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SUMMARY
PERAFACE / LANGUAGE
By
Ahmet Hamamcıoğlu/Editor Language, is the
first as for virtue in communication and interactivity between individuals, and
in social sensitivity. Language, is the
mystic being that forms our thought. Language, is that our
window opening to world, broadens our horizon, and the solely a tool for
understanding. Language, is the
mirror of our soul. Language is the main
tool bearing a culture that is to create common sense and thought. Unless a
nation able to use its language as effectively, it’s not possible to convert
its dream power to productivity. Language is a
condition to be a nation and it is a ‘must’. It’s being accepted that
development for a nation parallels with its language wealth. Unless to be used a
common language there will be no national compromise. 16th
economical power in the world is Turkey, and Turkish, its language is placing
among 10 important languages in the world. In spite of this, since it cannot be
represented in international standardizing organizations our language is being
effected negatively. Technology runs with
light-speed. We have to work more, save our culture more systematically, and
effort for our language to be developed. Contemporary need is
to learn a foreign language for everyone, but provided that not to be far away
from our own language. We have to use the Turkish equivalents proposed for
foreign words, don’t we? Are we sensitive to
use right and careful Turkish? We must consciously make an effort for being
found of the equivalents of imported words coming from other languages, and use
them. And also we must make an effort for Turkish to find its identity itself
refining from foreign words. We must think about
how to speak and write Turkish properly. Turkish language need
to be preserved by all of us. Only we keep alive our language and will be
keeping alive. Since we cannot be
changed it with the other languages, we should rise it to a place that is
effective in universal language family. We should make our
language as the language of science and culture. Science is universal,
but there isn’t any universal language. At the same time, science is not under
any nation’s monopoly, so every nation may develop the science and add on it. It’s being defined
by linguists that the importance to be given to the language and the human being
is identical. Like an intellectual defined “The language used by a society,
reveals its future.” Language is the
solely tool for originating of healthy societies, nations and deep culture, and
the tool for being inherited of all these features to future generations. Atatürk says;
“Turkish is one of the most rich languages. Provided that it should be
processed consciously….” MIXED SIGNALS
By Bill Stoneman /
Freelance writer based in Albany N.Y. Many institutions have attempted retail
strategies based on profitability segmentation, and although anecdotal success
stories abound, it's difficult to see bottom line improvement. Executives
increasingly are realizing that profitability analysis, by itself, will not get
the job done. This is not to suggest that profitability-based segmentation is
without merit. On the contrary, the insight that a handful of clients
contributes more than 100% of retail earnings at a typical financial institution
is profound. This revelation has sparked deep soul-searching among bank
marketing strategists. Confronted by the now-famous "profitability skew,"
they realized that the "one-size-fits-all" approach to serving
customers was no longer valid. At least a few major players apparently have
taken meaningful advantage of profitability segmentation. Instead of fueling an
overall expansion, profitability segmentation became a guerrilla weapon that
institutions used in an ongoing fight among themselves over the most lucrative
banking customers. In contemplating how to respond to these
developments, managers should consider three factors. First, capitalizing on
profitability segmentation requires far more work than many people probably
realize. Adherents must be committed to substantial organizational change and be
prepared to deal with a host of transition issues, such as re-pricing products
and re-thinking service and delivery. Second, relationship profitability metrics
must be put in their proper context. Such metrics often work best as a
supplement to other decision factors, such as customer needs. Institutions must
look beyond statistics to the individual. Third, the industry needs to redouble efforts
to stake out places in the fastest-growing areas of financial services, such as
brokerage and mutual funds. How much long-term value can be derived from the
profitability segmentation framework when people are making less use of the
major types of banking products on which it is based? In many cases, investments
in elaborate segmentation schemes offer less return than comparable deployments
of organizational resources in new product areas and value propositions. Description, Not
Prescription Profitability analyses and associated remedial
programs are not substitute for more sweeping retail banking imperatives, such
as lowering overhead expenses and expanding affiliated brokerage and mutual fund
businesses. Also, when dealing with profitability segmentation, managers need to
understand that analysis does not necessarily provide prescription. The profitability skew would seem to suggest a
strategy of coddling the best customers. But profitability metrics provide no
guidance on whether high-value customers will be flattered or annoyed by regular
calls from account managers. Nor can they predict the next account a customer
will open — let alone whether the new account will be used in a way that is
profitable to the bank. Decision support is another area where
profitability metrics fall short. In a vacuum, profitability measurement might
help determine the financial consequences of a re-pricing decision. But in the
real world, customers react to product re-pricing in unpredictable ways,
throwing off the projections. Banks that use flawed metrics to drive product
design and pricing decisions may self-destructively encourage "low value"
customers to take their business elsewhere. Segmentation's
Promise Sales programs didn't seem to work as well in
banking as in other businesses, however. Bankers gradually came to understand
that profitability in this industry depends on the complex interaction of
balance levels, fees paid and transaction patterns of individual customers.
Furthermore, the contribution of individual customers to bank earnings varies
widely. A typical program was introduced by PNC Bank
Corp. in the fall of 1998. PNC offered price incentives to customers who would
bring more of their financial business to the Pittsburgh-based bank, and it
imposed fees for heavy teller usage. While teller fees raised the cost of
banking for customers who visited PNC branch offices day after day, the price
breaks rewarded many clients having high current or potential relationship
profitability. The minimum balance threshold for interest-bearing checking was
lowered. In addition, instead of granting free checking to customers based only
on deposit balances, the bank began counting loan and brokerage account balances
toward the target. Analysts are divided, however, on whether such
projects really make a difference. Taking the positive view is analyst Robert
Patten at Lehman Brothers. He says banks "have gotten much better at moving
customers to non-personal channels," and cites increased usage of direct
payroll deposit, automated teller machines for cash withdrawals and automated
phone systems to check account balances. A contrary opinion comes from Lawrence Cohn,
director of research for Ryan, Beck & Co.: "The companies keep telling
me they are doing this and how wonderful it is. But when you look at the
aggregate revenue growth in their retail banking business, it doesn't seem to be
any different than anybody else's." Carrots and
Sticks At the low end, products have been re-priced
and re-packaged to encourage customers to consolidate their accounts at First
Tennessee, keep higher balances, and either do more of their business through
self-service channels or pay extra for continuing to use the branch. But therein
lies one of the potentially costly pitfalls of profitability segmentation: while
there is little risk in pampering the best customers, remedies for the
unprofitable segment can easily backfire. The basic objective of most segmentation
strategies at the low end of the profitability skew is to keep these less-valuable
customers from getting too much face time with high-cost tellers. Effective communication between front-line
staff and customers may be even more important in making a smooth transition.
This requires schooling tellers and call center operators in the thinking behind
segmentation strategies. Essentially, institutions are using profit
metrics as a basis to recast relationships across the full spectrum of retail
customers. That's a big job, with the analytical portion being only a small part.
To make the most of the exercise while avoiding myriad pitfalls, managers must
re-think products, information systems, pricing strategies, sales and service
practices, delivery channels, marketing campaigns, and so on. Limits to Profit
Segmentation Retention programs alone are unlikely to
reverse the continuing flow of funds from insured deposits to uninsured
investments that pay higher rates. To deal with that problem, banks need to do a
better job of marketing their own brokerage and mutual fund services. There's also this paradox to consider: the
very effort banks make to retain their most profitable customers will almost
certainly reduce that profitability. Higher service levels cost the bank more.
Revenues decline when customers are granted concessions on interest rates or
fees, or are encouraged to move bank deposits into non-insured investments.
Banks are further encumbered by their need to cover the costs of their branch
networks. The higher an institution's overhead ratios, the less flexibility it
has to offer concessions to price-sensitive, high-value customers. Even though profitability-based segmentation schemes alone won't cure sluggish revenue growth, they still remain valuable in helping marketers assess individual customer relationships. As long as banking organizations introduce new services and new delivery channels, as long as they cut costs by removing services that some customers want, and as long as they craft new marketing campaigns, customer relationship profitability will be a key factor in measuring whether these ventures are paying off. PRIVACY UNDER SCRUTINY
Jo Ann S.
Barefot / KPMG Barefoot Marrinan, Columbus, Ohio
A variety of developments underscore the
gravity of the situation. Congress is considering a bill that would require
banks to disclose privacy policies and permit customers to "opt out"
of certain uses of their data. Meanwhile, class action litigation is pending in
a number of states, sparked by Minnesota's suit this summer (since settled)
against U.S. Bancorp for selling customer information despite promises not to do
so. The European Union also is negotiating with
the United States over a rule that data on European citizens cannot flow to
countries that inadequately protect privacy — including, in the EU's opinion,
the United States. And numerous other privacy protection actions are underway:
at federal, state and local agencies; in litigation; in industry forums; and in
market-leveraging policies adopted by big technology companies such as Microsoft
Corp. and IBM Corp. These episodes drive home the point that
privacy touches a central nerve with people. It is intertwined with core
feelings about fairness and freedom and self. And there are no easy solutions.
The complexity of the issue overwhelms legislative and regulatory bodies, which
will tend to respond in a disjointed way that causes as many problems as are
purportedly solved. Also, the privacy controversy is developing so fast from
almost a non-issue a year ago to weekly headline news now that keeping pace will
be a huge challenge. The rub for banks is that they will not be
able to safeguard customer privacy completely without undermining the most
exciting innovations in banking. These innovations promise huge benefits, both
for customers and providers. But to capture them, financial services companies
and their customers will have to make some critical tradeoffs. When the stakes
are so high, nothing can be left to chance, which is why banks must immediately
begin developing comprehensive approaches to the privacy issue. There are at least four focal points of
privacy risk. One hot issue concerns information transmitted over the Internet,
whose value is maximized only if providers can use the data they gather on
people's interests and purchases. Another is third-party relationships, where
partners access customer information in the act of handling bank referrals. A
third issue is computerized credit scoring, a process that streamlines
underwriting but also can be arbitrary. A fourth area, data mining and customer
relationship management, unsettles some people because it involves the extensive
collection and use of sensitive customer information. There are a number of key steps that banks can
begin taking now to deal with privacy risks. Institutions should make sure they
are complying with the Fair Credit Reporting Act, which likely will be enforced
more stringently in the future. They should prepare themselves to cope with a
broad requirement to let customers exclude their records from internal usage and
external sharing arrangements. Relationships with third parties should be
reexamined with information usage issues in mind. Where feasible, voluntary
privacy protection steps should be taken, so as to avoid legal mandates and
controversy. And privacy consciousness must become ingrained in the banking
culture. Quicksand Solutions will be hard to come by. The two
most conspicuous areas of privacy risk are the Internet and technology-driven
uses of customer data, both enables of the most profound changes coming to
financial services. Banks will not be able to safeguard customer privacy
completely without undermining the most exciting innovations in banking. These
innovations will yield huge consumer benefits but also demand privacy tradeoffs. The consumer and business value of these new
approaches will be so compelling that the market will simply have to move toward
them: competition will demand it. As these market forces move inexorably
forward, customers will want the positive offshoots, such as improved financial
services and lowered prices. At the same time, they will complain about loss of
privacy. The complaints will generate politics,
regulation and litigation. Government "solutions," in turn, will
create huge problems because they will evolve piecemeal, often without a good
understanding of the underlying issues. They will produce high costs, high
risks, confusing and conflicting mandates, a volatile regulatory climate and
many other unintended consequences. Privacy risks will coalesce in four major
areas: The Internet.
The hottest arena of controversy will be electronic commerce and online banking.
Internet privacy risks range from security — from hackers and unauthorized use
— to questions about the intended uses of data
by companies offering Internet-based services. Internet companies are acutely aware that this
infant marketplace, for all its burgeoning growth and profound potential, could
be strangled in its crib if the consumer decides it is not a safe place to
transact business. A few high-profile cases of customer harm could set back
e-commerce by years. Amazon.com got a taste of privacy risk this
summer. After months of glowing publicity regarding its trail-blazing role and
progress in bringing happy consumers into e-commerce, Amazon found itself
attacked for compiling and disclosing data on customer reading habits. To the
embarrassment of some parties, it publicly listed the books most frequently
purchased by certain affinity groups, including the employees of specific
companies. One well-known company's best seller was a book critical of its CEO,
while another large firm's employees seemed quite interested in reading about
sex. Amazon's assurance that the lists were disclosed in the spirit of
"fun" did not dispel the unease of critics, some of whom had never
realized that their own purchase information might be tracked and used. Of course, Amazon.com is by no means alone in
wanting to capitalize on information about online customer activity. Such
information will be used by all companies offering services on the Internet,
including banks. That usage is a key to the Internet's power, for consumers and
businesses alike. The ability to collect and analyze patterns of consumer
searches and purchases enables providers to tailor products, to find customers
who may be interested in particular products, and to package and price services
optimally for each customer. Inexpensive and inclusive, electronic
marketing brings buyers and sellers together, matching attractive products and
services with the people who likely want them. Costs are so low that the
consumer ends up with both better and cheaper services than would be possible
the old way. But the approach only works if Internet companies can use the data
they gather on what people are interested in and what they buy. Third-party relationships.
Banks are beginning to design Web sites that connect customers to online
partners; some that provide attractive products themselves; others that search
for products on the terms that customers specify and at the best prices
available anywhere. The Internet today truly is a "web" of
inter-related companies that form complex alliances that share and refer and
serve each other's customers. In many of these arrangements, it may not even be
clear to the customer just which entity he is dealing with as he moves from the
gateway site to the others to which it is linked. If customers come to a bank Web site, they —
and their lawyers — will surely hold the bank responsible if privacy problems
arise, even if the bank's third-party partner commits the offense. The Internet
will be a nexus for these kinds of issues. However, vulnerability to third-party actions
is by no means limited to Internet scenarios. Today, banks share data in a wide
variety of ways. Customer privacy questions attend outsource service
arrangements, joint ventures, co-branding and affiliate marketing, broker and
dealer relationships, sales of lists and customer data, and vendor arrangements
of all kinds. Credit scoring.
Another seedbed of privacy exposure is the growing reliance of banks on credit
scoring and data modeling for risk management, marketing and risk-based pricing.
These days, such techniques are used from cradle to grave in the credit process.
There are applications in market segmentation and customer targeting,
underwriting, sophisticated risk management systems and relationship-based
pricing. Banks use scoring and modeling techniques to help determine levels and
types of service to offer. Increasingly, these scoring innovations involve
intensive collection and analysis of data on customers and prospects. Data mining and CRM.
The next step after expanded use of credit scoring is full blown "customer
relationship management," or customer-centric approaches to banking. Banks
are using data warehouses, flexible new middleware and internal Web-based
Intranets to link disparate databases on customers, comprehend relationships and
then approach each client as an individual. This shift from a traditional,
product-silo focus to customer-centered management will take time, but its
competitive power makes it inevitable. As technology permits low-cost, virtually
unlimited gathering and analysis of data, it unlocks the potential to improve
every aspect of banking. Banks will be able to customize products to attract and
keep their best customers. They will be able to target product offers with keen
precision to those who will want them; to reach customers through highly
efficient channels (including the Internet); and to deliver products the way
each customer wants. Further performance enhancements include the
ability to risk-assess customers with unprecedented accuracy, both at the outset
and over time; to understand which customers are most profitable; and to price
offerings based on risk and profitability. Information technology also will help
banks better understand customer attrition patterns and improve retention, and
to monitor trends on a real-time basis and make timely course corrections. This will result in better products at better
prices for consumers as a whole. However, many individual consumers will be
adversely impacted in some way. And all will find that this revolution in
banking involves extensive collection and use of personal information, both from
internal bank sources and from external sources such as data vendors and
Internet partners. Privacy controversy is inevitable. Most banks today are far from using full-blown
CRM systems, but most are moving fast to link databases for better
cross-selling, relationship management and profit analysis. Most are already
sharing data extensively with vendors and partners, if not actually selling it.
Every time a piece of customer information is put to one of these uses, it
raises potential privacy issues. Managing Privacy
Risks The most basic step is to assure compliance in
the one area where there are set rules today, and that is the Fair Credit
Reporting Act. The FCRA prohibits banks from sharing some types of information
among their own affiliates unless they disclose to customers that they plan to
do so and permit customers to "opt out." It is likely that most banks have not been
closely scrutinized by examiners in this area and that many institutions may not
even know how well they are complying with the current opt-out requirement.
Therefore, an immediate internal assessment of FCRA compliance should be a top
priority. Another step is preparing for a broadened
opt-out mandate. The FCRA requirement to let customers opt out is a mini-version
of what is likely to be the next big privacy mandate: a requirement to let
customers opt out of data use and sharing, generally. As this issue of the
magazine goes to press, legislation is pending that would require banks to
disclose an opt-out choice and to implement customers' wishes. The bill would
exempt some types of information-sharing, but it generally would enable
customers to restrict much of their information to uses relating to the banking
service they are buying. Even if current legislation does not pass,
some form of this mandate is likely. Its main provisions would likely echo the
European Union privacy rules (in much weaker form), as well as many state laws,
voluntary codes of conduct adopted by growing numbers of U.S. banking and
business groups, and the "encouragement" of American regulators.
Either on account of formal legal requirement or informal pressure, banks are
likely to implement the opt-out — and soon. While the right to opt-out sounds reasonable,
many banks are not geared to implement it. Systems must assure that specific
data on one "opt-out" customer does not move into another database,
for example, while assuring that other customer records continue to flow. That
is difficult to manage strictly within the bank, not to mention in relations
with third-party partners and vendors. And there are numerous practical
questions that as yet have no answers. What if a customer does not opt out when
opening an account but then does so later on a second account, after some
information has already been shared? What if customers want to opt out for some
uses of data and not others, or some types of data and not others? How will
regulations cope with the infinite variety of questions that will arise over
definitions about types of data and types of business arrangements that will
call for different handling? And what will happen if the mandate is
crafted, not as an opt-out, but rather as an opt-in, meaning that banks first
must obtain explicit permission from customers before making use of information
about them? Banks will lose the benefit of customer inertia, which under the
opt-out schematic would leave most data available. Instead, they will have to
seek affirmative permission to use information. In this country right now, which
banks are ready to articulate to customers the value proposition for such use? With or without legislation, bank information
technology departments should assess their ability to alter and block customer
information flows through the full spectrum of data-sharing arrangements. Meanwhile, legal, compliance and audit staffs
should address third-party risk. Banks must assure that vendors and partners
protect customer data accessed through the bank relationship. Third parties must
be prevented from sharing data with their other partners, selling it, misusing
it, or leaving it unprotected. And contracts are not enough. Banks must monitor
the practices of their partners and assure not only that they can, but also
actually do implement promised protections. If privacy failures occur and a bank
is anywhere in the picture, that bank can count on being included in any
subsequent litigation and publicity. It's also a good idea to take voluntary steps
that will proactively address issues while decreasing the odds for damaging
publicity and outside intervention. Whenever risks are high and rules are
ambiguous or absent, banks need a risk-management strategy aimed at staying off
defense. Customers increasingly are looking for these
kinds of policies. Major Internet players are demanding them of partners and
customers. Industry groups and government agencies are strongly encouraging
them, at least partly in lieu of more draconian regulation. We are approaching a
point at which privacy policies will be effectively necessary, even if not
legally required. Banks with voluntary privacy policies need to
make a reality check: can they actually do what they say? The potential
disconnect between what marketers and compliance people want to tell consumers
at the front end, and what systems actually do at the back end, is loaded with
risk. Finally, banks need to build privacy-conscious
cultures. The unmapped risks around privacy cannot be managed as a compliance
task. More basically, banks that want to win the gold rush for customers
empowered by Information Age choices will have to offer privacy safeguards that
gain and keep consumers' trust. A STORY / POCKET MONEY
By Ergün Aydalga, July 15, 1998 As he was leaving the
house his grandmother approached to him slowly. She put some money
into his pocket trying not to be seen by his mother. “Mother should not
see you. She doesn’t give you any pocket money” He smiled, and then
put kisses on her cheeks. The old lady looked
around with dim eyes, aimlessly. She went back to her
room even her wrinkles on her face not to change. He left the house
after he said, “Have nice day!” to his mother. He was in hurry,
because he had to be in time for his work. Before he was getting
into the bus, put his hand in his pocket and found that she gave him the two
banknotes in hundreds. In tearful eyes, he
thought the old lady, in her nineties, was still thinking that two hundreds
liras have the purchasing power. “If this rapid inflation goes like this we
also cannot keep in step with it. We may try to give the millions to our
children as if they are big moneys” he thought when he was getting into the
bus. He got a telephone
call at the end of a dull Monday. His cousins invited him to the cinema. The film’s theme
was about tolerance in human behaviors, integrity of fraternity, and warm
relations between grandparents and their grandchildren. He had very deep
feelings when he was watching the film. Sometimes he put himself to juveniles’
place, sometimes remembered his grandmother in her nineties. He stroked the
moneys she gave him. As he was leaving the cinema he was murmuring; “I’m going to
kiss her at home…..”
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