Software intended to track the profitability of bank products, branches, and customer segments is catching on in a number of banks' treasury departments.

National City Corp. and Marshall & Ilsley Corp. have each installed software in their corporate treasury and asset-liability management units to track the profitability of commercial and retail business lines.

National City, based in Cleveland, chose a system by Treasury Services Corp. of Santa Monica, Calif. It includes modules for transfer pricing, performance reporting, balance and control, and budgeting and planning. Treasury Services says it has installed this software in 80 banks to date.

Donna Pacchioni, manager of corporate accounting for $50 billion-asset National City, said profitability software is becoming more important as banks seek better ways to use their customer data. "It will help us focus on customers individually rather than just looking at customer units," she said.

National City is replacing a series of profitability tracking software packages developed by several software firms with Treasury Services' Evaluation and Reporting System. The bank, which has not disclosed terms of the software contract, also will buy a computer server from AT&T, said Ms. Pacchioni.

Having a single software package, she said, will make profitability reporting more efficient. "Our new system will allow us to integrate this valuable data into a single data base and improve data consistency," she added.

Milwaukee-based Marshall & Ilsley joins 11 other regional institutions using transfer pricing software developed by Bennett Management Services Inc. of Phoenix.

Executives at Marshall & Ilsley said the software should help them develop pricing strategies more quickly.

"More and more banks are having to pursue transfer pricing," said Donald H. Wilson, the $13.8 billion-asset banking company's treasurer. "The days of easy spread income are gone."

Using transfer pricing, banks allocate costs across various segments of their business. This allows for precise comparisons of different units' profitability, which helps in deciding how to allocate resources and set prices.

"We have a very strong retail franchise," said Mr. Wilson. "It's important to identify the strength of it and protect that."

Marshall & Ilsley has 30 bank subsidiaries and several nonbank operating units, among them M&I Data Services Inc., a leading data processor for other banks. National City has eight bank subsidiaries.

Marshall & Ilsley will install the Bennett software, dubbed Possibilities Pricing, on a Windows NT system.

Like the software from Treasury Services, the Bennett product collects pricing data on products - such as consumer loans - and calculates what profit the bank realizes when selling the products.

The software also compares the profitability of business lines - consumer loans versus commercial loans, for example - and that of branches, operating units, and customer segments.

"There is a tremendous push for profitability given the increasing competitive pressures in banking," said Dennis E. Bennett, chairman and president of Bennett Management.

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