• by Phil Leggiere , April 22, 2009

It wasn't too long ago that the phrase "banker's hours" was still commonly used, referring to the fact that banks, which then routinely closed in mid-afternoon, hours before most Americans got out of work, didn't follow or need to follow the same schedule as the rest of us.

That same sense of imperviousness extended beyond the clock to the ways banks interacted with and marketed to consumers.

Though banks long ago gave up banker's hours, it's taken far longer for financial institutions to fully respond and adapt to changes in consumer behavior.

Faced with a rapid influx of new competitors, banks no longer have a choice, says John Macaluso, Chief Technology Officer, Bank Solutions, at Fiserv.

"What's prompted us to change and revamp how we look at things like customer relations management (CRM) and its connection to behavioral data are profound shifts that have been occurring in the wider economy and financial industry," says Macaluso. "What I mean is that the lines that used to separate traditional banking and investment banking have blurred. They've blurred almost beyond recognition from the old-school banking world of a generation ago. You have so many non-traditional enterprises entering into the world of financial services.

"Most interestingly and most importantly," adds Macaluso," we see very large retailers who understand consumer relations and database marketing with deep expertise applying the logic of direct to consumer marketing to banking services."

This phenomenon has made it imperative for forward looking financial institutions to adapt quickly, becoming consumer-centric in a way they've never had to do before, Macaluso believes.

"The shift has had two major components," he says. "First there's self-service. Consumers are far more self-directed and able through new technologies to customize their own banking experience. That's raised expectations of speed and personalization of service."

The other area, Macaluso explains, is that banking, now more than ever before is a truly multichannel experience.

"Banking transactions used to take place at the branch office," he says. "Now the question is, 'What is a branch?' Is it the bank office itself? Is it the Web? Is it your cell phone? Or your grocery store? The fact is, the location of the bank is dynamically changing all the time."

Though the challenges of Internet time are daunting for nearly every traditional vertical, they create a huge challenge for banks to rise to the occasion by creating a seamless user experience by tying the information from all these channels together in a cohesive and targetable way, segmenting customers by an ever more granular set of behaviors.

"The big silo for most banking institutions," Macaluso says," is that customer data for the retail side, the savings and checking transactions, has never been connected to the investment side, areas like bonds and stocks. Yet without having a holistic view of consumer's portfolios, it's hard to really provide the kind of personalized offers and services consumers are increasingly demanding and expect."

He adds, "I'd love to tell you that it's all a pure science we have in place. It's got real science and deep mathematics behind it, but making truly multichannel, seamless, personalized service work is also an art, with ongoing refinements and challenges."

360-degree real-time awareness of the consumer is a long-term ideal, but not one that's likely to reach perfection anytime soon, according to Macaluso.

"We are making some progress all the time. But there's much more of a capacity to provide intelligent interaction with consumers at any given point of contact, accessing information in real-time about where a customer transacts, their transactions themselves and the types of services that they have been, and are likely to need and be interested in now.

"The old model of getting statements at the end of the month is becoming fast obsolescent for both consumers and banks," he says. 'We're at a point where if someone opens a CD you want to know in real-time how that changes their total portfolio value to the bank."

Macaluso believes the that over the next few years only traditional financial institutions who are ready to entirely retool themselves on a consumer-centric behavioral basis will be positioned to thrive, or perhaps even survive, as new players, who know consumer personalization and behavioral targeting "in their bones," push more aggressively into the fray.

A particularly telling catalyst, he says, will be mobile. "Mobile banking will put all of the trends which are already underway into overdrive," Macaluso declares. "It will change the level of granularity of data yet again because people will have their cell phones with them all the time. It will also heighten the level of scrutiny by the government about how data is gathered and used. The broad theme will be that banks who can invest in the type of analytics that also integrate all the current guidelines will be in position to take things to the next level. Those that don't -- or that insist on working within out dated platforms and models -- will be hard-pressed to survive."