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Consolidated Statements: Avoiding the Traps and Pitfalls

By Alfredo Rodriguez, Caribbean Software Group
alfredo@csgcenter.com

One of the hottest trends among financial services companies around the world is the consolidation of customer account statements, which provide the customer with a sort of global perspective about his or her financial position. Consolidating statements is a complex undertaking, but with the right strategy, it can be relatively painless in terms of time, effort, and money. The issue is whether the financial services company has the will to do it.
Banks are leading the way in consolidating customer account statements, largely for two reasons: 1) it is a way to strengthen the bond with customers, and 2) it will save money and improve profit margins. With the enactment of the USA Patriot Act, there is the additional incentive of complying with new privacy requirements and avoiding mistakes such as sending statements to incorrect addresses.

Also fueling the trend is the rapid evolution of online banking. Studies have shown that only about 5 percent of bank customers actually take the time to balance their monthly statements. We are fast approaching the day when customers simply will receive a notice by mail or e-mail that their monthly statements are available for their review online. Beyond bundling, however, consolidation is an opportunity to redefine the communication tool and add value to the customer business document.

Consolidating account statements is a challenging objective because a bank might have several different vendors or business partners for its different products, e.g. checking, savings, credit cards, investment accounts and each might have a different format, and different rules for presenting the information to the customer.

Probably, there also are different sources for the information. It might come from a mainframe, a network Access file, a sequential file, or from physical files that have been scanned.

To make consolidation work, you must figure out how to harmonize the different types of statements into one format, balancing the rules and regulations for each type of account to provide as much useful information as possible in one document.

You also need different rules for each source. In other words, if the information comes from a mainframe, we handle it one way, if it comes from the network we handle it another way, and so on.

The strategy that we recommend to our clients is to create a control file where we can manage each source of data. After we create the control file, we have rules to convert raw data into standardized data in an XML type of file. This converts the data into a homogeneous file suitable for formatting.
It is important that the bank be able to maintain control over the consolidated statement on its system, this includes information such as billing addresses, billing cycles, and types of accounts – commercial vs. individual, for example. The system should be customer-centric in the sense that the customer can decide how he or she wants the accounts combined. For tax purposes the customer might want accounts separated, but for other purposes the customer might want them combined. A household might have multiple people on a credit card account, for example.

Once you have developed the central control file and have a way to homogenize the data and maintain control of it regardless which service bureau is involved, then the challenge is to format it in a way that makes it easy to understand. You also want to be able to distribute the consolidated statement via multiple platforms: regular mail, fax, the Web (HTML), or e-mail (PDF). You also will want a system that can accommodate materials such as marketing inserts, graphics, and multiple languages.

The software for this purpose must be flexible and easy to use, because inevitably you will want to revise the format several times during the testing process. Our preference for this part of the process is the ISIS Papyrus software, www.isis-papyrus.com. The company has focused on document automation since its founding in 1988 and its products have been embraced by many of the largest financial services companies around the globe.
The Papyrus software formats and produces the statement from the data in the central control file. If the data or variable is in the control file, the Papyrus program will respond to the indicators as stated. No additional development for special cases is required.

A good example of how the system works is at the RG Premier Bank. Based in Puerto Rico, the company also has operations in Orlando (Crown Bank) and New York City. It has about 500,000 customers and about $10 billion in assets.

If, for example, the Premier Bank’s customer file indicates the language should be Spanish, the customer is over 65 and printing of checks on one side of the page is indicated, you can set Papyrus to recognize those cases in the file and print eight check images per page instead of 12, and include a marketing message in Spanish about special offerings for seniors, etc. The Papyrus program will make all those adjustments automatically and produce custom-tailored statements for your customers. In fact, the number of variations is limited only by the information in the control file. The Papyrus software, which is used worldwide, can just as easily produce documents in virtually any recognized international language including Hebrew, Arabic and the major Asian languages.

Some banks in Europe and Asia have tweaked the Papyrus software to produce customer account statements that include varying degrees of graphics. For example, high-priority customers get four-color graphical reports, while low-priority customers get their reports in simpler graphics in one or two colors. As long as the data are in the data file, the Papyrus program will recognize it.

In embarking on the path to consolidation, it’s important to avoid trying to do too much at the same time. It must be customer-driven, and it should be optional for customers initially. Otherwise, you could end up sending confidential information to the wrong people.

Testing and quality control are fundamental. Test it with your internal customers – your employees – before you roll it out to your external customers. The whole process from start to the initiation of the public roll-out should take no more than 90 days.

Alfredo Rodriguez is vice president and principal of Caribbean Software Group, Puerto Rico, www.caribbeansoftware.com, a software development company. He has more than 25 years of experience in technology for banking and other financial services.

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