Home Solutions Case Study: MASTERING MASSIVE DATABASES AT MASTERCARD INTERNATIONAL
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My document should have your information (name, case study title, etc.)Discussion Points1. MasterCard managers are motivated to increase (1) the number of individuals who have and use a MasterCard credit card, (2) the number of banks and other clents who issue MasterCards to customers and/or employees, and (3) the number of locations that accept MasterCard payments. Discuss how MasterCard could use its data warehouse to help it expand each of these customer bases.2. MasterCard makes its analytics tools available to all of its member banks and other issuers. It knows that getting its clients to use these tools can be critical to keeping them as loyal customers. Discuss the steps that MasterCard can take to promote greater use of its BI and reporting tools by its clients. Who do you think larger or smaller clients will benefit most from MasterCard’s analytics tools? Why?3. Do some Internet research to identify examples of “tap & go” applications. What are some typical types of “tap & go” payment applications and what growth trends are expected? Do you think that there are limits to the types of applications that “tap & go” payments can be used for? Why or why not?4. Do some research on the extent to which MasterCard’s PayPass digital wallet is being embraced as a payment mechanism for online purchases. What are the advantages and disadvantages of digital wallets such as PayPass? What can MasterCard do to encourage online merchants to accept PayPass digital wallet payments?5. Supporting mobility and smartphone apps is important to MasterCard. What challenges does MasterCard face in rolling out smartphone payment systems? Which of these do you think will be most difficult to address? Why?
C3-1CASE STUDY 3MASTERING MASSIVE DATABASES ATMASTERCARD INTERNATIONALMany organizations are working hard to address the opportunities andstorage challenges associated with “big data.” Industry experts estimate thatthe total volume of data is doubling every 18 months and the vast majorityof new data being generated is in business domains. MasterCardInternational (www.mastercard.com) is no stranger to wrestling with theissues associated with massive databases. MasterCard has amassed a datawarehouse that is more than 100-terabytes in size and company insidersexpect that it will growth to more than 1.8 petabytes. The growth ofMasterCard’s data warehouse is fueled by a client/server network that, onaverage, handles 140 million credit card transactions per hour on behalf ofmore than 25,000 financial institutions [WALL08]. In 2007, MasterCard’sworldwide network processed 18.7 billion transactions totaling approximately$2.3 trillion.MasterCard’s computer facility authorizes, clears, and settles each creditcard transaction in real time as a cardholder’s credit card is swiped.MasterCard’s bank and business clients expect the system to be fast andaccessible. To meet these expectations, MasterCard expects its network tohave a response time of 140 milliseconds per transaction (or less). It alsohas implemented sufficient redundancy and failover systems to be able toC3-2promise its customers 99.999 percent network availability. Needless to say,MasterCard customers also expect the transaction processing and datastorage systems to be secure.For continued success, it is important for MasterCard to grow its volumeof credit card transactions. To do this, the company works to expand its baseof bank clients and business partners by offering them an attractive mix ofproducts and services. Part of their efforts is directed toward helping itsclients increase the number of customers who hold a MasterCard and usethem to make purchases. To remain competitive against other credit cardissuers such as American Express, Discover, and Visa, MasterCard must alsocontinue to grow its volume of credit card transactions and it has learnedthat one of the best ways to do this is by being a good business partner forits clients.In addition to credit cards, MasterCard offers debit cards, prepaid cards,smart cards with embedded chips, and contactless cards. It also hasbusiness card programs for commercial and public sector organizations of allsizes. MasterCard partners with its customers to create customized loyaltyprograms and reward solutions to provide incentives for cardholders to useMasterCard to make purchases. By helping its customers identify thebenefits that services that are most appealing to their cardholders,MasterCard is able to help its partners increase customer satisfaction.MasterCard’s global processing system enables customers to extend theirloyalty programs worldwide. Hence, it is not surprising that MasterCard hasbeen successful in partnering with airlines and hotel chains on loyaltyprograms.MasterCard’s Data Warehouse StrategyMasterCard’s data warehouse has emerged to play an important role in thecompany’s competitive strategy. This global data repository has become aC3-3business intelligence (BI) engine that helps the credit card giant and itsclients make more effective business decisions.Planning for the data warehouse began in the mid-1990s. Interestingly,MasterCard’s executive team immediately grasped the data warehouseconcept recommended by the IT division as a potential game changer.MasterCard executives typically required a detailed business case justifyingIT investment recommendations, but in this case, the executives instantlyrecognized the proposed data warehouse as a strategic move to giveMasterCard a competitive edge. Specifically, MasterCard wanted to improvemarket share. At the time, MasterCard accounted for only about 25% ofcharges for goods sold worldwide using credit cards, with Visa accounting for50%. Since the creation of the data warehouse, MasterCard’s market shareincreased to 31%. Although Visa continues to be the industry leader,MasterCard’s role as a global leader in credit card processing hasstrengthened [BASE11].Financial institutions that use MasterCard rely on the history of creditcard transactions to provide information for targeted marketing and businessplanning. For example, a bank that issues credit cards might notice a largevolume of charges for flights on a specific airline. The bank can use thisinformation to negotiate a deal with the airline to provide special offers andincentives to cardholders. Similar promotional opportunities could be offeredto a hotel chain that would provide additional incentives (such as “stay twonights and get a third night free”) for using MasterCard to reserve and payfor a room.MasterCard’s BI and Reporting ToolsMasterCard runs a combination of homegrown and off-the-shelf analytictools to identify buying trends, credit card fraud, and other usefulinformation. The company can correlate and analyze transactions toC3-4determine a consumer’s interest or detect anomalies that suggest a card hasbeen stolen. MasterCard offers bank clients access to these tools, as well ascustom reports.Among the signature applications provided by MasterCard is its PortfolioAnalytics suite of BI and reporting tools. This suite includes a wide range ofstandard reports that let members analyze transactions every day, week, ormonth and compare the results to different parts of the country, other partsof the world, or predefined groups of similar banks.Another popular tool is the MasterCard Marketing Center, which helps itscustomers monitor, analyze, and develop campaigns to increase use of theircards. For example, a card issuer in Los Angeles might use the data to seehow many cardholders spent $25 or more in January and February onsporting goods at Wal-Mart stores. Then it might propose to Wal-Mart a mailmarketing campaign before the opening of baseball season, tied to heavyspenders with an affinity to the Dodgers or Angels. A card issuer in New YorkCity could use MasterCard’s BI and reporting tools to identify patterns inrestaurant charges for its most affluent cardholders. This information couldbe used to develop an “insider’s guide” to NYC “hidden gems for food andwine” to share with select groups of other MasterCard holders.The process used by MasterCard customers to make access the datawarehouse to populate reports or perform BI queries is illustrated in generalterms in Figure C3.1. Such transactions proceed in the following way:1. Member bank connects to MasterCard facility, known as MasterCardOnline. This could be by Internet, by means of a mobile accessservice, or by means of a private wide area network, such as a framerelay network. In the case of Internet access, all traffic must gothrough a firewall, which assures that unwanted traffic is blocked.2. User authenticates to MasterCard Online. A dedicated group ofservers is assigned the task of authenticating all incoming transactionrequests to assure that the user has permission to use the facilityand to specify the user’s level of privilege.C3-53. MasterCard Online verifies user product licensing. This has to do withwhich business enterprise software tools the bank client is able touse.4. User request is forwarded to a transaction server, which invokes theappropriate application software for this transaction. The applicationtranslates the request into the corresponding database requests andupdates.5. The transaction server forwards a transaction request to the datawarehouse, which processes the request and returns a response tothe member user.C3-6MasterCard continues to expand the size of the data repository and thetool set. The goal is to include every transaction handled by members over athree-year period, capturing the dollar amount, the card number, thelocation, and the merchant in each instance. But it is the set of applicationsprovided to members that is crucial in gaining competitive edge. MasterCardaims to gain favor with portfolio managers and member banks, who decidewhether to push Visa or MasterCard. If the online tools help those managersanalyze the profitability of the cards in their portfolio better or gain morecustomers and transaction volume faster, then MasterCard benefits. To keepahead of Visa, the MasterCard IT shop has dozens of full-time developerstasked to come up with new tools and reports to put in the hands of banksand other clients. The developers also work with MasterCard clients to createrepeatable custom reports that can focus on any aspect of authorizing a cardor transaction, including charge backs for disputed amounts and fraud.MasterCard has approximately 1.7 billion cardholders worldwide andMasterCard can be used for purchases at more than 33 million locations.While this might seem like sufficient market penetration, MasterCard isalways looking for new ways increase volume of purchase transactions.Several new payment systems have been implemented including “tag & go”PayPass cards that speed up purchasing by avoiding the need to swipe acard [LAWS12]. PayPass digital wallets have also been developed to speedup the payment process for online purchases.MasterCard has embraced smartphone payment systems and are rollingout smartphone and tablet PC apps that enable banks and business clientsuse mobile devices to monitor credit usage patterns and use its datawarehouse BI and reporting tools [TELE12]. As mobility become morepervasive, MasterCard’s data repository will be modified to assimilate mobiletransactions with traditional credit card transactions. This will almostcertainly result in an enriched set of BI and reporting tools.C3-7Discussion Points1. MasterCard managers are motivated to increase (1) the number ofindividuals who have and use a MasterCard credit card, (2) the numberof banks and other clents who issue MasterCards to customers and/oremployees, and (3) the number of locations that accept MasterCardpayments. Discuss how MasterCard could use its data warehouse to helpit expand each of these customer bases.2. MasterCard makes its analytics tools available to all of its memberbanks and other issuers. It knows that getting its clients to use thesetools can be critical to keeping them as loyal customers. Discuss thesteps that MasterCard can take to promote greater use of its BI andreporting tools by its clients. Who do you think larger or smaller clientswill benefit most from MasterCard’s analytics tools? Why?3. Do some Internet research to identify examples of “tap & go”applications. What are some typical types of “tap & go” paymentapplications and what growth trends are expected? Do you think thatthere are limits to the types of applications that “tap & go” paymentscan be used for? Why or why not?4. Do some research on the extent to which MasterCard’s PayPass digitalwallet is being embraced as a payment mechanism for online purchases.What are the advantages and disadvantages of digital wallets such asPayPass? What can MasterCard do to encourage online merchants toaccept PayPass digital wallet payments?5. Supporting mobility and smartphone apps is important to MasterCard.What challenges does MasterCard face in rolling out smartphonepayment systems? Which of these do you think will be most difficult toaddress? Why?Sources
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