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Merrill Lynch Navigates the New Relationship-Centric Paradigm

With investors decidedly shifting away from products and toward relationships, Merrill Lynch and other financial firms are adopting new types of real-time predictive analytics solutions to help them build stronger ties with clients.

After years of building technology systems around products, the paradigm on Wall Street has changed. Today, in the wake of the financial crisis, investors' focus -- and thus asset managers' approach -- has shifted to relationships. "For investors, it's no longer about selling me products," affirms Michael Maoz, a VP and distinguished analyst with Gartner. "Now it's about meeting my goals."

While this dramatic change will affect every touch point at financial firms, call centers are on the front lines. "Although call centers were established to resolve issues, now customers want interactions to demonstrate relevance," asserts Suresh Vittal, VP and practice leader for customer intelligence at Forrester Research. "And to demonstrate relevance, firms need new types of technologies that will help guide reps through a conversation by assimilating data gathered in real time during a call."

Serendipitously, Merrill Lynch finds itself on the front edge of the relationship-centric wave. As a byproduct of scaling up its phone-based Merrill Edge Advisory Center (MEAC) in 2005, the firm sought a better customer interaction system. "We had a contact management solution," explains Alok Prasad, head of Merrill Edge. "But we needed a more robust system that personalized information at the point of contact."

During 2006 the Merrill Edge team evaluated options for the MEAC, which fields inbound and outbound calls by routing them to any of 500 financial solutions advisers based on rules set up in its interactive voice response (IVR) system. By July 2007 Merrill had selected the Portrait Interaction Optimizer by Portrait Software, a division of Pitney Bowes Business Insight, from among five options. "In addition to the real-time functionality we desired, Portrait's web-based interface offered seamless integration with our Siebel Systems CRM," notes Prasad. "Also, we had some experience with using Portrait's Customer Analytics tool for data mining."

The design phase began immediately and spanned the balance of the year, Prasad reports. "Being successful required that our advisers really embrace the tool's capabilities," he says. "So we seeded the implementation team with business users, then started development from a blank sheet of paper."

During this phase, Merrill identified two areas for improving Portrait's solution. "First, it could be easier for the business rules administrator to use," Prasad says. "And more connection points between interaction management rules and the overall campaign management rules would be helpful for deployment across multiple channels. However, we have shared these points with Portrait and are confident they will be addressed."

Throughout the design stage, the team also sought feedback from MEAC advisers. "This was a key element to our success," says Prasad. "Soliciting information from advisers ensured the solution would be additive rather than distracting. For example, advisers said, 'Don't present me with too many options to pursue during a call. Just give me two or three.' "

After a straightforward integration with various back-end systems, the first rollout phase occurred in spring 2008. "Prior to the rollout, we trained a smaller pilot team," Prasad relates. "Then, in April, we began training all of our MEAC advisers. ... For multiple months there was guidance and ongoing monitoring of adoption to evolve our advisers' culture to encourage them to rely on the tool for shaping client interactions."

By late 2008 the solution caught the attention of Merrill's retirement group, leading to its rollout in that unit during spring 2009. "They saw the power of the tool, which drove the appetite for adoption," explains Prasad.

Since the MEAC implementation, the benefits have piled up. "The number of new accounts is up by 26 percent, and customer attrition is down 20 percent," reports Prasad. "Plus, average account balances have increased more than 35 percent, and customer satisfaction is up by 55 percent. Also, our adviser productivity is increasing. Most of all, we're able to deliver advising services that the industry has found difficult to deliver to lower-asset clients."

Beyond the Call Center

According to Gartner's Maoz, efforts such as Merrill's are a good start. But firms need to go further to build strong relationships. "An investor with five different accounts no longer wants to be treated as if he is on five separate islands," Maoz asserts. "For firms to demonstrate they understand the broader intent of an investor, intent-driven solutions must be adopted enterprisewide and not just by department."

Yet finding an enterprisewide intent-driven solution can be a Catch-22, Maoz acknowledges. "Available solutions are immature and definitely not commodity products," he contends. "However, a couple of years ago there weren't even products -- there were only toolkits. Companies should just be aware that solutions are not yet out-of-the-box."

While Forrester's Vittal substantively agrees, he emphasizes laying the groundwork now. "Applying real-time tools is a very complex challenge that will require significant organizational change and maturity," he stresses. "For example, call centers are compensated based on fast issue resolution. But the new paradigm will require longer conversations that cross multiple silos. This means developing completely new types of policies, procedures and workflows." Starting now, he suggests, is critical to ensuring an organization is mature enough to maximize the adoption of technology solutions later.

Regardless, two significant market realities are driving interest in real-time analytics technologies, says Mark Smith, EVP of Portrait Software. "Some of our financial firm customers are seeing a 60 percent rate of 'opt out' adoption," he says. "So firms are considering how to make the most of every inbound call. In addition, customer service has traditionally been a cost center; real-time solutions provide the opportunity to turn customer service into a revenue generator."

At Merrill, expanding the use of relationship-focused tools just makes sense, according to the firm's Prasad. "We're always looking for new ways and new technologies to help deliver better experiences while enabling our associates to be more effective," he says. "We are very comfortable taking a strategic risk that helps us leapfrog the competition. And for relationship-based experiences, we believe our real-time solution has given us a head start."

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio

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