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A project to clean up errors in customer records brought an unexpected dividend to PNC Bank.-A-Dub">
Kunkel agrees that, because the results are often indirect, "it's hard to sell people on data quality." The direct effect of eliminating address-data errors, for example, is that PNC drove the number of returned mailings down 98% from where it stood in the first quarter of 2000, when almost 45,000 checking- and savings-account statements and other mailings came bouncing back. In the three months ending June 2003, PNC saw only about 1,300 pieces of returned mail. PNC calculates that it spends about 9 cents per piece processing returned mail (just the handling labor, not the wasted postage), which means it's spending about $16,000 less annually than it was a couple of years ago. Not a big number for a bank that had revenues of $3.8 billion last year.
The real significance is that thousands of PNC customers aren't left wondering where their statements are, and the bank isn't missing an opportunity to promote other services to them. PNC points to gains such as a 14% increase in ATM and debit-card fees and a 15% increase in home-equity loans as evidence it is, in fact, broadening its customer relationships.
Better communication with customers may be a factor in PNC's improved customer-retention rate, which has climbed from 91% to 94% since 2000. That's impressive, given that the banking industry's average retention for checking-account customers is about 85%, says Kathleen Khirallah, a Tower Group analyst. It's generally much more profitable to retain customers than to recruit new ones, she says.
At PNC, data-quality efforts center on the bank's so-called Customer Information File (CIF), a 21-year-old mainframe application. CIF stores data in the Information Management System, a hierarchical database from IBM. PNC also has invested in Siebel Systems' customer-relationship-management software for its branches and its Web site, but CIF remains the bank's official repository of customer data. So when a branch employee processes an address change in Siebel, that change is recorded in both Siebel's relational database and in CIF. Some other changes, such as new account openings, are synchronized nightly.
Although PNC is evaluating the possibility of migrating all customer information to Siebel, for the time being Kunkel remains focused on refining CIF.
In 2000, PNC took two big steps toward eliminating errors in its customer files. In May of that year, the bank subscribed to a Pitney Bowes service that provides change-of-address data obtained from the U.S. Postal Service. That lets PNC bring its address records up to date and keep them current. A couple of months later, the bank began implementation of Trillium Software's data-cleansing offering.
At its most basic level, data-quality technology is aimed at eliminating errors introduced by sloppy data entry. PNC has also invested in a type of data analysis known as "householding," aimed at understanding the relationships between account holders. For example, if "Elizabeth," "Beth" and "Liz" are all listed at the same address, are they the same person? Or is "Liz" the daughter of a woman listed on one account as "Elizabeth" and another as "Beth"?
Customers tend to be annoyed when their bank fails to make what ought to be obvious connections, particularly when the bank treats multiple accounts for the same person as if they belonged to different people. "As a bank, you're supposed to be good at accounting and other forms of bookkeeping," Gartner's De Lotto says.
PNC previously used software from Brightware, now a division of Firepond, to improve the editing of customer records but wanted a system that would require less manual intervention. About two years before it started working with Trillium, PNC purchased and started to implement software from another vendorone Kunkel says he is legally not allowed to name. The bulk of that implementation relied on the vendor's employees or consultants, something PNC was eager to avoid in the future. With the implementation of the Trillium software and subsequent refinements, PNC project manager Greg Ford and his team quickly became self-sufficient.
"I believe we never would have got there with the other vendor. We would still be reliant on them," Kunkel says.
Trillium detects if an address doesn't exist, even though it may be formatted properly, by checking against a database of valid addresses. PNC immediately saw a big cut in returned mail.
One of the best ways to improve data quality is to get it right the first time. So Ford now works with the Siebel project team to integrate CIF interactive functions, such as address verification, into the graphical user interface deployed in bank branches. That will mean, for example, that when a customer comes into a bank branch to open a new account, the branch employee waiting on that customer will be able to detect potential problems with an address right away and correct them on the spot. So if that person lives on "1000 Maine Street" but it was entered into the new account screen as "Main Street," the address-verification system will be able to pop up an alert if no such address exists in that ZIP Code.
Today, address and watch-list matching exist as back-office processes that PNC applies to all new accounts.
Ford says he has learned it's important to instruct the software on when not to mess with data that it would otherwise "fix." For example, there was the time the system kept automatically changing a customer's address from "Apartment 10" to "Trailer 10," to match U.S. Postal Service records. But the change produced a swift complaint from the resident of that address.
"He turned out to be a senior vice president for some company, and he did not want anyone to know that his address was a trailer park," says Deborah R. Smith, vice president for technology delivery at PNC. While the system has to be flexible enough to make exceptions that respect a customer's preference, she says, " we don't want to take away the good that this does."