Profitability Software Gives Account Officers 20/20 Vision

As technology and mega mergers become more pervasive, many banks have lost their personal touch. However, Sterling National Bank, New York, is of the philosophy that technology should enhance-not replace-personal service.

The $1.2 billion bank caters to entrepreneurial businesses, offering a full range of products and services. Two years ago, it began offering transactions via the Web. Today, its Internet services rival those of the top money center banks.

Even while automating many of its services, the bank hasn't lost sight of its 70-year heritage of personal service. "Once customers get accustomed to it, they love it," said Louis J. Cappelli, chairman and CEO of Sterling National. "But what they love more is that if they have an issue, they can pick up a phone, and they're not going to get voice mail menus, buttons to push, or recordings."

You won't find a call center at Sterling. Each customer has a relationship manager who takes care of all their needs, regardless of the product or service. "That gives them a high sense of comfort, because the customer has one person they can deal with, who's going to carry the ball to make sure their requests gets carried through," said Cappelli.

That's not to say technology hasn't been a boon for the bank. As customers increasingly use the Internet for transactions, they call account officers less. That not only saves on costs, but it leaves account officers with more time to concentrate on more complex financial needs and search for cross-selling opportunities.

When it comes to keeping up on technology, smaller is better, said Eliot Robinson, executive vice president of IT and bank operations at Sterling National. "There's no question about it. When we see that the market or our clients could use certain services, we create them very rapidly, usually within a month or two months. For the majors, it may take them years."

Enabling account officers to view overall profitability of an account or group of accounts is ProfitVision, a profitability software tool from HNC Software, San Diego, Calif.

ProfitVision is a multidimensional system that analyzes customer relationships, products and business units across the enterprise. It incorporates an interface to core accounting systems and ensures the accuracy of profitability measurement through sophisticated cost-allocation methods, including activity-based costing. ProfitVision measures the profitability of individual and group contributions and can support management by objectives and incentive-based compensation plans.

Sterling spent less than $100,000 to acquire the ProfitVision system. "It was not a tremendous amount of money," said Robinson. "We thought that if we implemented the system it would have a positive impact on overall returns. It really opened up a lot of people's eyes in terms of analyzing relationships, and it's been a very good tool for the account officer to discuss pricing with their clients."

ProfitVision has allowed Sterling to zero in on its most profitable clients and assure they are given the best attention. "It's also allowed us to focus in on our less profitable customers to reprice the relationship so it becomes more profitable," Robinson said.

Since ProfitVision's installation four years ago, Sterling has tied more of its business units and systems into it.

"Right now it's being used very widely," Robinson said. "Every time a customer comes up for renewal of a line of credit, the profit information has to be included, so it's being used to actively make decisions on how to price and how to provide other services."

ProfitVision works in conjunction with Sterling's primary account access tool, Silverlake, licensed by Jack Henry & Associates. Silverlake tracks customers at the account level and includes all transaction accounts, loan accounts and general ledger.

The business units have extended ProfitVision's reach and usability by converting reports into Adobe PDF format and distributing them through the bank's intranet to lending and branch personnel.

"We used to deliver a pile of computer printouts to the account officers," Robinson said. "Now, they can go in and look selectively at top performers and bottom performers, without having to wade through a lot of paper."

FAST FACTS

INSTITUTION: Sterling National Bank

HQ: New York

ASSETS: $1.2 billion

BUSINESS CHALLENGE: Give account officers the ability to identify their most profitable customers and facilitate cross-selling.

SOLUTION: ProfitVision

KEY QUOTE: "It really opened up a lot of people's eyes in terms of analyzing relationships." - Eliot Robinson, executive vice president of IT and bank operations