How many loans did we close today? Who are our newest customers? Who are my ten most important retail customers at the Oak Street branch? How many complaints did the branches receive today?

Sound familiar? These are the questions posed by bankers that yield one of the most important assets an institution can have - information.

Information fuels every bank's engine for growth. It answers questions that uncover opportunities and reveal problems. In today's competitive climate, banks are now, more than ever, inextricably tied to the information business.

Today's banker requires more than just raw information in bulk, but quality information of the specific. Obtaining quality information can be difficult, and once obtained, it's usually so dated that it loses any potential value.

A prime example of the importance of accurate and up-to-date information is the recent experience of a southeastern bank which was missing significant fee income for basic services because its commercial profitability system was not fed complete and accurate information. Losing fee income for any reason is unacceptable, but especially so when the problem lies in poorly automated flow between systems.

By restructuring the flow, and routing the most recent information from all systems into a profitability analysis, the bank created a clearer picture of the services and products being used by customers. This comprehensive and up-to-date picture enabled the bank to increase fee income and gain a greater insight into the profitability of both products and customers.

Customer needs dominate a financial institution's attention in delivering services, and historically banks give little attention to their data processing systems as a source of customer information for designing products and services.

That's due in large part to the nature of the information, which is primarily for processing and reporting. But successful institutions recognize their own information needs are critical for developing the products and services that best serve the needs of both.

With the introduction of householding central information files, banks have attempted to build customer relationship profiles to determine retail consumer needs.

Householding is what its name implies - creating an institutionwide data base accessible to all departments and personnel. Many banks have implemented these types of files.

However, many still continue to encounter difficulty in making use of the information the customer files yield.

This is due to several problems. First, the system has a tendency to remain static because information is updated only once a month or quarterly. As a result, profiles of customer information are usually little more than snapshots at a point in time.

Secondly, ownership of the customer information file normally falls to the marketing department, which uses it for measuring the effectiveness of specific campaigns. Many such files don't include new services and products such as debit cards and insurance and equity products.

The customer information file must be as dynamic as the general ledger and demand deposit account report, with information updated daily. In addition, the information must be sophisticated, showing product usage by location and volumes for the current day as well as monthly and year-to-date averages. In order to react to customer needs, all departments must have accurate and complete information at their fingertips.

A third component of a successful customer information file is the point of contact at the bank. Each customer will have a customer contact person at the branch or electronic branch. These employees must make a serious and sustained effort to ensure the meeting of customers' individual needs while keeping the file updated.

This will make it possible for the bank to meet the goal of marketing and cross-selling all applicable products and services.

Out-of-date or inaccurate information is the major stumbling block for banks seeking to get the most out of their customer information files.

That usually involves an institution's batch systems. It's important to identify the source of this obstacle and overcome it.

The batch systems banks use for day-to-day processing date from the 1970s. They primarily crunch and spit out numbers in a raw data format. Today's landscape requires complete customer profiles in an easily understandable format. Batch systems should provide the customer contact person with access to all of the account and product information tied into credit and policy information on qualifying products.

The system should also enable the customer contact person to identify profitable matches of services and products as well as those that are no longer profitable.

Many times the way a bank handles its commercial customer revolves around whether or not a loan relationship exists.

An effective profitability system monitors information on all customers for the possibility of cross-selling opportunities, not just those who borrow money.

A bank in the Northeast provides a good example of the profits to be gleaned from treating all customers as opportunities for increasing profit. Until recently, the philosophy of the bank was that commercial clients were only users of basic services such as deposits and check writing. This philosophy, which still permeates the mindset of many institutions, overlooks lending to small and midmarket businesses, the development of commercial relationships, and the marketing of commercial investment products.

By converting all commercial customers to the profitability system integrated with all departments and systems, the bank generated enormous revenue from an untapped resource.

Not only did the bank triple its commercial business, it also strengthened its relationships with an important segment of its customer base.

Day-to-day reporting on new accounts, loans, and branch-by- branch customer complaints is critical for management to accurately assess growth opportunities and avoid troubling trends.

An innovative approach to monitoring information involves generating a daily flash report of the top 10 branches and top 10 salespeople for each business day.

A midwestern bank includes this information as part of its daily monitoring and reporting exercises, enabling it to monitor sales trends among its branches. With this information, management can determine the profitability of a branch and of its location. It can also spot trends not associated with market cycles.

The report is available to all customer contact personnel. The bank can monitor its daily sales effort and enjoys a significantly higher number of average daily sales than its competitors. The reporting system is also flexible enough to allow bank management to track specific products, as well as analyze various sales and marketing approaches -including the success of direct mail versus face-to-face solicitation in malls and grocery stores. The reporting system runs separate from the institution's core application systems.

These examples underscore the importance of maintaining information for monitoring an institution's direction and plotting its future. How well an institution profits from its data base depends on the quality of the information. Information is an important key to an institution's profitability, and not merely a component in reporting.

Services such as debit and credit cards provide institutions a wealth of information. Banks largely ignore this transaction information because it is monetary in nature and devoid of content- analysis value. However, institutions can customize products with participating merchants to yield very specific transaction information.

The system monitors product use, offering rebates and special financing to the customer based on the information. Promotions related to big-ticket items such as televisions are an opportunity for a bank to sponsor a zero finance plan for its customer. The alternative is losing that relationship to another institution.

Techniques such as Theory of Constraints, Total Quality Management, and Data Envelopment Analysis are incorporated into management systems so the bank can maintain a highly competitive advantage. Management reporting systems should be able to provide the inputs to these analytical techniques so that an institution can evaluate various delivery systems such as branches, customer service units, and relationship managers to maximize bank profitability. This information is helpful in the development of other products and services.

The staggering amount of information produced by financial institutions is more than a byproduct of being in the business of banking. It is the tool with which banks can sharpen their marketing efforts, identify profit potential, and avoid losing market share to competition. Mr. Wortmann is a principal of Financial Earnings Group, Atlanta.

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