Best Technological Implementation: Cap One's 'Innovation Infrastructure' Project

  In August 2005, Capital One Financial Corp., which up to that point did its processing in-house, signed a five-year agreement with Total System Services Inc., or TSYS, and began turning over most of its $46.4 billion card portfolio to the Columbus, Ga.-based transaction processor. Largely implemented during 2006, it was Capital One's biggest technology project ever.
  The move, which was a complete re-engineering of Cap One's processing infrastructure, earned the issuer Cards&Payments' 2007 Best in Payments Best Technological Implementation award.
  Besides scrapping its legacy system in favor of more than 100 applications developed by TSYS, Cap One got a new call center, revamped customer statements and made many other changes. The shift encompasses the issuer's North American portfolio of more than 40 million consumer and small-business credit card accounts.
  Cap One executives say the transition went smoothly, with few, if any, customer complaints.
  Cardholders will see a big difference later this year, Cap One officials say. The company will roll out several new products, and the procedures will be handled far more quickly.
  "It's very complex to build a platform for new products," says Dave Gordon, Cap One managing vice president for information technology. But TSYS's sheer scale and greater expertise in processing will ease the way, he says, declining to provide more details.
  The switch to TSYS, and the possibility of seamlessly introducing an array of new cards, could transform how Cap One, a relative newcomer to the payments world, is viewed. Until now, the issuer has gained more renown for its sophisticated marketing techniques than for its technological prowess, says Sarah Phelps, senior consultant with First Annapolis Consulting of Linthicum, Md.
  For example, for years Cap One has attracted many customers with its memorable television ads. And it often has completed detailed studies on how cardholders respond to the tweaking of interest rates, or even whether prospective customers find card offers more appealing if they came in blue or red envelopes, Phelps adds.
  The conversion to TSYS was done in three stages and was completed in this year's first quarter, says Gordon. As he and other Cap One executives see it, one key to the project's success was the significant involvement of the company's marketing executives.
  Indeed, until last November, when Gordon took the helm of the project to bring in TSYS, Robert Alexander, Cap One's senior vice president of marketing, oversaw the first two phases of the changeover.
  Historically, information-technology workers dictated how projects of this type proceeded, Gordon says. In this case, marketing advice ensured Cap One and TSYS would remember to include changes that improved the company's interaction with customers.
  For example, the new financial statements sent to cardholders use color and other design elements that make them much easier to read. "It's not just a lot of information on the paper," Gordon says. "What we saw was a very transparent conversion for customers."
  The transformation Cap One underwent in 2006 seems to have gone smoothly. This year should demonstrate how well Capital One and TSYS put it to use.
  This year's runners up were...
  * MasterCard Worldwide's PayPass
  * Chase Paymentech Solutions' Chip-and-PIN Rollout in Canada
  * Peppercoin Inc.'s Micropayments System
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