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Vertical Focus: Financial Services
For the rest of the January 2003 issue of CRM magazine please click here
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Banks and financial institutions have bought all the CRM tools and analytics packages. Now they need to regroup and rethink how to use them to their advantage. By the end of 2002 the global financial services market will have spent $10 billion on CRM--$6.7 billion of that on the retail banking side--with 44 percent of that in the United States. Tom Richards, financial services CRM director at IDC, a research firm based in Framingham, MA, says that that is an enormous amount of money to have spent and have so little to show for it. "Financial folks are backing up and rethinking goals--or if they even had any in the first place," he says. The financial services industry was among the early adopters of CRM technology. Now there is some pullback on implementations. Financial services companies are examining how to use the tools to make money, according to Melinda Nykamp, vice president of professional services at Fair, Isaac & Co., and author of The Customer Differential: The Complete Guide to Implementing Customer Relationship Management. "The tech side is loaded and that heyday is over," she says. "Now comes the hard stuff where companies are asking how to use the new-found tools and capabilities to drive revenue. The question on everyone's mind is how to make money doing this." One thing the financial services industry is sure of is that you need to be customer-centric to make money. And that's why analytics are key in the financial space, Nykamp says. "The whole notion of customer contact and customer centric, rather than being driven by cutting costs, is returning to the original CRM premise," she says. However, organizing resources and budgets around that concept can only happen after the financial sector irons out which metrics and measurements are most useful, according to IDC's Richards. And there are only so many ways to measure, he says, with the caveat that "you can't measure what you can't measure." Nykamp says that to date, financial services have embraced analytics, but mostly to measure marketing successes, rather than to look closely at customers and to perform life-cycle analysis.
And the IT spending downturn has also caused implementations to move to a more phased approach, which is in line with an overall look at CRM implementations. "People are doing small projects and looking at how to get more successes more quickly," says Steve Ely, director of marketing for S1 Corp., a provider of CRM solutions for the financial arena.
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