Centralized Customer Data
Banks have the best, most comprehensive information of any business for understanding customer intentions and needs. From payroll deposits to debit and credit card spending to cash outflows, they have access to consumer behavior and financial information that most companies would kill for. And yet in most institutions, cross-sell efforts have never achieved the returns that many marketers had hoped. With the implementation of CRM systems over the past 10 years, many banks believed they would have the capabilities needed to more effectively tap into this wealth of information. But CRM systems quickly hit the wall that has stymied many other initiatives in today's financial institution: the line-of-business silo.
Today's financial services organization evolved organically over time. As new services and business units developed, most institutions created distinct operational silos with their own individual data repositories for increased efficiencies. Unfortunately, in today's market, where companies want to deepen customer relationships and solidify loyalty, these barriers have made effective use of CRM and cross-sell increasingly difficult.
Marketing departments have become highly creative in developing new products, but the difficulties inherent in crossing line-of-business silos have limited the effectiveness of cross-sell efforts. For banks to finally achieve their cross-sell ideals, there must be a fundamental change in the way they store and access data. Realistically, it may not be feasible to break down the silos; rather, new approaches must enable organizations to virtually scale these walls to get a more comprehensive view of their customers.
Location. Location. Location.
One of the most direct approaches to facilitating a 360-degree view of financial services customers is the centralization of customer data. By integrating data repositories and transitioning to a single system for data storage, financial institutions can overcome many of the most prevalent issues limiting the effectiveness of CRM systems.
Most CRM systems currently focus on collecting information about inbound and outbound customer interactions, but the most effective cross-sell opportunities naturally present themselves around customer life occurrences such as marriage, the birth of a child, a change in living situation, retirement, et cetera. In many of these instances, customers will initiate transactions, but because data repositories remain siloed, the individuals responding to requests do not always have complete information about the customer's current holdings, history, or life situation. As a result, many of these opportunities are missed regardless of existing CRM capabilities.
Financial institutions can implement cross-sell processes by centralizing customer data in response to a more holistic view of the customer. As a result, offers will be more relevant, appropriate, and better received, as well as more lucrative. For example, when a customer applies for a mortgage, access to her complete file may indicate that she also recently welcomed a new child. These two occurrences would make an offer for life insurance or a home equity line of credit a highly relevant cross-sell offer. This kind of real-time business analysis and response to customer realities increases the appropriateness of offers and minimizes the need for less effective investments in mailing and marketing to blindly stimulate interest in additional products.
Efficiency at the Outset
An effective way for financial institutions to implement this kind of centralized data management is through the process of single account onboarding. Today, signing on for different products at the same institution often requires repeated collection of the same customer information and creates customer frustration.
Key to this undertaking is the creation of a single customer account. The duplicative customer databases in today's siloed structure prevent financial organizations from effectively using existing CRM investments. As lines of business expand, the incidence of multiple same-customer interactions will further complicate this problem unless banks adopt a different approach. In addition to enabling centralized access to customer information, banks must rethink their onboarding practices to facilitate greater efficiency. With a single customer account number and a unified onboarding practice, institutions can override many of the issues caused by siloed business systems.
Additional Business Benefits
A single customer account ID enables anyone interacting with the customer to view the customer's entire relationship with the institution. While the advantages for cross-sell and enhancing CRM capabilities are clear, this approach also benefits other arenas such as collections, compliance, and security. For a collections agent, complete access enables a clearer understanding of a customer's holdings with the institution and the insight to ensure he approaches every collections situation in a way that both minimizes risk and protects the bank's broader customer relationships.
In their efforts to comply with regulatory deadlines, many banks have had to implement redundant compliance procedures across each line of business to satisfy the requirements of know-your-customer regulations, antimoney-laundering, and the new MISMO mortgage lending guidelines (currently in preregulation stage, but likely to become mandated). For commercial lenders with extensive unstructured loan portfolios, single account onboarding and data centralization can enhance compliance with Basel II through a more formalized ability to assess risk.
Finally, from a security standpoint, duplicate data in various line-of-business silos makes the organization more vulnerable to leaks and data loss. Centralizing storage of customer data enables greater investment in protecting the data for the entire organization, as well as increased ability to monitor access and ensure integrity.
Of course, anytime we talk about breaking down barriers, we run into issues of institutional tradition and resistance to change. This is particularly true in instances that require dislodging the ownership of customer data. The answer is to implement in stages while clearly communicating the broader benefits this new approach facilitates. By focusing on immediately achievable wins and promoting their impact, financial institutions can make the transition to centralized data and single account onboarding smooth and successful throughout the enterprise.
About the Author
Alan Horton Bentley is director of worldwide marketing for financial services at FileNet. Please visit www.filenet.com