Bank One Inks Processing Deal

Bank One has tapped TSYS to take over its credit card processing from First Data Corp. when the latter's contract expires in 2004. The conversion of all Bank One accounts should be completed by late next year.

"Current plans call for certain new account activity to be processed with TSYS as early as this summer," said Rick Ussery, chairman and CEO of TSYS, Columbus, Ga.

Starting in 2006, Bank One will process its own transactions as a licensee of the TSYS processing application. In 2010, the bank will own the card processing technology outright.

"The phase-in allows us to license the software, control this core function and plan a seamless transition for customers," according to Jamie Dimon, chairman and CEO of Chicago-based Bank One.

During the past 18 months, Bank One has insourced most of its systems, hiring more than 1,700 new technology professionals.

"We do not believe we are sacrificing any economies of scale or capability by managing the technology ourselves," according to Dimon. "In fact, we are seeing evidence to the contrary."

With more than $70 billion in outstanding balances, Bank One is one of the nation's top issuers, serving 50 million cardholders who spend more than $155 billion annually.

Not many banks are expected to follow in Bank One's footsteps, at least in the short term. "You would have a hard time convincing me that the majority of banks can do their own technology more efficiently than an outsourced provider," said Jeff Baker, a principal and senior research analyst at U.S. Bancorp Piper Jaffray.