Publications in the press



Alexey Chernyshov

 Ph.D. in Economics, Vice President of the Bank Imperia

The main goal of work of any financial institute is profit-making, although more often this goal is masked under the hackneyed populist slogans. Let’s separate the wheat from the chaff. Shareholders of the bank will place the projected income on the one hand, and on the other – a range of business cases with the main refrain like «there is a priority line of development in the bank, we have extremely high ambitions, we would like to fall in the leading group of banks of Russia by the end of the year» and so on.

On the one part these projects are not feasible even in the foreseeable future without fresh ideas and additional

financing. This fact will be said in grave voice in the end of the year at the meeting of the board of the bank. From the other part, allocated small budget, overactive effect will allow reaching the goal. Do you want to get large-scale emission and regional expansion on the basis of principle of stimulation of the cobranded cards usage, to use financial and service advantages of banking services, to raise percent of non-cash payments usage and to raise awareness of the bank’s brand without grand financial enclosing and, finally, to get supernormal profit following the results of the project? But how will these all be implemented?

The dominant of any co-branding project is not only the stimulation of bank cards emission as a basis for implementation of payrolls and retail projects but the assignment of additional impulse in the work of regional bank branches which operate in the regions with a large share of bank-rivals. Let’s set a range of goals, for the attaining of which it would be better to take up another job, but not a co-branding project. There are 200 co-branding projects registered in the international payment association Visa Incorporated just in Russia, but successful projects – several tens. It means that resources, invested in the product development and promotion, are turned out to be wasted! So, the main goals, deriving form the solution of co-branding project business case, are summarized into the following: increase of emission and operations with cards, awareness of the bank brand and taking the banking services market segment.

Choose the partner

It is not enough to have a target project, publicized brand and the interest of potential consumers for the formation of long-living and perspective alliance. It is very necessary to put a partner’s stability and his wish to sate the future project with different preferences as much as possible in the center.

It is possible to make a whole turn from the banks which display a keen interest to the popular brands. As a result, after the turn, several banks make the projects exactly the same with one and the same brand, the consumers answer the question – where is the catch and why are there so many banks with the only partner?

Alas! A bank will bring down the plank of services quality overrated for him. It is clear that there is disinterest only form one party – a large trade retailer doesn’t give any preferences to the bank, and the bank is simply obliged to use its narrow resources in the project. The result will inevitable. It means, that the dominant in the question of choosing a partner is his constant interest, financial stability and the most important – down-to-earth approach to understanding of his own progress in the nearest future.

Success factor

Sensation of social importance and belonging to a certain society segment are the main success factors for any project. But how these factors can be embodied, what thing shall attract our attention, what factors can’t be used in the project? We will try to answer these questions shortly. If a bank or its potential partner for the project are planning to reach the given task, not only to reassert itself on the service market and use a budget at the same time, so, I think it is necessary to make six simple steps, which bring to the beneficial effect for sure.

Step 1. Determine the need of real values which will be extremely necessary to the holder of co-branded card. Do not forget that there are cards of other issuers with already existing preferences, which are quite analogous to yours on the market. Your card has to offer something unique to the holder.

Step 2. Develop additional list of potential partners for the project, which are finding new possibilities for their progress, in spite of the presence of your partner. It is quite possible that your partner won’t get the first pit stop. Connect with these partners, determine their level of interest and narrow your list up to two-three potential candidates.

Step 3. Develop marketing plan and budget of the project. The marketing plan should stipulate market size and share, which you are planning to seize. Determine the quantity of cardholders in the plan, which you are waiting for the list of your clients in the first year after initiating the project. The budget should include costs for initiating and project monitoring as well as additional maintenance charges which you possibly don’t wait for.

Step 4. Prepare the requirements specifications for the project and turn it to the candidates. In the case of opposite interest discuss your offer taking into account the existing strategy of the project development. Try to account maximum quantity of a candidate’s offers, as the popular Latin phrase Ipsae res verba rapiunt (a self-explanatory business) never go back on somebody! Describe together all necessary resources for the project.

Step 5. Examine and evaluate the formed cases for each potential partner and determine with whom you like to work most of all. Remember, a human factor plays a big role. A good deal of potentially significant and financially successful projects miscarried because of such an insignificant factor.

Step 6. Develop the project and documentation for marketing. They have to enclose your know-hows, packet of offers for development of the customer base, mass-media, press-releases and so on. Make a prediction for 90 days ahead on the basis of which thereafter you will make modification of the project. Meet the chosen partner and be sure that his purposes are serious.

Activity of many banks in the given market segment constantly demands to sustain themselves in a good trim, as it is necessary to develop and launch operatively non-standard products, based on the new ideas and solutions. It is necessary to do best so that the business rivals have nothing to do but to copy and imitate blindly.

Using TQM (Total Quality management) principles we will get direct benefits for the bank and the partner: widening of a consumer base and increased balance of accounts which will able to assure any sceptic of the bank board.

As indirect benefits it is possible to point out the following fact. On statistics, a co-branded card is chosen consciously as a first card in their life, another 20% of clients choose a card using a popular Russian method of communication - word of mouth. Growth of a consumer base for nearly 40% is a typical display of a synergetic effect. (For information: Imperia Bank has 48,6% of the co-branded cards in its portfolio).

Market potential

Today all banks are experiencing problems with liquidity, and the only way in this situation is to seek actively for new clients. It is easy to write a plan of cards issuance, but it is too difficult to implement it. That is why banks started actively cooperating with the clients of their clients, that is large retailers, air companies, chains of pharmacies, filling stations, sports and theatre events and so on.

As an example I would like to give the co-branded cards produced together with NovaCard, - official bank cards of football championship and Olympic games: MasterCard 2006 FIFA World Cup, MasterCard UEFA EURO 2008, MasterCard UEFA Champions League of 2006-2007 seasons, XXIX Summer Olympic Games in China Visa Beijing 208 Olympic Games. For Imperia bank the company NovaCard made the projects MasterCard UEFA Champions League of 2008-2009 seasons, XXI Winter Olympic Games in Canada Visa Vancouver 2010 Olympic Winter Games, World Football Championship in South Africa Visa 2010 FIFA World Cup South Africa.

Initiating a perspective project of MasterCard, connected with a famous Canadian circus Cirque du Soleil in the guest trip 2010 – Saint-Petersburg, Kazan, Moscow, should be noted on the face of the picture.

Just enumeration of such projects casts bravura emotions, but for any bank such projects is just the beginning of penetrating and scrupulous work on the market of co-branding projects.


To estimate market perspectives let’s turn to the experience of large foreign banks such as, for example, Bank of America. That is hard to believe, but the bank offers several hundred kinds of the co-branded cards to its clients. Let’s look attentively at the bank card program, where and how does it position itself as a bank and where are its dominant and recessive characters.

The air company – Alaska Airlines Visa Signature Card, Hawaiian Airlines Visa Signature Card, Asiana Visa Platinum; the travel agencies – Royal Caribean Visa Credit Card, Total Rewards Visa Credit Card by Harrah Entertainment, Beaches Platinum Plus Visa Card and so on. The list can be lasted further, but there are two the most pompous projects with intensified dominant factors – MLB and NASCAR. In USA, where basketball and motor transport competition usually attract numerous auditorium from different social segments of the population, the bank found a simple and reasonable solution for a consumer base increasing – it launched the co-branded cards Major League Baseball Extra Bases Credit Card and NASCAR Race Points Platinum Plus Visa Credit Card.

Bank of America made impossible things possible: cards in the given projects are produced for all admirers and fans of the concrete personalia, that is cards for all basketball clubs of USA – Arizona Diamonbacks, Atlanta Braves, Baltimore Orioles and so on, showing club form and equipment, cards of all pilots of NASCAR – Bill Elliot, Dale Earnhardt, Darrell Waltrip and others, with pilots’ photos and personal autograph on the card. Such projects are directed on the new client solicitation and retention of the existing ones. There is no need for trouble as for growth of balances on the card accounts, implementation of additional bank products, building of long-term and friendly relationships with clients.

At the same time it is possible to examine the projects initially implied for maximum well reach of all client groups simultaneously. Saks Fifth Avenue World Elite MasterCard, Best Western Platinum MasterCard, Carnival World MasterCard, Commerce Miles Visa, Free spirit onyx World MasterCard, Singapore Airlines and the second largest bank of India ICICI Bank with the program KrisFlyer, CCB and Bulgaria Air, the projects for the student market using ISIC and so on, all of them can be treated as such the projects. Just a simple enumeration of the co-branding projects helps to understand that the service market is open and the growth of the projects quantity is doing the clients good.

Drawbacks and faults of the co-branding projects

Drawbacks of the co-branded cards are more often connected with risks, arising from a bank or a partner. The partner, such as insurance company or a travel company, can have potentially big financial problems. Or the card can have limited life cycle, as it is launched for a certain event. However, even for such partners banks create successful projects. For instance, the card for music lovers Soundaccount – Universal Music Group Int. and German Savings Bank Association; the first Islamic card Emirates Islamic Bank and Skywards; Air Chine and Bank of China within Summer Olympic Games launched the co-branded card 2008 Beijing Olympic Games.

The other theme is the co-branded cards produced for the milestone events and having limited usage, and demanding accurate positioning. Imperia bank faced with such problems when registered the co-branded cards of XXI Winter Olympic Games in Canada Visa Vancouver 2010 Olympic Winter Games.

The card Visa Gold with approved design for the banks was not recommended according to the opinion of New-York Hockey Federation, and, to our opinion, because the Russian team became World Hockey Champion, and a hockey player was painted on the card of Gold category. The bank resources and the most important – time, which can’t be regained – were expended. We have the same situation with the card MasterCard Cirque du Soleil, earlier represented design was recommended for usage.

But except the outer difficulties there are internal ones, they are the faults of the co-branding projects. Let’s examine a line of typical faults in different co-branding projects. On the first place I would like to put the project of famous and respectable bank and the project of one famous air company. Integration of deposit with minimum initial installment of assets and the co-branded card as a present is in the basis of very interest project. The sum of instalment was available for all segment of the society. I call such instalments as «vacuum cleaner» that is the bank gathers all cash assets from the market, touching pensioners and unemployed and so on. Well and good to the staff who invented this project, but they forgot about peasant wit of their potential clients, as bonus miles are credited free of charge on each card, and it was possible to place several deposits with the co-branded card. As a result, a paradoxical situation was put – a turn of clients for the placement of deposits with minimum initial amount and with free miles to each new card. I perfectly understand the felling of bank staff: there is a turn in the bank and not for cash withdrawals but for addition them into the deposit.

Now let’s estimate how much does this bank generosity cost? All banks participating in the loyalty program on the score of a partner, pay to air company for each calculated mile in average 0,01 US dollars. That is for each placed deposit on which several thousand miles are charged the bank will pay several tens of US dollars at the same time by paying charged percents to the depositor and by withdrawing form the budget costs for plastic drafts production, embossing and PIN-envelops. On the one hand, the bank coped with attractiveness of a significant amount of cash assets and a big number of new clients, that is the stated objective had been reached, from the other hand, an economic effect of the project was not initially meant for natural wit of the clients and for the actions of a regulator upon lowering of percent rates.

On the second lace I would place a famous project of a large bank and trade chain. Everything was good, the co-branded card with a constant discount in the trade chain, a chain of additional offices and cash offices outside the cash-and-settlement centre was opened. But after a while hard times are riped, and now there are no cashier's desk or co-branded cards in a trade chain.

I summarize that to control a potential client’s behavior as well as his loyalty is very difficult. It is possible to give a client certain preferences, but there is no telling if a client will reciprocate, and how this process can be estimated. A lot of banks grapple with such problems, and the result is seen by naked eye. There are successful co-branding, but also there are the projects made beyond all comprehension with typical faults and predicted result.

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