BMO Credit Cards: An integrative solution

Tatjana | Jen | Ramanan | Andrew | Pramod

Team 28

Salient Features:- ability to customize credit card-additional marketing

Salient Features:-variety of reward programs-core competency

Issuing Institution

Customers Master Card Partners

How can BMO improve efficiency and customer service?

BMO FLEX

MasterCard®

Flex Card

Causal Model: Customer Retention & Acquisition

Snob Value

EMOTIONAL NEEDS

SECONDARY NEEDS

BASIC NEEDS

• Exclusivity

• Dealing with trustworthy party• Control/track expenses

• Reward/loyalty program• Convenience of shopping

• Conduct transactions• Delay actual cash outflow• Short term loan

Elite Cards

Multiple cards

Snob Value

EMOTIONAL NEEDS

SECONDARY NEEDS

BASIC NEEDS

Causal Model: Customer Retention & Acquisition

Emotional Needs

• Cherry pick/add/drop rewards• Dealing with trustworthy party• Control/track expenses

Elite Cards

Credit Card Application & Usage Process Flow: Decomposition

1. SEARCH- Review alternatives &

identify the best fit

Model 2

2. APPLY- Branch / Kiosk /

Online

Model 1/2

3. APPROVAL PROCESS

- Issuing institution

Model 1/2

4. USE- If approved: Start

using the card

Model 1/2

5. REDEEM POINTS

Model 1

6. MODIFY PLAN- Opportunity to update the plan

Model 1

Step 2: Application Process

FIRST STAGE – Model 2

- User is matched with most suitable plan

- Interface fields are prepopulated with default information

SECOND STAGE – Model 1

- Allocation units are used to customize the plan

- Units: base amount + reward for credit card loyalty + reward for additional products with BMO

BMO Flex Card InterfaceTotal Allocation Units: 1,000 Additional Cost: $0

SPEND: EARN:

- Grocery Points: þx 1 ☐ x 2

- Air Miles: ☐x 1 ☐ x 2 + Car Rental Insurance+ Road Side Assistance- Interest rate:

- þ Market research- Receive

promotional offers (emails):

þ10/month ☐20/month

Grocery points: 2,000Air Miles: 24,000

POINTS STATUS:

19%

Steps 3 & 4: Approval & Use

• Similar to Model 1 & 2 process• The applicant is either approved or rejected3. Approval

• Model 1 & 2: If approved - start using the card• Model 1: 2-weeks grace period: opportunity to

modify the plan4. Use

Steps 5 & 6: Redeem Points & Modify Plan

• Similar to Model 1 process• Close match with the reward system• Rewards are useful & can be redeemed quickly

5. Redeem

• Builds on Model 1 customization• Opportunity to modify the plan after one year• Customers have different needs during different

stages of life• No need to switch to a different card

6. Modify

What are the barriers to the integrative solution?

Set-up costs are sustainable

What would have to be true

for the proposed model to work?

No loss of customers due

to complications

Partners can accommodate

annual changes

Customers will not perceive

new process as complicated

BMO

Partners

Customers

How to determine if the statements hold true?

• Identify any existing interfaces that can be used for the Flex Card

• Obtain quotes for additional development and assess development time

• Assess cost of training employees• Complete cost benefit analysis

Testing the interface set

up

• Conduct a pilot project and invite selected existing customers for trial

• Maintain feedback loop to allow customers to comment on service

• Invite new customers to sign up for the service and begin phasing out existing cards

Testing complication

of process

How does Flex Card Create Stakeholder Value?

Customer

Issuing Institution

MasterCard

Partners

Model #1Branded

Proposed SolutionFlex Card

Model #2Bank Issued

How does the Flex Card Add Value to BMO?

• Easy to bring new features/rewards to market• Marketing and promotion• One card replaces multiple cards

Increased Efficiency

• Incentive for customers to use Flex Card• Increased card loyalty• Revenue from new partners

Higher Profits

CUSTOMERSPARTNERS