Perspective: Outsourcing Segments of Your Card Operation

The long-term objective of reconfiguring a card operation is to improve stockholder value and increase net operating revenue. Outsourcing segments of a card operation that are heavily dependent upon staff, such as collection management and customer service, will often generate major operational savings. Functionally, the two areas are relatively static in their requirements for credit policies. Collection queuing — the ability to prioritize workflow, may require redesign to address volume and performance requirements; these operational components can be managed directly by the card issuer, co-managed with the outsourcer, or entirely offloaded to the partner. Standard servicing agreements can cover training requirements that govern customer interactions, establish credit policies, and provide fulfillment standards.

In contrast to customer service, collections carry more regulatory scrutiny at the operational level, as required by federal and sometimes local regulations. Chances are that an outsourcer with a strong industry presence will already have effective controls in place to comply with regulatory requirements and good customer service. If the potential partner is committed to servicing outsourced accounts, it will most likely have effective training staff and tools already in place.

Dispute handling and fraud control are other areas that rely on staffing, but they also have contractual and regulatory implications that require stronger skills to execute than other operational components. Time standards that govern responses to disputed transactions can create challenges for overstaffed operational units, although outsourcers will typically have sufficient resources on hand. Similarly, fraud units that react in real time can often see lift when placed in the hands of experienced outsourcers that can provide broader risk perspectives garnered from working your financial institutions’s accounts and by understanding patterns and attacks that affect other card portfolios.

Mobile payments is an example of an initiative that is not staff intense, but requires design expertise and the ability to integrate flawlessly with the payments architecture. Rather than cobbling together new channels that require extensive testing and integration, issuers can have immediate access to programs volume tested for network and product standards. Outsourcing service models can access proven and secure transaction pathways. Outsourcing operational components allows issuers to focus on the areas they do best: marketing the product, booking accounts, managing the credit risk, and increasing customer card spend.