Magazine article Journal of Banking and Financial Services

Getting the Best from Customer Relationship Management: Debbie Mutton Looks at How Some Banks Have Benefits from Adopting Customer Relationship Management. the Key Is to Avoid a Short-Term Approach

Magazine article Journal of Banking and Financial Services

Getting the Best from Customer Relationship Management: Debbie Mutton Looks at How Some Banks Have Benefits from Adopting Customer Relationship Management. the Key Is to Avoid a Short-Term Approach

Article excerpt

Marston Manthorpe--not an invented name but the managing director of a British financial information service--had a vision. He imagined walking into his local bank branch and being greeted by the customer representative in this manner:

"Good morning, Mr Manthorpe. I notice you were enquiring about our pension services on the web recently. Did you find all the information you needed, or would you like to speak to an adviser?"

As Manthorpe noticed, this sort of offer would more likely than not be accepted by the customer. To him this should be commonplace, considering the growing importance of customer rather than product-centric banking models.

His appeal was for an end to the blanket-bomb approach of leaflets advertising services and products and, instead, the use of CRM as a tool at a local level.

What do we find in Australia? A respected financial newspaper quotes Commonwealth Bank chief executive David Murray as 'scathing of particular technologies, such as customer relationship management'.

Simpler and less expensive systems were today doing a far better job, he complains, than the 'CRM fashion goods' of the late 90s, which loaded businesses with huge sunk costs in the systems, complex arrangements of dealing with clients and a skewed ratio of front-end to back-end staff because of maintenance needs.

In the case of the National Australia Bank, the bank credits CRM with generating about 1.5 million sales leads for bankers and financial planners in the past year.

The Royal Bank of Canada has taken a keen interest in the NAB system, since the Melbourne-based bank won best customer relationship strategy award from the UK Institute of Financial Services in 2001.

The NAB has taken 15 years to reach a position where it believes it has CRM on track, but it knows it has a long way to go. For the NAB, the next step will be linking its Australian and European data warehouses to gain a global view of customers. This is expected to be achieved by 2006.

Perhaps the rhetoric of the CBA's David Murray needs some context, given his bank's head of retail banking services recently said cross selling was a key factor in the bank's retail growth strategy.

The bank, however has been lagging in this key sector, with a 2002 Roy Morgan survey showing that, of the major financial institutions, Suncorp led in cross-selling, with 3.7 products per customer.

The Brisbane-based Suncorp was followed by the NAB (2.6 products), Westpac (2.57), ANZ (2.42), CBA (2.22) and St George (2.03). CBA has since put its May figure at 2.5 products and aim for 2.8 by December next year, while St George now aims at integrated sales and services to target customers more efficiently.

Judging from Mr Murray's recent strategic briefing, however, the CBA remains committed to CRM. As marketing lecturer Mike Crisp of Sydney's University of Technology told a conference recently, CRM may not be delivering very quickly, but deliver it will.

Over at the St George Bank, there has been a solid push to use CRM to build its share of high-value customers and sell them more products. Among these aims is moving an extra 30,000 customers into its 'gold' segment, defined as those with more than $200,000 in deposits or $300,000 in loans.

Looking further abroad we find the Garanti Bank--described by Euromoney in 1999 as the best small bank in the world and by the London Financial Times as the most respected company in Turkey--reporting a copybook example of CRM.

Taking as its maxim 'start small, but think big' the bank embarked on a project that required massive involvement of its branches, popularising among branch staff the importance of gathering and maintaining reliable customer data.

Through strategic decisions the bank:

* Carries out customer analysis using continuously updated data, as well as analytical methods and tools;

* Analyses results and designs action plans, such as campaigns, promotions and special marketing initiatives;

* Uses several channels to reach customers as a result of the plans developed; and

* Evaluates the results to complete this cycle. …

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