Management Strategies

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Susan Foulds and Chris Musto, analysts, Watchfire GomezPro
Susan Foulds and Chris Musto, analysts, Watchfire GomezPro
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Mergers and Customer Loyalty Initiatives Driving Changes to Card Issuer Sites as Bank of America and Chase Top Credit Card Scorecard

The Q3 2005 Credit Card Scorecard, recently released by Watchfire GomezPro, reveals several developments shaping issuer sites, chief among them improved rewards management and efforts to address security concerns.

The Q3 2005 Credit Card Scorecard, recently released by Watchfire GomezPro, reveals several developments shaping issuer sites, chief among them improved rewards management and efforts to address security concerns. A number of credit card sites have also changed or are likely to change soon as a result of mergers and acquisitions.

The Credit Card Scorecard ranks the 15 largest general-purpose card issuers that promote online applications for a consumer credit card without an invitation or an application fee. The Scorecard evaluates these issuers according to 203 weighted criteria across four categories Functionality, Ease of Use, Privacy & Security and Quality & Availability.' These criteria focus on five critical tasks: Get a Card, Check and Pay Bill, Look Up Information, Get Service and Learn & Plan.

Chase and repeat winner Bank of America tied for top Overall score in this edition of the Scorecard. Bank of America's continued success is in large part due to its leadership in the Ease of Use category, where it also repeated as winner. Chase ranked first in Functionality with a revamped offering intended to combine features that had been available at Chase and Bank One while improving on the usability of both. Citigroup again won the Privacy & Security category, and Chase assumed the previous Bank One leadership position for Quality & Availability.

The top three issuers by Overall score:

1. Bank of America. In addition to winning the Ease of Use category, Bank of America tied with Chase for first in Functionality and won the Get Card and Value Added Services tasks. Since the previous Scorecard, the issuer added the ability to request credit limit increases and implemented stronger security measures such as Site Key, an optional two-way authentication feature. Bank of America also provides robust payment options and integrated rewards functionality. Integration is a hallmark of the Bank of America offering, which pre-fills product applications for existing customers and maintains a consistent look and feel online across products and pages. 2. Chase. Ranking among the top five issuers in seven out of the nine categories and tasks, Chase's offering excels by making an extensive range of resources easy to use. The overhaul of online account management in the wake of the merger goes well beyond credit cards, as the new online platform will support a broad range of JPMC products and services. The project is ongoing; significant enhancements to online card management came as recently as August. Meanwhile, the legacy Bank One site has gone away, though Chase serves some legacy Bank One co-branded portfolios through a separate offering.

3. Citicards. Repeating as the winner of the Privacy & Security category, Citicards' offering reflects a Citigroup-wide approach of making a visible commitment to online security; Citigroup offerings on other Scorecards also do well in Privacy & Security. Since the last Scorecard in Q1 2005, Citicards has focused on Ease of Use considerations, rolling out improvements to both the public site and account management area. The public site sports a new homepage, as well as new versions of the card chooser, application and registration processes. The account management area benefited from enhancements to the payment and balance transfer features.

The Scorecard also shows that the many mergers and acquisitions involving issuers are shaping their approach to the online channel. Beyond the merger of JPMorgan Chase and Bank One, several recently announced or completed transactions are changing the online landscape. Washington Mutual will soon follow up its just-closed acquisition of Providian with a Washington Mutual-branded card marketed to existing Washington Mutual customers. While large card issuers affiliated with a branch banking business often operate separately from the branch business, Washington Mutual's extensive retail branch footprint suggests an opportunity to integrate credit cards closely with other products. Online, this approach could lead to the kind of tight integration between a national card's business and far-flung branch business now seen at Bank of America and Chase. ' Bank of America, for its part, is set to acquire MBNA, a move which would bring under one roof two very different online strategies. MBNA's site is focused on credit cards and designed to emphasize MBNA's primary focus on higher-end transactors.' Consider that MBNA rolled out its integrated, robust online rewards management even though the site still lacks same day credit for online payments and an e-mail alerting program, both common and popular features. Assuming most MBNA agent banks stay on after the acquisition, Bank of America will also face the challenge that Chase now faces having acquired Bank One: supporting online customers of cards branded in the name of other banks.

MBNA's decision to prioritize online rewards management points to a strategic dynamic now at play in the card industry. Given the pivotal role rewards programs play in cardholder loyalty, the increased emphasis on improving online rewards management illustrated by MBNA's rollout has been overdue. MBNA itself made the most dramatic splash in improving online support for rewards management, launching a new rewards area under a dedicated tab that allows customers to view transactions, redeem points and transfer points between accounts — all without having to sign into a separate rewards site. Meanwhile, Citicards and its Citigroup affiliates took advantage of corporate product breadth by rolling out a cross-product rewards offering, the Thank You program, which awards points for both credit and debit transactions, as well as online bill payment, among other things. The online offering supports Citicards' advertising by calculating for prospects the points they could earn by opening accounts at Citi and using Citi accounts for transactions.

These moves show that major issuers are seeking to distinguish themselves through robust, integrated online rewards management. MBNA and Citicards, along with American Express and Discover, have invested heavily in this area, while some other issuers have significant rollouts in the works. Meanwhile, integrated rewards management is still evolving, with most issuers offering only rudimentary information online or sending customers off to third-party rewards management offerings.

For an industry that offers essentially one product type and relies on common infrastructure such as payment networks, the credit card industry features remarkable diversity in the approaches individual firms take to their online offerings. Online rewards management is just one part of the online experience issuers are seizing on as they change their sites to suit their particular value propositions and business models. The pace of change in these sites has only picked up over the last year, with concerns about the effect of site usability on customer acquisition and online channel usage and the need to contend with mergers driving much of this change.

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