The millennium is nigh, but the age of miracles hasn't passed. That's the drill about the call center of the not-too-distant future, three years, by most accounts. It will integrate all channels, echo the retail chain mantra of "consistent customer experience" (uniformity and reliability), and, mirabili dictu, present the ultimate cross-selling opportunity for financial services, in real time. What more could bankers ask for?

The popularity of the telephone itself makes call centers the natural hub for electronic delivery for both consumers and banks, reports Ian Rubin, technical analyst at The Tower Group in Needham, MA. Echoing the views of others, he says, "A lot of financial service customers are accustomed to using the phone. It is ubiquitous, cost effective, comfortable, and accessible. A lot of the infrastructure in place at larger institutions for the phone channel can support the fax, Internet, and emerging channels."

technology in the air

At the same time, through a host of messages from the manufacturing arena such as "Quality is job one" and "Anything, anytime," consumers are becoming oriented to technology packaged in manageable ways, according to Dominick Cavuoto, consulting partner in charge of financial services electronic commerce, KPMG Peat Marwick LLP. "Think of the scanner at the supermarket checkout counter or the wand at the gas station which automatically starts the pump and charges your account," he says.

Some industry experts argue that since revenue momentum is a problem in banking, the call center, a focal point of customer information and contact, will become more important for proactive marketing, sales, and customer retention as well as service. It will almost equal the branch network, which will concentrate on service, reports Ladd Willis, executive vice president of First Manhattan Consulting Group. "A couple of years ago (we expected) the branch to become the sales organization. Instead, 75 percent of the sales in branches produced unprofitable relationships." The call center is the logical point to pull information together so that wherever the customer interacts, the bank turns the point of contact to a sale or retention activity. "You must monitor customers and flag their needs or they may be targeted by the competition," he adds.

So what's the hold-up in building a multi-media call center operation? The ramifications of year 2000, at the moment. "Banks are overwhelmed by the people and huge resources devoted to it," says Anne Livingston, payments systems coordinator at the American Bankers Association (ABA), Washington, DC. When IT says something about call centers, the bank says 'Get in line.' It's a problem of where it falls in the food chain."

Trepidation about cost, personnel, organizational change and lack of political will are more constant factors. The question of where the responsibility sits for such a decision varies with each institution. At PNC Bank Corp. ($73.2 billion in assets) in Pittsburgh, PA, executive vice president Frederick J. Gronbacher took that lead. In July of this year the call center took 2.9 million calls; 965,000 were answered in person.

The bank is organized into market segments and components. Segments include private banking, small business banking, American Automobile Association (AAA) members, and mass market. Products include loans, credit cards, deposits, and investment products. Channels include branches and the National Financial Services Center, PNC's direct bank responsible for the telephone and online activities: ATMs, PC banking, kiosks, and the Internet. "Once you divide business into components (manufacturing refers to products; sales to customer segments; delivery to service, sales), you try to manage each business to its value proposition," he says. "Product people build products, deliver them through channels, and package them to satisfy segments that the segment managers focus on. For instance, the consumer loan product line designs loans for private banking, mass market, AAA members, and also provides capital for small business at the lower end."

Whatever the corporate structure, the challenge is to find customers and conduct business. To ensure the necessary scale, PNC entered a partnership to piggyback on the AAA brand name to build a national "virtual" banking franchise through the auto club's 34 million members. For the last year, PNC has supplied financial products to the club's new AAA Financial Services Corp., including a low-cost credit card, mortgages, and auto and student loans. By 2005, PNC hopes to generate business equivalent to a standalone bank with $18 billion in assets; it currently has $2 billion.

It took PNC, a combination of more than 20 banks, five to six years to complete its integration process. PNC consolidated 50 operations, and took out several hundred systems and several thousand products to get to a single platform and common technology (and fit its year 2000 systems into the maintenance structure). After finishing the infrastructure in 1994, PNC built the phone center in 1995, and added online functions last year. The call center serves AAA and other customers. Agents take messages from Internet and PC banking customers.

a long time in the making

Another leader in the channel integration effort is Cleveland-based KeyCorp ($67.6 billion in assets), pushing to become a national bank. Its call centers take 3.5 million calls a month, up from 3 million a year ago. KeyCorp processes almost 60 percent of its transactions by telephone and ATM.

As with PNC, KeyCorp started thinking about integration in the early 1990s. Society Bank of Cleveland, a predecessor, conducted a study showing that customers wanted 24-hour service and integration, and decided to get in on the ground floor, according to executive vice president Patrick J. Swanick. Now the bank has common systems, including deposits, for the whole company and one database. "We are very centralized, very structured; it gives us great flexibility. We don't say we can do something in Ohio but not in Washington because of different systems," says Swanick. Integration also increases productivity by eliminating duplicated efforts across various systems.

KeyCorp cross-sells primarily in the call center, using the database to suggest the next logical product based on customer behavior, purchasing patterns, and bank relationships. By the fourth quarter a similar system will be in place for PC and Internet banking. It will ask customers for information to update and add to the database.

Cost is a real factor in call center integration. PNC spent $35 million to create its direct bank; NationsBank, with $227 billion in assets, has invested $40 million so far in software for a multi-phase, multi-channel project, according to sources. Yet experts say that some of the big numbers bandied about assume that the guts of a system have to be scrapped. Middleware can avoid this, integrating data from core bank systems to one presentation at one screen.

Andersen Consulting will create a Full Direct Banking Asset System for NationsBank, which will later be sold to other institutions, according to a recent Tower Group report. This report, presented in May, describes the bank's situation, which mirrors common call center problems, such as processing customer inquiries, distributing call volume efficiently, and designing call center agent management and training to improve productivity and lower turnover. NationsBank declined to be interviewed.

NationsBank's project started with the call center and Web channels. Future phases will expand to PC banking and branch sales and service. The second phase will support Web self-service for bill payment and funds transfer. The third phase in late 1998 is likely to include additional channels, customer segmentation, and bank products. It will enable consumers to speak to the same agent more than once or leave a voice mail message. To increase targeted cross-selling, it will customize voice response unit (VRU) menus via data entered by callers, such as PIN numbers (as will PNC in the same time frame.)

NationsBank has allotted 30 percent of its project budget to "agent performance," including a defined career track within the bank. Informed observers say that more than technology and cost, the human resource element is crucial. As a result of its recent report findings on call center profitability, the ABA will conduct a follow-up on why call centers are not meeting expectations, due in November. "We suspect it's the people issue," says Donna Berzellini, ABA associate director of bank programs and professional development.

Even with the right people in place, there is the question of how much integration is too much. In terms of channels, for example, both PNC and KeyCorp exclude the ATM, saying it is best suited for simple, fast, high- volume activity, not mulling over investment decisions and the like. Similarly, industry insiders disagree on including products like mortgages and mutual funds.

Finally, call centers cost too much to run. They were designed to streamline service. Instead, customers use them more than expected, often tying up agents with questions easily answered by VRUs. It is just as important to get customers to use call centers economically as it is to use them to strengthen a relationship-based strategy, according to John Karr, partner in the financial services industry consulting practice at Ernst & Young. And a relationship-centric strategy is not the only way for financial services to be profitable, he says. "Look at MBNA and Capital One (Financial Corp.) They are doing fine."


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