First Union Corp. said it expects its new data warehouse to increase revenue by more than $100 million annually.

In early May the $220 billion-asset banking company launched the enterprisewide warehouse. It captures customer account information from 20 sources, including automated teller machine, credit card, checking, savings, brokerage, mortgage, and vehicle leasing transactions.

Data base software from Informix Corp., Menlo Park, Calif., supports the warehouse.

First Union, based in Charlotte, N.C., started work on the warehouse about 18 months ago and tested a prototype at the end of 1997. The system now holds 13 months worth of records from the company's 16 million customers.

The warehouse's use of computer memory is expected to expand to four terabytes, as First Union adds retail banking information and then includes information related to the commercial side of the business. Tower Group, Newton, Mass., estimated in 1997 that only 18 financial institutions had data bases using as much as one-half terabyte of memory. Several data marts-smaller departmental warehouses-are under development to help extract and analyze the data.

Naras Eechambadi, senior vice president of the banking company's knowledge-based marketing unit, declined to reveal the data warehouse's price but said it should pay for itself within a few years.

Return will accrue through better cross-selling, increased customer profitability, greater customer retention, and the acquisition of new, more profitable customers, Mr. Eechambadi said.

"It makes it a lot easier for people who are making decisions to get good information to base those decisions on," Mr. Eechambadi said.

By this fall the company plans to have installed software that will use the warehouse to conduct marketing campaigns, Mr. Eechambadi said. Two years worth of aggregated customer information, including all communication with customers, will be analyzed to predict appropriate targets for a variety of marketing programs.

First Union will also use the warehouse to initiate triggered marketing programs, in which specific pitches are immediately made as people contact the bank.

Many banks are building data warehouses to improve their share of customers' spending on financial services. A 1997 Mentis Corp. study of 36 banking companies of all sizes found that 72% had data warehouses and the remaining 28% were planning or developing them.

Still under debate is whether banks are better off starting with several small data marts that can eventually be pulled together or with an enterprisewide warehouse that is more complex and takes longer to assemble.

Instead of storing all customer information, banks should try to capture and analyze certain segments and gradually bring in other pieces, said Kathleen Khirallah, senior research analyst at Tower Group. Though First Union is not using this approach, it seems to have built a good system, she said.

"The tools are in place," Ms. Khirallah said, "but the question is whether they have the skilled marketing practitioners and budgets in place to make the data warehouse worthwhile."

Mr. Eechambadi said he is confident the company is collecting the information it needs. "We understand this data fairly well, and we've worked with it for a number of years," he said.

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