JPMorgan Chase, Wachovia, Wells Fargo and other financial institutions are giving customers a little extra something along with their monthly statements and other financial documents-personalized advertisements and promotions tailored just for that customer and delivered either online or in print.
Wachovia is the latest bank to deploy software that sends highly personalized messages to customers on statements and documents.
The technology allows financial institutions to customize its correspondence so that the marketing messages are more meaningful to customers, says Brent Burns, group vp of financial services for Exstream. Joining Wachovia as Exstream customers are Citigroup, JPMorgan Chase and Fidelity Investments.
Burns says the monthly statements may be the most visible aspect of Exstream's services to the typical bank customer, but in fact that's just a part of the overall business which can include things like letters, confirmations or prospectuses.
Indeed, digital printing's declining costs and its variable imaging capabilities are fueling an increase in personalized communication, according to Matt Schott, a senior analyst at Tower Group. Technology from companies like Exstream, Docucorp and Metavante is helping institutions to provide segmented messages, with investor-specific salutation, advisor-specific signatures and customized marketing messages, according to research authored by Schott. Many firms are moving away from mail inserts in favor of personalized messages printed in the document itself.
A focus on customer retention is one of the drivers behind this type of communication, Schott says, particularly with the Baby Boomer generation. As these people retire, it will become more important that banks connect with customers and effectively convey their messages, he says.
New technology that makes specialized communication easier is also helping to drive adoption among institutions, according to Schott. Other factors fueling adoption: added regulation and mergers and acquisitions, both of which require much more communication on the part of financial institutions.
Many factors that affect print and mail costs are declining, according to Schott, and the industry is just scratching the surface of the Internet's delivery capabilities.
With Exstream's tool, Dialogue, a bank can use some of the space on statements and other correspondence for ads that are geared to the specific customer. For example, the bank can advertise a particular seminar that may be helpful to a customer, and then follow up the next month with one of several different ads depending on whether the customer actually attended and, if so, what feedback he gave the bank. Burns says this can be especially helpful for banks in working with high-net-worth customers.
The main problem faced by most banks in implementing a program like this stems from the same problem that any large-scale implementation faces: a mish-mash of legacy systems, says Burns. And often times, each of these disparate systems produces a single type of customer correspondence. "Many times, every piece of paper you receive from your bank is produced by a different tool," he says.
Indeed, the first three years of the company's existence were spent in research and development, Burns says, to help produce a product that could manage the variety of systems found within the institution.
This type of customization is similar to traditional direct marketing, except that with this new generation of customization, banks are not typically looking for new customers, but communicating in new ways with their existing customers.
Some institutions justify the costs from the savings they can glean from faster printing and better production of the various printed material, Burns says. According to Exstream, Key Bank has said it "saves $1.5 million annually in production expenses using Dialogue to create its high-net-worth and retail check-image statements."
One of the key attractions to Exstream's product is the flexibility it allows, says TowerGroup's Schott. He says the retirement market, wealth transfer and merger activity are all increasing financial institutions' focus on retaining clients and, consequently, prompting them to try to find value in their existing communications.
Another application of this is the "print on demand" segment, Schott says. Mailings that go out once or twice a year, like proxy statements, can be printed and mailed as needed, reducing the actual storage space needed to store piles of documents.
One of the challenges faced by vendors in this market is the wide range of options from which banks can choose. While there are only five or six software providers that compete directly with Exstream, Schott says there are many other companies that offer some aspects of the same overall service. One option, for example, is to use a service bureau, which may only handle the printing of annual reports and proxy statements.
Though there is competition in the market, Schott sees upside for software vendors in the personalized printing and print-on-demand business.
