Washington Federal Savings Bank has all the markings of a solid, century-old financial institution, which it is. It has a main office perched right in the town center of Washington, Pa., eight branches in the southwestern suburbs of Pittsburgh, and a total commitment to hometown banking. 

But, underpinning that very traditional mantle, is a group of professionals who’ve proven that the use of sophisticated market analysis and deposit strategies, usually reserved for big banks, is possible, prudent, and profitable for smaller institutions.

Washington Federal’s use of advanced technology and information resources wasn’t introduced as a way of creating internal efficiencies, although that is one of the benefits. Instead, the impetus to unearth and apply powerful data and demographics was to support the most fundamental philosophy of community banking: be the best financial resource for the people you serve.

Under the leadership of President Brian Smith, the $715 million-asset savings bank engaged a group of data service companies including Metavante, Acxiom Consulting, and Quest-Analytics to discern patterns from a relentlessly changing puzzle. “Data isn’t something that you put aside and work on once a month,” says Mike Pirih (pronounced “peer”), senior vice-president and chief information officer. “In order for the process to work, the people who are involved have to be involved regularly,” he says. “I look at customer and market demographics and our internal information dashboards an average of an hour every day—not including time spent over lunch, Googling for more information.”

Michelle Gula, president and CEO of m.rae resources, a strategic bank advisory firm that works with the bank, concurs, “We see varying degrees of interest in the power of data and technology utilization for deposit gathering purposes. The tools are there, in abundance, for every size bank. And, the rewards can be great. But, it takes bank-wide commitment to get results.”

Several years ago, Washington Federal made a commitment to coordinate its technology with internal and external resources, and embrace the new program bank-wide. As a result, assets grew by nearly 17% and deposits by 22% during that period.

Data drives cross-sales
To begin, the bank uses its data warehouse (part of the core processing provided by Metavante), and lead generation and business intelligence software from Quest-Analytics to store and analyze all of its customer profile information. This includes basic data like name, address, birthdates, account open dates, net income, net worth, and customer profitability.

With this information at hand, Pirih’s team is able to identify target groups. “By looking at the data, we found that a substantial number of our customers fall into the over-50 age bracket,” he explains. “Those same customers represent an equally significant amount of our total deposits.”

Four years ago, the bank developed a package for this segment and watched the relationships grow. They also noted the group’s tendency to be far more engaged than other customers. “These are individuals who clearly want attention from us,” says Pirih. “So we respond accordingly with package enhancements, and constantly seek ways to interact and nurture the relationship.”

By breaking the group down even further, using household income, Washington Federal is able to project the potential for profitability and set realistic benchmarks.

For example, statistics show that individuals with a net worth of $250,000 or more have approximately 50% of their financial assets at their primary financial institution. Using that guideline, the bank developed logical business rules to generate cross-sell opportunities that strengthen the relationship and obtain more wallet share from that segment.

As part of its contract with Quest-Analytics, the bank subscribes to Acxiom Consulting’s demographic intelligence solution which combines multiple sources of market, demographic, and financial data and information to reveal consumer growth potential, commercial growth potential, and market position, for example. These are all the bits of information that allow the team to identify, separate, and sell to prospective customers, with the ultimate goal of developing new long-term, and profitable, relationships.

Track it on the dashboard
Each month, Pirih’s team populates the updated demographic information into their internal system. Each quarter, they prepare and review dashboard reports to understand key growth areas, as well as sales benchmark targets and results.

They also stratify customers by age, and segment them into Generation Y, X, Midlifers (also termed “Gen Jones”), Boomers, and Seniors.  Again, by following the transaction history and interaction at the bank, they’re able to create products that match the needs of each segment.

More recently, the team put together a free account with a cash-back feature and electronic statements, primarily for Gen Y and Gen Xers, and followed their results. “Using that dashboard, we’re able to look at the initiatives from the previous quarter and create benchmarks that tell us whether anything we did had an impact —and how much,” Pirih says. “We’re also able to tell if the people targeted for the product were actually the ones to use it.”

Employees have to “live the brand”
As the customer data warehouse and business intelligence software was tested to predict accurate cross-sell leads, the next challenge became training for branch managers and customer service representatives.

“Training is so critical to the overall success of any strategy, but especially to a front-line deposit strategy,” says Michelle Gula. “You need everyone involved to be on the same page. Knowing how to engage the customer and connect them with the right products and services is not an intrusion, it’s a value-add.”

Pirih says that his group showed some initial resistance to the cross-sell process, but most people quickly came on board. “There’s a big difference between pushing the latest promotional item and readily identifying a true customer need and acting upon it in a way that makes sense for the customer,” he says. “But you need everyone on board so you legitimately live the brand.”

Early in the process, John Clayton, Washington Federal’s senior vice-president of Community Banking assumed responsibility for sales training and engaged an outside consultant to assist with employee sessions.

After several rounds of training and testing, including three months of group instruction and one-on-one guidance, employees were internally “certified” as consultative sales representatives. Clayton also led a three-month training camp where business rules were created and employees practiced their sales calls with other employees to gain confidence with their listening and asking skills.

“Front-line staff and CSRs need to have the right tools and training,” says Gula, “so they view themselves as experts —people who are so at ease with evaluating a customer’s needs that their recommendations become second nature.”

In customers’ best interest… truly
To ensure that the bank can identify and respond quickly and consistently to emerging opportunities or issues, Washington Federal employs a lead-generation model. “We engage ten business rules,” said Pirih. “About half are service-focused, and half are qualified customer cross-sell opportunities. It can be as simple as a reminder during a transaction that an e-mail address is missing on the customer’s account.”

Each day, the system pushes a prioritized list to the bank’s customer service representatives (CSRs). They make calls throughout the day and update the lead generation system with the results of their calls and with comments on prospecting opportunities.

Gula says that this step is where most banks falter. “Many of the banks that we see across the country make an effort to collect good data,” Gula says. “But, we rarely see a systematic approach to managing this data or consistently acting upon it in ways that will positively affect profitability.”

The business rules written into Washington Federal’s software recognize very specific changes in data and automatically cues bank staff to take predetermined action. Among the most important is a rule that detects if there has been a significant change in a customer’s deposit balances over the past six months.

“The attrition rule automatically identifies the customer and pushes out a message indicating that the account shows behavior of potential attrition,” says Pirih. “The message contains all required information for our team to call the customer and ask if Washington Federal is meeting their expectations. They’re generally able to find out if the person plans to leave the bank and can take care of any issues that are prompting their decision. We’ve always been low in terms of attrition,” Pirih adds, “but introducing this process is what got us down to below 0.40%.”

“It’s banking in the customer’s best interest,” says Pirih, making a point that’s reiterated throughout the bank’s marketing materials.

For example, Washington Federal’s money market account pricing is tiered with a significant bump—over $25,000 moves to the next higher rate. The group wrote a business rule to recognize when the sum of a customer’s accounts would get close to that magical $25,000 mark. If the customer has an average money market balance of $18,000 for the past six months, holds a savings account, and has a CD that’s about to come due, bringing their cumulative balance up to the tiered amount, the system pushes a lead out to the responsible CSR or relationship manager.

From there, Washington Federal does the unexpected. The banks calls the customer and offers to pay them more money.

“We make a point of letting our customers know when we can reconfigure their accounts so they earn additional basis points,” Pirih continues. “It’s been very helpful in getting new money into the bank because they appreciate our efforts to help. And they tell people about it.”

Of the ten business rules in place, three are designed to generate “service calls,” while the others are lead opportunities. For example, three weeks after a customer opens an account, the software automatically sends a lead message prompting the CSR to call, thank the person for their business, and find out if everything was handled satisfactorily. The lead message even includes a script written by Clayton’s group, to help guide the conversation.

Likewise, current customers who are approaching the big 5-0 are automatically sent a birthday card letting them know that they are pre-qualified for a lifestyle product with lots of benefits.

“Every quarter we review what potential enhancements can be made to the business rules to ensure that we’re being as service oriented and productive as possible,” says Pirih. “And we meet with Quest to make adjustments as often as necessary.”

A little competition helps
To ensure that Washington Federal’s front lines have a consistent source of motivation, branches are divided into two teams and encouraged to compete for total new dollars (loans or deposits). Each month, a report detailing successes is prepared for senior management; and each month, quarter, and year, awards are doled out for the winning group. Individual achievers are also singled out and compensated for their outstanding achievements on a monthly basis, with leading branches and individuals recognized at the bank’s annual holiday and awards banquet. Awards are presented by the president and sales manager at luncheons or through branch visits.

“That’s how we use the lead generation system operationally—to reward people for meeting and achieving goals,” says Pirih. “But we made a point of waiting three months to instill any productivity targets in order to ensure that everyone had at least 40 hours of training under their belt.”

Obviously, the creation of a data analysis and deposit capture program of this magnitude is quite a feat. “But,” says Gula, “with shrinking margins and ever-increasing competition, it’s imperative that community banks begin, at the very least, by organizing their data and acting upon it. It’s a scalable set of projects that can be paced appropriately for any size bank.”

Pirih agrees, “If you break it into a process—it’s possible. You just need to address each piece a step at a time.” BJ