CRM in the Financial Sector - Boon or Bane?

Like every other industry the financial services sector is also witnessing a plethora of changes. Facing umpteen challenges, the industry despite its phenomenal growth,

has witnessed a slump in some areas. The main reason? Changes, vast competition, increased costs, decreased efficiency, inadequate client relationships and poor sales processes. Something vital is needed to cut through the waves and make the sector boom. Organizations need to basically better their relations with their customers in an effort to sustain them.

Financial firms find it almost impossible to have a complete and holistic view of their customers and that puts them at a disadvantage when knowing their customers is a criteria. More often than not selling financial services and products is infinitely more difficult than the work other industries face. The requirements demanded of financial service employees right now far surpass those of the other industries, which indirectly contributes to the fact that this particular industry lags far behind the others.

The past decade has seen companies in this sector slowly realizing that there is an answer. The financial services industry is now looking at customer focus as a means by which it can achieve lost profits. The result ? An acute focus on customer relationship management - CRM. Adopting this strategy has slowly resulted in financial firms, venture capital, private equity, investment banking institutions etc, achieving an increase in overall productivity.

CRM for financial services enables the financial firm to know the customer better. In addition it helps uncover potential customers and improves overall customer service. It helps build an advantage over competitors as firms are enabled to increase their intelligence about the customer. CRM manages to provide this information to almost every employee. CRM for financial services endeavors to improve and encourage relationship building with existing and potential customers, the various departments within the organization, management etc.

The dilemma that most financial institutions face is that they do not store their valuable customer data in a comprehensible or easily assessable manner. In financial firms this intelligence is generally scattered throughout the firm and is almost unusable. CRM encourages financial services firms in changing their scattered data into something that can be used by every employee in an easy manner. Who does it benefit? Analysts, asset managers, financial professionals all stand to benefit from the implementation of customer relationship management.

CRM's benefits to the Financial Services Industry in a nutshell are:

Identification of potential customers
Provision of data regarding history and preferences of investors
Increase of customer knowledge of employees
Provision of an excellent view of customer relationships
Encouraging customer relationships
Increasing and improving financial productivity
Storage and provision of financial data of customers
Easy assess to collated financial data
Managing financial deals
Evaluation of a potential investment
Aiding client acquisition
Investment selling
Tracking and monitoring financial deals
Aiding the sales team in the provision of customers needs
Encouraging and assisting the increase of cross selling and upselling
Enabling the building of trust for brokers, agents and financial planners etc

Guidelines for Financial Firms opting for CRM:

It is imperative to pay additional attention to what other means the organization can adopt in order to maintain and build customer relationships. Every possible means by which this can be achieved should be scrutinized and indulged in.
Financial institutions implementing CRM need to realize the importance of online banking and indulge in it. Since almost 55 million is being spent on it firms opting for CRM need to focus more on online banking and understand that it benefits the customer enormously , indirectly giving a hand to customer management.
It is highly important for financial institutions to analyze and understand the needs and preferences of their customers. The data that CRM provides should be scrutinized and studied sufficiently so as to really know the customer.
Segmentation should be undertaken with sufficient focus being made on each segment and the right communication within the segment .The right marketing efforts should be made as well so that the adequate balance between customer focus and profitability is achieved.
Firms need to focus their marketing efforts far more on the customer than on the product itself.
It is imperative that sufficient and frequent customer retention programs are initiated.
Technology should always be incorporated in all business efforts to ensure the right implementation of CRM.
Focusing more on the hottest trend - relationship banking will go a long way in the successful implementation of CRM.
Sales and service should be carried out only after sufficient customer knowledge is obtained and scrutinized.
Holding onto traditional practices is something most banks do. This should be avoided as much as possible.

Pitfalls of CRM for the Financial Sector

The complexity and magnanimity of this particular industry makes it harder to adopt a holistic and integrated customer approach.
Financial firms tend to focus more on the product than on the customer. In this respect they are almost oblivious to them.
Since most financial organizations are considerably big in size, the cost involved is considerably higher.
There are various challenges facing the industry and these all need to be overcome in order to actually succeed at the implementation of CRM.

The Bottom Line?

Is CRM for financial services actually benefiting the financial services sector? The answer is yes. Obtaining, maintaining and basically utilizing a customer database in an effort to maximize or improve customer relationships will go a long way in increasing overall productivity. A failure to focus on these relationships can prove detrimental while knowing and indulging your customer preferences can go a long way in securing and raising profitability.

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