August 07, 2002

CRM holds the promise of empowering employees while enhancing customer loyalty and value. In order to achieve the best results, however, banks need to approach CRM with a mindset that's customer-centric, not operations-centric, experts say.

CRM technology supports sales associates with data analysis to measure the value of a customer's past and present relationship. This information can be harnessed by business operations to better serve customers, not just through promotions and campaigns, but through interactions within the branch and contact center as well.

However, banks that rely on the technology primarily to improve operations, rather than serve customer needs, fail to see results and quickly lose faith. Factor in the technology's costly and lengthy implementation, and many bankers have grown skeptical of CRM's value.

Despite hefty investments in customer-facing technology, mid-sized banks haven't experienced hikes in sales productivity, according to the 2002 Mid-sized Bank Study, which benchmarks banking organizations between $1 billion and $20 billion in total assets.

"In some cases, companies don't really understand what the end result should be," said Ken Casey, senior vice president, electronic banking and central services, ATB Financial, Edmonton, Alberta. "By launching big technology projects that eat up investments due to an extremely long implementation period, you lose funding and company support."

The flawed mindset that pushed some companies to install multiple CRM systems has come back to haunt them in the post-merger era. "The dynamics of acquisitions makes it difficult to have a unified system that spans all applications," said Paul Rodwick, vice president of market development and strategy at E.piphany, a San Mateo, Calif.-based CRM software vendor. "And today's economy offers no appetite to rip out systems and start over. Instead, banks should put more value in the systems already in place."

Yet by refocusing their strategy, banks stand to reap dividends through CRM. "This technology is about the actions banks can take regarding the analysis more than the operational improvements," said Richard Skriletz, national managing partner for business intelligence and CRM at RCG Information Technology, a consulting firm.

"Consider the retail industry," he said. "They look at customers according to their shopping baskets, not what aisles they shopped in. Banks need to look at customers the same way; examine the products and relationship they have with the bank, and target the right products to fit their needs."

One year after installing the Siebel 2000 CRM tool in its 200-seat call center, ATB (formerly Alberta Treasury Bank) has experienced a 25 percent gain in productivity and a 50 percent gain in sales.

"Analysis lets us know more about customers when they call in, and we have a better opportunity to recognize a gap in product line or need instantly," said Casey.

Once customer information is analyzed, real-time data is stored in Siebel's database. As customer service reps input account numbers, the system pulls account information as well as links to other accounts, so all relevant data is available for cross-selling.

Still in the early stages of extending CRM access throughout the organization, ATB is planning a one-branch pilot of Siebel 7, a thin-client solution that provides access to customer data via the Web. "As customers chat with the branch teller, her screen will display a full view of the customer, as well as the last contacts and transactions with our call center to follow up on service," said Casey.

ATB's success story proves that CRM requires a long-term commitment to deliver results. "Contact centers, sales automation, even self-service applications are all a cost of doing business," said RCG's Skriletz. "The payoff comes from finding new business operations and managing the customer relationship."

CRM enables an institution to look at its entire data model, said ATB's Casey, and to "look internally at a branch level to see where there are barriers in service levels, where you can use analytics to become more customer intimate."

But, he said, "there will only be a payoff if you do not expect the technology to drive the initiative. Technology gives easier, faster access, but users need to use it properly to increase profits."

RECIPES FOR SUCCESS
Banks should start by combining customer data scattered throughout the enterprise into a centralized database, thereby eliminating redundant sales campaigns that alienate customers.

The next step is to start projects on a "pain-by-pain" basis, said E.piphany's Rodwick. "Banks need to think big, but start small. Look at your organization and pick an immediate 'pain' where you can get an immediate return on investment."

"Incremental implementation and monitored growth is an important idea," he continued. "By using real-time information that is shared across the organization, you gain value within the company."

Some companies start by using customer analytics to improve their call center efficiency. "Some clients have increased sales revenue by 18 percent, simply by having real-time information," said Rodwick.

When Andrew Rosen joined Fifth Third Bank, Cincinnati, as vice president almost two years ago, he noticed that many customers were closing their accounts. The problem got worse after Fifth Third merged with Old Kent Bank. "It was hard to provide the same service as when we were a smaller bank, and as we expanded we focused on sales and customer acquisition, not customer retention," he said.

But since adding Harte-Hank's Allink Agent CRM tool last November, the bank has improved customer retention by 50 percent. "We added a CRM project called SOS, for Save or Sell, to help us change our focus to existing customer relationships. This technology helps us to not only identify customer behavior changes, but also gives us the opportunity to follow up with customers within 24 hours," he said.

A one percent loss in customer retention can equate to a $20 million loss in income for a large bank. Noted Rosen, "If we could reduce defection by one percent, that translates into more than $1 million in additional profit."

CRM is about capturing new customers as much as retaining old ones. In Germany, Commerzbank has installed Web-based technology to obtain information on non-customers and pitch them targeted marketing campaigns.

"We are seeing big improvements in our ability to know each customer as an individual or individual firm," said a spokesman for Frankfurt-based Commerzbank. "In the past, we had to employ many different applications, contact individuals by phone and locate paper records by hand. Now, we have tools that pull this information together automatically."