This is an exciting time in banking and technology. Breakthroughs like those discussed at the last Retail Delivery conference by Bill Gates of Microsoft Corp. and Lew Platt of Hewlett-Packard Co. painted a vivid picture of what can be. But as you will hear frequently, the real name of the game in banking today is profitable revenue growth. So the important focus is on how technology serves that goal.

Bank executives around the world are all challenged with aggressive growth plans-12%, 15%, 18%, 20% a year. It is in that ambitious context that bankers have invested so heavily in information and technology.

The results so far are mixed. On the positive side, according to the Department of Labor, in the third quarter last year U.S. workers' productivity showed the biggest gain in five years. Technology investments may have finally begun to show results.

The bad news is we cannot correlate spending on information and technology with greater profitability. The technology survey report by American Banker and Meridien Research confirmed "there is little agreement about the impact of this technology spending ($50 billion in 1997) on the banking industry's profitability."

If this were football, we would be in the red zone-within 20 yards of scoring a touchdown. In other words, when it comes to investing in bank technology we have made significant progress. We have traveled almost the full length of the field and have a few critical yards to go.

One thing to keep in mind is that when you get to the red zone, expectations rise. Investors and analysts expect that if we have gotten this close, we ought to be able to score-to show more profitable revenue growth.

However, the yardage gets tougher in the red zone. Acquiring the information and technology has been a significant accomplishment. The endgame is harder. It involves skills that most simply do not have today. To succeed, we will have to develop what we call at my firm "market competence"-the ability to use information and technology to get the right sales and service through the right channel to the right customers at the right cost.

Acquiring the new competence involves three requirements. First:

The press paints a mixed picture of customer value. We can point to advances like personal computer banking, home banking, Internet banking, voice response units, telephone service centers, credit scoring systems. But when we listen to customers, it is clear they see things differently.

Here are some of the dichotomies:

We say our new technology lowers the cost of transactions. But customers ask why, if costs are lower, they are seeing more and higher fees.

We say our new data warehouses and data mining tools let us send very specific direct mail with specific messages tailored to the right customers. They say they are flooded with mail, most of it junk that doesn't bring value.

We say our new phone centers let us contact customers with messages tailored to their next needs. They complain about getting too many calls from people who clearly don't know who they are or what they value. Customers are investing more money in caller ID and call blocking than we are in targeting them.

We say our new segmentation technology lets us deliver very specific value propositions, exactly fitted to specific types of customers. They wonder why, when they come into a branch and then do business with the phone center, the value proposition can't follow from one "silo" to another.

We say technology lets us remove some of the human factor so that we can offer a more consistent approach to the customer. But customers say the last thing they want is a less inspired, less able, less knowledgeable, more programmed response to their needs.

So customers are pushing back.

According to American Demographics, "U.S. corporations now lose half of their customers in five years, half of their employees in four years, and half of their investors in a matter of months."

We are talking about a very transient group that obviously does not see sufficient value to warrant lifelong relationships. There is more at stake here than losing wallet share. What happens when we also lose access to customers?

If we are going to score from the red zone, we need to take the information and technology that add value for us and make sure they also add value for the customer.

Which brings us to the second requirement:

To create value, it takes better information about customers and better ability to analyze the information. And it takes more channel options to give customers more variety, convenience, and flexibility. These are areas where banking shows progress. So in this respect we are well prepared for the next level of success.

But there is a gap. Peter Drucker says, "Information develops rapidly; competence develops slowly." If we are really going to see a different outcome, we need to do things differently, and that means a new level of competence.

In "The Future of Banking, Part II," the former Donaldson, Lufkin & Jenrette analyst Thomas K. Brown delineated the three traits that will set successful organizations apart from the rest: "They will have engaged employees; they will operate with a clear vision that is understood throughout the organization; and they will be leaders in sales and marketing execution."

How do we make sure we have engaged front-line employees who have a clear vision and are able to execute? Robert Benson, professor of information management at Washington University, said in Information Week, "It's what the organization does to use information and reach out to customers that counts.

The purpose of IT (information technology) is to change the behavior of its users to better achieve their business objectives."

But for most banks we work with, if the mission of IT is to change behavior, the current capability of IT is really just to change the technology.

A crucial question is, Who is in charge of making sure behavioral change actually flows out of the new information and technology and winds up as value for the customer? Most banks have not established this accountability.

Which brings us to the third requirement:

It must help individuals think differently, make different decisions, behave differently.

Our research shows that the average front-line banker makes 25 to 40 decisions a day. To waive a fee or not. To refer a customer or not. To profile a customer or not. The incriminating fact about all our technology spending is this: Rarely has it changed the actual behavior that matters to customers. Decisions that matter to customers (and the bank) continue to be made independent of our new data warehouses, mining tools, and decision support systems.

Banks have demonstrated competence in managing transactions. They have the necessary operating systems and can track where a transaction enters, where it goes, how it is handled, and where it ends. But there is no system or process for all those critical 25 to 40 decisions.

What banks need is an operating system for customer optimization. It would absolutely ensure that in every market and in every instance, the front-line banker would know exactly what value proposition would be most meaningful for the customer and the bank-and would also have the skills, judgment, and tactics to make the value proposition come to life.

This operating system involves a new category of technology-not the kind that just facilitates transactions, but technology that enables behavior that matters to customers.

Reaping technology's reward means conquering a new challenge for banking, melding the formerly separate worlds of technology and behavior.

There was a time when most assumed technology was the answer. Then we learned it is not technology, it is behavior. And now we have come full circle, closing the loop. It is still behavior, but it is technology- enabled-a brand new kind of technology.

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