases?

Here's an example: Bank A and Bank B are the two major players in the U.S. Bank A has reduced credit cards fee to zero. Bank B wants to understand why.

Thank you.

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Benjamin replied on Sep 04, 2018
ex-Manager - Natural and challenging teacher - Taylor case solving, no framework
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this is related to the customer value, weither it's retention of existing customer or attracting new ones. Here is I would proceed :

1. Understand the root cause / trigger of such action

  • Is credit card fee an important criteria in customer's choice over the different banks ?
  • Are current client living for new bank offering zero fee ?
  • Is the bank trying to gain market share and developp its customer database by attracting new customer with this type of offer ?

2. Evaluate the customer value by identiying the different revenu generated per customer

  • Recurrent revenues : credit card fees, insurances, agios, commission over exchange rate, etc.
  • Project related revenues : loan interests (car, real estate, consuming, etc.)

3. Run the economics of reducing credit cards fees

  • Compare the loss of credit card fees revenues on the customer databse over the value generated by new / retained customers

Hope this helps



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