In his first four months as MasterCard's U.S. region chief executive, Alan J. Heuer has crisscrossed the country seeking input from as many members as he could talk to.
As he noted in a recent interview, the 13,600 U.S. member banks are his primary concern. "One of our biggest challenges here is being responsive to a set of members that "have different ambitions, different strategies, different desires," and MasterCard must continuously work at being responsive.
Meanwhile, when he spends time at MasterCard International's headquarters in New York, the 54-year-old executive has been picking the brains of colleagues and preparing for the association's relocation to Purchase, N.Y., in October.
"I think MasterCard is positioned to do exciting things, and I feel very good about the association's future," said Mr. Heuer, a former retail banking executive at Bank of New York and Marine Midland Bank.
In this recent interview, Mr. Heuer discussed some of the many issues on his mind, among them the competition. He will have an opportunity for the first time to meet his counterpart at Visa U.S.A. - Carl Pascarella - at the American Bankers Association's national bank card conference, which begins Sunday in New York and ends next Wednesday with speeches by the two association leaders.
Q.: What do you think the recent mergers will mean for MasterCard?
HEUER: The mergers seem to be in the papers every Monday morning. I see them as part and parcel of what's going on in the banking industry in the United States - a massive consolidation, a phenomenon that bankers and others have been talking about for many years and that has clearly picked up steam.
The overcapacity that exists in the American banking industry is being dealt with in the marketplace as people consolidate to realize operating efficiencies, to merge business lines, to get into new products, new geographies. There are reasons why these mergers are happening, but fundamentally it goes back to the overcapacity in the U.S. marketplace.
Q.: Will this affect the credit card industry?
HEUER: Apart from the consolidation of the banks, there's been a consolidation that's been under way for a number of years in the credit card business in the U.S. This does nothing but add to that phenomenon, accelerating it. Clearly, when big banks like First Chicago and NBD, or First Union and First Fidelity, or Chase and Chemical merge, they create larger credit card portfolios. Over time there will be benefits that accrue from that, due to better technology, better management expertise, or whatever.
Q.: What about the respective allegiances to MasterCard and Visa?
HEUER: I think the important thing is that these banks issue both brands and will continue to do both.
Q.: How would you describe the state of the credit card industry?
HEUER: I think there is no question that the industry is alive and well, enjoying attractive returns. It is clearly a very good business for our members. The returns are among the best of any of the business lines that our members are in. This is not to say it isn't getting more competitive every day and isn't getting tougher to come by new accounts and retain existing accounts. The intensity grows continually.
Q.: What are the bankers' concerns?
HEUER: They're all very aware of the increasing competitive pressures. They all have one eye on the evolving payments industry in the U.S. They're very aware of the technology companies and vendors of various services and their interest in getting into the act. The pace is quicker than it's ever been, and the competition is getting tougher. It's simply part of business in the United States today and reflects what's going on in a lot of industries.
Q.: What are the consumers saying?
HEUER: We do a fair amount of research, because it's obviously important for us to stay in tune with the mind-set of consumers. Clearly, one of the things they are telling us right now is that their lives are too complex, that their most scarce resource is time and what they want from financial services are things that make their lives simpler and easier.
Q.: How can you build the brand, and are you content to be the No. 2 brand to Visa?
HEUER: I'll answer your second question first: Obviously not. We have aspirations.
In terms of how we try to build the brand, and the perception of the brand, and the attributes we want consumers to have in their heads about the brand, clearly media advertising is a big part of that. We are very active and have become more active in the sponsorship arena and in various promotional undertakings on a local or a national basis, and in a lot of individual member activities.
So it's a multifaceted attempt to position the MasterCard brand in the minds of the consumers in a very positive way. We want MasterCard to stand for value, for bringing simplicity and benefit to the cardholders.
When we say brand management, it encompasses all of those things. We want consumers to have a preference for us. It's awareness and preference that we are after. We go after that by zeroing in on what consumers want and trying to position our brand that way.
Q.: What are your plans for MasterCard?
HEUER: MasterCard's mission is one that we all agree on. That is, simply, our fundamental role is to support and enhance our members' profitability. In everything we do, that has to be foremost in our mind.
MasterCard has a number of roles it plays in that framework. First, and most important, is the basic role of managing the brand, managing the interchange system, and managing the switching operation. We are very much focused on doing everything we can to improve our performance in those functions.
At the same time, I feel MasterCard can add value to our members in a number of ways, by providing research results to them, in making information accessible to them. Also there is a longer-range technology type of role, being sure we are on top of all of the technology developments, be it chip card, electronic commerce and the Internet, and the like.
Q.: How would you describe MasterCard's relationship with Visa?
HEUER: I think in some areas it makes sense for the industry, for our members, for MasterCard and Visa, to work together. These would include secure transactions over the Internet, or setting standards for chip cards, or privacy concerns. We are working together on those things.
Competition is good. It's the primary reason there are two card associations in the U.S. - the consumer benefits. I suppose if there were only one association we wouldn't be here 'til eight or nine every night.
Q.: MasterCard recently struck up a global alliance with Verifone to develop on-line point of sale debit. How important are such joint efforts to your association?
HEUER: Strategic alliances are very likely to be a part of MasterCard's future as we team up with people who bring other capabilities or experience or technologies to an undertaking. I see us as part of a number of alliances, in the technology area, certainly, perhaps in the operational area, and maybe marketing. I think in today's fast-evolving world, alliances are something to help you get from here to there quicker, more efficiently.
