CRM adding the personal touch

Gone are the days when customer relationship management (CRM) systems were card indexes containing key clients’ taste in port and their golf handicap, says Nick Brewer, Group Strategy Manager at Temenos, the banking software provider. The CRM system used to exist with two users in mind – the relationship manager and the client, but that is now evolving into a more fluid, multi-channel software approach. The change is partly driven by regulation, which, on both sides of the Atlantic, has forced the CRM database to be more than a simple financial master record. In the US, the Patriot Act demands a greater depth of knowledge of not only the customer, but also the other beneficiaries of funds. In Europe, MiFID and other customer protection edicts insist on the bank classifying all the trustees or beneficiaries of an account according to their ability to make financial decisions. Rex Cowley, head of international marketing and high net worth at Close Private Bank, says that “MiFID has provided a bit of focus” to the industry to re-examine the limitations of their CRM systems. Data protection and security regulations also insist on user classification to ensure that information is only available to the appropriate bank employees or intermediaries, he notes. The multi-channel approach is one that Finantix, another CRM software provider, is taking according to its director of strategy and alliances, Alessandro Tonchia. The prevalence of independent financial advisors (IFAs) and external portfolio advisors (EVAs) has added a layer of complexity that has to be accommodated by the private banks if they want to attract customers to their products through the intermediaries. The approach varies between banks, Mr Tonchia says, with some – such as Abbey – operating as “an execution channel for intermediaries”. Finantix built the bank’s systems to make all of its products available to intermediaries, and to construct model portfolios for clients so that its advice operated on an asset class level, balancing the portfolio in terms of allocations, while the IFAs were free to pick stocks. But it is not regulation alone that has moved the software forwards. “There has been a sort of swell that has been coming,” according to Mr Cowley at Close. Increasingly, he says: “Customers prefer to manage the relationship with the bank, rather than letting the bank manage the relationship with them.” As a result, there has been a “mind shift” that means “CRM systems, especially on the high-net-worth side, are becoming less focused on product sales and more tailored towards managing the customers.” Traditionally these systems have used a database to find clients for a new product. Now that process needs to be reversed so that products can be identified to meet a client’s demands. To anticipate those demands, Mr Cowley says, requires “software that is giving the relationship manager a much better view of the client and who their other advisors are”. Namely, to obtain an aggregated view of all of an individual’s assets, including those not currently in the bank’s custody. “There is a much greater degree of self-direction amongst customers,” Mr Brewer of Temenos agrees. Customers are more tuned in to their financial requirements and the availability of products. Coupled with this, the loyalty that a bank may have been able to count on in a customer may no longer exist. Clients see their money as portable and are willing to spread their money across several institutions, a trend normally more prevalent in the retail sector. Like retail banks, Mr Brewer says, “private banks now have to sell to their customers. Now you have to have an understanding of what kind of products the customers need.” The next generation of CRM systems, which Mr Brewer calls “analytical CRM”, will incorporate this smart cross-selling functionality, using data on assets not currently under the bank’s control to gain greater wallet share from their customers. The systems should also, Mr Cowley adds, include personal information, “to allow the relationship manager to be more personalised with their approach in corresponding and interacting with the customer, so they can respond to the customer in the way the customer prefers to be responded to.” Mr Tonchia at Finantix says that the smarter CRM system will allow larger universal banks in particular more ability to exploit economies of scale and make personalised services that are normally restricted to high-end clients available to the mass affluent by making them lighter touch and hence more cost-effective. Systems like Finantix can be multinational, with local back offices operating as silos to deal with the various national regulatory requirements, with a single, global CRM layered on top. This provides front-end systems that can offer relationship managers the ability to take a global view of their clients’ wealth and identify potential deficiencies in their global portfolio risk, target cross-selling opportunities, or poach business from their competitors. Fundamentally, Mr Cowley says, “CRM is no longer just a sales tool.”