{"id":4884,"date":"2015-12-09T16:19:42","date_gmt":"2015-12-09T21:19:42","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/tcs-bank-innovating-in-russia\/"},"modified":"2015-12-09T18:25:02","modified_gmt":"2015-12-09T23:25:02","slug":"tcs-bank-innovating-in-russia","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/tcs-bank-innovating-in-russia\/","title":{"rendered":"TCS BANK: Innovating in Russia"},"content":{"rendered":"<p>I chose the company as an example of effective allignment between\u00a0business and\u00a0operation model. The company has elegant business model which was totally unique for Russia at that time and still is.<\/p>\n<p>This effectiveness failed though because of external factors which no reasonable person could have predicted.\u00a0I think I need to share this example with my section mates to show how you can be 100% correct but fail anyway in a risky market.<\/p>\n<p>&nbsp;<\/p>\n<p>The company was launched in 2007 by a serial entrepreneur in Moscow. His only financing was his own stake of $70 mln and he invested it all, so not in line with what they teach un in FIN 1.<\/p>\n<p><strong><b>Business model<\/b><\/strong><\/p>\n<p>Moscow\u2019s Tinkoff. Credit Systems Bank (TCS) was founded with the goal of becoming Russia\u2019s first pure credit card lending institution by:<\/p>\n<ul>\n<li>selling competitive, premium-quality card products,<\/li>\n<li>aggressively expanding its portfolio,<\/li>\n<li>minimising transactions per-card processing costs and,<\/li>\n<li>in the absence of any branches, drive dynamic direct marketing campaigns and provide the best possible customer experience.<\/li>\n<\/ul>\n<p>Initially TCS\u2019s business model was copied from Capital One, that was sending credit cards via mail and financing it by lending quick money from the market (not by inviting deposits). Noone has done anything like this in Russia before. Credit cards penetration was close to 0.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><b>Allignment with operating model<\/b><\/strong><\/p>\n<p>Components of TCS\u2019s \u00a0business model were backed by the corresponding features of its operating model, making the company really\u00a0successful.<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/slide2.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4822 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/slide2.png\" alt=\"slide\" width=\"828\" height=\"620\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/slide2.png 828w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/slide2-300x225.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/slide2-600x449.png 600w\" sizes=\"auto, (max-width: 828px) 100vw, 828px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>So, TCS was very successful and even went public in early November 2013. And then something else happened.<\/p>\n<p><strong><b>Banker\u2019s Black Friday<\/b><\/strong><\/p>\n<p>\u201cNot everyone can lose a billion in a couple of hours\u201d \u2013 Oleg Tinkov (TCS owner), November 19<sup>th<\/sup>, 2013.<\/p>\n<p>On November 19<sup>th<\/sup> 2013 Russian government passed a law on banking services with a mistake that could be interpreted as a ban on TCS business. TCS shares fell 40% on that day and though the mistake was corrected, share TCS\u2019s price never recovered.<\/p>\n<p>Oleg Tinkov said that theri bank was the last entity\u00a0that was traded without the &#8220;Russian factor&#8221;. Operationally the company is still performing great and top management is thinking about delisting from London Stock Exchange if &#8220;investors will not appreciate our great performance&#8221;.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>Share price of TCS Group Holding PLC:<\/p>\n<p><a href=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/share-price.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4853 aligncenter\" src=\"https:\/\/i4tsk12in2b2y7uts14c528g-wpengine.netdna-ssl.com\/wp-content\/uploads\/sites\/4\/2015\/12\/share-price.png\" alt=\"share price\" width=\"909\" height=\"317\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/share-price.png 909w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/share-price-300x105.png 300w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2015\/12\/share-price-600x209.png 600w\" sizes=\"auto, (max-width: 909px) 100vw, 909px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>Sources:<\/p>\n<ol>\n<li>Company\u2019s website &#8211; https:\/\/www.tinkoff.ru\/eng\/<\/li>\n<li><a href=\"http:\/\/www.attunity.com\/sites\/default\/files\/case_study\/TCS-Attunity_CS_0.pdf\">http:\/\/www.attunity.com\/sites\/default\/files\/case_study\/TCS-Attunity_CS_0.pdf<\/a><\/li>\n<li><a href=\"http:\/\/tsys.com\/Assets\/TSYS\/downloads\/cs_tinkoff-credit-systems-bank.pdf\">http:\/\/tsys.com\/Assets\/TSYS\/downloads\/cs_tinkoff-credit-systems-bank.pdf<\/a><\/li>\n<li>http:\/\/www.forbes.ru\/milliardery\/249496-pioner-goda-pochemu-vse-marki-olega-tinkova-khorosho-prodayutsya<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A story of a great Russian bank that is struggling with country risks<\/p>\n","protected":false},"author":464,"featured_media":4885,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-4884","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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