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All Charged Up

MasterCard gets a payoff through a flexible approach to IT-enabled product development

IT in the Driver's Seat

One way MasterCard is trying to innovate faster is by expanding its sources of ideas. The company is going beyond its traditional partners, the financial institutions, and is listening as well to merchants and even consumers. Within the IT department, Dunbar has put in place what he calls an Accelerated Solutions Development Environment (ASDE), a software development process that helps IT respond more quickly to such proposals.

Dana Lorberg, group head of technology strategy and business development at MasterCard, says the environment enables the company to choose the software development methodology that meets a customer's needs best; some projects might be developed using a traditional waterfall methodology, others using an iterative method or agile methods. Project managers use ASDE to take a project from start to finish — from requirements development through the pilot stage to product launch.

The ASDE process was inspired by a project that addressed new card activation. The company saw people getting new MasterCards and then leaving them, unactivated, in their wallets. One of MasterCard's issuing banks offered to work on the problem. MasterCard and the bank put together a program through which people who used their cards at participating stores got rebates. From the initial two-day meeting between MasterCard and the bank, it took six weeks to launch, including changes to MasterCard's systems in order to credit customer accounts with incentives to use the cards and with rebates when they did use it. The result was a significant increase in card usage over a three-month period.

Afterward, executives recognized the value of having a repeatable process for identifying and executing innovation. "What is misleading is the idea that innovation is dreamed up by product guys," says Jerry Sargent, MasterCard's vice president of debit strategy and alliance development: "IT, they see some things that we don't see. Our view of this innovation process is extremely collaborative".

ASDE was useful in developing a real-time debit card fraud monitoring tool that MasterCard expects to roll out this quarter.

One of MasterCard's technology vendors suggested the concept for the fraud monitor, proposing the two companies work together on a new way of scoring online transactions in real-time. The tool, employing neural network technology, uses information such as where a card was used last and develops probability ratings that a particular transaction might be fraudulent. MasterCard was able to develop a tool in about six months.

Dunbar says examples like these show that MasterCard has been able to boost its ability to innovate through collaboration. "We can facilitate large-scale problem solving and creativity," he says. Now MasterCard just has to keep up with the future.

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