Banks push IT to help link customer data

Information technology leaders and executives at the Bank Administration Institute’s Retail Delivery Conference last week in Anaheim, Calif., vowed that 2002 will be the year of the customer, saying that technology should no longer be deployed for its own sake but only when it can enhance existing services.

But therein lies one of the biggest challenges the banking industry faces. Many conference attendees expressed concern over the lack of standards to tie together disparate, back-end database systems, with some placing their hopes on more consistent metadata through XML and other emerging protocols.

“The biggest challenge for this industry is the lack of technology that will allow us to leverage the technology we already have,” said J. Randolph Bryan, senior vice-president of delivery channel management at Hibernia National Bank in New Orleans.

Long-Term Opportunity

Conference keynote speaker David Coulter, vice-chairman of New York-based J.P. Morgan Chase & Co., told more than a thousand attendees that customer satisfaction must be seen as a business strategy and that the long-term opportunity for banks is to drive down costs around the transaction hub and pass the savings back to the consumer.

Internet-based technologies “absolutely fit into the new model of retail banking, but it must be engineered carefully and deliver value to the customer consistently and with up-to-date information,” Coulter said. “Some call this customer relationship management, but I’m cautious about that terminology because too many see CRM as a technology strategy,” he said. “Small incremental change by the finance engineers to make a little better use of the technology we have will pay enormous dividends in the years ahead.”

Banks could use some bottom-line help. According to New York-based First Manhattan Consulting Group, which released the results of a banking study at the conference, bank core deposits will continue to dominate the retail venue and profits over the next three to five years, with the nation’s top 30 banks growing profits by just 1 per cent per year.

Others say a well-trained sales force that can use data mining tools to determine customer needs will be key to growth in the next few years.

Joe Guyaux, executive vice-president and CEO of regional community banking at PNC Bank in Pittsburgh, said, “The PNC sales force has been trained to take what the customer tells them and combine that with what they know” through back-end systems.

Like small banks, large institutions need to better utilize customer information to personalize “the whole [customer] experience,” said Richard Hartnack, vice-chairman of Union Bank of California. The problem many big banks face is that they have silos of customer information at different business units that they are struggling to link together through the use of middleware systems, due to a lack of standards, according to Hartnack and other executives.

Guyaux also espoused the benefits of using technology to integrate customer channels so that transactions can be monitored. That way, whether a consumer contacts the bank via its Web site, a branch location or the telephone help centre, “we know when that transaction occurred,” he said.

FleetBoston to Web-Enable ATMs, Revamp Technology

Playing off the banking industry’s customer-centric mantra, FleetBoston Financial Corp. announced last week that it plans to Web-enable its automated teller machines (ATM) in order to extend the reach of existing online services to its customers.

The project, which Fleet expects to cost tens of millions of dollars, is in line with what other executives at the Bank Administration Institute’s Retail Delivery conference here say is necessary to grow in the future: using technology to integrate existing services.

ATMs are Fleet’s highest touch point, accounting for 25 million transactions per month. Meanwhile, the Boston-based bank’s online banking site, HomeLink, has grown to more than 2 million registered users.

Nandita Bakhshi, vice-president and director of Fleet’s self-service and ATM banking division, said that through many acquisitions over the past decade, “we’ve gained a network that’s very disparate, made up of all types of ATMs of varying ages. The new architecture will provide a simple experience for our customers regardless of the type of ATM.”

San Francisco-based Wells Fargo & Co. and Charlotte, N.C.-based Bank of America Corp. are piloting similar programs.

Fleet’s Web-enabled ATMs will let customers access and print 30-day account statements, review investment account information from Fleet’s Quick & Reilly investment subsidiary in New York and pay credit card and utility bills.

Fleet’s ATMs, developed by NCR Corp. and North Canton, Ohio-based Diebold Inc., currently run on two distinct software platforms. To tie the two legacy systems together to share customer information in real time, the bank is using an open platform called Aptra, developed by Dayton, Ohio-based NCR. Bank customers will interface with HTML screens, using touchpads and screens. The bank will also move the systems off its mainframe architecture and onto its Windows NT Web servers, an architecture that it says is robust enough to handle the upgrade.

Bakhshi said Fleet will be able to connect ATMs to back-end systems through dedicated IP virtual private networks. The bank plans to pilot the system on 200 machines in New York and Boston in the first half of next year. It currently has more than 4,000 ATM machines on the East Coast.

Fleet’s effort to Web-enable its ATMs is expected to eventually pay for itself, Bakhshi said, because the bank will no longer have to develop separate services for different platforms and “will now be able to leverage developments on our HomeLink site and partition it over to the ATM side.”