MBNA Corporation is one of the most successful banks in the world. Like traditional banks, MBNA takes deposits and makes loans, but it has no branch banks, no commercial loans, and only a small number of checking accounts. MBNA specializes in making loans to individuals through a credit card.

Credit cards are commodities, but MBNA differentiates itself by the way it attracts and retains the highest-

quality customers.

Each of MBNA’s 14.4 million customers on average carries an account balance that is more than

$1,000 (45 percent) higher than the industry average, has average transactions that are $45 (47 percent)

higher than the industry average, and has a loan default loss that is 40 percent lower than the industry average. Its customer retention rate is 97 percent, compared to the industry average of 89 percent.

One of the largest credit-card issuers in the world, MBNA states that through the use of advanced information technology, “We can control every aspect of our customer relationships and ensure consistency and quality in the delivery of our products. In 1997, MBNA’s systems efficiently handled 12.5 billion on-line transactions, 120 million customer payments, 17 million requests for credit cards, and 192 million customer statements and letters.” MBNA monitors 70 quality measures daily and evaluates its employees on 14 of them daily.

Required In small groups or individually, respond to the following items:

a. How does MBNA Corporation define quality?

b. Examine MBNA’s homepage and describe how the company attracts its customers.

c. What are the advantages and disadvantages of controlling variation and quality of services as closely as MBNA does?

d. Prepare a written evaluation of whether MBNA’s approach to managing quality is desirable in all organizations.