SAN FRANCISCO — Providian Bank, the nation's sixth-largest credit card issuer, entered Argentina this month after spending a year evaluating and testing the market to the point where the bank already has credit card customers.
The move is Providian's second foreign expansion. It entered the UK about a year ago and is considering “a variety of other places for expansion around the world,” said spokesman Alan Elias.
“We have a lot of confidence in the ability of our product offering to work well in that marketplace,” he said. “Argentina has the highest GDP per capita in Latin America and a very high growth outlook.
“Right now statistics indicate that under 20 percent of Argentine households have bank card accounts. We believe millions of others in that marketplace are creditworthy but currently don't have access to credit. And we'll go after both groups.
“Providian's model ranges from platinum plus all the way to a gateway kind of product, and we think that is the kind of model that will work in Argentina where folks are very used to making purchases and maintaining their daily lives with the use of credit,” said Elias.
But credit is not easy to get, he said. Credit card holders must have a bank account in a specific bank, and only with that account can they obtain a credit card.
Nor can they take the card with them once they leave the issuing bank. They have to start over again once they open a new account at another bank.
“Providian will be the first pure credit card company to come into the Argentine marketplace,” Elias said. “We've already started the process of becoming known in a variety of ways.
“We will be relying on direct mail, which is not that widely used in Argentina for credit card solicitation. And we are also developing a series of partnerships which will give us additional opportunities to obtain accounts and provide other services for potential card holders.”
Argentineans generally don't pay bills by mail but come in person to banks and payment facilities to make their monthly payments.
“We have already structured deals with a couple of the larger payment centers, including one of the largest, Pago Facile, and we expect to be in a minimum of 6,000 locations where Providian card holders can make their payment.”
The bank is using some local list brokers to obtain names for the direct mail campaign.
“We are already looking through some lists. There are credit bureaus whose lists we can work through. It's a bit more of a challenge than it is in the US,” he said.
“But working with partners means you can maximize the impact of your direct mail campaign and provide our card products a higher level of visibility wherever our partners or potential customers are located.”
Providian will use Oca to deliver its direct mail rather than the privatized Correo Argentina. Oca has a better reputation for moving mail faster in urban areas.
For now Providian will only issue MasterCard in Argentina because only registered banks can issue Visa. “We are beginning the process of applying for a bank charter and once we get it we will start issuing Visa too.”
Elias does not anticipate any difficulty in obtaining the charter despite Argentina's renowned bureaucratic jungle.
The bank already has an operation on the ground in Buenos Aires, the city and the province where Providian will concentrate its efforts, with a staff of 50.
The Internet is still down the line for Providian because “it is still a little less accepted as a business model, although that is changing quickly,” he said.
“We have a global e-commerce division here in San Francisco which will look to incorporate a lot of products and services via the Web where it is appropriate. It's just a question of the level of acceptance among average Argentineans.”