3 ways credit card providers can use BPM to enrich their service offerings and achieve business transformation

Business process management (BPM) in credit card services has covered credit card issuance, card servicing and bills management, but in 2014-2015 the focus is going to be more on better customer service, best in class case management systems and dispute management.

With increasing security breaches and data thefts taking place in 2013, there are three areas where credit card providers can enrich their service offerings using BPM. This will have an enormous impact on their business and will improve the productivity of institutions.

Disputes & frauds resolution is not going away
According to a report by Javelin Strategy & Research, total financial losses attributed to identity theft and fraud amounted to $21 billion in the year 2013. This begs the obvious question: what do banks and financial institutions need to do?

Banks must follow intent-driven processes based on the customer profiles. Correct categorization of the customers helps in reducing complaints and disputes because it helps the resolution of disputes very early in the dispute resolution life cycle. Managing risk according to the business value of the transaction is also important so as to handle the cases which are most urgent from the stakeholder’s point of view to avoid credibility loss. Additionally, banks need to abide by federal, country and association specific regulations. In the U.S. E, J, G, V needs to be complied with for all credit cards related activities along with timelines and documentation requirements.

Key measures for measuring the effectiveness of a dispute management processes include the following:

Parameter What it means Best strategy
Measurement of the false positives Cases which are recorded as frauds/disputes but actually are not frauds/disputes Categorizing the customer complaints resulting in correcting the dispute to reduce the false positives
Cardholder Satisfaction Customer satisfaction is aligned with future transactions which makes it a key metric Keeping a close watch on the customer satisfaction index through surveys
Pend timeframe Time duration for the handling of the entire dispute resolution Reduction in the overall dispute cycle time

Customer satisfaction – Core of the credit card business
The financial institutions should focus on providing the best customer service in order to increase the satisfaction levels with best-in-class case management systems, quick case and dispute resolution systems. Operational efficiency, integration aspect and faster issue resolution is very important in this regard in all areas such as control & compliance, disputes, payments, research & reconciliation, fees and adjustments etc.

If all such processes are streamlined and handled efficiently, the customer satisfaction will be drastically improved with simultaneous increase in the way business operates for credit card companies.

Security (compliance) still remains a major issue
Enough has been said and discussed about this area but still a vast majority of the organizations are not mature enough to implement and maintain a PCI sustainable security compliance program.

The credit card data that banks have at their disposal is highly fraught with the risk of invasion. Most banks have internal systems in place but they are not PCI compliant today, hence going forward, it will be important for the banks to deal with security related issues related to card’s information and they will have to rapidly evolve their processes to make them PCI compliant not because of the penalties imposed upon them in terms of transaction losses, security breaches and thefts etc., but to make this part of their DNA itself so that these scenarios never arise in the first place.

According to a Verizon report-2014 on PCI Compliance, there were a few key takeaways:-

  • Compliance needs vision. To be sustainable, compliance needs to be embedded in “business as usual” as an ongoing process. The best thing banks can do as an organization in order to simplify the PCI compliance workload and achieve real security, is to put the compliance program within wider governance, risk, and compliance strategy.
  • Dedicated effort is needed to be PCI compliant. PCI compliance needs time, money, and executive sponsorship. It needs to be part of everybody’s job — application developers, system administrators, executives, and even staff in shops and call centers — not just left to the IT security team.
  • Compliance needs to be leveraged as an opportunity. Done right, PCI Security compliance can drive process improvements, identify opportunities to consolidate infrastructure, and generate additional equity. Think of it as an opportunity, not a burden.

Financial institutions dealing with the credit card products need to improve their internal processes and the way they deal with credit card frauds and disputes in addition to  adhering to PCI standards and incorporating recent changes in the fluid complex regulatory environments. The first step is to improve the customer service and embed the fraud detection mechanism with maximum thrust on early detection of the frauds/disputes as these two greatly impact the credibility and brand for the financial institutions dealing with such products and services.

Neeraj Kumar Swansi

Senior Consultant - Banking and Financial Services, Virtusa. Neeraj Kumar has worked with a variety of clients from different industry verticals but has a special focus and experience in the banking and financial services industry. For nearly 5 years, Neeraj has been involved in delivering transformational solutions for banking technology companies in addition to also supporting banking and financial services companies in implementing solutions across different products and platforms including those for corporate banking, retail banking, project finance, foreign exchange, payments and Risk Management. He has worked with Credit Card providers to improve their operational efficiencies, time to market and effectively handle customer disputes by streamlining the case management capabilities to enhance the overall effectiveness of the case and dispute resolution processes. Neeraj holds an undergraduate degree in Mathematics from St. Xavier’s and MBA from IIM Calcutta.

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One Comments

  • suresh babu Venkata May 16, 2014

    Real nice read

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