Credit card issuers that want to operate on the Internet can turn to a couple of specialized software companies for assistance.
Many systems are available for on-line bank account access, but there are fewer options for credit cards, because the market is at an earlier stage of development. Destiny Software, a 40-person firm in Conshohocken, Pa., specializes in helping card issuers market products on the Internet.
Incurrent Corp., with 10 employees in Parsippany, N.J., has a slightly different focus: providing Web-based account access for cardholders.
Destiny was founded in January 1994 as a purveyor of on-line banking software. Its first product was Granite Foundation, for electronic delivery of various financial services. The second, Granite Sculptor, is specific to card marketing.
In the works are Granite Retail, for credit card account access, and Granite Commercial Card for the business market.
"We're working on automating the entire process of customer management and Web-enabling it from the very beginning-from advertising to prospects to the servicing of actual customers," said Lucinda Duncalfe, 35, Destiny's chief executive officer.
Its clients include two of the most prominent financial Web advertisers, First USA and Bank of America. The latter was the first customer; Destiny helped launch the bank's groundbreaking home banking program on America Online in 1996.
Destiny software is used for First USA's cobranded cards with America Online and Yahoo. Another top-10 card issuer will come on-line with Destiny's system in the first quarter of 1999, Ms. Duncalfe said.
Incurrent was founded by a team of technologists who, in 1994 and 1995, developed Internet applications for an H&R Block subsidiary, Block Financial Corp. They put up on the Internet WebCard Visa and Compuserve Visa, which was folded into WebCard after America Online bought Compuserve.
These experiences led Mark Betz, president and CEO, to the conclusion that "this was a market that had a lot of attractive characteristics and could benefit strongly from the use of on-line technology."
Mr. Betz had been a senior system architect at H&R Block. He said the server software he developed is being sold as NetTeller by Jack Henry & Associates of Monett, Mo. "It is running about 80 Internet banks," he said.
Mr. Betz said the methods for setting up card issuers on the Internet are fairly standard, and product differentiation comes through creativity. Incurrent's "technology does not stand out as unique," he said, "but our feature set does."
The day is approaching when several card companies will let customers "search their transaction histories, get one-click expense reports, and have e-mail alerts generated when credits post or when the balance limit is approached," Mr. Betz said.
He compared on-line card account access to home banking: neither is a "demand-driven" business, yet there are business benefits in offering both.
These services "broaden the interface between the issuer and the customer," said Mr. Betz, 38, whose company opened in June 1997. "They get the customer more involved in the product and they allow the issuer to deepen the relationship such that loyalty is enhanced and the account is more likely to be retained over time."
Incurrent's system, CardSite, starts at about $90,000, Mr. Betz said.
Ms. Duncalfe of Destiny, a veteran of several Internet start-ups who holds a master's degree in entrepreneurial management, predicts more card issuers will migrate to the Internet as responses to mail solicitations continue to decline.
"You can do that marketing so much more effectively on-line," she said. "Everyone's finding this is a great channel."
Security concerns about on-line accounts are diminishing, Ms. Duncalfe said, and bankers seem more enthusiastic about Internet opportunities. "Today there are very few who are saying, 'Customers won't do this over the Web,'" she said.
The security issue may be fading, but there is still credit quality to worry about.
Those that "focus on secured cards or riskier portfolios wonder if the demographics are there on the Web," Ms. Duncalfe said. "Frankly, I don't know the answer to that, but the (Internet use) numbers I've seen are so good that I'd take the risk."
The types of services offered by Destiny and Incurrent have emerged as a new specialty within electronic banking, Mr. Betz said. When he calls on prospective customers, he finds that "there is no faster way to lose the interest of a credit card bank than to show it a product that was made for checking accounts and say, 'By the way, we can put your credit card balance in here.'"