First Union Corp. said it expects to increase revenue from retail customers by $100 million in 1999 as it hits its stride in technology-based relationship marketing.

The $237 billion-asset company has just finished installing two pieces of software that complete a three-year, $33 million data warehousing project. The final components are considered the most crucial to realizing the anticipated revenue, because of the valuable customer data they deliver to hundreds of front-line salespeople.

"This is the technological engine behind First Union's strategy to anticipate and meet the individual needs of every customer," said president and chief operating officer John Georgius.

First Union's ambitious revenue goal illustrates the coming of age of data warehousing at large banks, where tens of millions of dollars invested in the technology are expected to start paying off.

Among other banking companies expecting to profit handsomely from sophisticated customer profitability information is Fleet Financial Group of Boston. Fleet spent $28.1 million on its data warehouse and expects to reap $100 million of extra revenue a year starting in 2001, said Randall B. Grossman, senior vice president and director of customer data management and analysis.

KeyCorp is projecting that its data warehouse will add $135 million this year, said Jack L. Kopnisky, president of retail banking. Cleveland-based KeyCorp plans to average one additional product sold to each of its 440,000 most profitable customers, for a revenue gain of $306 per household.

Royal Bank of Canada said its data warehouse, which has foundations dating back to the 1970s, has helped add 100,000 people to its most- valuable-customer base. It has increased its average profit from its one million customers in that category by about $100, according to James T. Rager, executive vice president, retail financial services.

"Large banks are realizing that this type of initiative becomes a business-critical strategy, i.e., they can't live without it," said Bill Bradway, an analyst at Meridien Research in Needham, Mass.

KPMG Peat Marwick has said banks that can manage and improve customer relationships can improve profitability in their retail banks by 50% over five years, compared with 10% for banks that retain the status quo. The advanced banks should also be able to boost their stock prices by 53% over five years, KPMG said, compared with 35% for other banks.

First Union is already ahead of the game, with 55% to 60% of its 16 million customers profitable, according to Nara Eechambadi, senior vice president of enterprise information management. At most banks, 10% to 20% of customers provide 80% to 90% of profits.

The Charlotte, N.C.-based banking company will seek to increase that profitability by providing salespeople with cross-selling leads. Five hundred to 1,000 bank salespeople will use Sigma Executive software from MicroStrategy Inc., which enables them to tap into comprehensive customer information.

Another package, Sigma Explorer, will be used by about 100 people to analyze and better understand customer segments and sub-segments.

These users could find out, for example, the number of customers between 45 and 55 who earn more than $125,000 a year and yield the bank a profit of at least $500 a month.

The software users could then determine what percentage of those customers are private banking clients. The software would develop a plan for converting the others.

First Union has divided its customers into 10 groups to focus on retaining the top 10% and learning why the bottom 10% are unprofitable.

"Often customers are not profitable because we have put them in the wrong product," Mr. Eechambadi said.

The bank is tripling the capacity of the warehouse that stores its customer information. The upgrade will let the bank add customers from its 1998 acquisitions and include small-business and commercial accounts.

First Union said its warehouse, which stores up to 24 months of customer transactions, would become the industry's largest, with 27 terabytes of information. The warehouse is updated monthly for now; First Union plans to move to daily updates.

Mr. Bradway of Meridien Research said First Union is making "a real investment in customer knowledge." But information is only half the equation, he added.

"A profit increase of $100 million will depend mostly on how First Union interacts with customers and executes its campaigns," Mr. Bradway said.

Robert E. Hall, chief executive officer of the consulting firm Action Systems in Dallas, has described the challenge as "putting the 'R' back in CRM," or customer relationship management. He said the goal of maximizing relationships and their profitability has been obscured by "an old process for sales and excessive faith in strategy and technology."

First Union is conducting an intensive sales training program designed to help its people match products to clients. For example, low-profit customers are being offered credit cards linked to checking accounts, rather than overdraft products. When overdrafts occur, the amount will appear as a charge on the credit card.

The bank also is developing a retention plan for its most profitable small-business clients, though it has not quantified earnings expectations for this project.

ISLANDIA, N.Y. - Computer Associates International said a million- customer savings bank based in Barcelona, Spain, has chosen the company's Unicenter TNG to manage its information technology infrastructure.

Unicenter TNG is designed to help simplify technology management, streamline operations, and improve service quality.

Caja General de Ahorros de Granada, popularly known as La General, had undergone a major back-office overhaul in which distributed systems complemented existing mainframe operations, Computer Associates said.

The new platforms included Hewlett-Packard HP-UX in La General's data processing center and Microsoft Windows 3.11 and NT in offices.

La General has thousands of personal computers and 350 automated teller machines.

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