BUSINESSWEEK ONLINE : MARCH 27, 2000 ISSUE
COVER STORY Q&A with MBNA's Charles Cawley "We are focused on the credit-card business year after year" Credit-card issuer MBNA Corp. is one of a select group of companies that have landed on the BW 50 every year since the list was launched four years ago. The company has built a huge business around affinity marketing, offering credit cards that are tied to colleges like Pennsylvania State University or professional organizations like the American Institute of Architects. MBNA President Charles M. Cawley discussed MBNA's track record with Philadelphia Bureau Chief Amy Barrett. Edited excerpts of their conversation follow: Q: MBNA has performed well in terms of sales and earnings growth, and yet your stock hasn't done well over the past year. Why is that? A: I think primarily it is the fascination with Internet and high-technology stocks. My fear is that many average consumers are investing in the technology [sector]. If the high-tech bubble bursts, it will affect consumers more broadly than [just via] the stocks they hold. Q: Where is most of your membership growth coming from? A: We opened 12 million new accounts last year. What's driven that growth is new affinity relationships. We have a credit card tied to the NFL. That has grown to over 1 million accounts. Our NASCAR program has been huge. Overall, our sports marketing business has been one of the biggest engines for growth for us. That has turned into a $5 billion business. Q: Your business in the United Kingdom has also been a fast grower? A: That business will hit close to $10 billion this year. We started there in about 1995 and began to really grow in 1997. The pleasant surprise is that affinity marketing is even stronger in the U.K. We have programs tied to soccer, to the store Burberrys, and to several universities there. America Online just signed with us in Europe. So they will issue an AOL credit card. Q: Why do you think MBNA has been so consistently successful? A: I think part of the reason we are more successful is we are very focused on the credit-card business. Citibank is very good at the credit-card business, but they go in and out of it depending on the strategic issues within Citi. And for Banc One, it's not their major focus. We are focused on the credit-card business year after year. The core of what we do is we think about the credit-card business. And all of our other businesses in some way or another feed off that core business. Q: Your loss rates are very low compared to the rest of the industry. Why is that? A: The first thing is to get the right customers. What we do that is probably different than everyone else is that all credit decisions [at MBNA] are made by a human being. And in 25% of the those cases, a human being called up to get clarification on the application. Q: So you have a person who makes every decision on who gets a card? A: A human being sits and looks at the application. We have maybe 600 analysts. Certainly, they are heavily assisted by technology. Also, our affinity programs...are endorsements of organizations people belong to [and] generally have a better quality applicant. Plus we don't do what the fads do or what the analysts say. We do what is right. We are people who know how to lend money. What we are doing is getting the right the customers and keeping them. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The 50 Best Performers COVER IMAGE: The BW 50: The Best Performers TABLE: The 50 Best Performers TABLE: Total Return TABLE: Sales TABLE: Net Margin TABLE: Earnings Decline TABLE: Earnings Growth CHART: The Fast-Changing BW 50: A Breakdown by Industry TABLE: Return on Equity Follow the Leaders CHART: Beating the Indexes--Again Great Performances, and How to Spot Them Sifting for Clues TABLE: How to Pan for Gold TABLE: Business Week's Performance Rankings of the S&P 500 (.pdf) TABLE: Business Week's Industry Rankings of the S&P 500 (.pdf) TABLE: Alphabetical Index (.pdf) ONLINE ORIGINAL: Q&A with Biogen's Jim Vincent ONLINE ORIGINAL: Q&A with AOL's Steve Case ONLINE ORIGINAL: Q&A with General Dynamics' Nicholas Chabraja ONLINE ORIGINAL: Q&A with MBNA's Charles Cawley ONLINE ORIGINAL: Q&A with Pfizer's William Steere ONLINE ORIGINAL: Q&A with Kansas City Southern's Landon Rowland ONLINE ORIGINAL: Q&A with Omnicom Group's John Wren INTERACT E-Mail to Business Week Online

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