19 November 2008

Banks have had to adapt to different channels of communication, resulting in the need for a plethora of technology to accommodate them

Banks are keenly aware of the importance of customer information, yet many are unable to make the best use of it. Lindsay James looks at the role of customer relationship management technologies, and the impact they are having on the advisor

Banks in both developed and emerging markets are facing daunting challenges. The current state of the economy, teamed with heightened customer expectations, intense competition and increased regulatory change, are pressures that are impacting all aspects of bank operations. What’s more, a typical bank can now offer anything between 300–500 products and services, a vast change to 20 years ago when the average bank offered just three or four products.

“Banks are experiencing a big paradigm shift at the moment,” says Microsoft’s international industry manager for financial services, Max Fatouretchi. “I was recently speaking with a senior manager at one of the big four banks, who told me that five years ago just five per cent of customers e-mailed the bank. This year that figure has gone up to 65 per cent, which illustrates the changes in customer behaviour. The decrease in footfall into actual brick-and-mortar branches means that banks have got to up the level of service when they do come into contact with customers.”

“Customers are highly influenced by the Internet and mobile applications that they now frequently interact with,” says Lizette Nigro, senior product manager for relationship management and business intelligence at Open Solutions. “They want it now, they want it to be fast, and it had better provide a positive experience! With the recent near collapse of many financial organisations and the sub-prime lending controversy, banks must work harder than ever to regain the confidence, trust and personal relationship with customers. There needs to be more focus placed on personalisation and improvement of the customer experience through all channels.”

To do this, banks need to put all of their focus into using to their advantage the vast amount of information they hold about the customer. Most banks agree that they already hold a considerable amount of personal customer information, but do not necessarily use it to provide the best possible advice and experience. In light of this, the Microsoft-EFMA Banking Advisory Council has recently released its report, Creating the smarter knowledge bank: maximising the use of customer intelligence and advice for superior results, which focuses on the key issues and challenges in developing a new customer advisory model that is more suited to today’s multi-channel environment and the steps that can be taken to gain better use of customer intelligence.

Great expectations
The report highlights the necessity for banks to gain a better understanding of customer preferences and the type and level of advice required. Taking account of the manner in which customers want to receive advice will become increasingly important in deciding how to give it. “In today’s competitive climate, customers are disloyal – they will have no qualms about moving to another bank if they aren’t happy,” says Fatouretchi. “The advisor has to have a true understanding of the customer if they’re going to give the best advice and service possible.”

So it becomes evident that if banks do not put together a clear solution to provide better advice models to customers, then others will step in. “Customers are increasingly aware of their own purchasing power and frequently switch providers,” says Anita Clifford, director of integrated customer relationship management (CRM) at Touchstone Group. “A single customer is very likely to have their saving accounts, mortgages and loans with different lenders and many will review this on a regular basis to ensure they are getting the best value and service. This has increased the need for banks to focus on customer retention.”

The ability to communicate with customers in a way that they prefer is crucial to creating a lasting relationship. This means that the whole range of communication capabilities – including e-mail, telephone, SMS text, instant messaging and video conferencing – should be integrated and made available to frontline staff.

“As some customers embrace the latest technologies, banks are having to be flexible and accommodate the way in which their customers wish to interact with them,” says Clifford. “Banks have had to adapt to different channels of communication, resulting in the need for a plethora of technology to accommodate them.”

“Customers continue to want enhanced customer service,” says Annette Giardina, head of the Microsoft practice at Cirquent. “They expect integrated secure Web portals, the ability to get the right information quickly and easily without having to queue in person or on the phone, intelligent alerts – such as a text message to inform you that you’re about to be overdrawn – and a seamless experience regardless of whether it is online, on the phone or in person.”

Making the best of information
The Banking Advisory Council’s report highlights that the greatest need for new technology is in managing and analysing existing customer and product information, which is currently held in disparate parts of the organisation, and in marketing technology to provide better support to frontline staff. Banks therefore need to accumulate valuable customer data in a single repository, have the capability to analyse this information to obtain in-depth knowledge of customer needs, and provide that knowledge to frontline staff. With the right technology, banks will be able to provide a better and more consistent level of customer service and will be able to manage their business with real-time analytics and performance management.

CRM, backed by strong business intelligence, is critical to better serving the customer and supporting growth opportunities. CRM solutions should be fully integrated with the day-to-day work environment of frontline staff and make it easy to translate customer insight and centralised marketing campaigns into successful customer interactions. Additionally, CRM solutions should be easy to use and provide value to the end user to help speed user adoption.

“Many in the banking industry have invested heavily in CRM in previous years,” says Giardina. “A great deal of these solutions are focused on operational CRM – getting information about customers, providing service and selling, which is very valuable to the business. However, what is lacking in many of these systems is analytical CRM; the ability to have actionable business intelligence, which provides sales teams and customer care staff with the right information at the right time, in order to create a better outcome with the customer.

“The challenge facing banks with CRM is to provide user-friendly operational systems coupled with easy-to-use business information – not just reports – to their end users, in order to help them do their jobs more successfully,” continues Giardina. “Technology such as Microsoft Dynamics CRM provides a user-friendly solution for banking professionals that is tightly linked with familiar Microsoft applications such as Outlook and Office, creating a much richer user experience.”

Dynamics CRM uses Microsoft SQL Server Reporting Services to provide user reports and actionable business intelligence. The product can easily be integrated with Microsoft SQL Server Analysis Services and Office SharePoint Server to provide collaboration tools, document management and self-service portals. It works closely with Microsoft Unified Communications Manager to provide easy multi-channel interaction with customers and collaboration with colleagues and experts within the organisation, via e-mail, phone and chat. This solution set helps to create an easier yet richer user experience, and more effective customer management.

“Microsoft offers its customers the power of choice,” says Giardina. “They can deploy on-premise as either a self-managed or managed service or they can deploy an on-demand hosted solution using exactly the same application and tools. This means that in addition to a choice of deployment methods, customers can also change at any time without having to reconfigure or retrain. In the current economic climate it is very helpful to be able to choose between an operating expenditure and a capital expenditure without limits on future options.”

Empowering the advisor
These technologies can make a real difference to the advisor, giving them access to a rich source of information that will enable them to offer a more personalised customer experience. “With CRM technologies, the advisor is able to make a quick decision, benefiting from a true understanding of the customer’s requirements,” says Fatouretchi.

In the current climate the advisor is faced with an increasing number of regulations and audit trails, as well as the added pressure of having to make sales and make the customer feel wanted. “Advisors need to be constantly aware of regulatory obligations such as Treating Customers Fairly,” says Clifford of Touchstone. “They also need to be kept up-to-date with accurate product and customer information. Technology can play a large part in helping with this by providing advisors with the information, account-ability and flexibility they need. If an advisor makes the experience for the customer a rewarding and pleasurable one, then in turn they should be able to increase customer retention and maximise profitability for the bank.”

The Banking Advisory Council’s report suggests that banks currently operate too much in a product and channel silo mentality and process. The ‘smarter knowledge bank’ will need to break out of that mentality and offer a more coordinated and integrated cross-channel advice model. Banking staff will need to be much more channel-aware in referring customers from one channel to another and in using specialists where appropriate.

“CRM technologies enable the bank and its advisors to deliver the service in a way that the customer expects: 24/7 with multi-channel communication,” says Clifford. “It provides the advisor with a 360-degree view of the customer, showing all comm-unications with that customer regardless of which bank representative has been involved. This includes, for example, information about the products used by the customer, any issues raised and any events or campaigns they may have expressed an interest in or attended – it provides a completely holistic view of the customer.”

CRM technology can also empower the advisor away from the traditional bank. Increasingly, we can expect customer contact to take place outside the branch – in locations such as the workplace or at the customer’s home. In this context, mobile technologies will be an essential tool for advisory staff that operate remotely and need full access to customer and product information.

Microsoft’s customer intelligence and advisory solutions interoperate in heterogeneous environments to integrate and analyse information from multiple data sources and provide frontline staff with a holistic view of the customer, enabling them to provide superior financial advice and drive profitable relationships.

“Microsoft technology is constantly evolving to meet the needs of the customer and can be considered leading-edge with regard to the new technological areas such as Microsoft Mobility,” says Clifford.

Thinking for the future
The Banking Advisory Council’s report concludes that essentially, banks need to regain the trust of their customers regarding their ability to offer quality advice and options on financial services products. It will not be sufficient just to provide good advice and use of customer intelligence – to become a truly smarter knowledge bank, the customer must receive clear communication on what is available, how it is available and what value it adds. Multi-channel banking offers the scope to revolutionise the customer experience in terms of quality advice and using customer intelligence to make personal banking a more pleasurable, customised and rewarding individual experience.

The challenge for banks is to develop the capability to achieve this quicker than the competition. Many believe that this will become possible as CRM technology becomes more widespread and therefore more cost-effective. “As time moves on, the integration challenges that many banks are experiencing should start to fall away,” says Barrie Neill, retail banking strategy manager for Temenos. “Analytical CRM will get cheaper and the cost of ownership will decrease. This will benefit the financial industry as a whole.”

This article first appeared in the Winter 2008 edition of Finance on Windows magazine.

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