NationsBank Hires a Consultant For Customer Profitability Study

NationsBank Corp. has teamed up with Sabre Decision Technologies to conduct a detailed review of the bank's most profitable customers and how they do their retail banking.

Using the consulting firm's software and data base analysis tools, Charlotte, N.C.-based NationsBank hopes to rank its customers from the most to the least profitable, and to gain a clearer understanding of the banking patterns common to each group.

The partnership is Sabre Decision Technology's first foray into the financial services industry.

Based in Dallas/Fort Worth, Sabre is a division of American Airlines' parent AMR Corp., and has traditionally worked to devise business strategies for the travel and transportation industries.

Tim Wishon, senior vice president for advanced applications at NationsBank, said the bank chose Sabre Decision Technologies over other firms because of the company's experience in sifting through vast amounts of information for the airlines industry.

"We want to really get focused in on the core customers that are most important to us, what they would need in the future, and how we can enhance that relationship," Mr. Wishon said.

The techniques and computer services that Sabre brings to the table will enable NationsBank to learn, among other things, whether its prime customers prefer tellers or automated teller machines, if they use home or telephone banking services, and how much they tend to deposit into and withdraw from their accounts.

"Before we brought Sabre on board, we had a profitability segmentation that allowed us to show the relative profit contribution of each customer household, which shows us the top 20% of our customers," Mr. Wishon said. "That's useful information, but it doesn't tell you how they got there or why they're profitable."

Mr. Wishon said that NationsBank, which has more than $184 billion in assets, had seen small local competitors thrive by offering products targeted to particular customer bases.

"The people who are winning in the marketplace are the ones who are really using the information they have and understanding who their core customers are," Mr. Wishon said.

Steve Clampitt, a senior vice president at Sabre, said airline reservation systems were comparable to banks' computer data bases.

Mr. Clampitt said that the same analytical tools that airlines use to differentiate customers - between, say, a business traveler who flies first class during peak hours and a frequent-flier mileage user flying off-season to Hawaii - could be used by banks to determine, for example, why some branches lose customers and others gain them.

"We have spent a lot of time over the last 10 years trying to make sense out of this type of information for airlines, and a lot of that has been driven by deregulation and the airlines' needs to become more efficient," Mr. Clampitt said.

"The financial services industry is facing the same kinds of economic pressures and is looking at ways to enhance their revenues and profits."

Diogo B. Teixeira, president of Tower Group, a banking technology consulting firm, said the alliance makes sense.

"It's a commonly perceived problem in the industry that banks have traditionally had a monolithic approach to providing and pricing services and products," Mr. Teixeira said.

"Essentially, they are giving the same product to people who keep large balances in the bank and use the teller services infrequently, versus someone who keeps a low balance and uses the tellers twice a week to make a utility payment."

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