CRM serves as critical enabler in banking

BANGALORE, INDIA: With increased competition and the need to improve brand image, more than half of banks in Europe and the Middle East view customer-centric activities as a strategic differentiator and thus plan to invest in customer relationship management (CRM) technology, according to a new report commissioned by SAP AG and conducted by the European Financial Management and Marketing Association (Efma). In the report titled "Achieving Customer-Centricity Throughout the Enterprise," results from an online survey of 108 banks in Europe and the Middle East were analyzed and four key findings have been highlighted:

Banks recognize the strategic importance of CRM, but face many challenges including price competition, pressure to lower operating costs, fragmentation of customer segments and channel proliferation

Banks are moving towards a customer-centric approach, but it is a very slow process

Today, CRM at a bank is driven by individual departments and is primarily a front-end process, rather than extended across the enterprise

Banks still have limited information to measure their utilization of CRM

"In the current economic climate, it is more important than ever for banks to have as much insight as possible into the financial needs and behaviors of their customers and prospects," said Martha Bennett, research director, Financial Services Technology, Datamonitor.

"Providing a level of service that makes the client feel well looked after and valued is as critical as the ability to offer the most optimal product at the right time. In order to achieve this, banks need to ensure that they have systems and processes in place that allow a view across distribution channels and avoid organizational silos," she adds.

Shifting to Customer-Centricity

The survey found that the majority of bank respondents said they have not yet been able to adequately address their fragmented customer segments and that they see CRM as a key strategic driver and require a more enterprise-wide approach to managing the entire customer experience.

Survey respondents claim that their customer relationship management strategies are primarily front-end focused and situated on old legacy systems. These information technology (IT) systems lack the flexibility and scalability needed to give banks the transparency necessary to look across the enterprise and connect a bank's customers in different lines of business to each other. By enabling this visibility, banks can enhance customer service and operational efficiency. In addition, alignment between a bank's front- and back-end operations will allow them to better measure the customer lifecycle, employee productivity and return-on-investment.

"The results from the survey show that a high percentage of banks see the ability to differentiate their brand and products as strategically important by offering superior customer service," said Patrick Desmarès, secretary general, Efma. "But additionally, these findings emphasize the importance of well-chosen staff with the right attitude through all distribution channels."

The move to CRM is also evident in the number of respondents that state the investments they are making in this area in the near to long-term future. Nearly 50 percent of banks either have invested or are currently investing in CRM. This high percentage clearly indicates that banks are serious about utilizing CRM as a competitive differentiator to achieve their corporate goals. 

"In recent months, SAP has experienced the investment banks are making in standardized software for their core processes," said Julian Johnson, senior vice president, Industry Business Solutions, Global Field Operations, SAP. "As the survey results support, a bank's customer-facing activities are now an integral part of its business and included in its criteria for selecting standardized software. The value this brings to a bank is seamless integration of its back-office functions, which will provide a true end-to-end view of the customer."

About the study

The methodology for this research was based on the results of an online Customer Centricity survey of 108 banks in Europe (East and West) and the Middle East, carried out by the European Financial Management & Marketing Association (Efma) in conjunction with SAP.