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<p>BOSTON – As disintermediation continues to be the banter and long-term goal of many financial institutions, one survey found that while consumers want a consolidated statement and want their credit union or bank to meet all of their needs, many aren’t ready to jump ship and some are leery about putting “all their eggs in one basket.” This, according to a presentation that recently took place at TowerGroup’s annual Financial Services and Business Technology conference. Approximately 3,868 households were surveyed in March and April of people ages 18-25 and with income brackets between $15,000 and $100,000 to garner data on consolidated statements and whether a primary financial institution can be just that. Households use an average of 5.1 financial institutions for a variety of services, from banks to brokerages to credit unions, it was reported at the conference. While their majority of consumers (74%) may consider banks the primary institution, they tend to look elsewhere for lending services. Specifically, 38% look to their primary institution for auto loans, and even less (30%) for mortgages. Meanwhile, 44% of households have some affiliation with a credit union and 19% of those surveyed consider it their primary financial institution. For many credit unions that want to offer one-stop shopping to members, the key is being able to have the support in place to offer a variety of services and products. “People are going to shop around for the best product, but 68% say they are unlikely to switch financial institutions in the foreseeable future,” said Michael Weil, TowerGroup’s managing director of syndicated research services. To be able to “play with the big boys,” banks and credit unions “have to come up with a consolidation around the products and services that are most important – mortgage, checking and savings.” Indeed, most surveyed said they want to be able to consolidate all their financial business, with 70% responding positively to the statement, “I would like to do all my business at one institution that can take care of all my financial needs rather than using several institutions or specialists.” For those who had to choose which multiple accounts they would want aggregated under one statement, loans (15%), credit cards (6%) and deposit accounts (52%) were among some of the most popular items. Indeed, credit union, banking, and savings and loan services top the list for online aggregation services, TowerGroup analysts found. Being able to offer a consolidated statement and online aggregation services has much to do with measuring customer profitability, a process that is talked about more than it’s actually done, said some TowerGroup experts on the subject. “It’s sad because the purpose of measuring customer profitability is to be able to make better decisions, and who doesn’t need to make better decisions,” said Kathleen Khirallah, TowerGroup senior retail banking analyst. “The decisions relate to product realignment or redesign, relationship product development, segmentation, target marketing, segment evaluation and branch openings or closings.” Khirallah cited a number of factors why some financial institutions may be reluctant to measure member and customer profitability including the entire process being data dependent, “which means the quality of the data drive the quality of the results” and “profitability is a zero-sum practice, which confounds conventional wisdom” – “there is no such thing as “unassigned expenses-someone is ultimately responsible, which isn’t very popular in many organizations,” she said. The exercise of defining profitability and what it will be used for, which can be a labor intensive and drawn process and the proliferation of financial products and delivery channels makes the process complex, Khirallah said. The process also requires sophisticated methodologies and specialized technologies, further increasing its complexity, she added. Further, to provide wealth management services, providers need to think along the lines of product personalization, not mass customization, said Jim Eckenrode, TowerGroup’s research director for consumer banking, participating in a panel discussion on managing wealth. To ultimately do wealth management right, argued Ted Iacobuzio, TowerGroup’s director of consumer credit, there needs to be a single account that sweeps money where it is needed and most serviceable. “The account must look at the consumer’s entire financial picture – assets, liabilities, product and service use – and provide the consumer the ability to manage those areas from one location, possibly in an automated fashion,” Iacobuzio said. “To do that there needs to be back office functionality integration, and that doesn’t yet exist.” -</p> <p>[email protected]</p>

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