With electronic banking growing more prevalent each day, banks find themselves pressured to improve their customer service centers, or be left in the dust.

It was the type of situation that any banker would dread: A long-time customer with a substantial sum on deposit was threatening to pull all of his money out of the bank and take it to a competitor.

Such was the dilemma confronting a telephone customer service representative at Centura Bank in late June. The customer was apparently more than dissatisfied with the treatment he'd received the previous day at a branch of the $4.2-billion-asset Rocky Mount, NC, institution.

But this story has a happy ending. Another service representative stepped in and calmed the customer down. Not only did the customer keep his accounts with Centura, but according to Kris Williams, vice president and manager of alternate delivery systems, he applied for a loan the next day.

If nothing else, this little tale demonstrates the increased importance of telephone service in retail banking. In this case, a problem that started in the branch was solved on the phone. Telephone banking's importance is rapidly approaching that of branch operations.

"Can't Do Without It"

"We can't do business without telephone service," says Williams. In fact, "we don't think we can survive" without it. In deference to that reality, Centura is upgrading its phone service this month under the name "Centura Highway." The service calls for a $1.5-million investment in new switching equipment and a new voice response unit. The reason for the expense is that as things are now, Centura's seven telephone service reps can handle only simple requests, primarily checking balances for deposit accounts. Even so, they're already fielding 8,000 to 12,000 calls a day. The Highway, however, will be a full-service bank. Customers will be able to call in, open accounts, apply for loans and do almost anything they can do at a branch. Centura expects volume to triple. The Highway will start with 12 people, and may grow to as many as 22 if need be.

"The only thing we can't give them is cash," Williams says.

Were Centura the only bank improving its telephone service, the activity there would hardly be noteworthy, but it isn't. If anything, it's hard to find a bank that doesn't already have some sort of telephone service. Like Centura, a steadily growing number of banks are stepping up from providing information-only services to becoming de facto banks over the phone.

Competition and the widespread sense that customers want to reach their money--as Citibank says, "anytime, anywhere, any way"--are driving banks to enhance their telephone services. Reliable estimates are hard to come by, but the general sense is that banks of all sizes are spending six and seven figures on the requisite hardware, software and switching equipment.

Some of the technology involved is quite elaborate and is a significant departure from what service reps have used in the past. For example, PNC Mortgage Co. is rolling out a pilot program at a call center in Louisville, KY. New mortgages will be scanned into a system using imaging technology, and when borrowers call up with questions, service reps will be able to call up copies of the loans on their screens. That will reduce a process that used to take as long as five days to a few seconds.

This hardly means that every technology component in a call center is being upgraded to leading-edge status.

Nonetheless, the trend toward sophisticated call centers should only accelerate. Customers now take it for granted that they can quickly get information over the phone, says Peter Begg, executive vice president with PNC Mortgage, and if they can't, they're likely to go to a competitor. For a mortgage company like PNC, that packs a double whammy. Not only does it mean lost business, but it costs money every time the company deletes a customer file.

At that rate, a few million dollars spent enhancing the call center looks like a bargain.

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