How to grow during the slump?

Vienna, 26 March 2009

R HidRoxana Hidan Deputy Director - Product Management

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A dAgenda

“Crisis” / “Recesion” / “Depresion”?• “Crisis” / “Recesion” / “Depresion”?• Heights of crisis in Romania

Ch ll• Challenges • Key steps

T t k• Top takeaways

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What is “crisis”/ “recession”/ “depression”?

Crisis is …a. A crucial or decisive point or situation; a turning point.b A t bl diti i liti l i l i ff i i l ib. An unstable condition, as in political, social, or economic affairs, involving an

impending abrupt or decisive change.(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)

Recession is …An extended decline in general business activity, typically two consecutive quarters offalling real gross national product.a g ea g oss at o a p oduct(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)

Depression is …pA period of drastic decline in a national or international economy, characterized bydecreasing business activity, falling prices, and unemployment.(Source: The American Heritage® Dictionary of the English Language, Fourth Edition)

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The effects of the global crisis on Romania’s economy …

• 28 Oct 2008 - “Bucharest Stock Exchange sinks to new record low, following worse crisis on the financial markets” – NewsIn.ro

• 29 Oct 2008 – “Standard & Poor's has downgraded Romania's rating to BB+, with negative outlook” – Financial Newspaper

• 22 Jan 2009 – “Leu’s fall – Romania’s leuplunges to a new historical minimum of 4 3127 per euro on regional trend” –4.3127 per euro,on regional trend –NewsIn.ro

• 12 Feb 2009 – “Romania could borrow more than EUR 8bn from the EC, IMF” – NewsIn.ro

• 6 March 2009 – “Romania's unemployment t i t 5 3% i F b i irate rises to 5.3% in February on crisis

replicas” - NewsIn.ro

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… and the impact on the Romanian banking environment …• 20 Oct 2008 – “Romania’s central bankgives Lombard credit of 2bn lei to offsetlack of money on the market” – NewsIn.ro

• 23 Oct 2008 - “Rates on the Romanianmoney market remain at 100%, but fewtransactions are closed” - NewsIn.ro

•02 Dec 2008 “Romania's central lender•02 Dec 2008 – “Romania s central lendergrants credits worth lei 49bn to banks inOctober” – NewsIn.ro

• 27 Jan 2009 – “Crediting brakes inDecember for the third month in a row, to anannual advance of 33.7%” – NewsIn.ro

• 28 Jan 2009 – “Romania’s central banklends 2.5 times less money to banks in Dec.over Nov. last year” – NewsIn.ro

• 28 Jan 2009 – “Romanians' overduepayments to credits rise 73% y/y inNovember 2008 to 1bn lei, central bankshows” – NewsIn.ro

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6But…..

“When written in Chinese, the word "crisis" is

composed of two characters - one represents danger,

and the other represents opportunity.”p pp y

John Fitzgerald Kennedy

危機危機

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How to reach the objectives?

ChallengesChallenges

Key steps

Top takeawaysp y

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We have to face several challenges …How could a

How could maximize the commercial

ffi i ?

How could a larger customer

base be achieved?

How could adjust the product and

service portfolio?efficiency? service portfolio?

H ldHow could

improve Bank’s value towards

How could customer

management and care be organizedvalue towards

customers?care be organized more efficiently?

How could optimize the How could gain

additional insight

…

value of the client relationship?

additional insight into clients’ needs and preferences?

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…to reach the expected results

Increase cross-Increaseselling

Increasecustomer’s confidence and loyalty

Increaseprofitability

Increasecustomer Increase

b dsatisfactionIncrease

competitive d t

brand awareness

advantages

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10How to achieve the objectives?

Internal evaluation

Market research

Determine target

customer ProductsRedirect

marketingEnsure

infrastructure

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Key steps Internal evaluationy p

examine existing customer database (score

the customer using key criteria)

use scoring methodology to rank and

segment the customers

use the obtained data to establish keyDatabase ScoringScoring SegmentationSegmentation

performance indicators and benchmark

separate the micro and small business

customers from other categories of clientscustomers from other categories of clients

evaluate current products

asses the activities and responsibilities of

the staff in-charge with this segments

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Key steps Internal evaluation

Marketresearchy p

establish the research objectives

design the research using the interviewdesign the research using the interview

methodology (qualitative research)

conduct interviews with as many companiesy p

as possible from each segment

analyze the data to determine the answers

to the questions and to compare the

difference in the answers between the

different segmentsdifferent segments

develop an action plan based on data

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13Researches told us what customers’ need

Individuals Private MSE Corporate

MSE main financial needs are transactional services and pure lending

Individuals Private banking

MSE Corporate

Cash management services

Transactional services

Investment products & servicesp

Financial advisory

P l diPure lending

Structured finance

Source: OTP Internal Research

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Key steps Internal evaluation

Marketanalysis

Determine target

customer

indentify customers and prospects with

potential

analyze segment profit dynamics: average

number of products, likely balances, growth,

cross-sell and up-sell potential

determine which customers are spending

more on the competitor's products than on

own products

it is easier and less expensive to sellit is easier and less expensive to sell

additional services to existing customers,

especially in economies were conditions are

not as good as they were previously

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Key steps Internal evaluation

Marketanalysis Products

Determine target

customer

bundling offers the possibility to link viable

products together, to link “need” with “value”

bundles maximize the chances and

afterwards the benefits of being the “house-

bank”

the packages can be done using different

strategies such as: inter-product cross-sell,

up-sell, inter-segment cross-sell

the bundle should be tailored taking also intothe bundle should be tailored taking also into

consideration the life stage of the business

building multiple relationships with abuilding multiple relationships with a

customer makes it more difficult for the

customer to leave

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Key stepsInternal

evaluationMarketanalysis

Determine target

customerProducts

Redirect marketingy p

multi-channels delivery is critical: every

touch-point is an opportunity to cross-sell, to

acquire, to service

multi-channels are an optimal tool in reducing

the cost of serving

do not underestimate the importance of the

dedicated RM; for most of the mature

companies the relationship is “the product”

redirect customers to appropriate productsredirect customers to appropriate products

taking into account the life stage of the

business

frame the small business owners and their

employees as individual customers

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Key steps Internal evaluation

Marketresearch

Define target

customer

Products Redirect marketing

Ensure infra-

structure

streamline the processes and operational

systems

build competencies and skills for the sales

force

develop and implement incentive schemes

fully aligned with the cross-sell strategy

design and implement certain marketing tools

to create awareness and build utilization

continues analysis and evaluation of the

client needs and customer value tracking

refine segmentation, products and update

performance indicators in accordance with

the feedback

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Top takeawaysp y

NeedValue

Profit

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Thank you for your attention!

Contact details:Email: roxana.hidan@otpbank.roM bil +40755 000 017Mobil: +40755.000.017

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