Head of Marketing at CRMNEXT, a specialist CRM solutions company serving some of the world's largest and fastest-growing brands.
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Even before the Covid-19 pandemic, fintech companies were giving banks and credit unions a run for their money. According to Ernst & Young’s Global FinTech Adoption Index, fintech’s global adoption rate soared from 16% to 64% from 2015 to 2019. With social distancing measures preventing most in-person business operations during much of 2020, use of fintech platforms to issue contactless payments and apply for PPP loans grew exponentially.
According to Ernst & Young, 68% of people are willing to use nontraditional financial tools. But consumers may still have more trust in traditional financial institutions. The same report revealed that 71% of those who already use fintech platforms worry about the security of the personal information they share online. People who prefer managing their finances with traditional banks and credit unions value the security and personalized wealth management services these businesses provide.
But banks and credit unions still must utilize technology to improve their customer relationship management. As Americans take advantage of record low interest rates to refinance their mortgages and businesses seek additional PPP loans, banks must compete with fintech platforms that are making these processes faster and easier at scale. It has never been more important for banks to ensure their digital footprint is in place, so that they can obtain and utilize the data necessary to offer a personalized, seamless, digital customer experience.
Core System vs. CRM
Traditionally, banks and credit unions have adapted their core systems in the absence of a true customer relationship management (CRM) system. But these core systems were never engineered to be a CRM and, in a lot of cases, existing core systems don’t have the necessary integration points to ensure a seamless employee and customer experience – which results in friction points developing between departments.
Traditional financial institutions may be reluctant to adopt a true CRM approach because they view it as a complete digital transformation requiring a huge lift and a lot of work. But the reality is that, with perhaps the exception of the healthcare industry, the financial services industry has the most data and technology at their disposal. And when all of that data is leveraged in mini silos or micro journeys, its reach is much too limited.
Micro Journey vs. Customer Odyssey
Joining these micro journeys into a comprehensive, personalized itinerary that serves a customer over the course of their life is the future of banking. For example, let’s say a customer takes out an auto loan. They may have little or no say in which financial institution is selected to service their loan, but this micro journey could be the gateway to a much more fruitful relationship with a bank that utilizes data-driven CRM.
Unfortunately, these micro journeys too often exist in silo. Most people have multiple micro journeys with different financial institutions. A typical consumer might have a micro journey with their mortgage, a micro journey with their credit card and micro journeys with their checking and savings accounts. Most banks and credit unions offer auto loans as well as all of these other products, but it's very rare that an institution will actually tie them all together to provide a holistic experience.
Data-Driven, Seamless Experience
Whereas other industries may be able to work in departmental silos and still make a big impact, this just isn’t possible in the financial services industry, where growth depends on empowering everyone at an organization to be able to upsell and cross-sell with a complete view of each customer. Banks utilizing CRM with strong system architecture that makes customer data visible to all departments are able to offer an adaptive, intuitive experience that’s a win-win for each customer and the bank itself.
For example, if a customer goes into a branch to fill out a mortgage application, and their customer service representative notices that the customer’s credit card utilization through another institution has been kept under 10%, they’ve never missed a payment and their credit score continues to increase, the bank might offer an even more competitive or floated interest rate to incentivize that customer to switch. In the future, CRMs will enable banks to offer even more products that use predictive analytics based on individual consumer data, in order to gain more share of the wallet.
Crawl, Walk, Run
The ultimate goal of CRM is to make it possible for financial institutions to grow while creating a seamless experience for both employees and members/customers. Breaking down silos and enabling a seamless employee experience allows the whole to be greater than the sum of its parts. Digital transformation through true CRM is no longer just a nice way to track metrics like NPS and CSAT; in order for banks to offer a competitive customer experience today, CRM is necessary to collect and orchestrate data so it can be acted upon in a way that’s meaningful to each customer.
Oftentimes, digital transformation seems so overwhelming because the entire process can take years or even decades. But it’s possible (and extremely helpful) to approach digital transformation in bite-size chunks, instead. This crawl, walk, run approach prioritizes the most immediate, meaningful gains for an organization based on an accurate model for ROI using quantifiable measurements such as asset size, growth rate and asset to headcount ratio.
There are quick wins that can be achieved early in digital transformation. It’s extremely important, as an organization is looking to change, to have these small milestones in place. The process of adopting a CRM should be guided by a clear roadmap of success, with milestones that the organization can not only hope to achieve, but expect to achieve.
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