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Card Services Card Services E-Commerce StrategyE-Commerce Strategy

November 12, 2003

2

eIntroduction

E-commerce Strategy - Government Card Services

Self-Service Portal

A single point of entry for all GCS applications

A community where customers interact

Aggregates all related information:

Training & Documentation

GSA SmartPay Program

Platform for e-marketing efforts

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eIntroduction – continued

Portal Aggregates:

New Self-Service functions for GCS:

Online credit card application

Online credit card statement

Online credit card bill payment Existing application: TheMonitor

Migration of existing application to an industry standard platform (J2EE)

4

eGoals

1. Enhance the relationship with the customer

2. Reduce the cost of business operations

3. Reduce the cost of supporting the application

Introduction – continued

4. Create a platform to deliver targeted ads

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eBackground

The Bank: Diverse Financial Services institution Retail, Commercial and Investment Services

Government Card Services (GCS): Major U.S. Government card services provider

Awarded contract from the General Services Administration for SmartPay program:

Grants the right to compete for business of individual U.S. Government Agencies

Compete based on quality of service and reputation

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eBackground – continued

Hired a consulting firm to build an application to support card services operations: TheMonitor

EXPEN$IVE: $$$ 50—60 million $$$

Not Profitable Depreciation charges through 2003; Break even

thereafter

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eOperations Environment

Supplier TSYS – Credit Card processing company

Card Issuing and Transaction Gateway

Customer

Federal Agency (DoD, FBI, CIA, etc.): Decision Maker 2m Cardholders: Government employees; Do not use

TheMonitor 10,000 Agency Program Coordinators (APC):

Administrator of SmartPay End user of TheMonitor High turnover

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eOperations Environment – continued

Revenue Transaction fees, interest and late charges; Offset

by rebates Account setup fee

Critical Success Factors Meeting & exceeding requirements of GSA Master

Contract Low Cost – Credit card service is a low margin

business Program and application acceptance – must have

large number of cardholders to be financially viable

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eInformation Systems

Monitor

Online

TSYS Monitor

Reporting

Card Data

TransactionsTransactions

ReplicateReplicate

Account & Cardholder Maintenance

Detect exceptions & misuse

Analyze spending patterns

Card Updates

Online Help Desk

Monitor Announcements

Password Reset Documentation Training

Cardholder fills out application

APC approves faxes to Bank

Bank re-keys into TSYS

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eInformation Systems– continued

Monitor

Online

Monitor

Reporting

Applications Not IntegratedData is re-keyed from

Monitor Reporting into Online

Applications require multiple logons

Multiple Platforms

Online Help Desk

Sun Solaris

NAS

IBM / NT

Crystal

Sun Solaris

WebSpherePassword Reset not available

anywhere else

Multiple platforms Strains systems administrators

= Common root cause of security incidents

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eCompetitive Analysis

Strengths Good relationships with most federal government

agencies Existing applications can be leveraged for GCS

Weaknesses

Application architecture inefficient TheMonitor is not user-friendly Application Server is not supported by the Vendor

Opportunity Relationship with GCS cardholders can be

leveraged to expand business with the cardholder as an individual

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eCompetitive Analysis – continued

Threat Competes with other major banks for the right to

provide card services to individual federal government agencies

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eChallenges

Netscape Application Server Unsupported by the vendor high risk to operations,

a problem could be un-fixable Redundant & Non-Standard Java code – difficult to

support

Crystal Reports Client-side software requirement complicates

upgrades

Poor Usability Impedes acceptance

High APC Turnover Heavy use of Help Desk Impromptu Training

New features will exacerbate existing problems

Probability

Impact

= Time

Risk

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eStrategy

Create a community where customers want to be by making their jobs easier

Create a portal where all services and can be obtained

Add new features that improve the customer service Improve the usability of existing applications

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eStrategy

Portal Portal - Single point of entry for Government Card Services

All applications accessible from the portal Aggregates training, documentation, system

announcements and U.S. Government provided information on SmartPay

Bulletin Boards for communications among users and with Bank personnel

New FeaturesNew Features - Improve service and reduce cost

Online credit card application Online credit card statements Online payment of credit card bill

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eStrategy – continued

Marketing Marketing Harvest existing data to build a customer profile Use the portal as a platform for targeted marketing to

cardholders Utilize e-mail as a marketing tool Publish e-mail Newsletter

E-Mail Newsletter Success FactorsE-Mail Newsletter Success Factors Focus on what the reader wants, not what the bank

provides Help the customer do their job

Integrate with call center procedures: “Would you like to get our newsletter?”

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eStrategy – continued

Redesign TheMonitorRedesign TheMonitor

Improve the usability of the application Re-architect and migrate to an industry standard

platform (J2EE) Reduce redundant code and leverage application

services Create seamless transition between applications

(single sign-on) Upgrade to Crystal Enterprise

No client software Dynamic hyperlinks allow integration with Online

Monitor Move to Sun / Solaris Platform

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eLegal and Ethical Issues

Privacy Bank does not share financial information of

customersCopyright

Customers could post copyrighted information on bulletin boards

Digital Millennium Copyright Act provides protections. Bank must:

Establish terms of use that prohibit posting of protected material

Provide mechanism to “take down” offending material

E-Mail Policy TheBank.com the sending address

“ADV:” in subject line

No more than one marketing e-mail per month

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eMarketing / Communications Plan

Phase 0 – Introduces the Portal Banner ad on TheMonitor “Coming Soon” Introductory web page: Features and Benefits Email and U.S.P.S. mail to cardholders, APC’s and

AgenciesPhase 1 – Build awareness of the Portal; Announce

Availability Banner ad on Monitor: “Now Available” Email and U.S.P.S. mail to cardholders, APC’s and

Agencies Rich media presentations of new features (Intro

page)Phase 2 – Ongoing Advertising to cardholders online and via e-mail Communicate value to agencies via Relationship

Managers Continually take feedback to improve value provided

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eMeasuring Success

Value to the Customer Use of the Portal (page hits and logons) Adoption of online Card Applications – Goal Y1: 50%,

Y2: 75% Adoption of online Statements and Bill Payment –

Goal: 25% Use of the Bulletin Boards Sign-ups for additional Bank servicesValue to the Bank Cost savings from online Applications, Statements

and Bill Payment Sign-ups for additional services Reduced use of help-desk Reduced support cost

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e

Sun Solaris

Implementation Plan

Ask The Customer

Build New Platform

Develop Portal

Migrate & Redesign Monitor Online

Develop New Features

Migrate to Crystal Enterprise

WebSphere 5.0 (J2EE)

Applications

Statements

Bill Pay

Portal

IBM & Windows NT

Crystal 7

Monitor

Crystal Enterprise

Crystal

ClientMonitor

NAS Sun Solaris Sun

Solaris

Survey & Interviews

Usability Test

Measure and Communicate Value

SiteMinder (single sign-on)

Current Platform

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eBenefits

Cost Savings Reduced support cost: Windows N/T & 1 FTE - $85k

annually Card Applications: 15 FTE’s - $600k annually Online Statements: $550k annually Online Bill Payment: $750k annually + Improved

cash position

Security Common Platform = more secure environment

Relationship Opportunity to cross-sell other services to cardholders Faster Service: Card applications & statement delivery Demonstrates Value Better customer retention Highly usable application Improves GCS brand image

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eEstimated Cost

Migrate Monitor and Improve Usability Pilot + Migration

New Applications Portal Online Card Applications Online Statements and Bill Payment

Infrastructure Application Server Single Sign-on Crystal Enterprise Professional Development

Marketing Build awareness

$350,000

$1,220,000

$200,000

$500,000

$96,000

$114,000

$180,000

$48,000

$100,000

$2,808,000

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eReturn on Investment

Break Even in 16 Months Break Even in 16 Months

+ $900,000 Return in 24 Months+ $900,000 Return in 24 Months

+ $1,900,000 Each Following Year+ $1,900,000 Each Following Year

Doubles Shareholder Value in 3 yearsDoubles Shareholder Value in 3 years

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eEnsuring Success

What if: Card Applications do not reach adoption goal of 75%? Keep track of online and manual card

applications

Include a reminder in approval notice to APC when card is issued from a manual application

Generate e-mail to APC informing of benefit of online applications (i.e. 1 per month when online apps > x %)

Fallback: Discount the set-up fee for online application

What if: Statements and Bill Pay do not reach adoption goal of 25%?

Ask the customer

Re-evaluate marketing strategy & usability

Fallback: Offer rebates to government