Effective Implementation of Portfolio Management Programs in Banking

Commercial banks need to compete against competitors to ensure sustainable growth. One of the surest ways to achieve a leading position in the competition is to conduct a portfolio management activity. Portfolio management in banking has long gone beyond the formation of credit scoring models. In modern realities, the fact of issuing a banking product does not determine its future profitability or only partially determines it. The cycle of interaction of the bank with clients is expanding, covering an increasing number of stages of the client's journey. Portfolio management develops and opens up new opportunities for banks, allowing them to stimulate customer activity and increase the profitability of products. However, effective approaches to working with clients are poorly formalized and vary from bank to bank and from product to product. The aim of this work is to identify effective mechanics for working with a portfolio of banking products and to identify ways to increase the profitability of products through the effective implementation of portfolio management programs. This goal is achieved by performing the following tasks: 1) Analysis of existing scientific and business approaches to product portfolio management 2) Analysis of client's motives for working within portfolio management 3) Development, implementation and formalization of a credit card portfolio management program in one of the largest Russian banks. 4) Determination of effective approaches to customer segmentation and development of incentive campaigns within the credit card portfolio management in one of the largest Russian banks The object of this research is the portfolio management process in banks. The subject of the research is the effectiveness of the implementation of portfolio management programs. The research methodology includes both an analysis of existing scientific literature on portfolio management and an analysis of market research related to the motives of clients to actively use banking products. In the practical part of this work, a large Russian bank has been developed and described: a methodology for segmentation of credit card holders, a methodology for creating and testing campaigns for reactivating a credit card portfolio, a methodology for implementing a credit card portfolio management program. The main practical value of this work is created by formalizing the approach to managing a credit card portfolio in a bank: from conducting portfolio analytics to launching the portfolio management process itself. The paper describes the key stages and rules for the effective implementation of the portfolio management program. The work consists of three chapters: 1) The first chapter describes the results of the analysis of the main goals, objectives and benefits of programs implemented by banks in the framework of product portfolio management 2) The second chapter is devoted to the analysis of the main motives of clients when choosing and using banking products, which should be guided by when developing portfolio management programs 3) The third chapter is devoted to the description of the process of effective implementation of the credit card portfolio management program in one of the major Russian banks