Following the lead of other industries, banks and credit card companies are building expertise in "competitive intelligence."

The idea is to take publicly available information about rivals and assemble it in a way that helps senior executives formulate strategy.

It might be described as a special form of data mining-with a corporate rather than a customer focus.

Experts in competitive intelligence said relying on advanced computers to interpret legally obtained data is far better than older methods of gathering and analyzing information.

Benjamin Gilad, a Rutgers University associate professor who has written two books on the subject, said, "Competitive intelligence is a systematic way to assess where the industry and market are going-and where you are and are not going to be in it-early enough to make a difference."

Technology companies like Microsoft Corp. and Motorola Inc. are leaders in the field, and observers say banks are getting in late, spurred by competitive pressures that are especially intense in credit cards.

The number of bank and financial company executives who belong to the Society of Competitive Intelligence Professionals has grown rapidly in the last year, but their representation is still relatively small. The group, founded in 1986, has 5,364 members, but only 220 are from financial organizations.

Active companies include American Express Co., Chase Manhattan Corp., Advanta Corp., Ford Motor Credit, BankAmerica Corp., and NationsBank Corp.

"The banking industry is just beginning to learn what competitive intelligence is about," said Helen Rothberg, a professor at Marist College in Poughkeepsie, N.Y., and a member of the Arlington, Va.-based society.

At last month's annual conference of the society in San Diego, few bankers were talking about their initiatives.

The concept of competitive intelligence is so new to banks that they strive to keep their activities proprietary, Ms. Rothberg said.

"What little presence they have here is really being kept under wraps," she added.

The very term "competitive intelligence" may evoke images of spies in trench coats.

In industries other than banking, there is less stigma: Many companies have come to understand that the process relies on legally and ethically obtained material.

"About 80% of competitive intelligence is public knowledge," said Emily Post, an American Express Co. spokeswoman.

American Express relies primarily on newspaper and magazine articles but also looks at corporate filings, reports by Wall Street analysts, and other sources, Ms. Post said.

"We don't ask for confidential or proprietary information," she said.

Two years ago, American Express stepped up its competitive intelligence efforts dramatically. It began to encourage employees to share new information on competitors routinely and proactively, without a specific request from within the company.

Explaining the policy change, American Express spokeswoman Gail Wasserman said, "We are a much less inwardly focused company than we were several years ago. Competition has increased exponentially, not only in credit cards but in financial services."

Competitive intelligence is important not only to American Express' proprietary businesses, Ms. Wasserman said, but also for dealing with its partnerships that involve other industries.

Lee A. Spirer, a principal at Booz-Allen & Hamilton, de-scribed how competitive intelligence came to benefit one credit card issuer, which he declined to name. Its management was not aware how fast competitors were siphoning business away through balance-consolidation offers.

But down the hall from management, a mail room clerk had begun tracking the problem on his own initiative.

By counting the checks customers had sent that were drawn on competitors' accounts, the clerk had developed a rudimentary system for tracking the business going out the door, Mr. Spirer said.

When the clerk's activities came to light, the company quickly formalized the process and made it part of its strategic decision-making process.

Often, Mr. Spirer said, information is available internally, either stored away or in the hands of employees.

Mr. Gilad said a good competitive intelligence system costs less than $1 million a year to run and can save hundreds of millions of dollars in missteps and missed opportunities.

Typically, a company will either form a competitive intelligence unit around a group of employees, or assign one person to work with an outside company on the program.

Traditionally, the best way to gain such intelligence was to hire people away from competitors. That practice is less prevalent, Mr. Spirer said, leading to an increasing reliance on systematic intelligence.

In the last two years, for instance, Advanta Corp. and Capital One Financial Corp. have been paying employees extra in return for multiyear noncompete agreements that prevent them from taking similar jobs with rivals.

Not everyone agrees that banks and card issuers should be diving into the field of competitive intelligence.

Ben Barnes, general manager of global management solutions at International Business Machines Corp., said bankers are right to focus more on building information systems to analyze customer data.

"My advice would be to start there first," Mr. Barnes said. Those data- mining and marketing systems can be a foundation for competitive intelligence.

As banks and their financial service competitors begin to dip their toes in the water-chemical, pharmaceutical, telecommunications, and other businesses already have-they must overcome cultural impediments, consultants said.

"My sense in banking is that there is a very quick preference for quantitative data," said Kenneth A. Sawka, director of business intelligence for the Futures Group of Glastonbury, Conn.

He said banks' reliance on numbers often causes them to overlook more useful sources of information, like sales representatives and third parties who can offer more comprehensive and analytical assessments.

While banks have tremendous volumes of point of sale data, Mr. Sawka said, they rarely study it in a way that would enable them to map future strategies. A competitive intelligence system, he added, can help companies anticipate market developments and prepare to respond.

In the short run, Mr. Gilad said, banks' continued reliance on tactical data will not be fatal. But "once the takeover mania subsides and growth becomes much more difficult after the initial cost-cutting, banks may feel the pinch to compete not just tactically, but strategically."

At that point, he warned, banks that lack strategic intelligence will suffer.

Charlene Stern, a former Wells Fargo & Co. executive who runs Stern Marketing Group of Berkeley, Calif., said it may take some time for banks to cultivate this kind of information-sharing and strategic thinking.

"Competitive intelligence is only as good as a bank's ability to convert it to competitive advantage," Ms. Stern said.

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