Behavioral Tracking During a Merger.

Most bankers understand the rationale for bank mergers and the challenges associated with making mergers a success. To put it simply (and somewhat simplistically), the rationale for merging centers on efficiency: serving a larger number of customers more efficiently, offering the customers the efficiency of a broader range of products and services, growing the customer base more quickly and efficiently, and so on.

The challenges of mergers are equally well understood. They range from internal issues, such as

* personnel,

* operations and

* technology,

to external issues, such as effective communication. In other words, the challenges center on reaping the maximum reward from the merger, both as it relates to operational efficiency and the maximization of the value of the customer relationships that are being acquired.

Moreover, it is well understood that mergers occur in a very time-compressed environment. Failure to keep on track, whether it relates to system conversions or customer communications, lessens the value of the merger--sometimes dramatically.

Customer retention: the traditional approach

One of the most difficult challenges facing bank mergers is customer retention. Efforts at retaining customers usually focus on a series of communications highlighting the benefits of the new entity coupled with details covering the specific changes a customer will see in his or her relationship. Banks supplement these outbound communications with phone numbers the customers can call with questions and, in some instances, an additional outbound calling campaign aimed at high-value customers. The results of these efforts have been mixed. Few people involved in merger activity believe that banks are doing all that they can to communicate precisely with the customers who most need to hear from them.

What if banks could do more? What if they could expend their limited resources talking to those customers exhibiting behaviors that showed them to be at-risk of defection after a merger? What if they could understand how each customer normally interacts with the bank and could detect those who were able to defect by spotting a change in their patterns of behavior?

Mergers and behavioral tracking

Today, technologies exist that can evaluate transaction-level data to learn how each customer interacts with the bank. The technology automatically sends tailored alerts at the moment a customer's pattern of behavior starts to change. With this technology, communication is focused on those customers who behaviorally "raise their hand" to indicate risk. And communication is delivered during the window of time in which the customer is contemplating defection--and not after it's too late.

Banks seeking to maximize the value of a merger should deploy this technology early in the process. The tool can then serve the critical role of ensuring those customers who are most likely to leave are getting the attention they need. In so doing, the technology helps to ensure the bank's resources are used for maximum advantage and that the business objective of customer retention--often a key reason the merger has been undertaken--is achieved.

Jeffrey Caplan vice president of sales and marketing of Verbind Inc., Lexington, Mass. Verbind is s supplier of real-time e-marketing solutions.