• September 1, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Market Focus: Financial Services -- Keeping Your Money on Their Minds

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Volatile economic times don’t make a tough job any easier for financial services institutions (FSIs). Customers don’t always know how to adjust, costing themselves time and money. As a result, FSIs—traditionally early adopters of CRM—are turning to the technology once again.

“FSIs invested heavily in CRM tools in the mid-to-late 1990s with mixed success,” says William Band, vice president and principal analyst with Forrester Research. “But they are sticking their toes in the water once again, either upgrading existing systems or starting from scratch.”

The goal this time is differentiation. “The drive for revenue growth is what’s causing FSIs to re-evaluate their strategic orientation and refocus on the customer, rather than the products,” Band says. So what do FSIs want from CRM suites? Forrester’s findings indicate they want:

  • a common customer experience across channels and lines of business;
  • a customer-centric viewpoint; and
  • dynamic marketing abilities.

Legislation such as the Gramm-Leach-Bliley Act and the Patriot Act places certain requirements—often conflicting—on how financial entities manage customer data. Financial services is highly regulated—“especially with the threats that exist to the U.S. economy,” says Cynthia von Hollen, principal, financial services industry, SAP America. “You can track a person’s businesses owned, children, property—really understand that customer. But with some regulations, you can’t even share that information between divisions of the same company.” The Patriot Act, for example, requires tracking transactions to prevent terrorist activity. “So on the one hand you have privacy as paramount; on the other, you must monitor and know everything.”

“I talk to financial advisors and ask what they need to be compliant,” says Beth Kohler, director of Act! product management for Sage Software. “They tell me a lot about recorded histories—when a customer bought a particular policy or security, when information was communicated, when transactions took place. Because of this, security is an issue.” Data integration with multiple applications means a high potential for prying eyes. The typical approach is role-based, with certain data fields marked read-only and others invisible to certain users.

The opt-in/opt-out question is sticky for businesses affected by anti-spam or Do Not Call lists. Those regulations, plus consumer response, have reduced marketing latitude. “Up to 50 percent of the population you used to work with have opted out of your communications,” says Mark Smith, executive vice president of Portrait Software. Yet all is not lost. “This is actually a great opportunity,” Smith says. “You can’t contact them, but they will eventually have to contact you. That’s the opportunity to do marketing.”

The key is knowing what to do when customers call: “Don’t just read off a list of services or you’ll turn them off even more,” Smith says. “Focus on the service. They could be in a delicate situation and/
or thinking of leaving you…. Real-time analytics takes all of the new information from the current context into account. If you wait, you’ve lost them.”

“It’s important to understand the nature of the customer,” von Hollen says. “Some place a lot of trust in financial institutions and want advisors. Others are very private.” Price optimization and predictive analytics can help establish a customer’s buying behavior and sensitivity to pricing. “Some will move an account if the price is good; some will want to maintain a relationship, or have other factors to consider.”

And where does software-as-a-service (SaaS) fit in? Historically, FSIs have shied away from letting financial data off their premises—a trend only now starting to reverse itself. “Many large [FSIs] are moving to SaaS,” Smith says. To allay fears of data snooping, one approach—such as Portrait’s—is essentially a double-blind Web service. “Alongside [Oracle’s] Siebel or Salesforce.com, we’re deliberately not connecting to the database,” Smith says. “The system packages data on a case-by-case basis, looks at the anonymous bits, and provides instructions.”

Business ByDesign, SAP’s still-in-development foray into SaaS, may also target FSIs. “There is discussion [about a financial services version] but it wasn’t included at the initial release,” von Hollen says. “But as a battleground industry, we will certainly continue examining [it].”

Need a proof-of-concept for SaaS in financial services? Look at Cantor Fitzgerald and BGC Partners, a now-independent former Cantor unit that provides integrated voice and electronic services to wholesale market participants across the globe. Cantor needed a way to better represent its portfolio online while complying with strict regulations about portraying Web properties. By implementing the Clickability On Demand Web Content Management Platform, Cantor achieved 70 percent reduction in time-to-live for content, and a 26 percent year-over-year increase in monthly page views year over year. Its partner BGC experienced a 74 percent increase in unique visitors and a 425 percent increase in monthly page views.

SaaS is just one area of flux. CRM in mobile banking is an even hotter topic for von Hollen. “Financial services companies need to start preparing for a new generation of customers who will want to interact in different ways,” she says. “Generation X is Internet-banking savvy. For Gen Y, the phone is their PC.” 

SIDEBAR: Top 3 Vendors in Financial Services
Source: Forrester Research

  • Oracle’s Siebel CRM*
  • Oracle’s PeopleSoft CRM
    *Does not include Oracle CRM On Demand (formerly Siebel CRM On Demand), which was ranked fifth.


[NOTE: The print version (and earlier electronic versions) of this article incorrectly referred to the former Cantor Fitzgerald unit that is now an independent company called BGC Partners. The editors regret any confusion this may have caused.]

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