Chase Manhattan Card Chief Plays a Strong Hand

Like many of his colleagues at what they call the new Chase, Michael Urkowitz has been through plenty of mergers and system conversions.

After all, in the year after Chase Manhattan Corp. merged with Chemical Banking Corp. he was responsible for integration of consumer products at what became the nation's biggest bank.

But then came an even tougher challenge. He had just two months to prepare for the largest and most complex conversion in bank card history.

Mr. Urkowitz, an executive vice president, took charge of credit card operations last Aug. 19. The card conversion was scheduled to happen over a long October weekend.

A $25 billion credit card portfolio, nearly equally divided between the old Chemical and Chase, was to be put on a single operating platform linked to a proprietary customer service and collection system.

Harry F. DiSimone, chief operating officer, was one of thousands of Chase employees who camped out for the duration. He started at Lake Success, N.Y., on Thursday, Oct. 17, at the old Chase host operation and ended up the following Monday at the old Chemical's command center in Hicksville, N.Y.

Bank employees were also in satellite operations around the country and with First Data Corp. staff in Omaha. All told, 4,500 were retrained for the new operating environment.

Mr. Urkowitz, who took over the top card job from Chemical veteran Charles R. Walsh, was on hand for much of the weekend, Mr. DiSimone recalled. But he was not immersed in the mechanics.

"Mike focused on being very visible, very available to people," Mr. DiSimone said in a phone interview from his office in Hicksville. "He was here a lot, and he talked to all ... making sure they felt O.K.

"He also knew people were going through a great deal of personal anxiety, being away from their families, so he reinforced a lot of messages about commitment and dedication, how important this was to the organization as a whole, and how much the individuals' contributions meant to him."

The conversion went well, but Chase's task was not over.

"We had 30 days to catch our breath, and then we launched Wal-Mart," said Mr. Urkowitz, referring to the bank's latest cobranded card.

Applications for the retailing giant's MasterCard were available Oct. 14, but most of the accounts went on the new platform a month later. By April 15 Chase had 818,000 Wal-Mart accounts, more than a million cardholders, and $650 million in outstandings.

Building on the momentum, Mr. Urkowitz orchestrated a reinvestment in technology. This year $340 billion-asset Chase will spend $25 million to install a massively parallel processing system from International Business Machines Corp.

"What we did, which I'm very proud of, is that in the early days of the merger we focused on getting a common technology platform, getting everyone to work well together, and setting a common direction," Mr. Urkowitz said recently.

"We straight-away also began defining a strategy for the future and investing behind that strategy.

"I think a lot of companies would have said merging is enough," he added. "I'm proud of the fact that we said we had to do both things at the same time."

Massively parallel processing is supposed to enable Chase to do what Capital One, First USA, and other pure card players have done: mine huge customer and behavioral data bases to target highly customized offers, as well as organize collections and customer service operations.

"There is no other product where you have such detailed behavior data on your customers as in cards," said James R. Beams, director of retail services for the Tower Group, a consulting firm. "It's on the leading edge in retail financial services to better manage customers.

"Card providers can afford to invest in technology because of the margins, and they have valuable data, so there's something worth investing in."

Sanford C. Bernstein & Co. analyst Ronald Mandle said one of the key aspects of such high technology "is just raw computing power. The more computing power you have, the more ways you can find to massage the data you already have and see what's useful there.

"But I think it has another dimension beyond pure number crunching, and that is testing of various types of product mixes in terms of pricing and credit lines."

An issuer like Chase has the power, he said, while Capital One has more experience in testing. Chase has an opportunity to catch up.

"We're now at the point where we will have made a dramatic uplift in both technology and tools-where we will be, I believe, second to none," Mr. Urkowitz said.

Among other benefits, he said, enhanced data bases will allow Chase to manage its customers better, build prospect lists, and staff call centers more effectively. Using sophisticated mathematical models, Chase will be able to predict behavior and adjust pricing points more quickly.

It is common for card issuers to do three to five big solicitation campaigns a year, Mr. Urkowitz said. "Rather than a small number of monster solicitations, we'll have a steady stream of frequent solicitations with shorter lead times and more up-to-date criteria."

Chase plans to unveil, for example, platinum cards, following other card issuers, including the industry leader, Citibank.

The technology will help Chase ride out a wave of delinquencies that has hit the card industry hard and to accelerate its growth, Mr. Urkowitz said.

With 17 million accounts and $25 billion of outstandings, Chase is No. 3 among bank card issuers. Its cobrand partners, besides Wal-Mart, are British Airways and Shell. The latter program is the largest, with more than three million accounts and $4.5 billion of loans.

Chase is in the market for more cobranding relationships. Among the companies rumored to be in the market are major retailers and import car companies, such as Mercedes Benz, Nissan, and Toyota.

Chase is "not a singles player," said Donald Berman, president of Cardholder Management Services, Plainview, N.Y. "They're going to hit home runs, or they're not going to step up to the plate."

The bank is looking at "everything and anything," said card consultant Michele Turkel of Spectrum International, Scarsdale, N.Y. It has gained from cobranding experiences, she said, and "decisions are being made at a lower level" than when Mr. Walsh was in charge.

Beyond cobranding, Chase is keeping its eyes open for portfolio acquisitions. "There are no big deals on the horizon," said investment banker Robert K. Hammer of Thousand Oaks, Calif., but "Chase is certainly a world-class competitor. Some of the largest deals in the late 1980s were from Chase."

Meanwhile, Mr. Urkowitz said the card unit's 6,500 employees can relish accomplishing so much in so little time.

"We have proven to ourselves that an organization that had only worked together for 12 months was able to mature and reach the point where it could execute one task after another," he said. This took place even as leadership changed hands.

"They have a very capable management team that is well grounded in the banking industry," said Mr. Berman. "They know how to do the blocking and the tackling, but they also are some very forward thinkers."

Mr. Urkowitz, 53, has worked at Chase Manhattan for 23 years, primarily in corporate and wholesale services. He joined the controller department in 1974 and worked in operations, risk management, and operations and systems.

Before joining Chase, he was a project engineer for Grumman Aerospace Corp. He received bachelor of science and master of science degrees in mechanical engineering from the City College of New York.

People who know him "know his superior intellectual capability, his technology background, the way he thinks in a logical way," said Mr. DiSimone. "Even more obvious than those things is he has a great deal of customer focus. He has terrific instincts around customers."

Even though he doesn't come in direct contact with cardholders, Mr. Urkowitz has established "listening posts." "From the simplest complaint letter," said Mr. DiSimone, "he spends a great deal of time trying to understand why we dealt with a customer in a certain way."

Mr. Urkowitz finds so much fun in the intellectual challenge, he said, that "some days I'd work for free."

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