When National Commerce Bancorp. customers in Knoxville, Tenn., call a toll-free number to get information on their accounts, they don't talk to a customer service employee of the bank.
Instead, their inquiries are fielded by an employee of Alltel Information Services Inc., the Little Rock, Ark.-based outsourcing and technology firm.
Memphis-based National Commerce is among a very small but growing group of banks that have turned to a third party to run all or part of their call centers.
Though outsourcing of telephone sales and service is an unthinkable option for many banks, the need to get a call center up and running sometimes overrides the desire to staff it with bank employees.
Some banks see outsourced call centers as a way to provide comprehensive service without large investments in technology and staff. And some smaller banks that want to offer personal service 24 hours a day say it's cheaper to rely on an outsourcer during late night hours when call volume slows to a trickle.
The fact that some banks look to outsourcers for help with call centers underscores the growing sophistication of telephone banking.
No longer does it involve just hooking up an automated voice response system and putting a few agents in a room to handle questions and problems. Call centers are increasingly staffed around the clock and are equipped to take loan applications, open transaction and brokerage accounts, and transfer funds - just about everything except dispensing cash.
"Put yourself in my shoes," said Tom Scott, chief executive of Commerce General Corp., the bank's data processing subsidiary. "There is nobody in our bank that had call center experience."
That National Commerce would hire an outsourcer for telephone banking is in some ways startling. The $3.7 billion-asset bank was a pioneer in developing supermarket branches, and its aggressive sales culture is widely admired in the industry.
But the company had been late to enter the telephone banking arena, and until this year, it lacked even a basic call center equipped with an automated system to handle routine account inquiries. Mr. Scott said the bank needed to catch up. Outsourcing, he said, gave it the means to do that quickly and efficiently.
"I spent a year looking at what it would cost us to bring it up ourselves versus what it would cost to bring it up with Alltel," he said. "I had less cost and less risk" with Alltel.
Because the call center is in the bank's Memphis headquarters, executives say, they can closely monitor Alltel's performance.
The facility began to field calls from Knoxville customers in June. By September, all National Commerce customers will be able to bank by phone. Later, Alltel will also make outbound calls to sell bank products.
Meanwhile, Centura Banks Inc., Rocky Mount, N.C., uses outsourcing in its call center, though its situation differs from National Commerce's.
The bank first employed Customer Access Inc., Raleigh, N.C., to handle overflow calls. Now, Customer Access handles some of the bank's late night and early morning calls as well.
Mark Gamble, group manager at the $5.5 billion-asset bank company, said farming out part of the task had several advantages. The deal with Customer Access reduced the cost of handling each call by more than 10%. Centura also was freed of the expense of maintaining a disaster recovery site.
Customer Access also is footing some of the costs of developing front- end software, which will save the bank "hundreds of thousands of dollars," said Mr. Gamble.
But Centura stopped short of turning over all functions to a third party.
Only simple and easily answered questions are routed from the automated voice response unit to Customer Access. Customers with more complex sales and service calls are bounced from the automated system to the bank's own customer service agents.
About 87% of the bank's 300,000 calls per month are handled through automation, a rate that is among the highest in the industry. About half the calls that reach a live operator are handled by Customer Access.
"When you really come down to it, 80% to 90% of all calls that come into banks are repetitive, relatively simple information requests, or relatively simple problems," said Don R. Montoro, a Customer Access senior vice president. "Only 10% or 20% of them are moments of truth where the bank's reputation is on the line."
But those moments are exactly why most banks are reluctant to turn over the keys. They say they wouldn't dream of letting another company man the front lines of customer communications.
"At one point, this is going to be your only contact with your customer, and if someone else is doing that for you, in essence, someone else is going to be the provider," said Francisco Sauza, a senior consultant at Speer & Associates in Atlanta. "Somebody would have to show me the advantages before I would decide to do that."
Patrick M. Blanchard, general manager and senior vice president of Wachovia Corp.'s call center, said: "As long as your costs are in line, my preference is to stay in-house because I can control the quality much better.''
But Mr. Scott said National Commerce's contract with Alltel includes guaranteed performance standards. The vendor, he said, is better able to deploy 19 representatives to field 60,000 calls per month.
"When you can bring in people with 15 to 20 years experience managing a call center,," he said, "that shortcuts the learning curve for a bank that doesn't have any experience in call centers."
