Last year, KeyBank saw an important gap in its credit card strategy – not owning its card portfolio meant it did not have the control it needed to properly manage its relationships with its customers.

The KeyCorp unit bought back its portfolio in August, a move that severs its agent bank relationship with U.S. Bancorp's Elan Financial Services. This week KeyBank announced the next step in its credit card strategy: to replace its current offering of three credit card products with a new assortment of five card products, allowing it to serve narrower groups of consumers and businesses.

Its new products include a rewards card, a revolver card, two business cards and a private bank card with rich rewards for its internationally traveling clients. KeyBank plans to offer these cards in June, and to roll its existing card products into these new offerings.

The Elan marriage "was a very good relationship, just the control and 360 degree view of the client wasn't there," says David Bowen, senior vice president of consumer segment strategy and product management at KeyBank. "We wanted to enjoy all the economics, which is both risk and reward, of owning a credit card portfolio."

While KeyBank owned its customers' checking accounts, the bank didn't own the credit card experience. Owning all of these products allows the bank to offer rewards across different types of accounts. This is part of the bank's "competitive distinctness," he says.

There's a "broader view of the entirety of the relationship" when you own the portfolio, says Bowen. Knowing more about the customer "certainly influences any decision we make and the client treatment," he says.

For example, if a customer misses a payment on a credit card, the client calls KeyBank and the bank can see whether the client is the son or daughter of a business client, Bowen says.

The KeyBank and MasterCard relationship goes back to 1997. Since then, MasterCard "on an on-going basis has worked with Key to bring products and solutions that make sense for their customers," says Seth Eisen, a spokesman at MasterCard.

KeyBank's MasterCard relationship has also covered debit and ATM.

KeyBank and MasterCard have "complementary capabilities," says Bowen.  "MasterCard has been a very flexible and helpful partner in the process" of developing KeyBank's credit card strategy, Bowen says.

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