Memoirs of a Citibank technology warrior - The global cards project (Part 2 of 4)

• Citibank sought to launch cards across multiple geographies simultaneously 
• The Regional Card Centre team developed and implemented Enhanced Cards System platform successfully
• The standard system across the globe had three regional codebases, which resulted in cost savings

This is the second of four parts. Click here for part one of this article, How the bank built the CORE; Part three: The “Systematics” project; and part four: Lessons learnt from the “Global Go to Common” project. In this part, Kanagasundram shares the story behind the successful development and deployment of the global cards project by the Bank’s International Cards Center in Singapore.

Rana Talwar was appointed as Consumer bank head for Singapore and Southeast Asia. He built the Asia and Middle East upscale consumer banking franchise for Citibank between 1983 and 1996, and the fact that is still survives today is a testament to the excellence of his efforts and that of his team.

The Asia Cards business and the global ECS+ Cards technology project

When it came to a decision to launch cards in Asia in 1988 (a joint decision by Pei Chia and Rana Talwar) Talwar did not rely on consultants as this was not his style, but after some introspection came up with his own strategy – he would launch in multiple geographies simultaneously and the objectives would be simple – five million credit cards in five years, each credit card would yield a $50 annual profit leading to a net $250 million increase in the bottom line. A simple objective but one which would require superb implementation. As it turned out this objective was achieved in under four years – an astonishing success. Talwar chose as his main players good managers rather than people who had credit card experience.

There were many objections to launching cards in Asia. The pundits said -there were no credit bureaus, there was low merchant acceptance, Asians will not revolve their balances, fraud will be endemic etc– Talwar ignored the naysayers and trusted his gut instinct. He realized that there were many pre-requisites and moved decisively to implement them – first class managers with a proven track record (cards experience was secondary), a robust credit process and above all a world class technology platform. Everything else would follow. I was lucky to be chosen for the latter job as the head of a regional cards technology centre and what followed led to the most successful technology project ever for Citibank (with the development and global deployment of the ECS+ platform), or indeed any other bank in Asia.

The base of the cards system was a commercial package called CardPac, but it was soon modified and improved beyond recognition, giving the Citibank businesses a competitive advantage in cost and functionality. The new cards team was called the Regional Card Centre (RCC). Not all the functionality was available from day one, but were developed over a period of about five years as the business expanded and required more sophisticated functionality.

The first task was South East Asia – Visa and MasterCard cards businesses were launched in 1989 and 1990 in Singapore, Malaysia, Thailand, Indonesia and Philippines. Thereafter North Asia – Taiwan and Hong Kong (which were Bank of America portfolios bought by Citibank), who initially planned their own regional processing centre saw the results in South East Asia and were brought in, all within time and budget.

Then Japan enquired whether they too could be processed from Singapore. My immediate conclusion was that the project was not possible mainly because the cartel that processed for Citibank and acted as a central switch for its transactions would not or could not co-operate in providing the technical information and support necessary for a complex de-conversion and transfer – this was in addition to the problems caused by the fact that Japan had its own unique communication and interface protocols. When I explained this to head of the Japan business Yashiro San, he immediately said he would transfer processing to the Sumitomo group. The ECS platform was also deployed to the Middle East and Eastern Europe.

In 1992 even after the success of the RCC and the ECS platform was established in Asia, there were moves in the US to transfer the Asian cards business processing to the US centre at Sioux Falls, South Dakota. The ostensible reason was to save costs – although technology costs in Asia (both data centre and application system support) had been reduced - per card cost annually had fallen from US$ 12 to $4 as volumes increased, but the costs in the US with a 30 million card portfolio was $2. They ignored the fact that the cards proposition in Asia was more upscale and had more features, the database was fragmented across 12 countries, was customised for each country legal regulations and language.

We spent two weeks in the bleak winter in Sioux Falls and Larry Fendley, the technology head of the US cards, showed us all the enhancements done by his team. We were particularly impressed by the credit scoring functionality, the use of a segmented database for faster batch processing but above all by the customer service platform – a single screen containing all the relevant customer data rather than the multiple screens that had to be navigated in the native CardPac version.

After we returned, the team spent six months designing the same enhancements for credit, faster batch processing and customer service on CardPac. We also added some innovations on our own – an automated billing dispute management system (BDMS), a parameterised Rewards system (which was so flexible that it was later adapted for use by the banking system as well), a parameterized system to discriminate authorisation limits according to the Association merchant category codes, a cook book for co-branding that enabled the base system to be modified to launch a new co-branding card within two months an advances frauds management system - Fraud Early Warning System (FEWS) developed according to specifications from Richard Parry and Vaman, the Regional fraud prevention team (who helped us in other projects as well ).

This was the genesis of ECS – the Enhanced Cards System - which was subsequently rolled out across Asia, Middle East and Eastern Europe over 12 months to replace the plain vanilla CardPac system that we had first installed. Incidentally the costs were billed to each business annually and expensed, not capitalized, and this shows how modest was the expenditure for such a major enhancement. ECS gave the Asia cards businesses a clear advantage over the competition and one of the reasons that it became the premier cards franchise in Asia by the 1990s.

The result was a standard system across the globe with three regional codebases but capable of sharing enhancements within and across regions within weeks. Costs worldwide were down to $5 per card per annum for both application support and data venter processing. Above all the businesses were happy with the new functionality and the regular new releases three times per annum. There were also never any audit issues.

Click here for part one of this article, How the bank built the CORE; Part three: The “Systematics” project; and part four: Lessons learnt from the “Global Go to Common” project. 

Watch the TABLive interview with Ajit Kanagasundram.

Ajit Kanagasundram is formerly managing director, technology, Asia Pacific at Citibank. The views expressed herein are strictly of the author.