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Adoption of trends (4) (servicing on banking customer relations)

A reader with cross-industry expertise might get misled by the header of this blog contribution. Also the title of the attached article “new wave of CRM” suggests something like a revival. You can ask therefore, whether we get a repetition of activities from late 90’s and begin of 2000, because research and marketing put banking industries in those days also in business hype.

To explain the current Banking CRM business targets is the focus of SAP’s latest research in Banking. This research was co-sponsored by EFMA and complemented by results out of a Datamonitor report and a Mintel Group report.

Most banks have large numbers of customers and a definite, but very commoditized, set of products. So one could ask the question why this typical consumer market is that different from other consumer markets (like high tech, manufacturing, retail, etc.). The answer to that question also distinguishes among the values the first and second wave of CRM in banking industries will drive.

Typical for CRM in the late 90’s were the differentiation between sales and services. The main effort in relation management of sales processes was the lead generation and prospect engagement cycle. A next product sales to the same customer assumed similar efforts in marketing, and prospect relationship management compared to the original sales process. Services processes focus was around maintenance, claims, warranty, etc. In Banking industries customer relations last long-time. The service associated to the product is sold to the customer (not the product). The service is usage, prolongation, and short-term response times. In the first wave of CRM products were comparable among different providers, so sales was typically led by an instant, product specific cost/benefit consideration, less by loyalty or brand of the provider. The results of Banking CRM were limited as customers expect more insight and service delivery by the bank. Customer insight was blocked by silo-ed data and the lack in connectivity between front- and back-end.

The second phase of CRM incorporates now the specifics of the banking customer relations:

  • the customer has in general a long-lasting relationship with the bank, which extends considerably the duration of the sales phase typical for other industries
  • the customer need is specific to its profile based on life characteristics, income, social status and others. The need is therefore “more” foreseeable. As the customer has a long relationship to the provider (the bank), the customer expects major part of this need is known upfront by the bank advisor based on the profile information of the customer and its existing relationship.
  • the agent/advisor has a complete overview regarding all engagements between bank and customer independent of the data management of the specific business applications (silo-ed data bases, back-office, …)
  • the customer engagement information is in sync across all interaction channels
  • banks might better tailor their product offering to the specific customer demand
  • within shorter periods in time

With this in mind banks can deliver additional value to their customers and reduce churn and increase customer share of wallet. In this way the second way of CRM supports Bank’s growth strategy, creases brand value, and extends customer’s loyalty. Please read more details in the article “Courting today’s bank customer”.

With this specific adaptation of late 90’s CRM approach also Banking can respond to the current customer behaviour profiles, which are driven by flexibility and mobility. The differentiation in value among comparable products masters competitors including the non-traditional financial service providers. More details are include in the white paper: Courting Today’s Bank Customer

Kind regards Paul

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