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Lightening the Load of
Credit Card Delivery Burdens
A look at how a team of Business Process Reengineers eased both the “fraud” and “opportunity” risks
associated with delivering credit cards in emerging consumer markets
T
By Rajit Bhalla and Miguel Villanueva
he typical credit card weighs
less than 0.02 ounces, yet the
logistical task of delivering one in
many emerging consumer markets can
be anything but lightweight. Delivering
new credit cards to recently approved
and renewing cardholders presents
some very weighty challenges and can
cause significant revenue leakage for
banks in emerging markets.
In the recent case of one South
American bank, 35% of all new and
renewed cards were failing to arrive to
their intended recipients within 60 days
of the card being issued. As a matter of
this bank’s policy, these cards — 270,000
a year in all — had to be shredded at an
annual cost of $1.3 million.
But by identifying the root cause
of delivery delays and miscues and
developing a detailed monitoring
system across the entire card issuing
lifecycle, new methods were devised for
managing operations and optimizing
the delivery channel workload. The
ultimate goal of these efforts is to
improve the rate of successful card
deliveries from 65% to 85% in 6 months
and to 90% within a year.
To benchmark this bank’s challenges
against peer institutions, big data
resources were used to analyze ways that
application, underwriting and issuance
processes can be optimized. That was
combined with the firsthand knowledge
of card delivery processes from a team
member who worked at a bank in Asia
that faced a nearly identical operating
and regulatory environment, but was
able to raise its card-delivery rate to 95%.
Mailing a credit card and
instructing the lawful
recipient to activate
it by phone using a
government-issued ID
number — the standard
activation protocol for 181
million U.S. cardholders —
presents too high a fraud
risk in most developing
markets in Latin America,
Asia, Eastern Europe,
the Middle East and SubSaharan Africa.
In both markets, mail-driven card
delivery presents heightened risks
atypical of mature markets like the U.S.,
where stronger systemic safeguards
against card activation fraud make postal
delivery a relatively riskless proposition.
Mailing a credit card and instructing
the lawful recipient to activate it by
phone using a government-issued ID
number — the standard activation
protocol for 181 million U.S. cardholders
— presents too high a fraud risk in most
developing markets in Latin America,
Asia, Eastern Europe, the Middle East
and Sub-Saharan Africa.
Moreover, in the case of the South
American country in which this bank
operates, it is customary for consumers
to write down their governmentissued ID numbers on widely-handled
documents, such as restaurant receipts
— meaning it would be relatively easy
to steal a consumer’s ID number and
fraudulently activate a card that’s been
delivered through the mail.
To mitigate this heightened fraud
potential, cards in this South American
country must, by law, either be couriered
to the intended recipient’s doorstep for
signature, or be delivered to a local bank
branch for the consumer to pick up.
Furthermore, cards must be delivered
to the authorized user or formallydesignated proxy.
Typically, initial credit card sales were
sourced through calls and cross-sold
thru co-branded models with contract
couriers and bank branches, which
then assume responsibility for card
delivery and receipt by applicants. But
these methods suffered from poor work
stream hand-offs, lack of ownership
and no focus on applicant dropouts;
consumers that initially apply for a
card, but change their mind during the
protracted delivery process.
To address this, delivery processes were
scrutinized beginning with the consumers’
viewpoint at origination, which allowed
analytics and reengineering consultants to
map and evaluate end-to-end workflows
across sales, operations and delivery
to identify the root cause of delays and
miscues.
As a result, there were a number of
new processes put in place to help the
bank improve its delivery rate. First, sales
representatives began capturing accurate
and complete information about when
and where consumers are available to
accept delivery of their cards. In addition,
the bank tracks the performance of its
courier service vendors and monitors
success rates in specific geographic
regions. Card deliveries in certain areas
are assigned to specific couriers based
upon the vendor’s past success rate for
delivery in that area.
The biggest lesson learned from this
process is that failure to meet the first
delivery date greatly increases the odds
that subsequent delivery reschedules
will be less and less successful, until
the intended recipient eventually says,
“Never mind, I already received a card
from another bank,” once a courier finally
makes contact for a delivery.
With that in mind, the most important
element of this new process is improving
the rate of first-time courier deliveries.
But in order to accomplish that, it was
crucial for the bank to understand that
it didn’t just have a courier management
problem; it had an end-to-end delivery
oversight and management problem.
By embracing a roadmap that
comprehensively addresses all of
the issues causing the problem, the
bank is taking the necessary steps
to ease both the weighty risks of
fraudulent card activation and lost
cardholder business.
Rajit Bhalla is Genpact’s lead
unsecured lending subject matter expert
worldwide. Miguel Villanueva is a
reengineering engagement leader for
Genpact in Latin America. You can email
them at rajit.bhalla@genpact.com and
miguel.villanuevaganoza@genpact.com
Genpact is a global leader in business
process management and technology
services, leveraging the power of smarter
processes, analytics and technology to
help its clients drive intelligence across
their enterprise. Our Reengineering team
uses Lean Six Sigma methodology to lean
enterprises forward as well as down,
thereby making them “Future Ready.”
Case Study
Response
Snapshot
Backstory
Initial credit card
sales were sourced
primarily through
calls and cross sell
thru co-branded
models with
contract couriers
and bank branches
that then assumed
subsequent
responsibility for card
delivery/receipt by
the applicant.
Problem
Poor work stream
hands-offs, lack of
ownership, and no
focus on “drop outs”
(of those originally
applying for a card,
but then changing
their mind once the
protracted delivery
process began).
Scrutinized delivery
process from
the customer’s
viewpoint across
originations, which
allowed involved
analytics and
reengineering
consultants to
map and evaluate
process flow end-toend (across sales,
operations and
delivery) to identify
the root cause of
delivery delays and
miscues.
Solution
By applying this
customer view
across upstream
and downstream
activities that
impact successful
processing and
card delivery, the
team was able to
introduce first-timeright concepts for
managing operations,
and streamlining/
optimizing deliverychannel workload
distribution.
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