News

Getting personal with your machines

April 13, 2005

Going to the corner deli and ordering "the usual" makes us feel special. There's something nice about going to a familiar place where "everybody knows your name."

It's to the deli owner's advantage to know his customers and treat them well.

Like most businesses, banks and credit unions have built consumer loyalty by getting to know their customers. But the majority of mid- to small-sized financial institutions are reluctant to use their ATM channels to extend their customer service. That's in spite of the fact that 40 billion transactions across the globe take place at the ATM annually, evidence that the ATM is "arguably the bank customer's favorite delivery channel," said Jerry Silva, senior analyst of delivery channels for TowerGroup, a research and consulting firm for the financial services industry.

Historically, FIs have been reluctant to offer much more than basic cash transactions at the ATM. But, according to Silva, that's beginning to change.

Customer relationship management has recently undergone an overhaul, said Rob Straub, director of solutions for Wincor USA.

In the past, banks would profile households and market financial services to them that other households in their demographic were already using.

"Basically, they would come up with a profile of typical services that the consumer should and would want to have," Straub said. Now FIs are learning how to take that same data and use it at the ATM.

CRM at the ATM proved profitable for Singapore's OCBC Bank, a leading FI in Asia with $73 billion in assets, 110 branches and a network of 410 ATMs. In 1999, OCBC began using relationship banking at the ATM.

Even though 90 percent of OCBC's ATM transactions were cash withdrawals, after implementing ATM CRM, time spent at the ATM decreased from 30 seconds per person to 10, and the response to targeted offers, previously offered by mail, increased from approximately 2 percent to 40 percent.

"It positively impacted the bank's ability to touch the customer," said Silva, who wrote a case study about OCBC's success in January 2005.

The 'big leap'

Straub and Silva said most FIs, especially smaller ones, don't have backend systems that can support CRM data. "The reason why it's a big leap is because all of the channels in banking grew up independently," Straub said. "They're not integrated."

"The biggest cost is going to be in the backend," Silva said. "'What kind of system do you have that can handle this CRM information?' is a question banks need to ask themselves."

The good news, however, is that as legacy ATMs are replaced with Windows-based ATMs, establishing a backend CRM database should be easy, Straub said.

For instance, Wincor's ATMs have a data repository where CRM information can be stored and built upon.

"It's all available now," Straub said, and a lot of manufacturers are offering it.