Taking CRM to the Bank
European banks still expect to increase its investments further in customer relationship management solutions despite having already spent considerable sums on CRM over the past two years, according to a recently released report.
Market researcher, Datamonitor surveyed the retail banking, insurance and investment sectors across Europe about IT spending strategies for 2002 and found that CRM is a high priority for all the sectors, but only banking will continue to make considerable investments this year.
According to the report, called IT Efficiency in Financial Services: European Financial Services Technology Survey 2002, 42 percent of the retail banks surveyed stated they plan to increase spending on CRM. This makes CRM the most significant area of growth in technology spending for banks in 2002. Meanwhile, 17 percent they will not be increasing spend in any area of IT this year.
James Adams, a technology analyst for Datamonitor says that the continued investments in CRM are a surprise - especially in light of market conditions and general IT cost cutting.
"It reflects the fact that many institutions are yet to see value from their CRM systems and feel more work is needed before the full potential of the investment they have already made is realized," Adams says.
Adams explains by adding that most of those surveyed claim they have failed to see a return on investment from their current CRM systems. However, he also notes that most survey respondents say that ROI measurement was difficult or often resulted in efficiencies but not bottom line cost savings.
"Most of these companies are just starting to realize that CRM is more than just a technology and they have to align their business processes to CRM," Adams says.
The study shows that although cost savings is a priority for all sectors surveyed, tighter IT budgets make it more difficult for firms in insurance and investment to justify spending on CRM. For insurers take on IT infrastructure challenges that are still generating massive inefficiencies within the insurers' systems is higher significant priority.
Adams concludes the insurance and retail investment sectors are likely to invest more in CRM in the future, but for 2002 those industries are focused on cost cutting measures.
"Traditionally IT investments by financial services institutions (FSIs) have been justified by the increased cost efficiency of internal processes. More recently, with investments in the Internet and CRM, IT success has been measured in the way it enhances the actual products and services of the institution," Adams says. "In the current trading environment many FSIs, particularly in insurance and investment, have reverted to cost efficiency as the main measure of success, with a new emphasis on improving the cost efficiency of IT investments themselves. However, the longer-term trend remains one of moving to a broader measure of IT success, encompassing efficiency and effectiveness."