ABA/BMA Survey Shows Big Increase in Use of Bank Telemarketing.

Banks have increased sharply their use of telemarketing-both inbound and outbound-in recent years. And, they seem to be obtaining results from the growth, according to the recently released ABA/BMA "Bank Marketing Survey Report--2000."

In some categories of bank size, the use of call centers (inbound telemarketing) has doubled since 1987. Among banks in the asset size of $500 million to $1 billion, for example, use jumped to nearly 57 percent of those surveyed, compared to about 18 percent in 1987. Overall, 26 percent of financial services institutions now use outbound consumer telemarketing, and 31 percent use call centers.

The statistics are based on the responses of 376 U.S. banks of all sizes and locations that participated in the survey between March and July 2000. Banks were asked a total of 41 questions dealing with advertising, public relations, sales promotion, staff sales/customer relations training and marketing research. Prior to the year 2000, the marketing survey had been conducted annually since 1982 by the Bank Marketing Association. Its original title was "Analysis of Banking Marketing Expenditures." Last year, for the first time, the study was conducted jointly by BMA and ABA.

The year 2000 survey showed that banks have positive feelings about telemarketing. Nearly 15 percent reported that they increased the use of call centers in 1999, compared with less than 1 percent, who reported decreased use. Nearly 13 percent of respondents said they had increased the use of outbound telemarketing in 1999, compared with less than 2 percent who said the opposite.

Although there has been an explosion in the use of call centers, their presence is still closely tied to the bank's asset size, the report said. Of the banks in the $50 million to $100-million asset size, only 18 percent said they maintained a call center in 1999, compared with 87.5 percent of banks with assets of more than $5 billion.

Consumer outbound telemarketing also increased in all bank asset categories, but not as dramatically as the use of call centers. In the asset range of $250 million to $500 million, for example, nearly 33 percent of banks reported using outbound telemarketing in 1999, compared with nearly 22 percent in 1987. The change was most dramatic among larger banks. In the category of banks with over $5 billion in assets, 100 percent said they did outbound telemarketing in 1999, compared with about 67 percent in 1987.

Large banks, in general, embraced telemarketing with the most enthusiasm. Overall, about 15 percent of the surveyed banks said they increased the use of telemarketing in 1999, but among the largest categories of banks, the figure was 75 percent. When asked to rate the effectiveness of outbound telemarketing, larger banks tended to rate it higher than smaller banks.

The products most often sold through telemarketing include home equity credit (61 percent), checking products (52.9 percent), certificates of deposit (44 percent) and debit cards (32.9 percent).

The survey also showed a big leap in the use of direct marketing, particularly to promote such products as home equity credit, checking debit cards and seniors' accounts. While nearly two-thirds of the surveyed banks say they have a website, bank managers give their websites only modest ratings for effectiveness in serving customers and in gaining new business.