Despite their rampant success with credit cards, top executives of Advanta Corp. won't let themselves be pigeonholed. Though more than 75% of the company's revenues come from the credit card business, Advanta is a direct marketer of a lot of products, insists Richard Greenawalt, chief operating officer. We have defined ourselves by our ability to appeal to consumers in providing a valuable offer at a good price. If such comments sound vague, it is because Advanta does not necessarily want to be fully understood at least not by its competitors. Indeed, Horsham, Pa.-based Advanta offers a variety of noncard products, including home equity, mortgage, and small-business loans. But despite the company's efforts to play up its diversity, it is nowhere more prominent than in credit cards. With $7.5 billion of managed card receivables, Advanta ranks 14th in the United States. Credit cards are a powerful platform, said Mr. Greenawalt, but it would be fairly self-limiting to offer just one product. Anat Bird, chairman of Finexc Group in New York, who has had a long-term consulting relationship with Advanta, said the company's emphasis on a broad product line reflects a feeling that lack of diversification can make it vulnerable. During the past year, with the launching of both new products and business ventures, Advanta has been out to prove that it is anything but vulnerable. When Alex W. Pete Hart, MasterCard International's former president, joined Advanta as executive vice chairman more than a year ago and became chief executive in August, Advanta was at a strategic impasse, said Ms. Bird, who recently became chief operating officer of Roosevelt Financial Group in St. Louis. Pete was brought in to dream up the company's next moves, she said. Mr. Hart joined Mr. Greenawalt and Dennis Alter in the company's top rank. The three comprise the company's office of the chairman. Though Mr. Hart declines to take credit for Advanta's latest maneuver RBS Advanta, a joint venture with the Royal Bank of Scotland to issue credit cards in the United Kingdom industry sources believe he is the reason Advanta has turned its attention abroad. During his five years at the helm of MasterCard, Mr. Hart spent much of his time shoring up relationships with bankers in other countries and gaining an understanding of their markets. Still, he contended, Advanta could have gone international without me. The U.K. partnership, announced in June, places Advanta in the company of MBNA Corp. and Household International, which have card operations in the United Kingdom. With those exceptions and that of Citibank, which has a number of card-issuing operations in Europe, Latin America and Asia, U.S. card companies have generally shied from international markets. Advanta does not expect to be crowded out of the British market by its U.S. competitors anytime soon. Reluctant to divulge competitive information, Mr. Hart said simply that the U.K. market is less aggressive than that of the United States and that a lot of payments are made by check that could be converted to electronic methods. We are over there to scrap and fight, he added. Thomas P. Facciola, an analyst at Salomon Brothers Inc., predicts that Advanta will focus on marketing credit cards. European markets are seen as less mature when it comes to consumer credit, and debit cards are increasingly popular. One difference between the United States and Britain is interest rates U.K. card issuers charge 20% to 26% on outstanding balances, high by U.S. standards. Direct mail marketing is just taking off in the older country. Though Advanta brings considerable marketing skills and technology, it would be naive to think that because you have a successful approach in one market that it can be transported to other markets, said Mr. Greenawalt. Advanta is also considering expanding into another 10 or 15 countries. Mr. Hart said it would likely target countries with stable economies and growing middle classes. Another of Advanta's new ownership interests is Advanta Partners, a limited partnership that works like a venture capital fund, investing in small, start-up companies. The idea behind Advanta Partners, launched more than a year ago, is to identify companies that offer products or services that in some way might benefit Advanta. Of three investments to date, Advanta has publicly announced only one: in HNC Software Inc. of San Diego. HNC offers neural network technology, a form of artificial intelligence that helps banks and merchant processors cull from their transaction patterns early indications of money laundering, skimming, or other types of fraud. As of late July, a year after Advanta's investment at $7.80 a share, HNC's stock price had nearly tripled. It wouldn't make sense for Advanta to buy HNC because they sell to our competitors, said Mr. Greenawalt. What we gained from the investment was the advantage of getting their product six months ahead of others. The other venture investments were in businesses related to target marketing, Mr. Hart and Mr. Greenawalt said. A source close to Advanta, who asked not to be identified, expressed concern that at least one of these investments was too far afield from Advanta's core business. The executives refused to discuss this issue by giving any hint about their investment portfolio, nor would they address rumors that Advanta is developing an agent bank program to issue cards on behalf of other institutions. We know that Advanta has been approached by other banks to run their card businesses, so it wouldn't be surprising if Advanta is considering the agent strategy, said Mr. Facciola. Advanta is known primarily for offering low-priced products to profitable, creditworthy customers and for maintaining a lower cost structure than most of the industry's biggest card issuers. The company's success is evident in its 50% annual card growth rate and an impressive string of quarterly profits. But Advanta's return on assets is 1.5%, according to Mr. Facciola, which is good for a commercial bank but below the 2% returns common among its credit card competitors. Advanta was created to be that type of player, to accept the lower returns and exist with a lower cost structure, said Mr. Facciola. The company has so far shunned the cobranding approach that has been critical for companies like MBNA Corp. and Household Credit Services. But it has introduced a product called the Edvance card, which rewards customers with $50 Series EE U.S. Savings Bonds for using the card. The Edvance product is the first such niche card among several that Advanta plans to use to attract small groups of new customers. We may (offer) a number of discrete products that are targeted to different customer segments, said Mr. Greenawalt. We are not talking about products that bring in millions of customers but rather, hundreds of thousands. Out about a year, the Edvance card is marketed to parents of young children who are saving for the cost of a college education. Taxes on the bonds' interest are waived when they are redeemed to pay for higher education. While concerned about churning out new products and launching businesses across the Atlantic, Mr. Greenawalt reflected on what makes his company unique. We develop our own core capabilities from scratch, he said. It takes longer, he conceded, but in the end Advanta has the advantage of being able to grow at its own pace. The alternative strategy of acquiring companies at multiples of book value imposes a need for rapid growth and quick returns concerns that would hobble Advanta's independent-minded entrepreneurs.

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