Capital One Financial Corp. has announced plans to provide a range of outsourcing support to small and medium-size credit card issuers.

Capital One, the spinoff of Signet Banking Corp. of Richmond, Va., has hired Paul J. Cusenza to direct the effort it has dubbed value-added alliances.

Mr. Cusenza, 35, a vice president, reports to Nigel Morris, Capital One's president and chief operating officer.

For the past nine years, Mr. Cusenza worked for Mercer Management Consulting in Washington, most recently as vice president and member of the financial services industry group. He has consulted with card issuers on marketing and operations, systems, and general management.

Before joining Mercer, he was a marketing representative with IBM Corp.'s national accounts division in Southfield, Mich.

Mr. Morris said his company wants to bring its highly successful information-based strategy to issuers that have not had the scale or ability to build sophisticated account management capabilities themselves.

"Those who have more of an information approach can maximize profit and do very well in this business," Mr. Cusenza said. "Those who do not will have a tougher time competing."

John R. Soderlund, a principal at First Annapolis Consulting in Maryland, said small and mid-size players are suffering higher attrition rates, lower response rates to solicitations, and an uptick in some of their credit losses when compared with the industry leaders.

Banks with portfolios of $100 million to $1 billion have two alternatives: to sell or to outsource, he said. Falls Church, Va.-based Capital One, at $8.9 billion outstanding, is a top 10 card bank.

"One alternative is to turn to a Capital One and say, 'You've proven you can do this in the marketplace, why don't we put together a deal?" Mr. Soderlund said. "You can manage part of my portfolio; we'll come up with some way to evaluate how much value you bring to that process.'"

Mr. Cusenza said Capital One will give outsourcing clients access to its investment in people and technology. The client issuers would continue to own their portfolios and concentrate on adding accounts and "we as partners can maximize anything they originate on the back end," Mr. Cusenza said.

Capital One offers to manage the accounts and provide back-office services such as card processing, customer service, and collections.

"It allows us to leverage our capabilities, apply them more broadly, and maximize (clients') profits, giving them an ability to compete that they would otherwise not have," Mr. Cusenza said.

He said Capital One expects to announce clients by early next year.

In this new specialty, Capital One will compete against Card Issuer Program Management Corp. PNC Bank Corp. is the first client of that Atlanta company, run by former Wachovia Corp. and First Data Corp. executive Jerry Craft.

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