When the Bank Administration Institute's annual Retail Delivery Conference and Expo opens this morning in Atlanta, the crowd will probably hear a lot less about the Internet per se than it has in years past and a lot more about what Web technology can do to improve the basics of banking - in branches, for example, and in lending decisions.
With many banks in the midst of upgrades - cosmetic and technological - to their branch systems, vendors want a piece of the action. And noting bankers' understandable preoccupation with declining consumer credit quality, companies that sell products aimed at weeding out bad loans hope to make hay.
Several new vendor partnerships are meant ostensibly to help bankers get more value out of the technology they have bought over the last few years. One is International Business Machines Corp.'s alliance with Wincor Nixdorf, the ATM manufacturer, to develop advanced teller machines and videoconference systems for branches. Mark Greene, the general manager of IBM's banking industry group, said that banks that have invested in back-office infrastructure and CRM software need to develop their front-office capabilities to make the investments pay off.
"Banks have been hunkering down and not thinking about growing" over the last few years, Mr. Greene said. But many have started investing in their branches recently, he said, and this gives them a good opportunity to make better impressions on consumers.
IBM is also expected announced another jointly developed initiative, this one with Cisco Systems Inc. of San Jose, Calif. The technology they are offering, called "branch transformation networking solution," is supposed to make virtually every banking product and service available to every customer anytime, anywhere, regardless of whether the customer is visiting a teller or ATM, or using a telephone or the Internet.
IBM and Cisco say that the technology system - essentially a branch reengineering product - is based on common network components, and converges voice, video, and data in a way that should improve speed and service delivery.
"Financial services organizations are evaluating investments in applications and network infrastructure that can deliver reduced costs, improved productivity, and new competitive advantages," Mr. Greene said. "Banks will be able to more easily break down various service silos that exist in many branches today."
Separately, the software vendor SAS Institute Inc. in Cary, N.C., is counting on a resurgent interest in risk management, as banks try to figure out when it is safe to get back into some debt markets.
"A lot of pain is coming from the fact that these banks don't know what they don't know in terms of their credit exposure," said Michael C. Chiarella, the program manager at SAS. "Bad debt is the highest it has been in 10 years," and as a result "there is no resistance to spending in this area."
Mr. Chiarella said that his company will be offering a new real-time credit scoring program that allows banks to develop scoring models more quickly.
Meanwhile, MasterCard International will be on hand with a new plastic card product for banks: A prepaid pharmacy incentive card that could help supplant free drug samples in doctors' offices. The cards will carry a predetermined value when used to buy a particular drug at the pharmacy. Pharmaceutical companies would supply the cards to doctors' offices for distribution to patients.
CRM vendors will be attending the conference in force, aiming to fight the industry's backlash against their products.
Tom Madison, the general manager of the financial services business unit at Inforte Corp., a Chicago-based CRM vendor, said that after installing CRM, some clients "find themselves staring at these immense amounts of data and wondering why it isn't helping."
Mr. Madison said that while attitudes are changing in favor of CRM, there is still a long way to go. Only about 10% of financial companies have constructed "a true CRM strategy and [are] ready to execute on it," he said. And a lot of companies are "a long way from building intelligent back-office systems and connecting them to the front office."
About three-quarters of potential customers come to Inforte with specific technology requests rather than an overarching strategy, Mr. Madison said, and this is usually a recipe for failure. One company recently approached Inforte with a very narrow request to centralize all customer information.
" 'We need to consolidate data, and that was that' was their attitude," Mr. Madison said. He said he advised them to put the technology in context before going ahead with a large investment.
Another CRM vendor, Siebel Systems Inc. in San Mateo, Calif., is delivering the same message. CRM "was oversold in terms of expectations and naively implemented by some without an understanding what it would take to genuinely change the workings of an organization," said Nicholas H. Ward, the general manager of Siebel's financial services unit.
CRM is "not about code written in software, it's about business strategy," Mr. Ward said. "What is lost on people is that it is an integrated effort that includes not only information about customers, but that the information also needs to be integrated and delivered into the experience of the customer."
CRM vendors have been bolstered by the fact that at least one large bank is reporting positive results from its installation. FleetBoston Financial Corp. credits the CRM it is using in its wholesale bank with a 15% increase in attempted cross-sales over two years, and a 23% increase in actual products sold over the last 18 months. Fleet said cost reductions have helped it more than recoup what it invested in the system.
Dean Athanasia, Fleet's executive vice president and managing director of business development and strategy, said that about 70% of CRM ventures at financial institutions had failed because executives neglected to take "ownership" of the initiative, meaning that they did not establish a meaningful business strategy for the technology they were buying. Fleet, he said, had set up "organizational accountability" so that responsibility for the CRM effort would not fall in between the cracks of business and technology.
Charles Pierce, Fleet's senior vice president of corporate client services, said that in the past six months the number of service-related issues in the wholesale bank that are resolved within a day has risen 10%. "I think you cannot divorce service and sales, and I believe Fleet has integrated sales-force automation and service on the same platform," he said.
