Despite their investments in technology, financial institutions are wasting opportunities in CRM. At present, they lack the desire to use the information for cross selling. This could be about to change, but complex implementation remains the key barrier. As a result, IT vendors need to make the process easier for financial institutions to implement.
New Datamonitor research shows FSIs are failing to make full use of their CRM capabilities.
Datamonitor’s new report, European CRM in financial services survey, finds that financial services institutions are failing to use their CRM capability to create sustainable competitive advantages. Most FSIs do not see cross selling as a key use of customer data. However, the FS sector is increasingly viewing CRM as a strategic development and it is expecting demonstrable returns and a clear strategic direction.
FSIs currently use CRM primarily as a tactical tool to identify high value customers and measure profitability. Instead, they need to use CRM to create a sustainable competitive advantage. While FSIs do not currently want to use the information to enhance their cross-selling abilities, this will change in the future.
Complex implementation remains the key barrier to CRM adoption. Advances in technology integration are largely addressing the business process re-engineering challenges faced by banks. However, IT vendors have neglected insurers and brokerages, providing less in the way of sector specific CRM offerings. This has lead to a significant lack of ‘off the shelf’ solutions and of skilled expertise in these lines of business. As a result, vendors need to focus on this area while easing the pain of implementation for all FSIs.
CRM strategy had primarily been a function of individual business lines and IT departments, but the current trend is for a centralized, business decision maker and board level strategy formulation approach. The move to centralized corporate groups will re-address the inefficiencies generated through cumbersome processes, enabling greater cost control and integration.
Financial service institutions must view CRM as a strategic initiative. Other approaches will inevitably lead to an over-emphasis on certain business functions or, as seen in the past, an exaggerated reliance on technology to alter the nature of customer relationships and interaction.