It?s notoriously tough to gain a competitive edge in the credit card industry. But the MasterCard Global Technology and Operations Center has found a way to provide better customer service, reduce expenses and get productivity gains from its own frontline staff through a self-service extranet called Member Services Online.
The system provides member financial institutions with online access to customer and market research, forms and timely transaction information. It has gained popularity quickly; the total number of users doubled in 2001, one year after the service was deployed in March 2000. And 87 percent of interactions are now conducted online.
The idea of a company moving its services online is not new, but the sheer volume of publications, reports and interactive services?complemented by the ease of use, cost and time savings, and possible savings of a small forest?s worth of paper?is what gave MasterCard a competitive edge in its industry and an honorable mention from this year?s Enterprise Value Awards judges. ?Other companies have done extranets; however, the magnitude of the undertaking is usually not on this scale…. Members and users are flocking to this new capability and openly state there is little comparison with the competition,? says Enterprise Value Awards Review Board Member Bob Reck, president and cofounder of the Kendall Consulting Group of Sarasota, Fla.
MasterCard has recently been gaining a lead in the battle with Visa for market dominance. According to Avivah Litan, vice president and research director at Stamford, Conn.-based Gartner, last year the number of Visa cardholders was down 0.2 percent, while MasterCard?s cardholder numbers were up 21 percent. The correlation between Member Services Online and MasterCard?s successes is hard to make, but in this highly competitive field, with financial institutions battling for consumer dollars in a soft economy, any system aimed at providing better customer service helps.
The system?s original goal was to merely enhance available online resources for MasterCard?s own customer service representatives. But soon, the company?s executives saw broader benefits in extending the system to member banks as well. MasterCard built the new system by holding focus groups with financial institutions and heeding their recommendations for which services to include in the system.
MasterCard has invested about $2.6 million annually in the system since 2000 and claims payback on this expenditure in less than two years from the first dollar spent. Vice President of Member Services Thomas Wham, a key developer of Member Services Online, says that MasterCard can now track which online services are being used and which are not. During the first eight months of launch, usage of two online products soared, while others barely got a glance, giving MasterCard indicators on where to focus any product enhancements, says Wham. MasterCard Global Technology and Operations Center Senior Executive Vice President Jerry McElhatton calls Members Services Online ?one of the most valuable individual applications that we have developed for our members.? McElhatton says that so far this year transaction numbers are up 18 percent, a jump he partially attributes to MasterCard?s excellence in customer service.
Member Services Online?s key features indeed streamline a formerly time-consuming task requiring reams of paper. At the end of each day, businesses nationwide report their credit card transactions to banks, which in turn request funding approval for those transactions from MasterCard through authorization research requests. Before Member Services Online, it took a MasterCard customer service representative 36 to 72 hours to complete a single request and fax the results to the bank. Now, clients can log on to Member Services Online, conduct the research themselves and have an answer within 10 seconds without having to speak with anyone from MasterCard.
Since the introduction of Member Services Online, MasterCard has seen a significant drop in expenditures. Expenses affiliated with authorization research requests dropped 67 percent from 2000 to 2001, a savings of more than $73,000 now that this research can be sent electronically. In that same year, MasterCard saved around $300,000 in outside vendor expenses for the paper delivery of settlement advisements, $220,000 in production of hard-copy manuals and publications that are now downloadable. And online billing is expected to entirely eliminate an annual cost that once exceeded $500,000. With 88 percent of the total first-level support now online, the customer support group was able to maintain the same headcount, on average, throughout 2001 despite an increase in support requests of nearly 69,000.
Member Services Online was built mostly out of new applications and is accessed through a secure extranet. Downloadable Member Publications were developed using a number of common platforms including Adobe Acrobat, Microsoft Windows NT and Microsoft Office. All data from eService is retrieved from servers via a direct connection to a database or a file transfer. The eService tools run on a Sun Solaris server through Oracle databases and have several J2EE applications. The eService information is accessed through internal systems including the mainframe, NT servers and other Sun servers.
Clients say the new system reduces the amount of actual paperwork they must deal with and increases their ability to access information. Kalli Conklin, a compliance manager for Greenwood Village, Colo.-based First Data Merchant Services, used to talk with a MasterCard customer representative a couple of times a day, but now she can access the information she needs through Member Services Online, eliminating those phone calls.
?Before, just getting updated forms from MasterCard would take a few days or a week,? says Conklin, who acts as a liaison between banks that employ First Data and major credit card companies such as MasterCard and Visa. ?It would come via fax or through the mail, but we would have to interact with MasterCard.? Now, forms are sent electronically, landing in Conklin?s inbox a matter of seconds after they are requested. In the past, once reports the size of the Encyclopedia Britannica would come to Conklin by fax or mail, they were copied and mailed to clients, at First Data?s expense, often requiring staff to work a Saturday afternoon in the office. Now those reports are quickly downloadable. Conklin says Member Services Online ?saves time in every possible way.?
Betti Tierney, manager of MasterCard?s Global Member Operations Support Department, sits on the front line, providing customer support and consultation to banks. Member Services Online puts the information she needs to serve clients at her fingertips, meaning more time can be spent working through customer problems than hunting down a paper trail of documents. Ten to 15 minute phone calls with clients have been cut to one-minute conversations, giving member banks a much more satisfying experience with MasterCard, and Tierney more time to focus on the development and training of her staff. And in today?s economy, any system that frees up staff to improve operations and pursue new business is vital.