In an industry defined by the paradox of missed expectations and ever higher goals for call centers, PNC Bank may well provide a glimpse of the promised land.

The 1,000-person National Financial Services Center near the company's Pittsburgh headquarters handles 150,000 calls a day (about 70 percent of those within the voice response unit), supports more than 300 products and services and is fast becoming multi-media-capable for everything from 800 daily fax inquiries to urgent electronic mail.

The center, which opened in 1995, was preceded by a $400 million investment in a single platform and data center. Today, the company is able to extend its reach far beyond the Alleghenys. "The motivation was to provide a platform and a central site where we could make the kinds of investments that were required to have a world-class center and to be able to manage and measure it in a way that made sense," says Joseph Guyaux, CEO of PNC Bank's regional consumer bank, which includes the call center. "And (PNC plans) to use that platform to leverage our reach where we would not be limited just by physical buildings."

But PNC is clearly an exception. Experts say that the good news is that after years of fumbling with how to pull together once disparate call centers, bankers are integrating every point of customer contact. The bad news is that most are not ready to capitalize on sales opportunities.

Recent studies have shown many bankers are disappointed because their costs did not drop as they had hoped when they made 24-hour access available. "We've seen that single channel users have been converted into multi-channel users," says James B. Moore, president and CEO of Mentis Corp., the Durham, NC-based research firm which has studied bankers' expectations of their call centers. "When you make it more convenient for consumers to transact, they transact more often."

That lesson is why Moore is convinced that bankers will strategically invest in the call center as the point of integration for all channels-and the launch point for cross-sell efforts. The Tower Group forecasts that spending by bankers alone will top $500 million by 2001. Other experts predict that number will reach $1 billion when all other areas of financial services-from specialty finance companies to insurers-are included.

And experts say the real return on investment will come when financial services companies are able to turn every contact with the customer into a customized sales opportunity. Virtually no one is at that point today. Moreover, they say that most companies have cultural hurdles to understanding how to measure their return and few are equipped to deal with a fundamental change in the customer relationship. "Most of us never go into a physical outlet today. We deal with our banks through the PC or on the phone. There is no personal relationship," says Deborah Ingram, head of the financial services group at AT&T Call Center Solutions. "If I can't have a personal bond, what I have to do is emulate a personal relationship through the kind of information that helps me really know that customer."

Ingram says that direct channels change both the speed of service and who is in control. "When you have physical branches, you control the speed of the way I choose to deliver service. When you move to electronic methods, you shift control to the customer and many aren't prepared for that," she says.

Mentis' research shows that 71 percent of the largest institutions plan to integrate all their delivery channels through the call center. To do that effectively, Moore says bankers will need to emphasize specialized call center agents to handle specific calls and technologists will need middleware that makes intelligent call routing automatic. "This will be the backbone of the delivery system because it embraces people," Moore says. "People sell and people service."

One key indicator of call center performance potential is whether customer service representatives are equipped to respond to calls through the use of tailored scripts. Mentis found that scripting is widespread among institutions of all sizes, but that 62 percent of those scripts were based on product ownership. About one-quarter of those surveyed said they customized the script by segmentation criteria such as age. A scant 8 percent said they based such sales efforts on usage patterns-a practice which experts say should be more widespread as information systems make it possible to track product usage across all channels.

Beyond separate projects to build their data warehouses, financial services companies are also focused on enhancing the connectivity of the call center. In this high stakes chase for solutions, Moore boldly predicts that the technology providers which solve these problems will dominate banking technology. "This will be the intelligent point for handling the customer across all points of the enterprise. This will be a strategic high ground for a vendor. The vendor who owns that high ground, like IBM twenty years ago, will own all that flows from it," says Moore. "The shakeout is driven by the move from client/server architecture to network-driven architecture. This is the paradigm of choice."

But understanding the profitability of the call center also depends on the ability to measure its contribution to the bottom line. Customer activity is still credited to the branch-not the channel which actually sold a product or service. Bankers concede a need to shift measurements so they really know what works.

Larry Wilson, chief administrative officer of Norwest Bank of Texas, says that profitability is still tracked at the branch level even after the superregional opened a Texas-only call center in Lubbock last fall. His solution is to not scrap the current system, but rather set up a specialized system of allocating costs and revenues at the call center. "We have found that this is a common problem," he says. The lack of measurements is a residue of bygone days when the role of call centers was viewed more narrowly.

"Years ago, call centers were just the back up to the branch offices. They were really there for the overflow," says Bob Sverak, vice president in the call center group at Charles Schwab & Co., which handles 400,000 calls a day through its four operations centers. "Today, we are the service arm of our branches, of the company."

More fundamental is how call centers are working toward the goal of making a sales effort with every customer contact. "The issue for most is how to turn the inbound call center effort into a sales opportunity," says Tom Bolleum, CEO of Anytime Access, which provides call center outsourcing for more than 200 institutions. "When someone has taken the time to call you, when it is convenient for them, you want to be ready to make the right offer. That is a dramatic shift for most banks."

The same is true for insurance companies. Nate Natraj, vice president and general manager of the financial services division at Scopus, says that most insurers are only now offering term life through a direct sales effort in response to non-insurance competitors.

Change does not come easily for an industry whose beginnings were of agents selling policies door-to-door. "Families don't want an agent sitting at their kitchen table hounding them," says Ted Fortezzo, director of insurance and finance at Telespectrum Worldwide Inc. in Omaha, NE. "Insurance companies need to give consumers the ability to buy whatever they want the way the want to buy it because the consumer is getting smarter."

That reality has forced insurers to adjust and has created strong demand for companies which understand direct sales. Last year, companies such as Colonial Penn Insurance Co. were acquired for a premium nearly double that of traditional insurers. Carmel, IN-based insurer Conseco paid $460 million for Colonial Penn.

Conseco chairman Stephen Hilbert says the acquisition moves beyond simply buying the customers and capabilities of Colonial Penn. Instead, he says the challenge is to automate sales, service and customer information across diverse-and sometimes competing-channels. Under his model, if the direct sales effort fails, the household can be referred to a subsidiary which can attempt a sale through direct mail, or possibly to one of the thousands of local independent or staff agents who can try a face-to-face sale.

"We have to be able to take advantage of all of those possibilities to build our sales," says Hilbert.

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