[September 04, 2008]

CRM in Banking On the Rise in Europe and Middle East, Study Finds

By David Sims

TMCnet Contributing Editor

Increased competition and the need to improve brand image are pushing more than half of the banks in Europe and the Middle East to view customer-centric activities as a strategic differentiator, and thus plan to invest in customer relationship management (CRM) technology, according to a new report commissioned by SAP (News - Alert) AG and conducted by the European Financial Management and Marketing Association.

Nearly 50 percent of banks either have invested or are currently investing in CRM.

The report, "Achieving Customer-Centricity Throughout the Enterprise," from an online survey of 108 banks in Europe and the Middle East, found that banks recognize the strategic importance of CRM "but face many challenges including price competition, pressure to lower operating costs, fragmentation of customer segments and channel proliferation."

It also found that banks are moving towards a customer-centric approach -- "but it is a very slow process," and that generally today CRM at a bank is driven by individual departments and is primarily a front-end process, rather than extended across the enterprise.

The study also found that banks still have limited information to measure their use of CRM.

"In the current economic climate, it is more important than ever for banks to have as much insight as possible into the financial needs and behaviors of their customers and prospects," said Martha Bennett, research director, Financial Services Technology, Datamonitor. "Providing a level of service that makes the client feel well looked after and valued is as critical as the ability to offer the most optimal product at the right time."

The survey found that while the majority of bank respondents said they have not yet been able to adequately address their fragmented customer segments, they see CRM as a key strategic driver and require a more enterprise-wide approach to managing the entire customer experience.

Survey respondents said their customer relationship management strategies are primarily front-end focused and situated on old legacy systems.

In July a study by the Association of German Engineers (VDI) showed that "half of all German companies do not make use of customer relationship management systems (CRM)," according to the study's sponsors.

In most companies, the study found, there is not a systematic controlling of the bidding process — "75 percent of companies said that bid proposal management is a usual everyday process which is not systematically planned," VDI officials said, adding that "this fact shows that there is still a lot of potential for improvement in this process."

Many companies consider customer relation management to be "quite unimportant" — study officials said that about 20 percent of respondents said that they do not have any particular measures strengthening their relations with customers.

In a fairly surprising finding, and maybe something got lost in translation here, the study's sponsors said "one quarter of businesses do not measure their business success regularly." Just reading off the cue cards here, folks, but First Coffee would be open to correction on that stat.

80 percent of those companies interviewed are faced with the requirement of more individual and more rapid products which in general increase the cost of bid proposal management, the study found, adding that "to customers, quality and value for money are more important than a price."

In June a study by Britain's DMC Software Solutions found that over 40 percent of businesses in the high technology, aerospace and retail sectors across the US and Europe have invested in CRM software, as well as two thirds of telecom operators and over half of financial services, pharmaceuticals and transport.

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David Sims is a contributing editor for TMCnet. To read more of David's articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Mae Kowalke

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