Visa takes credit for delivering IT value

Visa expects IT to deliver innovation

As the chief information officer (CIO) of Visa Europe, Steve Chambers is responsible for the IT that supports more than 360 million cards owned by consumers making purchases worth more than €1.3 trillion (£1.16tn) every year.

If that wasn’t enough, when he took the job in 2004, Chambers’ brief was to build a completely separate IT platform from the global Visa Inc organisation.

The European arm is owned and operated by 4,600 European member banks, and it had to implement Single Euro Payment Area (SEPA) rules in its payment card processing business to meet local market needs and lower transaction costs.

One of the priorities was a new authorisations platform that links to more than 4,000 Visa card-issuing banks. Ensuring a smooth switchover for such a high-profile system was essential.

“Most importantly, we needed to minimise the impact as there were some processing differences, as well as avoid needless cost and change for our members,” Chambers told Computing.

Further project milestones will see the rollout of a new clearance and settlement system, due to go live in June, when most of the core platform will be in place.

Visa’s IT agenda is also heavily focused on improving the interaction between merchants and customers. An example of such an initiative is the reduction of response time for transactions from 10 to five seconds. Under the new system, if a bank’s computers do not respond in that time, Visa will approve the purchase on the card issuer’s behalf.

“Although we connect the banks together, the service is delivered to consumers and merchants and we always think about things from their perspective. If anything goes wrong with the Visa system queues get longer and everyone gets frustrated, so it is critical that the service performs to a high standard,” said Chambers.

E-commerce is one of the main areas through which Visa intends to drive more efficiency gains for customers and improve levels of service. The strategy, according to Chambers, is to use technology that allows banks to control parts of the transaction process.

“When systems get overloaded in a busy period, they have to call customer services and get us to stand in for them for a couple of hours, for example. But if we can put that ability in their desktop, they can do it themselves,” he said.

“There is an opportunity to put some control in the hands of our members to improve the perception of the service, as well as their level of engagement with us. Some may look at Visa as a switch, an isolated thing. But the technology at banks is as important as ours when it comes to delivering the brand promise, so I want people to think as inclusively as possible.”

Despite the belt-tightening across the banking sector, Chambers said Visa’s board and member banks still expect a focus on innovation.

“Operationally, banks don’t want to spend money – they hate rolling out things such as our regular releases because they don’t see those as adding business value,” he said.

“But they do want to entice customers and increase use and performance of their card products and our board wants us to innovate, so there is no lack of desire or effort to continue with it.”

Visa also has several proof-of-concept projects in areas such as mobile payments, contactless cards and security. But Chambers said none are likely to be huge revenue generators or new services in the short term, as they require adoption from banks, businesses or consumers.

“Firms will invest in technology supporting new products if consumers will use them,” he said. “But there is no point in doing something that has no business value. Before embarking on a spending path, it is all about ensuring you are absolutely clear why you are doing it.”

Securing card payments is the top priority

A review of all systems and processes two years ago determined information security to be one of the top priorities for Visa Europe.

Some 20 per cent of the company’s €200m (£179m) annual IT budget in Europe is to be spent on security improvements this year.

During 2008, Visa carried out upgrades of communication devices for enhanced data security and improved encryption of all information sent and received across its network.

Customer-facing initiatives included improvements in the online authentication service Verified by Visa, which was created to tackle card-not-
present (CNP) fraud.

Another innovation is trials of a card referred to as the “one-time code”, which uses an alphanumeric display and keypad built into a credit card to authenticate consumers.

The public reaction to security measures varies, which is likely to mean the development of a range of tools to give more control to different consumers over the way their cards are used, said Chambers.

“We have found that people operate in different modes of preference when it comes to security and that there is no one-size-fits-all solution for human behaviour. It is not about picking a technology that everybody will use, it is about identifying gaps in different parts of the cardholder base,” he said.

“There are things we can do to give customers direct connection to Visa so they can determine whether they want to restrict use of their cards abroad or on the web, for example. We will be looking at building on the tools we already have
and giving consumers a choice.”

Managing IT staff in a downturn

Visa Europe does not foresee the economic downturn having an immediate impact on its IT workforce, but recruitment has been slowed down as a precautionary measure.

“I took the decision to delay any new hires until the next quarter because I am being prudent,” said Chambers. “We are in a good position right now, but just in case things change I don’t want to have to take a knee-jerk reaction, so I decided to slow down to build some cost savings to protect us.”

Chambers said effective communication is one of the best tools to help IT leaders survive the recession.

“No one can say jobs are safe forever, but it is all about being open and honest, and talking to your staff,” he said.

“When you establish a level of trust in your communication, it becomes a lot less difficult to make the points that need to be made in tough economic times like these.”
At the same time, the company is suffering from a chronic skills shortage, added Chambers.

“Probably one of our toughest challenges is finding the people we need, particularly for senior management roles and some key roles such as enterprise architects,” he said.

“We have a very good head of datacentre operations now, but it took me more than a year to find him. It is very difficult to find the right blend of expertise – that’s still a problem, even if we are Visa.”