business will be absolutely central to its push to become a global
retail banking superpower, according to Gilbert Arira, the bank’s
head of cards. He outlined the bank’s ambitious four-point strategy
for the fast-developing business in an interview with William
Cain.
The reorganisation of BNP Paribas’s retail banking business unit
will help unlock the underexploited potential of its global cards
business, according to the French bank’s head of cards and
electronic banking.
Go deeper with GlobalData
In an interview with RBI’s sister publication Cards
International, Gilbert Arira said the restructuring, which
aims to link up the international parts of BNP Paribas’ consumer
banking enterprise, would help the cards business take advantage of
the group’s global scale. He also revealed a four-point strategic
plan to increase the business’s profitability – including an
ambitious aim to sign up every retail banking customer to a card
product.
The plan included:
• ‘One account, one card’: Arira said the bank is aiming to
cross-sell cards to more of its retail banking customers across the
franchise;
• Activation: ensuring customers continue to spend on BNP
Paribas products once they have signed up for a card;
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By GlobalData• Customisation: allowing customers to choose card designs and
customise features, benefits and loyalty programmes;
• Internet distribution: the business aims to originate 10
percent of its card sales through the internet within the next two
years, and offer online customisation services.
BNP Paribas (BNPP) has 45 million cards in issue, 25 million of
which are credit cards and 20 million are debit and deferred debit
cards. Of those, 39 million are outside France. The cards division,
which is now part of the bank’s new Personal Finance division,
contributes around 8 percent of BNPP’s retail banking profit. That
equates to a half-yearly profit of roughly €196 million ($288.7
million) on retail banking profit of €2.45 billion.
Arira said: “The cards business has a potential which has so far
been underexploited. There is a lot of room for improvement,
especially in emerging markets where there is the potential for
very rapid growth.”
He added: “We have been through a major reorganisation in retail
banking to become more globally focused, and cards will be one of
the main drivers in the organisation. It is starting now and the
goal is we want to be a global player.”
The bank has announced a raft of structural changes to its
business as it attempts to leverage its global retail banking
franchise. Most recently, BNPP announced changes at the executive
board level, which saw the roles of head of retail banking
(Jean-Laurent Bonnafé) and head of international retail services
(Pierre Mariani) brought closer together.
The new Personal Finance division
In November last year BNPP announced it would combine Cetelem,
its specialist consumer finance business, and UCB, its mortgage
unit, into a new Personal Finance division. In May this year, it
also brought together some of the country units of Cetelem with La
Ser, a 50:50 joint venture with the second-largest French retail
chain Galeries Lafayette. La Ser specialises in card-based loyalty
schemes and personal loans, and had 10 million registered customers
in 2007, with a turnover of €1.9 billion (see RBI 592).
The overall aim is to increase outstandings within the new
Personal Finance entity to €160 billion by 2010, compared to €94.6
billion in 2007. BNP Personal Finance, ranked the largest consumer
finance operation in Europe in terms of numbers of customers, aims
to break into the global top five in two years, competing with the
likes of HSBC, Citi and GE Money. The bank has recently launched a
worldwide marketing push in the same vein as international rivals
ING and Santander; BNPP sponsors high-profile tennis tournaments
including the Davis Cup and Paris Masters and recently launched a
€25 million global TV advertising campaign.
Most of the businesses’ growth is likely to come from outside
France. Arira believes the best opportunities for credit card
volume growth exist in Central and Eastern Europe (CEE), where
credit cards are not widespread, Latin America and in North Africa.
In many CEE countries, credit card businesses see an opportunity to
switch consumers from salary cards, used mainly to withdraw cash
from ATMs, to more advanced product offerings which can be used for
internet and point-of-sale purchases.
The bank is also placing an emphasis on standardising cards
products across its subsidiaries and building universal platforms
to reduce costs and improve customer service – a process also being
undertaken by rival HSBC. Arira said: “This, of course, does not
mean one size fits all. We will provide the basis of common
products and each subsidiary will be able to customise them to fit
their market place.”
The main issue in the cards industry remains uncertainty around
interchange from the European Commission. The commission recently
ruled MasterCard’s cross-border fee illegal, and is also
investigating Visa Europe’s cross-border interchange charges. But
it has continued to push the idea of a third pan-European scheme to
compete with Visa and MasterCard, which it recently indicated may
also be permitted to charge interchange.
Arira said: “The commission is saying one thing one day and
something else the next. It is difficult to know where they want to
go. It is a critical component of the business – one third of it
comes through interchange – and in many areas if you come to an
interchange at zero you come to a non-profitable business. There
are also pressures in the US as well, and it is difficult without
knowing what the return on investment will be.”
