Financial-services firms are failing to get the most out of their CRM efforts, according to a study by Datamonitor, a London-based research firm, which released its findings today. That's because the sector is focused mostly on profit optimization and not strategic advantage.
Datamonitor interviewed more than 180 companies across the European banking, insurance and brokerage markets. The most surprising finding is that many of the companies aren't even using CRM to create cross-selling opportunities. Specifically, 56 percent of the respondents reported that they don't see cross-selling as a key use of customer data, while 62 percent of the respondents say they use CRM primarily as a tool for identifying high-value customers and measuring profitability.
But these companies must utilize CRM on both fronts: profitability and competitive advantage. "It is imperative to view CRM as a strategic initiative," stated Anders Maehre, financial-services technology analyst at Datamonitor. "Other approaches will inevitably lead to an over-emphasis on certain business functions or, as we have seen in the past, an exaggerated reliance on technology to alter the nature of customer relationships and interaction." On the upside, Datamonitor believes financial-service firms will eventually see the light as their analytical capabilities advance.
For now, CRM is being woefully under-deployed. Another contributor to the breakdown is that financial companies are finding CRM implementations to be too complex, says Datamonitor. More than half of the respondents say implementation difficulties are the biggest barriers to CRM adoption. The brokerage sector, in particular, faces aging proprietary networks and IT systems that don't work well with cutting-edge CRM software.
On the other hand, banks have relatively advanced technology, which means re-engineering challenges aren't as problematic. CRM vendors haven't missed the signs and are tuning their software for the banking vertical. Unfortunately for brokerages and insurers, there's not a lot of tailored solutions for them in the market. The banking community, though, faces other obstacles to CRM adoption -- namely, skeptical senior managers. Failed CRM promises have made these folks wary, says Datamonitor.
Tom Kaneshige also writes for Line56.com