If the leaders of Chemical Banking Corp. and Chase Manhattan Corp. were not convinced that bigness was a virtue, they would not have come to their historic merger agreement two years ago.
Today, they need look no further than their credit card operation to prove their point.
The combination last year yielded a $24 billion MasterCard and Visa portfolio, about double that of either partner. The "new Chase" has since built that up to $28 billion, making it one of the four biggest in the bank card industry.
Also, Chase has invested $25 million in a powerful, massively parallel computing system, which competitors of lesser bulk might have a hard time justifying.
Few people are as exuberant about the card business and its prospects as Michael Urkowitz, the 23-year Chase Manhattan veteran who has headed the unit since August 1996.
"This is a really good business," he said. "We are really optimistic about our potential to grow it and grow it well, so I'm just having a ball."
Mr. Urkowitz, executive vice president of Chase Cardmember Services, said "the worst has passed" on the consumer credit-quality front. He sees delinquencies, chargeoffs, and related indicators settling "at a level that is above the historic lows, but still down from the highs we've seen."
Also heartening, Mr. Urkowitz said, is the shrinking number of card issuers, which creates more opportunities for a giant like Chase.
"Consolidation will continue to be a powerful force, and we clearly intend to be a participant in the consolidation that's taking place," he said. When interviewed last month, Mr. Urkowitz refused to discuss the rumor that Chase was pursuing Bank of New York Co.'s $4.2 billion card portfolio.
Size has become a mantra among Chase executives, and the card growth has produced big numbers. Mr. Urkowitz's unit serves 24 million customers in nearly 20 million households. It has 7,000 employees, most located in Hicksville, N.Y.; Tampa; Tempe, Ariz.; and Wilmington, Del.
In August, the cobranded card that Chase introduced with Wal-Mart Stores Inc. last fall reached one million accounts, an achievement the bank celebrated with a glowing news release. "We're really excited about it," Mr. Urkowitz said. "I think the deal was one of a small number of uniquely successful cobranding partnerships launched in the last 12 months."
Other cobrand partners include British Airways, Shell Oil, and Nynex. Following Nynex's merger in August with Bell Atlantic, Chase announced plans to acquire the $350 million Bell Atlantic Visa portfolio to combine with its Nynex business.
"Cobranding will continue to be integral to our strategy, because it's one way for us to add value that transcends the core components of just a credit card," said Mr. Urkowitz. "Especially as those core components become increasingly commoditized, it's part of the way to distinguish ourselves."
Yet some card experts questioned Chase's cobranding performance. Anita Boomstein, a lawyer at Hughes, Hubbard & Reed in New York who specializes in credit cards, said the Nynex card was "a total failure," in contrast to some other Baby Bell programs.
Ms. Boomstein and others raised doubts about the Wal-Mart MasterCard, which offers no benefits other than a low interest rate.
"I was surprised they didn't need some sort of additional enhancement to make it sell in those numbers," she said. "It's nice to have a portfolio of a million accounts, but unless they have significant rollover percentages, the bank is not going to make money."
Mr. Urkowitz said the Wal-Mart card has been "performing the way we expected it to. There have been no surprises."
The Wal-Mart deal was just one of the initiatives Mr. Urkowitz has overseen since taking over from Charles R. Walsh, a veteran of Chemical and its Manufacturers Hanover antecedent who retired after the Chase merger.
The first stage of the computer conversion, completed last October, placed all Chase and Chemical customers on a single operating platform linked to a proprietary customer service and collection system.
The second stage, nearing completion, involves installing a massive parallel processing system from International Business Machines Corp. Intended primarily as a data mining tool, the technology will "dramatically enhance our ability to take value from the information we have," Mr. Urkowitz.
The system will synthesize information about customers and prospects, across both the credit card business and the retail bank.
"We'll make continuous enhancements to its power throughout the first half of next year, and when we're done it will be one of the largest consumer data bases in our industry, somewhere around two terabytes of data," Mr. Urkowitz said.
Barbara Smiley, research director at Meridien Research of Needham, Mass., said the upgrade shows Chase is taking "a data management view of card processing." The bank will be able to "do the kind of cutting-edge behavioral modeling you usually would associate with one of the monoline issuers rather than a bank, because the banks tend to lag a bit in terms of technology."
"It seems that they're doing a lot of things right," said John Olert, a director in the Fitch rating agency's domestic banking group who previously worked at Chase. "I don't think anybody is of the opinion that the consumer debt story is over, but they've done a good job managing through it thus far."
Before taking on his current job, Mr. Urkowitz, 54, was in charge of integrating retail products across the Chase consumer credit organization. He was responsible for information technology in such businesses as mortgages, credit cards, and consumer finances.
Earlier in his career, he worked in wholesale operations. But given that more recent assignment, he said it was wrong to consider him new to the card business.
Mr. Urkowitz said he is "proud of Chase" for attempting so much in so short a time. He sees the new card products and analytical tools as evidence of serious commitment.
"It would tempt almost anyone to simply focus on merging," he said. "What Chase did was also to focus on redefining strategy for the new company in credit cards, and that recognized that we would be operating at a different scale, a different breadth."