While more banks are turning to outside sources for additional information about their customers, they have a lot to learn about using the data effectively.

"The use of third-party data providers is increasing dramatically," said James B. Moore, president of Mentis Corp., a bank technology research firm based in Durham, N.C. However, using more external data does not guarantee better marketing or customer management.

"If you can't get your own house in order, getting more of the same from someone else isn't going to improve things," said Jeffrey Infusino, a vice president of Mercer Management Consulting.

Many see the information management difficulties stemming from data warehousing projects that either failed or were developed without sufficiently defined business goals.

"The name 'data warehouse' doesn't imply anything other than storage," said Scott A. Hansen, vice president of the financial markets division at John H. Harland Co. Banks also need to create "elegant solutions for the building the relationship" with customers, he said.

"There are a lot of strategies out there, but they have not been well integrated," said Robert Hall, chief executive officer of Action Systems, which preaches the use of information to create "market competence" at the retail banking front lines. "Bankers need to connect the dots," he said, adding that Dallas-based Action Systems is developing alliances and approaches to do just that.

Consultants and analysts generally agree that banks are far from the holy grail of customized, one-to-one marketing. "Most of them can't get at the information," Mr. Infusino said.

The complexity of doing one-to-one marketing at a bank is very great, said Andrew J. Frawley, president of Exchange Applications, a marketing systems company. "There are lots of data, lots of channels, lots of data- quality issues."

Despite the challenges, financial institutions are striving to make the most of their wealth of customer and prospect information. Credit card companies, for example, use a lot of external data to build data bases of prospects, Mr. Frawley said.

Mainstream retail banks do not do a lot of prospecting but are "enhancing their customer data bases with a fair amount of external data, ranging from credit bureau reports to demographic, psychographic, lifestyle data," Mr. Frawley said.

The data available for mining has become richer in recent years. Acxiom Corp., Claritas Inc., and Trans Union Corp. have bundled their specialized capabilities into a joint product called PowerPak.

Using data elements ranging from home equity to children's ages, a bank can use PowerPak to determine "the affluence or financial stability of a person," said Christopher A. Phillips, product manager with Acxiom Corp., Conway, Ariz.

The elements are culled from Acxiom's Infobase multisource data base, Trans Union's customer-lifestyle and customer-preference codes (called Solo), and Claritas' Affluence system, which classifies all U.S. households by estimated net worth and assets.

Trans Union has another product to help banks understand and market to their customers better. Its Trans Union Lists division, SRI Consulting, and Locus Group developed a predictive tool for financial services marketing.

The tool, called PIC (for prospect identification and classification), draws from and merges information from Trans Union's MasterFile data base of more than 140 million Americans and SRI Consulting's Macro Monitor Survey, a collection of consumer financial attitudes and preferences.

From the different sources of information, an individual score is developed that indicates demand for a product.

"The reason our data base is good for this kind of score is that we have over 350 attributes on an individual basis that we can use for modeling," said Timothy J. Claytor, product research manager with Trans Union Lists.

The data are extremely predictive "because we have so many different elements to model from," he said. "'It's a way to take the debit side of a consumer's profile and model his asset side."

For banks to make the best use of these data, they need to determine what parts to use and how best to use them. Large quantities of data are not necessarily the solution.

Analysts say the only way to find out what works is through tests of a tactic's impact on marketing efforts.

"You're not going to know data effectiveness beforehand," Mr. Infusino said. "You have to have a rigorous approach to testing ... You look at the results and you use what gives you a better predictive ability."

Even banks that identify pieces of data that are strong predictive indicators often "hit a wall in terms of their ability to execute," Mr. Frawley said.

It behooves bank marketers to build the necessary analytical capabilities, Mr. Infusino said. And they have a lot of sources of help.

Recognition Systems and Exchange Applications, for example, see automation as a significant element in improving banks' customer relationship management. Tailoring marketing campaigns to specific customers or customer segments becomes increasingly difficult for organizations that run hundreds of initiatives at the same time.

"If you can't automate that process, it's just too hard, too complex for people to understand," Mr. Frawley said.

Recognition Systems offers Ideas Solutions. This "is basically using the information that you put together in a warehouse in order to understand customer behavior, learn what people want, be able to take action on that, and deliver the appropriate products and services at the lowest cost," said Paul Gregory, president and co-founder of the Chicago-based firm.

With neural network technology, a branch of artificial intelligence, the system builds "very rapid and more accurate models of customer behavior," Mr. Gregory said.

"If you roll the clock back 30-odd years, effectively all of the banks did practice customer relationship marketing," Mr. Gregory observed. "Your local bank manager knew the majority of people who banked with him."

Ideas Solutions supports a bank's marketing campaigns by further defining its targets. A customer, NWS Bank PLC of Chester, England, was able to "reduce marketing costs by 20% to 30% but still get the same set of responses," Mr. Gregory said.

Exchange Applications focuses on "helping companies manage and optimize their customer relationships," Mr. Frawley said. Its software product, ValEx, "sits on top of a marketing data base or customer data warehouse and allows businesspeople to interact with the information, do analysis, set up plans, set up specifications, and actually execute direct communications with the customer," Mr. Frawley said.

Exchange Applications estimates 30% of its clients are from the banking industry, including Fleet Financial Group and KeyCorp.

Some of the best information may already be in the hands of banks; the trick is how to harvest it. "The best variables you can segment customers on are how they behave," Mr. Moore said.

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