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Banking on KM solutions

This article appears in the issue November/December 2004 [Volume 13, Issue 10]


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Retail banks maintain their competitive edge through CRM solutions, self-service and content management.

Retail banks manage loads of data—from customer information to millions of financial transactions. That information can be a blessing and a curse depending on how organizations manage their knowledge.

Retail banks also face the challenges of serving customers through many channels--in the branch, online, via the telephone or ATMs. The business challenge is integrating data and customer information to present one view to the customer. Retail banks incorporate a variety of KM solutions—enterprise content management, Web-based self-service and CRM technology--to remain competitive in the market and offer superior customer service.

Why KM?

Knowledge management is a critical element for financial organizations for a number of reasons, according to Mike Gotta, senior VP and principal analyst at META Group . First, workers are required to become knowledgeable about new products or services to support changing business needs. Second, the rapidly changing market requires more sharing and analysis of information from multiple sources. And finally, growing regulatory demands require more rapid dissemination and comprehension of controls.

"Compliance and CRM seem to drive knowledge management more in banking than in other sectors," Gotta says. "There is also more interest in emerging tools than in other sectors to improve information sharing."

Gotta believes banks tend to be more successful in managing customer knowledge vs. sharing knowledge internally. He says it's rare for organizations to do "KM for the sake of KM;" rather, they position it as an additive strategy to a business initiative.

"Customer intimacy is very much derived from solid analytics and solid relationship strategies—making CRM the primary justification for KM in this industry," Gotta says.

Targeting core customers through CRM

Successful retail banks translate raw customer data into actionable strategy. Historical data provides much value, according to Kathleen Khirallah, senior analyst at TowerGroup, because it enables the bank to conduct a time-series analysis. Looking backward at how customer behaviors change over time enables organizations to create strategies for the future.

"The management of customer data and what banks are doing depend on the size of the institution," Khirallah says. "Typically, large banks have more customers, much more raw data, and are more apt to invest in technology to manage that data. Smaller banks interact with customers more in the culture of the organization to compensate when they don't have technology."

Retail banks worldwide are expected to spend nearly $20 billion on customer knowledge and core systems in 2006, according to TowerGroup research. The management of customer data improves sales, marketing and service. Nothing frustrates customers more, according to Khirallah, than having to repeat their problem to every channel they interact with. All customers expect to have their information put in a shared repository for complete integration and one view of the customer.

Bank of Montreal (BMO)--a Canadian-based financial services provider offering retail banking, wealth management and investment products--added proactive customer service solutions to put customer data at the fingertips of its service reps. The goal, according to Ted Mendes, director of Data Management Services, BMO Financial Group, was to consistently provide outstanding service whether customers used the Web, ATMs, PCs, telephone or a branch office.

Bank of Montreal selected an IBM (ibm.com) customer insight solution to leverage its customer knowledgebase and CRM analytical environments. The bank's program, dubbed Customer Value Management, refines data, adding new models and analytical capabilities, as well as new tools for sales and service staff. Its goal focused on capturing problems and complaints and using the information to build a complete picture of customer relationships with the bank. That enables the bank to make offers based on event-triggers and anticipate customers' needs.

Today, the bank's solution affects nearly 1,000 branches and targets the needs of more than 7 million Canadian customers. A big part of its success relates to the synergy between BMO IT and business teams.

Data integration across KeyCorp

An enterprise content management system enabled KeyCorp--an $84 billion Cleveland-based financial services company with 902 retail branches and 2,200 ATMs—to improve internal operations and customer integration for a $12 million annual savings. The bank's two-year phased implementation, using Mobius Management Systems' ViewDirect content management system, created a corporate archive of checks, statements and internal reports.

"We realized a corporate archive would be the direction to go to get some operational efficiencies, service our customers better and provide one electronic version," says Allyn Pytel, senior VP, Client Services Group. "It's easier from a retention perspective and a delivery perspective. The electronic strategy has spawned a number of business opportunities and new product offerings."

KeyCorp transitioned from its microfilm process to an imaging solution where images are scanned, indexed and stored for 30 to 90 days and later compressed and moved to virtual tape storage silos. Customers can access the documents online through a secure Web site, which ultimately reduced the costs of printing and mailing as well as calls to the service center. Telephone inquiry is now available in seconds to customers needing assistance rather than the five to 10 minutes for the manual look-up process.

"Jobs and work lives have been made easier for employees not having to leaf through microfiche," says Karen Heathwaite, VP, Key Technology Services. "Before implementation, we had different standalone systems from different vendors. With the new archive, all documents are in this one location on the desktop, which certainly simplifies things when they need to respond to a customer."

KeyCorp updated 13,000 desktops across the corporation with ViewDirect. Training played a large role in the project plan, and employees responded extremely positively, according to Pytel.

As of August, 120,000 KeyCorp customers elected to turn off their paper statements and receive them online, which represent 15% of the total online customer base. One-fourth of new customers elected to receive e-statements when they originally sign up to bank with KeyCorp. Those customers receive their bank statements two to three days before the mail customers and can bank when they want with 24-hour-a-day access to 13 months of statement history and 60 days of checks. KeyCorp users have access to 80 million checks, 36 million statements and 175 million report pages each month.

Pytel says KeyCorp achieved its four goals for the initiative: enhance the customer experience, improve sales performance, streamline operational processes and leverage the Internet as a delivery channel. It saves more than $12 million a year by reducing customer mailings, consolidating tape storage and eliminating microfiche.

"We've seen more and more customers utilize the online delivery channel," Pytel says. "In the last month, we had 500,000 checks viewed by customers. With this concept, we let them access information at their leisure when it's most convenient for them."

Technology alone can't provide a KM success story. According to Gotta at META Group, technology relates to about 20% of KM success. The important elements leading to success focus on organizational issues (50%) and process (30%).

Web-based self-service

Many retail banks have added Web-based self-service to enable customers to search for questions against their online knowledgebase. According to Scott Schwartzman, COO at ServiceWare Technologies, a provider of Web-based KM solutions, the goal is to improve the customer experience. Knowledge management captures the actual experience of the customer and identifies those questions or behaviors that need to be addressed proactively.

"A content management portal provides information," Schwartzman says. "But true knowledge management organizes that information, structures it and makes the experience that much better. If the information is usable and based on experience, not only does it provide a better customer experience but it also saves customers money."


Vicki Powers is a freelance writer focusing on business and technology issues, e-mail vicki@vickipowers.com.


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