Management Data for the '90S

Article excerpt

How many loans did we close today? Who are our newest customers? Who are my ten most important retail customers at the Oak Street branch? How many complaints did the branches receive today?

Sound familiar? These are the questions posed by bankers that yield one of the most important assets an institution can have - information.

Information fuels every bank's engine for growth. It answers questions that uncover opportunities and reveal problems. In today's competitive climate, banks are now, more than ever, inextricably tied to the information business.

Today's banker requires more than just raw information in bulk, but quality information of the specific. Obtaining quality information can be difficult, and once obtained, it's usually so dated that it loses any potential value.

A prime example of the importance of accurate and up-to-date information is the recent experience of a southeastern bank which was missing significant fee income for basic services because its commercial profitability system was not fed complete and accurate information. Losing fee income for any reason is unacceptable, but especially so when the problem lies in poorly automated flow between systems.

By restructuring the flow, and routing the most recent information from all systems into a profitability analysis, the bank created a clearer picture of the services and products being used by customers. This comprehensive and up-to-date picture enabled the bank to increase fee income and gain a greater insight into the profitability of both products and customers.

Customer needs dominate a financial institution's attention in delivering services, and historically banks give little attention to their data processing systems as a source of customer information for designing products and services.

That's due in large part to the nature of the information, which is primarily for processing and reporting. But successful institutions recognize their own information needs are critical for developing the products and services that best serve the needs of both.

With the introduction of householding central information files, banks have attempted to build customer relationship profiles to determine retail consumer needs.

Householding is what its name implies - creating an institutionwide data base accessible to all departments and personnel. Many banks have implemented these types of files.

However, many still continue to encounter difficulty in making use of the information the customer files yield.

This is due to several problems. First, the system has a tendency to remain static because information is updated only once a month or quarterly. As a result, profiles of customer information are usually little more than snapshots at a point in time.

Secondly, ownership of the customer information file normally falls to the marketing department, which uses it for measuring the effectiveness of specific campaigns. Many such files don't include new services and products such as debit cards and insurance and equity products.

The customer information file must be as dynamic as the general ledger and demand deposit account report, with information updated daily. In addition, the information must be sophisticated, showing product usage by location and volumes for the current day as well as monthly and year-to-date averages. In order to react to customer needs, all departments must have accurate and complete information at their fingertips.

A third component of a successful customer information file is the point of contact at the bank. Each customer will have a customer contact person at the branch or electronic branch. These employees must make a serious and sustained effort to ensure the meeting of customers' individual needs while keeping the file updated.

This will make it possible for the bank to meet the goal of marketing and cross-selling all applicable products and services. …