Call centers may be the next bank area to face consolidation, according a report from Datamonitor.

The New York-based research firm predicted that the number of calls centers would grow only 4% a year on average through 2002.

The number at insurance companies will grow 6% and at investment firms 8.8%, Datamonitor predicted.

Among these industries, banking is the most saturated with call centers, it said. As a result, banks will be consolidating them into more centralized ones, said Randy Gernaat, an analyst with Datamonitor.

Through mergers and acquisitions, some banks may have "inherited two or three extra call centers," Mr. Gernaat observed.

KeyCorp, a participant in the report, consolidated call centers when it merged with Society Corp. in 1994. At the time KeyCorp had about 20 call centers and Society had two.

"We created four centers that serve the entire company," said Patrick J. Swanick, executive vice president of electronic commerce at the Cleveland- based bank.

Though reducing the number of call centers can help cut costs, the real motivation is to focus technology and training investment in fewer places, Mr. Swanick said.

Centralizing call-center operations also help a bank present a consistent image to a customer, Mr. Gernaat said.

But while larger banks move toward consolidating, smaller banks plan to add call-center capability, according to data from Mentis Corp., Durham, N.C. Only 36% of institutions with less than $1 billion of deposits offer call-center access now, but 16% expect to do so within 12 months and another 19% in 36 months, Mentis said.

Forty-five percent of these small banks will outsource their call-center operations by 2000, said Mentis president James Moore.

The Datamonitor report also predicts that the number of customer service reps at bank call centers will rise only 4.9% in total over the next six years.

Rises of 9% are foreseen at insurance companies and 8.9% at investment firms.

Technology and automation that will enable financial institutions to handle more customer inquiries will help curb call-center costs, Mr. Gernaat said. "When you look at a call center, by far the highest expense is labor."

Technologies like computer-telephony integration-linking a phone operator's computer and a voice-response system-can shorten the time it takes to serve a customer, Mr. Moore said.

The system enables the rep to see information the customer has entered into the automated telephone banking system; without such a connection, the rep would have to reenter the data.

However, this could also increase the time spent with a customer, Mr. Moore noted.

The reason: The rep could have access to more information and therefore be able to actively sell products to the caller.

The Internet could also affect call-center trends. The number of sales reps may actually increase as banks marry the Internet with call-center capabilities, Mr. Swanick said. KeyCorp is using its call centers to handle electronic mail from customers and inquiries over the Internet, he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.