There's something decidedly old-fashioned and maybe a little refreshing about the rise of Charles A. Schmidt to the top of a prominent credit card bank. Mr. Schmidt, 55, entered banking on the bottom rung in the mid-1960s. After graduating from high school, he got a job as a teller at Valley National Bank in Arizona. In the next 26 years, Mr. Schmidt rose slowly through the ranks, eventually becoming vice president and general manager for bank card services at what is now Bank One Arizona. The next step was First Omni Bank in Millsboro, Del., one of the relatively new breed of credit card operating units feeding consistent profits up to their parent banks. In First Omni's case, that is First National Bank of Maryland and First Maryland Bancorp., U.S. subsidiaries of Allied Irish Banks. Although he never attended college, I never bypassed anything, said Mr. Schmidt, bristling just slightly at the thought this might make him any less deserving of success. It is Mr. Schmidt's current role, as senior vice president and general manager at First Omni Bank, that he said has brought him the most satisfaction. He oversaw a recovery and return to growth at the credit card division that he called the highlight of his career. As Mr. Schmidt tells it, First Omni's bank card operation was sluggish at best before he arrived in 1992. Previously, our growth strategy was that of buying portfolios, he said. Our marketing had been relatively dormant, either with regard to these portfolios or bringing in new business. At the same time, competitors were growing rapidly, creating a sense of crisis for those at First Omni. Our business was running off, not growing, Mr. Schmidt said. We had no clear strategy other than just survival. The bank had 500,000 accounts in 1992 and not much in the way of a long-range strategy. Mr. Schmidt moved quickly to install new leadership for achieving a turnaround. First, we established a management committee and recruited for key positions, he said. We got a marketing director (Bob Falkenberg) from Citibank, an operations manager (Elaine Sosnowski) from Bank One, and a credit policy manager (Lynda Woodward) from First USA. Once assembled, the group devised a three-pronged approach aimed at revitalizing the card business. We wanted to develop business through our branches and through cobranding, he recalled. In particular, we were enthused about cobranding because it offered a wonderful opportunity for our bank to go fully beyond the traditional credit card relationship. If that didn't work, he continued, we would fall back on our prior national strategy to grow business through direct mail and telemarketing. That, he acknowledged, was the least desirable strategy of the three. So far, it appears First Omni will be able to avoid that fate thanks to considerable progress down the two more desirable avenues. The number of open accounts has risen to just under 700,000, according to Mr. Schmidt. First Omni recently made a major cobranding catch, Bell Atlantic, which Mr. Schmidt has said will more than double its credit card base. It's a first for us, and it's a jewel, said Mr. Schmidt. Because of the demands of Bell Atlantic, we will probably not aggressively pursue the third strategy of telemarketing. We'll still do direct mail and that kind of stuff, but we won't rely on it as much for our future growth. We think cobranding is a great opportunity for them, said Mark Abbey, a principal at First Annapolis Consulting in Maryland, which has close ties to First Omni. (William Westervelt, another principal, formerly headed First Omni.) Mr. Abbey said both companies have strong track records that will work to the product's advantage. Meanwhile, First Omni is reaching out to First of Maryland's retail customer base. In January, Mr. Schmidt said, the bank became the first in the state to offer to put photographs for identification purposes on both credit and debit cards. We did this in response to our strategy of developing branch business, said Mr. Schmidt. While people were there to get photo cards, branches could sell them other services. We bought and installed cameras in all branches, and took out TV ads. Mr. Schmidt said the bank had delivered more than 7,000 photo credit cards as of Aug. 1, and a comparable number on the debit side. In another first, First Omni last October became the first processing client of Total System Services Inc., Columbus, Ga., to adopt TS2, a complete remake of back-office technology that Mr. Schmidt said was indispensable to improving customer relationships and marketing. Implementing our marketing plan involved repricing our entire portfolio, and we used TS2 to do this, he said. By simplifying our portfolio, it made things much easier the branches then had a product they were more willing to promote. TS2 had been several years in the making, and Total System had bigger clients hankering for it. First Omni was large enough to be a valid test (of TS2), yet small enough that they could control the size of the project, said Mr. Schmidt. We accepted, based on the opportunity we had to exploit the capabilities of the new system. Mr. Schmidt said TS2 has nearly infinite flexibility. We think we can use it to quickly respond to competition. We can match price and features very quickly. The information that we hear is that the TS2 conversion went very well for them, said Mr. Abbey. In a tentative move toward national marketing, First Omni is also offering a Visa Olympic card on which a part of the proceeds supports next year's Atlanta games. We haven't aggressively pushed it, said Mr. Schmidt. We have a long- term plan in mind, but we're taking it one step at a time. Such caution and calculation seem to be paying off for First Omni. They have refocused their strategy, said First Annapolis' Mr. Abbey. The environment now is one in which issuers that try to be everything to everybody end up having problems. They've narrowed their focus and done well because of it.
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