A NEW AUTOMATION tool is letting Signet Banking Corp. see its customers in a new light.

Since January of this year, the $12 billion-asset company has been using a profitability analysis program that gives marketing and sales executives, a more intimate transaction-by-transaction history of every customer. The system, called Harvest, can also measure the performance of individual products and lines of business.

Having the system has paid off for Signet, which reported a 50% second-quarter gain of $40.4 million. Net interest income rose 22% to $129.8 million in the second quarter of this year.

While the Richmond, Va.-based company could measure profitability before, the analyses were time-consuming and restricted to individual products and business areas.

"We wanted to make our management information system more actionable," said David Knellinger, Signet's vice president of management information systems. "Our old system produced good report cards that showed historically what was going on, but we couldn't relate it to the customers who were causing the effects."

Signet's credit card division had been using a customer-driven system similar to Harvest for several years. After observing how that business was thriving, Signet realized that much could be gained from migrating a similar system across all businesses.

But such a step would be complicated for the bank, which has about 240 branches in Virginia, Maryland, and the District of Columbia.

Nevertheless, Signet took a giant step forward in 1989, deciding to outsource its data processing. The bank believed that by replacing existing International Business Machines Corp. and Unisys mainframe applications with an integrated banking system supported by an outsourcer, it would save money and stay on top of emerging technologies.

In 1991, Signet signed a contract with Electronic Data Systems inc. to install and maintain Software Alliance's Reliance 2000 Integrated Banking System.

After hearing Signet's idea for the cross-business profitability product, EDS enlisted the aid of Software Alliance, and the three parties went to

The challenge in creating Harvest lay in the bank's diverse systems applications.

"Reliance 2000 is the corner-stone of most of our customer, information," Mr. Knellinger said, "but we also had to pull data from our homegrown systems for commercial loans, leasing, and general ledger."

It took about a year of standardizing data files and creating data access paths to get the system up and running.

Here's how it works today: Harvest creates a customer information warehouse -- structured on IBM'S DB2 relational data base -- which helps tie together information from Signet's various applications systems. Before the data is available for analysis, it's reconciled against the general ledger to insure accuracy.

From there, the bank's 40 business analysts, each representing a particular line of business, use a stand-alone companion product called a data dictionary to write queries from their PCs for the information they want. Copies of the reports are then passed along for further analysis in spreadsheet form to marketing, sales, or product management staff.

"Harvest has done a good job of looking at revenues, expenses, and returns on an internal basis," said Anthony Davis, an analyst with Dean Witter. "It's showing where they're making money and where they're not making money."

Software Alliance is now marketing a generic form of Harvest, called Insight, to other banks.

Mr. Knellinger said that Harvest takes customer analysis beyond the limits of a standard customer information file.

"In the customer information file, we can see a customer's account and what other accounts are in the household," he said. "But Harvest can be used for trending purposes. Now we can examine a customer from three months ago to what he's doing today. We can measure change as well as influence change."

Harvest also increases productivity. Producing the less comprehensive profitability analysis reports of the past required manual input of data into spreadsheets -- a process that could take three months. With Harvest, better information is available faster: usually within a week, sometimes within hours.

Having a bankwide view of a customer's total relationship also increases operating efficiency. Previously, a product manager may have looked at a customer's file and wondered why service charges were not being paid. With Harvest, managers can quickly see if a customer has multiple accounts that make him eligible for a fee waiver.

Of course, the system also helps ensure that Signet collects the fees it's entitled to.

Karin Harrison, cash management product manager, says this has already helped Signet increase revenues, though specific figures are unavailable.

"In cash management, we found that there were cases where we were doing work for a customer, but the service was not passed on to our billing system," she said.

Now it takes 15 minutes to pull the information together and ensure that customers are accurately billed.

The cash management area has also used Harvest to track volume and revenue for individual products and develop highly targeted prospect lists for cross-selling.

Taking it one step further, Signet uses Harvest to determine how well promotions work. After a targeted mailing, Signet's marketers track how many customers sign up for the service.

"We can go in and segment customers by age, maturity dates, transaction type, and account type," said Deborah May, a business analyst. "This helps us monitor product profitability and gives us the ability to measure change month by month."

Harvest also has potential to help the bank develop new products. The system, for example, can generate a report showing what businesses a particular branch's commercial customers are involved in. If the report shows the branch is top-heavy with retailing accounts but the region is predominantly a manufacturing base, Harvest can help management identify the need for new products that specifically target the untapped market.

With a system like Harvest, Signet should continue to reap good fortune.

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