North America Bytes

Few financial firms are calculating profitability at the customer level, according to CorePROFIT study; Citibank's c2it person-to-person payment service drops transaction fee; ALLTEL acquires PMG Systems, a privately held provider of software and professional services; NYCH and EBA form e-commerce payment initiative for the Internet; Correction for First Security State Bank item that ran in 11_02_2001 BS&T eNEWS.

New research from CorePROFIT Solutions, a West Chester, Pa.-based enterprise profitability management company, reveals that many financial institutions are not analyzing profitability based on customer behavior.

According to the company's "2001 Profitability Technology and Costing Study," which included interviews with senior-level marketing and finance executives at the top 250 North American financial services organizations, many institutions are calculating profitability at the organizational and product levels but require detailed profitability information at the customer/account level.

Highlights of CorePROFIT Solutions' findings include the following:

Nearly 70% of the financial institutions have implemented a model for measuring profitability. However, 87% of these models calculate profitability at the organizational and/or product levels only.

More than half of the financial institutions are using profitability information for customer relationship management and sales and marketing programs. Other primary uses of profitability information include product management, business process re-engineering and financial decision making.

60% of the financial institutions are not satisfied with the underlying cost information they use to calculate profitability. More than 77% are currently using expense allocations or Federal Reserve functional costs as their primary costing methodologies.

Financial institutions noted that amongst their most significant barriers to profitability measurement are detailed cost information, data aggregation, and senior-level sponsorship.

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Citibank's c2it person-to-person (P2P) payment service announced a revised pricing structure, making it possible for consumers to send and receive money online within the United States for free.

The ability to send money online for free via c2it may be of particular interest to online auction users, who are among the most active users of online P2P payments services. Now, buyers using c2it for online auctions will no longer be charged a transaction fee by c2it to pay for their items. Online auction sellers, like all recipients of funds through c2it, will continue to be able to receive funds online without a fee.

In addition, c2it is offering online sellers the opportunity to earn an additional $5 for every new user they refer to c2it.

"The new domestic pricing announced today brings us further toward our goal of building the consumer payments engine of the Internet," said Antony Jenkins, chief operating officer, c2it. "Consumers have widely adopted online person-to-person payments services to settle online auction transactions. As they become more comfortable with these transactions, we've recognized that they are more willing to extend them to other types of personal transactions."

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ALLTEL, Little Rock, Ark., has acquired the assets of PMG Systems, a privately held provider of software and professional services based in Philadelphia. The acquired technology helps banks expand relationships with their most profitable customers by analyzing the cost to service each account.

The PMG products will be integrated with ALLTEL Information Services' existing mortgage and retail banking customer relationship management (CRM) offerings. ALLTEL will also retain 39 PMG Systems employees.

Financial terms of the agreement were not disclosed.

"The combination of ALLTEL's existing software assets and the PMG products creates a powerful customer profitability offering for financial institutions looking to increase their CRM capabilities," said Rob Lee, executive vice president of solutions management for ALLTEL's financial services organization. "ALLTEL can now provide bankers with the ability to better identify highly profitable customers, so banks can better target them for additional products and services. At the same time, they can identify low-profit, low-potential customers and migrate them to less costly channels, such as the telephone or ATM."

PMG Systems has relationships with many of the top 30 financial service providers in North America.

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The New York Clearing House (NYCH) and the Euro Banking Association (EBA), Paris, have signed a memorandum of understanding that will allow both organizations to work together on a global electronic payment infrastructure

When completed, the infrastructure will enable Internet-based, end-to-end electronic commerce for the first time. Both organizations will begin immediately to establish joint working groups dedicated to making geography and currency distinctions transparent to e-commerce.

"We are very excited to be exploring these options together," said Olivier Mas, chairman of EBA. "Our goal is to share resources and expertise as we seek to add critical new Internet compatibility to each of our payment platforms, creating the basis for a coherent end-to-end straight-through processing of our clients' payments independently of whether they are in dollar or in euro."

"This alliance is a natural for both organizations," said Jeffrey P. Neubert, president and CEO of the New York Clearing House. "We share many of the same bank members and a similar vision of where electronic payments need to evolve. The true opportunities in e-commerce can only be realized if electronic payments can flow across borders and transcend currency distinctions without any human intervention."

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CORRECTION

In the article on First Security State Bank, Charleston, Mo., that ran in the 11_02_2001 edition of BS&T eNEWS incorrectly states that the BranchConnect Teller Suite used at the bank to manage its day-to-day teller transactions was produced by National Source One, Springfield, Mo. BranchConnect Teller Suite(TM) is actually a product of BranchConnect Financial Systems, Inc., the Knoxville, Tenn.-based provider of teller automation solutions for the banking industry. National Source One is a marketing, sales and installation support consortium of systems integrators reselling BranchConnect Teller Suite(TM).