House of Cards: The Trend Toward In-House Card Processing

The following article is reprinted from the International Banking Systems Journal.

"[CSC is] confident that the market is now ripe for in-house licensed solutions. According to George Guzman, senior cards industry consultant at CSC, banks want the ‘speed, flexibility, and control’ that an in-house solution brings. Where can card banks look for these solutions and is the trend really for bringing things in-house?"

"For banks that issue credit cards, the credit card management system is the "core" banking system. It stores all customer accounts and information; authorises card purchases; posts balance payments; generates monthly statements; and supports customer service. The system is also used to configure and price new products. Whether run in-house or provided by a third party processor, the system is crucial for the growth and success of a bank’s credit card program."

News Article

House of Cards (61KB PDF)
Read the full article from the March 2005 issue of International Banking Systems Journal.

"Two categories of vendors provide these platforms: software providers and third-party processors. Software companies include CSC and CoreCard. These companies target card issuing banks and third party processors that provide outsourced card processing to banks. But many third-party processors, such as First Data, TSYS, Experian and Certegy, have developed or acquired their own highly scalable and functionally powerful systems for internal use. Some of this set of suppliers will license the technology to key customers that desire to keep their card platforms in-house."

"CSC’s CAMS II has the versatility demanded of card management systems. Used by large banks, such as Deutsche Bank and Nedcor, and by processors, including the newly formed pan-European processing company, SiNSYS, it is designed to process one million or more accounts and to be deployed anywhere in the world."

"CAMS II was launched in 1998 as the successor to the popular CAMS I system after three years of co-development with IBM and the old First Chicago. CAMS II runs on the IBM zSeries, leveraging IBM’s Parallel Sysplex technology, with DB2 as its core database. It can be fully integrated with CSC’s Hogan retail banking system. It processes a wide variety of card products, including revolving credit, debit, gift, payroll, commercial, gas, and prepaid cards. CSC predicts that the latter will be a ‘big growth area’. CAMS II is EMV-compliant for smart cards. And, since many bank card issuers run a complementary merchant processing business, CAMS II is equipped with merchant processing functionality, including flexible pricing and hierarchical merchant accounting. CSC’s hefty services organisation can perform heavy customisation for specific environments."

"Guzman notes that CAMS II users have found the system’s ‘transaction-level pricing’ and ‘rules-based architecture’ to be ‘key’, so too its support for loyalty programs. The rules-driven architecture supports new card product development and card customisation for different market segments. CAMS II’s features for real-time processing make the system as efficient as possible. These features include ‘end-of-day random pass’, so that only accounts with some activity are processed rather than all accounts every day. It also includes ‘smart triggers’, which forecast next processing dates for accounts based on business rules and a 24x7 continuous posting option."

"Scalability is crucial for card issuing banks, as mergers create gargantuan card portfolios. CSC benchmarked CAMS II at an IBM lab last October, demonstrating that it could scale to 100 million accounts with a peak transaction rate of 1500 transactions per second. Guzman is convinced that CAMS II’s strengths will tempt large bank card issuers to bring processing in-house rather than outsource to gain control."