The financial services industry has gradually concluded that customer relationship management is an expensive exercise with minimal rewards, and interviews with executives at a technology conference and elsewhere suggest that this view has taken a firmer grip today than it has before.
Not everyone has given up on CRM - using software and other technology tools to mine customer data and cross-sell products and services. However, among those who have soured on the practice, the words of disdain are stronger than ever.
"I think CRM is a sort of a joke," Catherine Allen, the chief executive officer of BITS, the technology arm of the Financial Services Roundtable, said at the Financial Services Technology Forum: Online 2002, held this week in Scottsdale, Ariz. The conference was sponsored by Thomson Media, the parent company of American Banker.
Many bankers - burned by multimillion-dollar investments in CRM - now share that opinion, Ms. Allen said.
"It seemed to be people [were installing] technology without really understanding what your customers wanted," she said. "That's why CRM became a buzzword. Instead, people are now saying, 'Let's listen to what our customers want, do more customer research. Let's have more in-depth understanding of the customer. Let's look at how we are serving the existing market.' "
CRM is "like a four-letter word to some bankers," Octavio Marenzi, the managing director of the Boston technology research and consulting firm Celent Communications, said in a recent interview.
Many banking companies spent huge sums of money on sophisticated CRM systems that failed to produce revenue or improve customer service, Mr. Marenzi said. In call centers in particular, only a small fraction of the functionality of the CRM systems is ever used, he said.
Best Practices LLC, a Chapel Hill, N.C., research firm, said in a recent report that 70% of all CRM initiatives have ended in failure.
"Banks forgot that the first word in CRM is 'customer,' " said Peter Soraparu, the executive director of content development at the Bank Administration Institute in Chicago. "It's the front end that needs the focus, and the savvy banks are concentrating on that."
Customer relationship management products, which give front-line bank employees a complete picture of a customer's relationship with the bank, are meant to help employees suggest suitable products for that customer, or to help the employee know to waive a fee if the customer is valuable to the bank.
However, industry executives say, too often the products are not being used properly. "What's the point of data if you don't know how to use it?" Ms. Allen asked.
The disenchantment with CRM seems to have generated a renewed interest in how to deliver good service. Senior bankers at the technology conference repeatedly emphasized the need to improve or enhance customer service, but they steered clear of the term "CRM."
Steve Ellis, the executive vice president of wholesale Internet services at Wells Fargo & Co., said that having deeper relationships with customers will naturally lead to more sales. "Customer service is the essence of your business."
Blaise Heltai, the managing director of global Internet operations at FleetBoston Financial Corp., said that his company had found some use from a product it calls eCRM, which gives "online access to corporate client information plus news, alerts, and other items to help wholesale relationship managers better serve their clients."
Online financial services sales have been slow so far, but that is mainly because of "customer behavior," he said.
