CRM: Financial services firms take a fresh look

Consolidation in the financial services industry and stringent regulations are driving institutions to improve processes with CRM. Analysts don't expect that to change anytime soon.

Financial services firms are working to improve their CRM processes, and CRM software vendors are seeing green as a result. Nearly half of financial services firms surveyed last year said they were planning to purchase a new CRM application or upgrade their existing CRM systems, according to a recent report by Forrester Research Inc., an IT analysis firm based in Cambridge, Mass.

Consolidation in the financial services industry is forcing organizations to integrate or replace legacy systems and spurring the increase in CRM spending, according to Forrester. Another cause is increased government and industry regulation, which is forcing lenders to standardize customer processes and institute more comprehensive audit trails.

The need to develop better service and sales processes is another major factor motivating lenders to invest more in CRM, as they seek to improve long-term customer loyalty and to sell more financial products and services.

"A bank that has a customer with a mortgage, checking account, savings and investments wants to be able to see them all together but also to value them together and market appropriately," said Mary Pilecki, senior analyst at Forrester Research, noting that it is a trend she sees in many types of financial services firms, from banking to insurance.

Aggregate, automate and analyze

Financial services firms – banks, mortgage lenders, insurance companies and investment firms -- are attempting to improve their CRM processes by aggregating customer data for easier access by customer reps, doing more analysis of customer behavior, and automating more elements of the service and sales processes.

For example, Farm Credit Services of America, based in Omaha, Neb., had customer data scattered across too many divisions and IT systems. Employees in one division often weren't aware of the transactions that a customer had with other divisions. So Farm Credit implemented Hong Kong-based CDC Software's Pivotal CRM suite to provide better synchronization and centralization of customer data. It recently added sales functionality to enable managers to track the progress of individual sales opportunities.

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"We can track progress within the sales pipeline along a set of milestones, so that at any point we can calculate the probability of closing on a particular opportunity with a particular customer," said Tom Dobbe, a vice president at Farm Credit.

California mortgage broker Lawson & Associates turned to San Francisco's Salesforce.com to replace an outdated contact management package. Lawson needed better centralization and synchronization of customer data, as well as automation of many basic loan approval tasks.

"It's like an invisible automated assistant. For instance, when a loan is approved, an email is generated to alert someone to order loan documents," said Dan Lawson, president and founder of Lawson & Associates.

At Wachovia Corp., a national, diversified financial services company, the Customer Analysis Research and Targeting (CART) group is leveraging CRM analytics from Cary, N.C.-based SAS Institute to analyze customer behaviors in order to improve customer satisfaction and attract new customers.

"It allows us to develop a profile of a highly satisfied, loyal customer, which we can use to target those who are most likely to be satisfied with us," explained Dan Thorpe, senior vice president and the statistics and modeling director for CART.

Glenmede Trust Company, based in Philadelphia, is using Onyx CRM software for a similar reason. According to CTO Nick Voutsakis, the goal is to manage customers in terms of relationships, not just transactions.

"We manage large, complex relationships with clients, sometimes multigenerational," Voutsakis explained.

Glenmede's Wealth Advisory Services, which offers financial planning, estate planning, estate settlement, tax planning, and retirement planning services for individuals, uses Onyx to streamline processes and consolidate its view of customer transactions.

Boomers may boost CRM for financial services

CRM spending by financial services firms will be fairly strong, according to the results of a September 2006 survey by Forrester Research. The survey found that 21% of companies planned to make a first-time CRM purchase in 2007, while 90% would be investing in a minor upgrade, and 35% in a major upgrade.

The baby boom market for financial services may give CRM vendors a boost as well, says Denis Pombriant, managing principal of Beagle Research Group of Stoughton, Mass.

"It will be interesting to see how financial services heats up as the baby boom generation ages and needs more wealth management and preservation services," Pombriant said. "We may find there are a lot of new things in financial services."

Sue Hildreth is a Waltham, Mass.-based technology writer specializing in enterprise software. She can be reached at sue.hildreth@comcast.net.

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