Once he took the helm of General Electric's financial services unit in May 1993, it didn't take Michael D. Schauer long to realize that the company had a communications gap.

While customer service, settlement and banking functions were handled at the GE Capital Consumer Card Co. bank in Cincinnati, marketing, risk management, and finance operated from the unit's headquarters in Stamford, Conn.

To close the gap, Mr. Schauer decided to move the headquarters to Cincinnati, bringing 55 positions with him.

"There's a lot to be gained from being under one roof," he said during a recent interview. "Communications is significantly better now. We can walk down the hall to decide to spend $1 million on the next solicitation," instead of having lengthy telephone conversations or traveling back and forth.

"Because of the pace and the volumes, we can't afford a communications or information screw-up."

Now as GE Consumer Financial Services finds itself growing to nearly 500 employees, it expects to add about 75 customer service representatives by March, which presents a new problem: space. In the two buildings it occupies in an office park north of Cincinnati, employees sometimes stumble over each other.

Soon they will move into one building, an old shopping mall about four miles away that has been retrofitted as an office complex, boasting 160,000 square feet.

The growing pains are indicative of something else -- a healthy business. With a revamped GE Rewards card program, a new cobranded Exxon card, and a healthy corporate card that serves GE's 12 major businesses, the 33-year-old general manager has his hands full.

Mr. Schauer brings a decade of experience to his latest post. He was executive vice president of Valley National Bank for all retail lending as it was taken over by Bank One, Arizona. Prior to that, he ran Michigan National Bank's credit card and installment loan program as senior vice president. He completed a four-year tour of duty with Citibank in its private label business.

Now he has returned to the city where he started his career with Citibank. With a master's degree in industrial administration and undergraduate focus on finance, the Wisconsin native said he was attracted to the pace and competition of the credit card industry.

"Therein lies the challenge and the opportunity to do things," he said, adding, "Winners and losers separate faster."

The Nilson Report, an Oxnard, Calif., newsletter, ranked GE as the 14th-largest bank credit card issuer at yearend 1993, with $2 billion in outstandings and 3.6 million cards. GE has remained a force, largely through its flagship card, GE Rewards, a rebate program that has been "sneaky successful," says Bruce Brittain, president of his own Atlantabased research firm.

In consumer surveys, Brittain & Associates found that GE Rewards doubled to 2.1 million cards from September 1993 to September 1994, "without very much fanfare."

"They continue to grow very steadily," said David Robertson, president of Nilson. "They're not a flashy outfit."

Many credit industry followers attributed the jump to the elimination of the program's annual fee, shortly after the program was rolled out nationally, and to this year's overhaul to a cash-back format.

"It continues to grow and we're very pleased with the changes," Mr. Schauer said. In fact, GE expected consumer fall-off after the restructuring. "There's no question there's a bit of consumer take-away there," he said. "But they prefer the utility of cash. That was loud and clear in all the research we had done and the results are bearing that out."

In thinking about GE's card operations, most attention is paid to the Rewards program, but the card executive was quick to point out: "We are not the GE Rewards card. That happens to be one of our products, but that would be like calling Household (International) the GM Card."

In September, GE launched a second big cobranded MasterCard with Exxon Co. USA, complementing the private-label program of nearly seven million cards run by GE Capital Retailer Financial Services in Stamford.

The Exxon MasterCard comes without a fee and a 9.9% introductory rate. Cardholders can earn a 3% rebate on purchases from participating Exxon stations and 1% on general purchases. Rebates are unlimited.

"We are trying to help Exxon solve for a multipoint attack plan to help them sell gas," Mr. Schauer explained. "We're pretty unique at GE in that respect that we can offer that."

The unusual situation creates a triangle relationship. "We have to be careful that in the competing products we don't end up focusing all our efforts on each other and not help Exxon sell more gas," he said.

Despite the challenge, he admits it's a competitive advantage. "We're finding that's a pretty unique twist we're bringing to the table to talk about now, especially if they want to do both," he said of the retailers.

Meanwhile, the consumer card group is planning to market its business card and purchasing card products outside General Electric. As it stands, the GE business card ranks as one of the top MasterCard corporate card products.

With 12 major companies in GE, plus in 24 in GE Capital, the card group has developed a welltested system to capture data at the point of sale and distribute that information back to the company. "We're looking at it pretty hard right now," Mr. Schauer said. "We're optimistic about the prospect. We have the strong GE name behind us and GE is very good in the business-to-business arena."

When he's not planning the next new product or direct mail solicitation, Mr. Schauer contributes to MasterCard International's board of directors. His presence helps GE "keep abreast of the leading edge of what's going on in the industry," he said, "and gives us an opportunity to influence where the industry heads."

GE Capital Consumer Card Co. At a GlanceHeadquarters Cincinnati General Michael D. manager Schauer Outstandings $2.3 billion Cards 3.6 million Cobranded GE Rewards, products Exxon Corporate GE Corporate, GE Purchasing

Source: The Nilson Report, company reports

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