Banking Industry
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Agenda
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What is CRM?
Agenda
What is CRM?
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What is CRM?
Gartner defines CRM as
a business strategy in which the outcomes optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behavior and implementing customer-centered processes.
Use of customer data for analysis, modelling and evaluation to create a mutually beneficial relationship between a company and its customers Automation of customer facing business processes. E.g. traditional applications like Sales Force Automation, Customer service, and Marketing
Analytical CRM
Collaborativ e CRM
Services and infrastructure that enable interaction between a company and its channels
Agenda
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What is CRM?
Revenue Generation
Increase sales to existing customers Retain existing customers Improve sales effectiveness
Improve customer interactions & insight Improve user interactions Consistency across multiple communication channels
Risk Mitigation
Remove risk of Legacy platform use Reduce risk from regulatory compliance
Cost Savings
Reduce business ops. & IT infrastructure costs Reduce Training & Staffing costs
Integration to KM systems
Agenda
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What is CRM?
Resolutions
Manage customer experience Develop deep customer insight Create and align multiple channels Develop differentiated pricing
Banks are employing various methods to resolve key challenges, which in effect are shaping CRM trends in the banking industry
Resolutions
CRM Trend 1
Manage Customer Experience & Lifecycle
Business Best Practices
Customer feedback is increasingly used to improve service operations and processes to enhance user experience As switching costs decrease, managing expectations has become critical to providing optimal customer experience across all touch points Growing importance for client advocacy has resulted in making the organizations customer-centric, provide innovative products and channels and increase the enterprise relevance to customers In retail industry for example, a great emphasis is placed on look, feel, layout and convenience of customer distribution channels (web, kiosk, physical locations, etc.) while also emphasizing customer acquisition and retention
financial institutions that excel in oneto-one customer experiences will be able to reduce customer attrition and see their asset growth outpace the competition by 30 percent -- representing more than $360 billion in assets
Towers Group's Research, 2007
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Customer Experience
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Quality of Interactions characterized by quality of agent service, self service functions, retail experience etc, Level of Consistency characterized by level to which processes, transactions, data provided is consistent across all channels to promote customer trust, increase adoption and advocacy Differentiation characterized by the extent to which customers are segmented and transactions, offers, loyalty programs, etc. are personalized and targeted
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It's pretty clear that there's a strong correlation between the customer experience and growth. "Customer service is the best revenue strategy we have, Wachovia CEO Ken Thompson; FinanceTech, Sept 2007
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CRM Trend 1
Manage Customer Experience & Lifecycle
Desired Capabilities
Key customer experience levers include: Providing quality information and data that is consistent across channels Move from a product-centric to a customercentric organization Focus on service quality, irrespective of channel used by customer Embrace portfolio- and segmentationbased customer handling and management processes Provide for best-in-class operational environment (call centers) for inbound calls, to support sales, service and marketing; empower customer-facing agents in the care channel to provide optimal experience Customer of One - Enable segmentation-based service; provide baseline & differentiated treatments along with targeted offer and loyalty management processes Simple and cross-channel consistent sales, service and marketing processes and transactions. Flexibility and agility in modifying processes to provide desired customer experience A metrics and measurement framework to monitor and modify processes to meet customer expectations Customer segmentation is key selective approach to customers is important for the model to increase profitability
Enablers
People
Focus on agent quality, training and measurement processes to provide best-in-class customer service on inbound calls Embrace a customer-centric culture in the organization and make optimal customer experience a key performance metric
Customer Benefit
Quality and consistent transaction experience that is channel-agnostic Increased levels of satisfaction from interactions; common processes for transactions makes the interactions easy to transact and manage A positive perception of enterprise, leading to long-term relationship that can translate to benefits due to loyalty & offer programs
Process
Commonize processes across channels; make transactions easy and consistent across channels Develop skill-based agent pools, with call routing strategies designed to provide customer-specific call handling experience
Technology
Deploy call routing techniques that will route a call to the right skilled agent with minimal wait time; deploy robust call routing infrastructure and processes; Segmentation-based call routing and handling optimized call wait time Decisioning engines, predictive analytics and dynamic sales tools are all necessary to provide the right offers to the right customers at the right time through a specific interaction channel
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CRM Trend 2
Develop Deep Customer Insight
Business Best Practices
CRM integrated solution provides 360o view of customers Increased customer acquisitions and retention through segmentation with predictive analytics Develop customer segmentation models to implement effective cross-sell and up-sell marketing programs Enhance customer information with 3rd party information such as demographics, lifestyle and psychographic data Leverage customer profiling to increase multichannel and multi-wave campaign opportunities CRM solutions present distinct presentation, business logic and database layers for alternative customer segments
Banks are service providers and should know more about what their customers require and how they interact...we can mine the data and use the insights to develop new productswe want to partner with customers on their financial life journey
- Eric Sandosham, Citibank Singapore
Leverage text mining to deliver useful intelligence from unstructured data such as blogs, e-mails, focus groups, graphics and call center notes
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CRM Trend 2
Develop Deep Customer Insight
Desired Capabilities
Create knowledge foundation about each customer for cross-sell and up-sell targeted marketing opportunities Leverage text mining to deliver useful intelligence from unstructured data such as blogs, e-mails, call center notes, video, graphics, etc. Provide information and data that allows customers to be segmented by channel and product preferences Quantify Customer Lifetime Value (CLV) and leverage for product and service differentiation Understand varying Family Life Stage for all customers to provide appropriate product portfolio Provide differentiated market offerings and service treatments based on segmentation schemas Increase customer loyalty management via targeted marketing processes Facilitates personalization of channel communications Develop effective customer models and scores for determining customer sensitivity to target marketing promotions and product mixes
Enablers
People
Data mining professionals to develop customer segmentation, cross-sell, upsell and retention models Significant IT and statistical personnel to capture, process and analyze customer structured and unstructured information
Customer Benefit
Customer will receive only targeted marketing collateral/communications relevant to product interest Customer will receive the appropriate level of service support vis--vis CLV Customer will be provided multiple and flexible channel options per need Integrated view of customer supports changing life stage needs
Process
Consistently capture all customer interaction activities and unstructured data into customer-centric data repository Analyze customer behavior to understand cross/up-sell and attrition processes
Technology
Predictive analytics and campaign management environment leveraged to exploit alternative customer segments for targeted marketing Enterprise Customer Information File (CIF) and Data Repository to consolidate all views of the customer Automated segmentation-based call routing and preferences for servicing Dynamic analysis, reporting and visualization tools to understand customer drivers
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CRM Trend 3
Create and Align Multiple Channels
Business Best Practices
In a typical multi-channel approach, customers still value the physical channel; brick & mortar branches are found to be critical for all customer profiles for engaging customers and maintaining customer relationships A channel strategy is found to depend on multiple factors: demographics, channel preferences, age, education, income levels, job type, etc. Channel Functionality is key e.g. complex functionality on low-cost web channel is found to decrease customer adoption and increase calls to call centers Low-cost online channels are embraced for their superior cost structures that enable aggressive pricing, specially in highly fragmented markets with high cost levels Businesses have embraced multichannel customer service management to align services with the right channels, coordinating efforts across channels to reduce costs and use integrated reporting to manage service quality, performance and compliance
A 30-year trend shows that ATMs and internet will overtake branches as the primary transaction channels in future
- Forrester Retail Banking Study, 2008
Channel Growth Rates (2001-05, Online vs, Retail) show the shift to online banking away from branches
BCG Retail Banking Study, Nov 2007
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CRM Trend 3
Create and Align Multiple Channels
Desired Capabilities
Multi-Channel integration is key success factors include a holistic, integrated enterprise CRM approach and technology platforms Common processes to drive multiple channels; online, branches, ATM network, customer care, etc. and Cross-channel data synchronization and availability are key to providing customers with accurate, relevant data, irrespective of their channel preference Branches needs to focus more on enriching customer relationship and customer experience while developing new branch models such as co-branded, segment/ product focused, in-store, etc. Critical areas to focus on channel strategy are channel development, channel promotion, channel integration and channel profitability Incorporate Governance structure into channel strategy to define service models for each channel; target specific customers, for specific transactions to specific channels based on customer data, preferences, value and other attributes
Enablers
People Agents and branch personnel promote a multi-channel strategy irrespective of customers preferences Specialization of human resources (specially in branch environment) is key to provide personal touch while reducing administrative tasks and enhancing transaction oriented tasks Process Branch evolution is key; physical branch plays key role in customer relationship. Branches need to focus on sales and advisory activities while increasing commercial effectiveness and reducing cost base Coordination and mutual channel support processes are key to providing a seamless service and build customer trust in channels Technology Set up data replication/synchronization capabilities for consistent data across channels; Utilize SOA and standards based architecture to provide the necessary agility Enterprise strategy around integration of data, backend systems, front-office tools
Customer Benefit
Real-time, accurate account information that is consistent across all channels, promoting channel trust and increase customer adoption & advocacy Multi-channel follow-thru for transactions Increase in the ease of doing business Decreased need for churn and potential for a long-term relationship
Many firms are still unable to share customer data across products, business units or customer channels, depriving institutions of a single view of the customer, making it difficult to field customer queries on multiple products and often obscuring potential selling opportunities
PricewaterhouseCoopers, Building the customer-centric Financial Institution, 2006
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Secondary
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CRM Trend 4
Develop Differentiated Pricing
Business Best Practices
Differentiated pricing has significant leverage on profitability so much that even a small improvement can yield large profit increase Develop pricing programs based on profitability, lifetime value analysis and customer segmentation for price optimization Engage broad base of management in pricing programs and address related data, process, technology, organization and human capital changes necessary to support pricing effort Benchmark, monitor and communicate the results of pricing program through out the organization
Expectation from pricing technology is too high (Gartner hype Cycle), which gives higher benefit for early movers opting Dynamic Pricing tool
Benefit Rating for Pricing Tool: High
(Source: Gartner)
A paradigm shift is taking place in the banking industry. In addition to modifying the business approach taken by banks, relationship pricing will cause competitive turmoil - Celent Dynamic and relationship-driven pricing will be key bank marketing strategies through 2011, starting in commercial, cash management and high-net-worth environments and inexorably spreading across all lines of business where regulations permit it - Gartner
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CRM Trend 4
Develop Differentiated Pricing
Desired Capabilities
Design pricing based on risk, customer segmentation and total relationship value Provide 360 degree view of pricing relationship and transparence in fees and charges with single consolidated bill Flexible product bundling Break product silos and price based on relationship parameters Cross Product Discounting Provide discounts on products depending on volume and usage of products in customer portfolio Multiple parameter pricing Allow multipleparameter pricing, time sensitive pricing or volume based pricing Redefine products and evaluate customer relationship to increase product and customer depth Integrate pricing and billing systems external systems like core banking, payment systems, collection systems, Brokerage systems. Increase and manage fee income end to end by moving to a centralized infrastructure Maximizes total expected revenue from differentiated pricing by reducing revenue leakages
Enablers
People Enable product development team in defining enterprise wide relationship based pricing rules Provide single customer value statement for products and services across banks LOBs Process Operational efficiency through streamlining pricing and billing practice across geographies and lines of business Customer service serve corporate clients better with a single view, single statement and a global price list Technology Develop pricing tool with ability to co-exit with legacy infrastructure Easy integration of the pricing tool with back end host systems and front end branch automation systems
Customer Benefit
Volume benefits and cross product benefits Transparency in pricing & billing and clarity on fee schedules Personalized products and services Product packaging and bundled offerings
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Agenda
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What is CRM?
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Growth Rate
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Challenges
Customers not convinced with TCO of an ongoing software rental model Buyers believe that SaaS is more expensive in the long run Customer Concerns on integration and customization capabilities. Data Security Issues Complex Pricing Models and Contract Agreements. Ambiguous SaaS solutions management model.
Benefits to Banks
Reduce infrastructure and service costs without sacrificing quality Achieve a better and rapid return on investment Faster deployment and lower upfront costs
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Challenges
Interoperability: Lack of common Technology standards for mobile banking. Many protocols are being used for mobile bankingHTML,WAP, SOAP, XML Security: Security of financial transactions, executed remotely and transmitted over the air, need to be addressed jointly by mobile application developers, wireless network service providers and the banks' IT units. Scalability & Reliability: Scale-up the mobile banking infrastructure to growing customer base. Systems such as Mobile Transaction Platform enables quick and secure mobile banking service. Application distribution: To check the upgrades and download Over The Air updates Personalization: To support personalization
Customer Benefits
For Banks Customers
24/7 bank services anywhere Easy service enrolment Variety of financial and information services Timely notification of due credit payments Monitor your fund activities Save your time and efforts
For Banks
Attract and retain customers Increase your operations security Boost your sales Decrease the customer service load Cost-effective solution Flexible service and pricing setup Pre-integration and quick implementation High performance
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Current Practices
Independent banking blogs are showing the potential to become substantial money making publications in their own right. Corporate Blogs : Employees of several banks are now using blogs to brainstorm internally and interact with customers. Deutsche Bank is to introduce new social computing tools. Financial services firms with aggressive marketing programs likely to use social media tools in customer-facing situations Community sites are becoming popular both for relationship building and as hubs for innovative financial services. Many good independent blogs on banking issues now being published on the Web.
Customer Benefits
For Community Users
Social Media tools like blogs, forums, podcasts, wikis and social communities give consumers a global soapbox Power to make or break reputations, enhance or damage brands, create winners and losers in the marketplace with lightning speed
Salesforce Adoption
Familiar interfaces and models, Tagging to associate clients with key words and pre-existing relationships
For Banks
Fast Response and Reaction to Customer Opinions Deep and Rich Customer Insight Customer-Led Innovation Increased Customer Retention Customer Acquisition
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Thank You
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Appendix
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