Trends in Credit, Debit and Prepaid Direct Marketing

Publication Date	September 2007
Publisher	VRL KnowledgeBank
Product Type	Report
Pages	144
ISBN Number	not applicable
Product Code	VRL00019

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Summary

Professional banking is an umbrella term used for the provision of dedicated financial services to the professional segment - typically including doctors, lawyers, accountants, engineers, architects as well as the staff and clients of professionals. This report is the only survey of the professional market available.

Why have a professionals programme The professional segment is an important and potentially very profitable segment, for reasons including: They demand a mix of personal, business, and private banking services creating large cross- selling potential. Research by RBC Bank finds that households requiring business and personal banking services are 1.6 times more profitable than business-only households and six times more profitable than average personal banking households; They often operate with high balances in current or escrow accounts; They are a good credit risk. Typically they operate in stable industries and have well understood and time-tested business models. They have well defined career paths and steady and high-end incomes. As professionals they tend to have many of the character traits that banks look for in their borrowers; Managed well, they are a huge source of referrals; Professionalsf costs and earnings vary hugely over the course of a lifetime. For example, a medical student will typically incur huge debts. A well targeted medical banking programme can provide a loan structure that mitigates this short-term situation in order to acquire a lifetime customer.

Increasingly professionals need to manage their practices as businesses and many banks are integrating high-margin business consulting and practice management solutions into their offerings. However in many markets the professional segment remains under served. Many banks simply erepackagef their existing offerings, offering focus on discounting an approach which brings limited results. The key to a successful programme is to offer a private banking level of customer service, often using just one account manager, and to recognize customers who are often time-poor.

What this report offers

Using primary data obtained from interviews with industry players and non-public domain material supplied from banks, it presents a comprehensive overview of the sector, including: What is the size and commercial potential of the market?

The introduction discusses the various definitions of the market and how this impacts upon estimates of size. Appendix A gives selected statistics onprofessional demographics in key markets. The introduction also describes the reasons why the professional market is attractive and potentially very lucrative. The section on financing for the clients of professionals discusses the potential of the patient and litigation financing sectors
What are the best strategies for succeeding in this market?

This is discussed in the section entitled "Strategies and Best Practices" in relation to management, products, customer services, marketing and risk management. Concrete examples are given in the case studies
What are the major trends in the professional market?

Major trends include the provision of business and practice management support together with financial services, the emergence of "medical banking" in the US, and the growing importance of patient and litigation financing. These are discussed in the Product Strategies and Financing for Professionals Clients sections respectively. They are also elaborated on in the case studies
How are banks positioned as competitors or potential partners in practice management, IT, payment solutions and medical equipment?

Bank's provision of non-financial services is discussed in the section on "Practice Management Solutions" and
Medical Banking. Numerous examples are also discussed in the case studies.

This rpeort feature cases studies from the following banks :

AMP Banking
ApoBank
Banco Popular Espaol
Bank of America Card Services
Citigroup
CIMB Bank
Citizens Bank
Doctors Bank
Fairfield County Bank
HVB
Matsco
Scotiabank
Royal Bank of Scotland
MLP Group
Standard Bank's
Stillwater National Bank
Nedbank's
SME Bank

With data from 150 countries, 20 case studies and original research and interviews from North America, Europe, Asia and Africa this report explains: Why a dedicated professionalfs programme is required and how to ensure it maximizes cross-selling opportunities; The income-cycle and unique needs of key professionals groupings, including the legal and medical profession; Best practice in risk management, customer relationship management and creative marketing;
Using alliances and affinity programmes to target customers; How to create value for customers through practice

management and time saving solutions; The ethical issues and reputational risks connected to emerging areas of practice, including litigation and patient financing

Content

Executive Summary
- Why have a Professionals Programme?
- Selected Survey of Product Offerings
Chapter 1 Introduction
- What is professional banking?
- The market
- Why have a special offering for professionals?
- Professionals are attractive customers
- Professionals have unique banking needs not met by standard offerings
Chapter 2 Strategies and Best Practices
- Management strategies
- Organisational design and professional banking
- The professional banking team a specialist unit?
- Product strategies
- Main product lines for professionals
- Insurance
- Practice management solutions
- Financial advice and wealth management
- Products for different stages of the professional lifecycle
- Products for different specialties
- Limited product offerings versus comprehensive product packages
- Gateway products
- New products versus repackaged existing products
- Customer service strategies
- High touch customer service
- High tech customer service
- Professionals as a source of customer referrals
- JP Morgan Chase CPA Advantage
- Lloyds TSB International Intermediary Service
- Crestmark Bank
- AEX Commercial Financing Group LLC
- Risk management strategies
- Risk profile of professionals
- Cash flow versus asset-based lending
- Professional liability risks
Chapter 3 Financing for professionals' clients
- Medical professionals Patient financing
- Care Credit
- Legal professionals Litigation financing
- The litigation finance industry
- LawFinance Group
- Accountants Professional fee financing in Ireland
Chapter 4 Case Studies
- Introduction
- Citigroup
- CitiCapital Practice financing
- Citi Health Card
- Citigroup Private Bank Law Firm Group
- Citibusiness for SMEs and Professionals India
- Citibank package for professionals Czech Republic
- Bank of America
- Bank of America Card Services
- Leveraging cards to cross-sell other products and services
- Bank of America Practice Loans
- Stillwater National Bank
- Specialised medical practice consulting services
- Concierge style service
- SNB Digital Lockbox
- Doctors Bank
- Fairfield County Bank
- Professionals Preference Programme professionals as
- a source of referrals
- Matsco
- Citizens Bank
- Citizens Professionals First for attorneys and accountants
- Award winning IOLTA
- Citizens Bank Pro Bono Award
- RBC Royal Bank
- RBC Plan for Professionals
- Integrating financial advice with banking services
- Scotiabank
- Scotia Professionals Plan
- Affinity partnerships with professional associations
- Royal Bank of Scotland
- Healthcare
- Legal services
- Customer service for professionals
- Investing in the education and knowledge of relationship
- managers
- Banco Popular Espaol
- MLP Group
- Bestpartner concept
- Acquiring professionals early and keeping them for life
- Highly qualified consultants
- Advanced IT platform
- Independent information for clients
- Pension provision advice for professionals
- Providing wealth management services
- ApoBank
- Products and services
- Delivery channels
- More than financial services
- HVB
- HVB KontoMed Account
- Practice management and business support
- Standard Bank
- The Prestige Banking Package for professionals
- Targeting students and new graduates
- Nedbank
- Nedbank Professional Banking
- Marketing to professionals through sponsorships
- AMP Banking
- Affinity partnerships with professional associations
- ASME Bank
- BSME Professional
- Advisory Services Network
- CIMB Bank
- Fast Track PRO Finance
- Appendix Statistics on number of professionals in selected markets
TABLES
- Table 1.2: US medical specialist compensation, 2004/2005
- Table 1.1: US physicians' income, 2005
- Table 2.1: How does the use of credit or charge cards impact on practice management
- Table 2.2: For which reason(s) do you prefer to use credit or charge cards when making purchases for your practice?
- Table 2.3: How has accepting credit cards helped your practice?
- Table 2.4: Do you wish more patients used credit or charge cards to pay for medical services?
- Table 2.5: Top issues confronting hospitals
- Table 2.6: Specific financial challenges
- Table 2.7: Mean number of patient visits per week by speciality, Canada 2004
- Table 2.8: Mean number of patient visits per week by speciality, Canada 2004
- Table 4.1: Summary of professional banking offerings of selected banks worldwide
- Table 4.2: Lawyers in practice settings, 2000 (%)
- Table 4.3: Private practitioners in practice size, 2000 (%)
- Table 4.4: Law firm size by number of lawyers, 2000
- Table 4.5: MBNA's rate of return on card portfolio versus industry average, 2004
- Table 4.6: Interest Rates on IOLA Accounts (as of March 1, 2007)
- Table 4.7: Distribution of Banco Popular Espaol products
- Table 4.8: Median age of population in Germany 2005-2050
- Table 4.9: Population aged 60 and 80 years or over as percentage of total population 2005-2050, Germany
- Table 4.10: ApoBank Key data as at 31 December 2006
- Table 4.11: ApoBank target market for private clients as of 1 January 2006 (not including veterinarians)
- Table 4.12: ApoBank's market share for financing self-employed physicians, dentists and pharmacists, 2001-05
- Table 4.13: ApoBank's market share of start-up financing for physicians, dentists and pharmacists, 1998-2005
- Table 4.14: ApoBank Market share of employed physicians and dentists, 2003-05
- Table 4.15: Forecast health expenditure in Germany (€billion)
- Table 4.16: Distribution of loans by type, 2005
- Table 4.17: Foundation for professional development courses for the period, 1998-2005
- Table 4.18: Value of scholarships provided, (South African rand),1999-2005
- Table 4.19: Number of participants in FPD courses 1998-2005
- Table 4.20: Percentage of types of participant in FPD courses, 1998-2005
- Table A.1: Number and density of physicians, dentists, and pharmacists in different countries
- Table A.2: Number employed in professional occupations, USA, 2006
- Table A.3: Lawyer population by state, USA, 2005-06
- Table A.4: Law societies membership, Canada, by province, 2005
- Table A.5: Number of Physicians by Province/Territory and Speciality, Canada, 2007
- Table A.6: Number of Lawyers in Europe, by country, 2006
- Table A.7: Workforce in Healthcare Sector and in All Industries by SOC 2000 major occupation groups and sex, England and Wales, 2001
- Table A.8: Healthcare personnel by profession, Germany (000), 2005
- Table A.9: Health personnel by providers, Germany (000), 2005
- Table A.10: Estimated number of professionals in South Africa including students (2006)
- Table A.11: Number of professionals by province and race, South Africa, 2001
- Table A.12: Employment by occupation, South Africa, September 2006
- Table A.13: Number of professionals employed full time, Australia (000), February 2007
- Table A.14: Number of General Practitioners, Australia, by state, 2005-06
FIGURES
- Figure 4.1: MLP's cross-selling quota compared to the industry
- Figure 4.2: MLP client and consultant levels compared to average, 2006
- Figure 4.3: MLP revenue by business line, €m, 2005-06
- Figure 4.4: MLP revenue by brokerage business line
- Figure 4.5: Source of income for pensioners per household
- Figure 4.6: Potential sales revenues MLP Finanzdienstleistungen AG per year and client
- Figure 4.7: Ageing population means increased demand for wealth management
- Figure 4.8: Health expenditures per capita in Germany, 1994-2004
- Figure 4.9: Source of payments for healthcare expenditures in Germany, 1995 and 2004