CRM - a way of banks gaining business in a recession?

I'm always suspicious of vendor surveys but this survey from SAP, reported on Finextra, rather caught my eye. It's entitled "European and Middle Eastern banks look to invest in CRM" and focuses on how banks are focusing on CRM to differentiate themselves from the competition.

To a certain extent this is obvious. It's hard to compete on interest rates alone, and most banks don't want to be in the position where they do. Brand is another differentiator, but a great brand with lousy customer service is hardly a way of retaining customers. Given the cost of customer acquisition and the that banks know a lot about their existing customers, it makes sense to manage the relationship better to get more value from your existing customers.

Simply managing a customers relationship well has long been a selling point of banks like HSBC's First Direct operation (see post: "The contact centre agent experience - First Direct" and "HSBC creates 250 UK call centre jobs & offshore in decline"). What's always surprised me is that while bank's have talked a lot about the importance of the customer relationship, very few have really focused on it. The report does highlight some of the challenges but I suspect that these are going to get increasing focus.

One of the problems with CRM applications in banking historically has been that it has been seen as a call centre application (maybe rolled out to branch sometimes) and as a solution in its own right. Of course the reality is that the application is only one part of the solution and the processes that go round it and the quality of the agents that use it are perhaps more important. Perhaps even more important is what the CRM application is integrated to. For example, linking CRM with a marketing spend tracker can provide all sorts of insight as to how effective marketing is, but is rarely done.

I suspect that as the economic climate gets tougher, the banks that know their customers better will be able to make better lending decisions with what credit they have. They will also be able to target their most profitable customers most effectively. The call centre is key here as it is likely to be a strong determiner of the bank's brand perception, its ability to reach its customer base and its ability to take advantage of sales opportunities when they arrive.

Effectiveness of CRM as a measure of a bank's future success? Well, there are probably dafter metrics floating around at the moment, and I wouldn't be surprised if we see a strong correlation.