People's Bank Installs Profitability Software

People's Bank, a Connecticut-based institution with a national credit card operation, has tapped HNC Software, San Diego, to provide high-end analytics and decision management software. HNC's Profit Manager has emerged as a critical component of People's Bank's new customer relationship management (CRM) initiative.

"Measuring and deploying customer profitability information for effective cross-selling and the overall optimization of customer treatment strategies will be a crucial aspect of our overall CRM program," according to James Sheridan, senior vice president of CRM at People's Bank. "We found HNC's Profit Manager software to be the most sophisticated and selected it as the cornerstone of our CRM initiative."

Profit Manager calculates the profitability of customers, relationships, products, and business units.

The system incorporates an interface to core accounting and banking systems, and guards the integrity of profitability measurement through matched-maturity funds transfer pricing and sophisticated cost-allocation methods, including activity-based costing.

The system can also be used to perform valuable "what if" scenarios and customer simulations to facilitate optimized CRM strategies.

The ability to generate funds transfer pricing and assemble customer fee income, customer activity cost drivers and functional standard costs from diverse data sources makes for rapid customer and product differentiation.

Traditional measures of customer profitability often include variables such as high average balances, demographics and multiple account relationships, but do not account for the actual cost of providing the services and channels that customers use.

There are segments within segments that warrant different treatment strategies. For example, a customer may have a high balance yet write a high number of checks and visit branches often, while another customer with a lower balance may use low-cost channels such as ATMs or the Internet.