5 September 2008

A bank’s customer-facing activities are now an integral part of its business and included in its criteria for selecting standardised software

Julian Johnson, SVP Industry Business Solutions, SAP A survey of 108 banks in Europe and the Middle East has found that more than half view customer-centric activities as a strategic differentiator, and are planning to invest in customer relationship management (CRM) technology.

The report, Achieving customer-centricity throughout the enterprise, was commissioned by SAP and conducted by the European Financial Management and Marketing Association (Efma). It found that nearly 50 per cent of banks either have invested or are currently investing in CRM – a clear indicator that banks are serious about utilising CRM as a competitive differentiator to achieve their corporate goals.

However, the survey found that although banks recognise the strategic importance of CRM, they face many challenges including price competition, pressure to lower operating costs, fragmentation of customer segments and channel proliferation. In addition, while banks are moving towards a customer-centric approach, this is a very slow process.

Within the bank, CRM is typically driven by individual departments and is primarily a front-end process, rather than extended across the enterprise. Survey respondents claimed that their CRM strategies are primarily front-end focused and situated on old legacy systems which 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. The majority of 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.

“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 behaviours of their customers and prospects,” said Martha Bennett, research director for financial services technology at 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 organisational silos.”

“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 of Efma. “But additionally, these findings emphasise the importance of well-chosen staff with the right attitude through all distribution channels.”

“In recent months, SAP has experienced the investment banks are making in standardised software for their core processes,” said Julian Johnson, senior vice president for industry business solutions, global field operations at 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 standardised 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.”