Banks Need to Cash in on Customer Data
A recently released report from Meridien Research shows that financial institutions need to do a better job of leveraging customer information across multiple product lines and service channels.
The report, called "Referential Linking Solutions: A Game of Connect the Bits", examines referential data linking technology, which facilitates the association of customer and household records across all divisions and groups of an institution.
Referential linking helps users identify trusted sources for specific customer data elements; establish unique, persistent keys that can be used to identify customer records throughout the organization; and allow integration of customer databases, according to the report.
And while, the report states that banks, brokerages and insurers could benefit from this technology, few are using it, according to Dennis Behrman, an analyst with Meridien Research, a Newton, Mass. market researcher that focuses on CRM trends.
"Financial institutions must realize that customer focus, including having a complete view of a customer's relationship with the institution, is fundamental to retaining and expanding relationships with consumers."
"Spending on referential linking solutions is miniscule compared to that of other strategic CRM investments, and looks like it will remain so in the near term," says Behrman, who adds that financial institutions are spending far more on call center functions, lead generation, marketing campaign tracking, and data warehouses.
For the current year, Meridien Research forecasts spending on referential linking solutions in financial institutions to be about $28 million, increasing to over $41 million by 2006. That is compared to overall CRM spending in the financial sector, which is expected to reach $6.8 billion for 2002.
Behrman says that financial institutions don't sell products but services and in order to remain profitable they need to manage the behavior of its customers.
"In finance, behavior is what determines profitability," he says. "To look at total behavior you need to have a holistic view of the customer."