A GartnerGroup executive is advising bankers to prepare for increasing complexity in their relationships with customers.

The anticipated melding of insurance, brokerage, and banking will lead to greater competition not only for customers but for individual transactions, said James B. Moore, vice president, financial services industry, at GartnerGroup.

The primary effect of financial industry convergence "will not be a reduction in the number of providers but a reorganization" of banks, said Mr. Moore, a veteran observer of banking technology.

He spoke at the recent IT for Wall Street conference sponsored by Ziff- Davis and GartnerGroup.

Banks will reorganize around packaging, pricing, technology-centric products, and delivery channels, Mr. Moore said.

With financial products becoming commoditized, financial institutions will increasingly specialize in the way they deliver services, he said.

New entrants into the financial services business may include chain store franchises, affinity and niche marketers, Internet-based supermarkets, and monoline specialists in cards and other forms of lending.

Mr. Moore said he expects banks to develop multiple brands based on three ways of interacting with customers: one that promotes deep relationships, a second for the affluent and small businesses, and a third for the vast majority.

An example of the complexity of branding's possible evolution is Canadian Imperial Bank of Commerce's relationship with Loblaw's supermarkets. The Toronto bank's in-store branches do not display the bank's logo but rather Loblaw's President's Choice brand name.

Like CIBC in this arrangement, "most financial service providers will not own their delivery channels because they won't be able to afford to," Mr. Moore said.

He added that half the 45,000 automated teller machines installed last year were owned and operated by nonbanks.

Information obtained when a customer opens an account can play a crucial role in determining how an institution serves a customer and cross-sells over time.

"The key to branding, product packaging, and segmentation is collecting and managing information," Mr. Moore said.

"The most important component of customer information is transaction activity, since this is the behavioral footprint the customer leaves."

He warned that the Internet might neutralize brand messages. "Technologies like intelligent agents, collaborative filters, and push technology" will put new competitors in front of customers, Mr. Moore said.

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