Conclusion
POS-lending market holds more than 20 banks and the main participants in the market are Альфа-банк, Кредит Европа банк, МДМ Банк, Национальный банк Траст, ОТП Банк, банк Ренессанс кредит, Росбанк, Русфинанс банк, банк Русский Стандарт, Хоум Кредит энд Финанс Банк, банк Cetelem. According to the four-firm ratio, the market can be considered to be an oligopoly and the concentration is likely to range from medium to high. The growth rates are very promising and the market grown by 46,1% during 2010.
Banks operating in POS-lending market target people who cannot afford a purchase at the moment but actually want to do it. Points of sales are large retail chains that sell appliance, furniture and wide variety of goods. In general, POS–loans targets people from 21 to 59 years old with average and below-average level of income. Moreover, the customer faces different substitutes of POS-loans such pawnshops, microfinance institutions and personal loans from banks. Also, borrowing money from friends without interest can be a substitute.
POS-lending market is promising and it will soon greet a new player. Generally, the key issues in the entry barriers are brand recognition and relationship capital. Entering POS-loan market, a bank should have very strong brand name and have sound relationships with retailers. The retailers, by the way, have very strong buying power in POS-lending market as far as they set various terms that banks are obliged to follow in order to have successful operations in the market.
The costs associated with operations in this market are not that high and are comprised by only fixed costs. The main fixed costs include employees’ wages, cost of money, software and hardware expenses, investments in equipment and facilities, rent, advertising, contracts with paying terminal owners. Concerning marginal costs, they always will stay the same as far as the cost of money will not change if a bank provides a customer with one more loan. If a bank decides to exit POS-lending market, it will not bare high costs. The exit costs will mainly include costs associated with contracts with retailers.
Regarding some future trends, the main key issue here is Sberbank’s entrance POS-lending market with a joint venture with Cetelem. Though many experts say that the bank will not set very low interest rates, the bank can take advantage of its brand name and decreasing a little bit the interest rates will greatly favor the bank. Moreover, it is expected that the joint venture will grab 30% market share and be great stress for already existing market participants.
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