Making the most of customer relationship management in financial institutes

In the old days, managing a customer in a bank or an insurance company was pretty easy. Most would have just one or two accounts and would be dealt with face to face, by mail or by telephone. But things have got a little complicated since then. Now the finance industry has spread its reach over a multitude of offerings and has a plethora of ways for its customers to interact with it. Web banking, specific mobile clients, social networks and email now vie with the older-style (but still very important) mail and telephone, while face-to-face still shows no sign of being sidelined. Also, different types of customer have different preferences for how they would like to be dealt with - and woe betide any organisation that tries to impose any particular means of interaction across the board.

In the old days, managing a customer in a bank or an insurance company was pretty easy. Most would have just one or two accounts and would be dealt with face to face, by mail or by telephone. But things have got a little complicated since then. Now the finance industry has spread its reach over a multitude of offerings and has a plethora of ways for its customers to interact with it. Web banking, specific mobile clients, social networks and email now vie with the older-style (but still very important) mail and telephone, while face-to-face still shows no sign of being sidelined. Also, different types of customer have different preferences for how they would like to be dealt with - and woe betide any organisation that tries to impose any particular means of interaction across the board.

So how can a company in the finance space best deal with its customers?

Historically, the institution has been at the centre of the interaction, and the customer has had to use different silos, both on a per-product and a per-channel basis. For example, if a customer wanted to take out insurance online, they would often find there was no knowledge of them as a current account holder. If they phoned through to ask a question about the web-based request they had just made, the agent would not be able to see the application because it would be "owned" by a different application (see diagram).

diagram

The received wisdom has been that a generic customer relationship management (CRM) software package can solve these issues. But many institutions that have gone down this route have found that, essentially, it introduces yet another silo of information, and that linking it to the existing systems involves expensive, fragile integrations that are hard to maintain over time as the various systems are patched or upgraded.

An alternative approach is to use master data management (MDM). Here, the essential reference data around a customer is aggregated into a single database. For the utmost security, this is reduced to the customer's name, a unique identifier and a securely hashed "signature" (it may just be a unique identifier and the signature). Each of the existing systems then has to have an additional field matching the equivalent hashed identifier. After that, any access made around the customer is carried out through the MDM database, giving access to all information about that customer.

MDM can then be extended to give a 360-degree view of the customer. An enterprise service bus (ESB) enables data to flow between the existing applications. If necessary, an "aggregation application" (which may be a CRM system) can be placed in the system to ensure all information is collated and can be presented to the various people who may need to access it - the customer or a bank employee. By applying granular security within the aggregation application, only those who have the rights to see certain information will see it.

The key here is to ensure that the "domino effect" can be dealt with across the different services the customer has with the institution. For example, a decision on granting a mortgage can be expedited by being able to see how well a customer has been running their current account, what level of savings they have in their savings account, that they have no loans outstanding and that their credit card has been paid off on time over the past 12 months. This set-up also enables customers to manage their affairs much more easily through their chosen means. The lowest-cost route for the institution itself is generally direct automation - a customer carrying out most of their interactions via the web is far cheaper than using ATMs, counters or email.

Even where the customer does feel there is a need to contact an agent via telephone or face to face, the fact that the institution's employee or representative has full vision of all the interactions the customer has had with it means they will be better placed to help the customer quickly, saving money and enhancing the customer experience. If the customer can see all their financial services from the institution in one place, they can move money between accounts, can make more informed choices on additional services and be a better (and more profitable) customer overall.

By using an architecture like this, the institution will also have a much better idea of how to position itself. With full knowledge of the customer's complete interactions with the institution, targeted services can be offered that the customer is more likely to pay for.

Many pieces of research have shown certain financial services organisations to be poorly perceived by their own customers. However, traditional CRM may not be the best way to improve this. Ensuring that existing systems can be brought together in a meaningful way will ensure these systems can continue to be used, maintaining their value, and that the needs of the customer and the institution are more closely aligned.

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