The managing director (MD) saw my report, terminated John Miles and put me in charge of the task force. “Go and clean the mess, stop the bleeding,” he told me.
To assist me in the clean-up, I asked for Sundar to join my team. He was the senior-most operations man in the bank, trained in HSBC. He knew nothing about credit cards either, but he did know operations. That was what I needed.
Sundar and I met in the credit card hall the next morning. From the look on his face, I knew he felt he had a daunting task on his hands. “Where will you sit, boss?” he asked. “Shall I throw out one of these idiots?” he said, waving at the glass cabins where all the deputies of John sat.
“No, Sundar,” I replied “not there. Find two tables, side by side, bang in the middle of the hall, one for you and one for me. Let everyone see we are going to be in the thick of things.”
My first, and most important, task was to convey the right message to the staff. So, I summoned everyone for a shop floor meeting.
“Mr Sundar and I have come here to clean up your mess,” I started.
“Neither of us know anything about credit cards, but between us we have over 50 years of banking experience.”
“You better believe two things—we learn very fast, and smell b…s… mighty quick. So, when we ask, you tell, and you tell the correct stuff, or else...”
It was a very brief meeting. When it ended, there was a hushed silence but I knew the staff had got the message.
The most immediate problem was the severe shortage of computer terminals and phone lines. Credit cards ran totally on a computer system and every task needed access to the system.
Without this, everything got delayed and lazy staff had a ready excuse: “No system, sir.”
The call centre and collections departments needed lots of telephones. Four debt collectors couldn’t possibly work with just one terminal and one phone line.
I rushed back to the general manager (GM) and asked for terminals and phones. He shook his head and said, “Sorry, I can’t help you there. These come under Mohammed (national, head of IT, direct report to MD). He doesn’t like me, and doesn’t like Indians, either. He won’t help.”
Evidently, the GM thought entirely along racist lines!
I had good relations with all the nationals within the bank, including Mohammed. So, I went directly to him and asked for terminals and phones.
He smiled and said, “Of course, my friend, you have landed up with a shitty task, I hear. Don’t worry, I will help you clean up that bloody gora’s mess!”
Everyone was not a racist!
Mohammed was true to his word. By late evening, we had all the terminals and phones we needed. Mohammed also deputed a senior IT guy to my task force.
The clean-up started. Sundar quickly sorted out the ‘pay order’ issue—lots of wrong entries and reversals. But an even more deadly problem emerged—chargebacks.
If you are not familiar with how credit cards work, just as I was then, here is what 'charge-back' means.
If you get a credit card statement showing a purchase that you never did, you can ask your card issuer for a refund. Your issuer will ‘charge back’ the transaction, i.e., send a claim back to the paying bank through Visa or Mastercard.
This bank will have 30 or 45 days to provide the 'proof of transaction', which is the time the bank gets to contact the shop where the purchase had been made and obtain proof that you actually did the transaction, namely (in those days) a copy of the purchase slip signed by you.
If the bank cannot produce this proof within 30-45 days, the transaction gets cancelled and you get a refund. The paying bank has to recover the money from the shop or bear the loss.
Our bank had point of sales (POS) machines all over the city—we were a paying bank as well as a card issuer. Charge-backs from other card issuers, relating to transactions done at our POS machines, used to be few and far between. Hence, the charge-back cell had only one staff.
Suddenly, chargebacks started rolling in, at first two a day, then five, then 10, then 20. The charge-back chap was totally swamped by the sheer volume and could deal with only a few of these. The 30-45 days deadline was missed in the great majority of cases, and the bank was losing oodles of money.
The MD got hold of a credit card expert from Barclays, London to be a consultant to the task force. When he arrived, I asked him why the charge-backs were ballooning.
He had a big laugh. “You are getting ripped off, mate. The big boys have got ya!”
He explained. It appeared that chargebacks were an important income stream for the big issuing banks—Natwest, Citi, and Amex. Their computer systems routinely, and randomly, sent out charge-backs to small paying banks where their cards had been used, even if their customer had not refuted the transaction.
If the ‘proof of transaction’ came back promptly, the system moved on to test out some other paying bank. If the response was slow, more charge-backs were sent to that bank.
Soon, every single transaction would be charged back. The paying bank would be flooded, responses would not come in time and the transactions would be cancelled. But the items would remain on the customers’ bills. The issuer would collect the payments from its customers and just pocket the money—profit!
The big banks also monitored the charge-backs of other banks at Visa and Mastercard (the expert wouldn’t tell me how). When a bank found that some competitor was making money charging back transactions to XYZ bank, they would start charging back to that bank as well. Soon, there would be a rampaging flood of chargebacks at poor XYZ bank.
This is what had happened to us.
I was horrified. Here was a business where there were only a few sources of making profits—fees, interest and interchange—and myriad ways of making losses!
The clean-up continued. Nearly 40 people worked long hours under Sundar’s eagle eye, digging into entries, examining procedures, and installing controls. I worked extra-long hours spending time at credit cards as well as doing my regular work. Tough days!
To cut a long story short, we stopped the bleeding, restored order, reconciled 90% of the unmatched entries and cleared the mess. And yes, we straightened out the tables and made them all face the same way.
Three months later, our task was over. I handed over to the new manager–credit cards, an Indian, and Sundar and I presented our final report to the board.
After I finished my presentation, one of the directors said, “You have done a wonderful job. Very well done. Congratulations.”
I had been handed a good opening for what had been on my mind.
“Thank you, sir, for your very kind words. They would sound even better if something tangible came along with them.”
“What are you suggesting?” the director asked.
“My team has done all the work, not me. They deserve a month’s bonus,” I replied.
“Of course, of course,” said the director “I fully support. Mr Chairman, don’t you agree?”
The chairman nodded. Everyone in my team got a month’s pay as reward for their efforts. I got three!
Happy ending for me!
No disaster for John Miles, either. The goras delved into their 'old boy' network and got him a job with Visa.
After all, he was one of them!
(Deserting engineering after a year in a factory, Amitabha Banerjee did an MBA in the US and returned to India. Choosing work-to-live over live-to-work, he joined banking and worked for various banks in India and the Middle East. Post-retirement, he returned to his hometown Kolkata and is now spending his golden years travelling the world (until Covid, that is), playing bridge, befriending Netflix & Prime Video and writing in his wife’s travel blog.)
