Essay About Card Payment And Credit Card System

Alpen Bank Swot Analysis
SWOT Analysis OverviewSTRENGHTSExperienceEstablished PortfolioStrong Brand Name & ImageCard Payments IncreaseValue-Added CompetitionWEAKNESSESImplementation CostsBrand and Name RiskNew Venture (New Service)OPPORTUNITIESIncrease in Business Transactions, Exports & ImportsIncreasing Income Per CapitaUrbanization & Lifestyle Shift Technological Growth Asset ProtectionTHREATSCompetitionLow-Income Per Capita MajorityLow Knowledge & Low UsabilityGrowth Rate of TechnologySWOT Analysis BreakdownStrengthsExperience: The management of Alpen bank is experienced and has high level of skills.Established Portfolio / Strong Brand Name & Image: Alpen Bank has an established portfolio of over 200,000 customers. The brand is established as a firm that is an elite bank and offers premium services.Card Payments Increase: As shown on the case study, card payment has increased by 35% in the year 2006. 9.5 million cards that were issued and are circulating represent this growth, as well as 8,000 ATMs and 150,000 POS. Value-Added Competition: As many of people of Romania prefer imported goods rather than local goods, this will be an added service to locals they can offer to compete against imported goods. WeaknessesFinancial Costs of Implementation: Alpen will have to spend a lot of money to acquire new customers, as well as to convert existing customers to credit card users. A 2,000,000 euros budget would could support targeted advertisement and television 30-seconds spots. Costs associated with staff and equipment to support the internal infrastructure of implementing a credit card system will represent a financial compromise of over 5,000,000 million euros annually for the first 50,000 customers and 750,000 for every additional 50,000 customers. At least for the first two years, they will have to cover these costs from other activities until it reaches a break-even point where income from credit cards can cover associated costs.Brand Name Risk: Alpen targets the rich and affluent members of Romania. If they decide to invest in credit cards they will need to incorporate not only high class, but also middle class and low class in order to make profit. Due to this fact, they will need to targets the whole market and their image could be transformed from a bank that offers elite services to the elite of the country to a bank that serves every society member. New venture: They were focused on expanding and opening offices. The 14 branches they operate in the Romanian territory can support the previous fact. Getting involved in credit cards will represent a new venture, which will represent a new risk for the bank.OpportunitiesPolitical factors (Increase in Business Transactions, Exports & Imports): Romania joining the EU (European Union) represents an increase in exports/imports from members of the union. The increasing volume of business transactions in the country will represent an increase in demand for money, therefore it will be very convenient the usage of credit cards to finalize transactions and act as a mean of quick payment. Economic factors (Increasing Income per Capita): If Alpen is operating in a bullish economy; they will face increasing opportunity as to serve and offer their services among the country. A boom in the economy will represent a boom in jobs, therefore more people working and earning higher salaries, which will lead to more people left with disposable income and making them eligible for owning a credit card. This would represent more business for Alpen.Socio cultural (Urbanization & Lifestyle shift): A country that is shifting from rural to urban life will face a flow of migration from one zone to another. Their lifestyles and activities will as well change. This will represent a shift from depending on farm products to purchased goods. It will be very convenient for individuals to own credit cards to help them in their increasing transactions. Urban lifestyle will demand certain class; people will adopt a purchasing mentality and tend to buy more, from malls, stores, etc. This will be a represent a demand in credit cards.Technological factors (Technological Growth): Points of sales and ATMs will encourage people to own cards to make transactions faster and easier. The need to own credits cards will increase on hand with technology. Security factors (Asset Protection): Even tough crime in Romania is relatively low compared to other countries in the region (offences declining by 51% between 2000 and 2004, and by 7% between 2012 and 2013), owning a credit card will represent the decline in use of cash and thus, a decline in being scared to be wandering around with cash, which is a common fear in urban places.ThreatsEconomic factors (Competition): Competitors (other banks) will be tempted to enter the Romanian market due to their expanding economy. These new banks entering the market will also introduce credit cards and this will increase competition in the industry causing the bank to incur additional marketing costs.Socio cultural factors (Low-Income Per Capita Majority, Low Knowledge & Low Usability): Romania is basically a low-income population (56.3% of the whole country is of a lower class) therefore; bank will have a difficult time approving credits for the vast majority of the population. Most of the population is not aware of the advantages of using a credit card, because they have never used one, and doesnt know how they work.Technological (Growth Rate of Technology): Even though technology is advancing, it cannot successfully meet the needs of all habitants. In a 1.7 million-population country, only 150,000 POS have been installed.