A customer relationship without any true customer contact adds up to a couple of nice words. After all, without customer contact, no business gets done. The contact may be faceless-and, one hopes, fast and easy-on the Web, but it still must be there. Contact may happen via telephone or in a branch, even at an ATM or kiosk, but it has to happen.

Would that one could leave "the relationship thing" to Lifetime Television. After all, business is business. And banking? How un- touchy-feely can you get?

Yet banks, among an ever-swelling chorus of large corporations around the world, have probably sung the loudest and longest about the primacy of customer relationships. From an operational perspective, customer relationship management, or CRM, is about contact in all its different forms and recent re-search by the American Banker's Association indicates about 60% of banks see their "contact centers" as the hub of their channel-integration strategies.

But, despite a seemingly inexhaustible affinity for CRM by most banks, what we're talking about isn't the stuff of group hugs. On the contrary, the job of gathering information about customers and putting it to good business use is serious enough that billions ride on the outcome. Technology keeps serving up new tools for connecting (and thus doing business)-channel capabilities old enough to be called a commodity in 2001, perhaps, but young enough to represent opportunity in its infancy. Good and interesting things are happening as banks' implement better customer contacts, but much remains to be done.

"I think the reality is, a very small percentage of banks are providing customers the type of service that, as any number of consultants will tell you, their customers want," says Art Coombs, chief executive of Echopass Corp.

What customers want, Coombs says, is simply everything from the branch and ATM to the phone and Web, adding that this news should be old hat by now. Today's question is one of functionality and, Coombs says, it is the customer who should decide what media to use, regardless of whether that customer is seeking a loan, a CD or any other product.

Headquartered in Burlingame, CA, Echopass provides a hosted contact-center platform.

"If you pick up my call in 30 seconds, why not my e-mail in 30 seconds?" Coombs says. "If I can reconcile my account online, why do you make me disconnect and call customer service to do something else? Shouldn't I just be able to click a link and have a (customer service representative) come online and chat with me, seeing exactly the same screens I'm seeing?"

Customers have a way of expecting the world-at a reasonable price, of course-including the prerogative of giving you their business through the channel of their choice on any given day, at any given hour. The word is out about connectivity; that's why it's a commodity.

In working to satisfy all customers' expectations of what constitutes a "relationship," bankers are equally mindful of both the consumers' and business customers' demands for an integrated, personalized, secure connection that, of itself, adds value.

Consolidation or no, commercial banking, particularly in the United States, remains hotly competitive, with the most active battlefront being customer service. In financial services, and commercial banking in particular, customer service is seen as the most logical means to differentiate one's product and service offerings from a competitor.

But today, as a recessionary breeze blows, bankers are acutely aware of the costs of meeting such wide-ranging expectations. For some, the uncertain shadow cast by the New Economy, along with the swift kick added by downward business trends, presents an unexpected opportunity as the competitive advantage resulting from good customer satisfaction comes into increasingly clear focus.

It's tough all over. No wonder solicitousness survives.

Still, give credit where it is due. When the economy was cooking, banks were already world leaders in exploiting technology to cultivate individual customer relationships. Some of the United States' largest and most powerful financial institutions aren't bashful in the least about characterizing this marketing imperative in terms that seem pretty touchy-feely.

But, hey, that's marketing, right?


"Sales," an old discipline, is not only back in town, it is looking extraordinarily fresh and fit.

What bankers are not spending on maintenance of existing operations-that is, what truly strategic investment they have undertaken since the money-devouring Y2K scramble-they have spent largely in an effort to address customer relationship management. Although the pace of the investment has slowed, it continues, and to hear Coombs and others talk, a year of tough times has produced expectations among banks that they will be given the capabilities to turn connectivity-related cost centers into profit centers, sooner rather than later.

Cue the sales-opportunity gong

Delighted, no doubt, about all this "at the hub" business, the contact-center solutions providers sing with the best (and least bashful) of them about what they can make happen.

Small banks and credit unions find a variety of application software providers targeting them specifically, while the big guys, the First Unions and Bank of Americas of the world, are always on the lookout for a better mousetrap to layer atop their own IT.

There are important differences in what "customer contact" means for small institutions compared with the technology involved at money- center banks. One of the nation's largest banks, Pittsburgh-based PNC Financial Services Group, is a ready example of those differences. For example, PNC runs its own call center instead of outsourcing such as sizable operation and, generally speaking, its private, in-house use of customer data is far more sophisticated than the analysis of customer databases maintained by smaller institutions.

Then again, don't tell Peter D. Schmitt that small banks can't do plenty with software platforms priced within their reach.

Schmitt is chief operating officer of Digital Dialogue, a Detroit- based corporation providing call-center services to credit unions. A joint venture of Dialogue Marketing, a call center operations company, and Maxxar Corp., a firm specializing in computer telephony integration, or CTI, Digital Dialogue targets institutions with assets between $75 million and $1 billion. Since its founding two years ago the company has served the credit union industry exclusively but, Schmitt says, its first bank customer is "in pilot now."

"You know, only about 16 percent of banks (with total assets) under $10 billion have implemented an online lending solution," he says.

Financial institutions, Schmitt says, not only must enable their customers to reach them around the clock but also to transact whatever business they desire, quickly and easily, as well as securely and privately.

Contact-center solutions for small institutions may be less sophisticated in areas such as customer-profitability analysis, but vendors of such platforms insist they provide a healthy complement of capabilities, including the genuine integration of all customer channels; "instant" credit decisions, up to and including closing and document preparation; institutionally branded contact-center operation, administration and reporting; and operation and maintenance of the attendant network architecture.

Kate Powell, a PNC Bank vice president who oversees strategic initiatives and information management, notes that large banks often put a variety of these application software providers' products to work in their own, in-house operations.

PNC's customer service center, called its National Financial Services Center, has 600 customer service representatives, about 200 IT specialists and managers, and receives almost 3 million calls monthly. Of that total, about 2.5 million calls are handled through the interactive voice response unit, or IVR, with the remaining 500,000 callers talking to one of PNC's "financial services consultants." With 100 or so "tech" people minding the store, Powell says, "PNC has been able to achieve an 82% use of IVR, and that is exceptionally good."

While "good" can mean it is less expensive for PNC Financial Services Group, which reported assets of about $70 billion at the end of last year, it is not good if the customers steered to using the IVR are not truly satisfied. No problem, Powell says, characterizing PNC customer satisfaction with IVR as "extraordinary."

"We called about 120,000 of our customers, essentially to teach them how to use the IVR, and today customer satisfaction with the IVR is at 92%," she says.

The experience of PNC's National Financial Services Center, Powell says, suggests comprehensive telephone service offerings "don't really migrate customers away from the Web or the branch. We find they use all three, and we want to accommodate that."

The big guys are living largest

At Charlotte, NC-based First Union, sales managers accommodate about 1.5 million of the bank's 15 million or so customers via the Internet, says Parrish Arturi, senior vice president of online strategy and marketing e-channels. That, he says, makes "the contact center today also serve as a point of contact for e-mail, for the Web."

"First Union recognized years ago the need to further develop remote banking channels," Arturi says. "And over time, this multi- channel contact center has provided us with a much better understanding of customers' needs-or a more customer-centric view of our business-and it enables us to give customers a consistent experience across all channels."

Nonetheless, he says, with many bankers still thinking of "the Web and the contact center as separate, a need remains for a high level of integration. There is a natural synergy between the two."

If that is increasingly true for this generation's prime customers, the next generation will take it for granted.

Arturi is candid about First Union's ability to leverage customer data collected from each channel, saying, "We've had a fair amount of experience in customer analytics and the foresight to aim for a holistic picture." And, like all bankers and vendors interviewed, he says U.S. financial institutions' customer data-whether collected by telephone or online-is secure, private and protected redundantly.

Seurat is one of the many companies First Union works with in managing its contact center. Carol Seymour, a Seurat managing director and chief marketing officer, says her company consults with banks "not on what markets they should enter, but specifically about relationship strategy."

In recent years, most industries have enjoyed a respite, if not an actual decline, in their cost per customer served, says Mark Turchan, Seurat managing director, but banks have had no such luck.

"A number of studies indicate the average cost of serving bank customers has gone up about 40% over the past five years," he says. "They face a real challenge in leveraging all this great technology, and doing so in an integrated way that doesn't cause your cost structure to explode."

Turchan is not suggesting that driving CRM "by making every interaction consistent, customer-centric and elegant" is a cheap solution and, as banking consolidation continues, he expects the largest banks to continue having an advantage.

With that scenario, Turchan says pressures of scale will be most acutely felt in contact-center management.

Given those parameters, it is not surprising that Turchan believes U.S. banks may well move significant call-center operations offshore. One offshore location with appeal, he says, is India where "call-center 'farms' with ... maybe 2,000 seats" are being built.

With most big U.S. call centers having only 700-or-so seats, Turchan says it is easy to look at India's planned mega-centers and imagine "the potential synergies for sharing the infrastructure, telecom, etcetera, and of course the facilities themselves."

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