• September 19, 2006
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Financial Success, Successful Finance, Through CRM

Tuesday morning's breakout sessions at destinationCRM 2006 in San Jose centered on businesses in the banking and financial services sector. Hosted by Barton Goldenberg, president of ISM and conference chair, one credit union and one bank detailed the advantages gained through the planning and implementation of CRM.

"Leading the Finance Industry Forward" introduced Eric Acree, executive vice president of operations for Vantage Credit Union, a full-service nonprofit financial cooperative. Before thinking about CRM, Vantage was a typical institution with mediocre performance (growth of 3 to 5 percent, according to Acree) and some notable performance issues. One problem area was data integrity and the business processes surrounding it. "We had more than one way to do things, whether it was opening an account or closing a loan, and that led to quality issues," Acree said. "Customers would come in to a branch and say they wanted a credit card, or [some other product]. The agent would log the sale in Excel, and send...individual results to the branch manager weekly. The manager would spot check it, then move it to personnel for them to figure out compensation."

Once Vantage recognized that problems existed, it turned to ISM to help develop a vision and strategy. This part of the project included assessing its many undocumented, informal business processes. The business case was another important step, Acree said. "It seems like a lot of companies forget to do this, to demonstrate ROI up front."

Acree decided early on in the process that quality would be more important than speed of implementation, and he has stood by this decision through a two-year process that isn't complete yet. "CRM is not a project, and it's not a technology. CRM is an ongoing process of improvement." This has led to scope creep, the continual addition of elements to the project, but the results are coming along. So far, these include 50 percent improvement in sales efficiency, mostly by eliminating manual data traffic; 20 percent improvement in sales production; 70 percent improvement in lending efficiency, which Acree described as "huge--this is where we make our money"; and 15 percent improvement in member satisfaction.

The second speaker of the morning was Gustavo Martinez Lira, CRM director of HSBC Mexico. This group of 1,400 branches and 5,176 ATMs serves 6.2 million customers and more than 11 million noncustomer users, making it the third largest bank in Mexico. The branch is still the main channel for transactions in Mexico, and HSBC wanted to be at the forefront of driving more business to the ATM, the phone, and the Web browser.

HSBC Mexico needed to make such transactions valuable to the customers and effective for the bank. Product bundling was part of the solution. "In the old way there was a fee for every transaction," Martinez Lira said. "Now we charge one fee for all a customer's transactions per month, up to a certain number, and we provide all the services and products they would have had to individually select." The monthly fee, formerly 50 pesos (about $5), was recently raised to 70 pesos accompanying the addition of a cash-back program with credit and debit cards.

Despite the new emphasis on other channels, HSBC needed to work harder at having the right relationship with the right customer. Data collection was an important part of this, but it had been neglected for some time. "We used to have a lot of artists as customers, because that was the first profession listed in the account creation field," Martinez Lira said.

Knowing the customer had to be more than instinctual. "Our agents used to believe that a customer who dressed well, or drove a nice car, or even one who was always coming into the branch was a high value customer," Martinez Lira said. "The analytics system said otherwise, but the agents didn't believe it--until we tied compensation to the system. Then they saw." With the greater availability of customer data, HSBC Mexico was able to offer advanced backing transactions to customers in the other channels, such as personalized loan offers through ATMs. "We make it easy for customers, but there's a lot of work going on in the background. We run the loan risk filters in real time through the machines."

By collecting and keeping only valuable data, using it to provide relevant offers across all channels and to build conversations with customers, HSBC Mexico has been able to get the best team and motivate them well. Martinez Lira quoted Rafael Arana, head of personal financial services, who implemented the bank's profit sharing program: "When you have limited time to sell and you are under variable payment, you don't have much time to guess what the customer wants. You have to do your homework prior to the customer contact."

The efforts HSBC has made since implementing the channel offerings in summer of 2004 have paid off. According to Martinez Lira, the new CRM program has led to 82 percent of new personal loans, 65 percent of new credit cards, and 10 percent of new auto loans being made through channels other than the branches. In a typical month the branches see about 72,400 contacts, but 260,000 at ATMs, 19,500 in the call center, and 40,000 over the Internet.

Related articles:

DestinationCRM 2006: Best Practice Basics

Success Strategies for Leveraging Customer Intelligence

Banking on Big Green

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