CUSTOMER RELATIONSHIP MANAGEMENT: A BRIEF HISTORY, AND A BIG MYSTERY

James R. Rosenfield
February 2002

Customers count, information about customers counts, and managing that information counts.
Relationships matter. What no-brainers! Intellectually and intuitively, no one who can fog a mirror would disagree. And yet Customer Relationship Management remains an elusive will o' the wisp for most companies, and a bitter, discredited experience for many others. What's the problem? Well, first a brief history of unkept promises: 1980s: Database Marketing. The promise of database marketing? To speak individually to countless customers. The reality: It's too costly, too difficult, and doesn't pay out on the bottom line, except in the case of business-to-business key account marketing. The compromise: A little database marketing goes a long way, which is very good news for everyone except technology vendors. You can do quite well simply by knowing how recently and frequently customers purchase; how much they spend; what they purchase; and an iota of demographics. Almost everything else is fluff and gloss. 1990s: Relationship Marketing. Major phenomenon: Loyalty programs. Major promise: Loyalty! Major result: Companies such as airlines now have an enormous incremental layer of expenses, without much to show for it. It's the familiar promotional conundrum: If your competition promotes, you have to promote equally, which eventuates in everyone making less money. But if you unilaterally withdraw from such competition, market share collapses. And, alas, no one, at least on the consumer and small business end of things, can tell the differences between loyalty, bribery, or inertia. Early 2000's: Customer Relationship Management (CRM). Major phenomenon: Great promise. Major reality: Promise unattained. What's the problem? What's the big mystery? WHY CRM AND CONVENTIONAL CORPORATE CULTURE ARE AT ODDS CRM does not mesh well with conventional corporate culture (with the exception, again, of business-to-business key account management). Its most significant and dramatic successes are likely to be found in non-public companies, many of whom are not eager to trumpet their successes in the business press or at trade shows.

There are three prevalent corporate inhibitors to making CRM work: 1) Cultural Most companies, alarming as this might sound, don't really care about their customers. If they did, customers wouldn't be frustrated, abused, stifled, stymied, and mistreated the way they are. Based on my experiences as a customer in the U.S. in 2002, I can safely say that things have never been worse. Airlines, banks, telecoms, Internet providers are universal customer abusers, where rude service people and ignorant technical help are the order of the day. The University of Michigan each year does a study of customer satisfaction in the U.S., and it's steadily declined since 1994! Customer satisfaction, in fact, is now at just about an all time low in numerous categories. One of America's biggest banks just came in at 60%, which is way, way below sea level. Customers will normally award you 75% customer satisfaction just for showing up! 2) Economic CRM requires investment spending, which means that increased profits will not be visible until some time in the future. For publicly traded companies, anything beyond next quarter is too far out even to contemplate. When you layer on top of this the current worldwide recession, the appetite for infrastructure investment spending disappears entirely. The corollary of this is that any company wise and rich enough to make the investment now might in the future have a great and sustainable advantage over its competitors. 3) Linguistic Customer Relationship Management is fraught with so much jargon and so many acronyms beginning with the tiresome "CRM" itself - that senior management's eyes glaze over. I personally have watched several Chief Executive Officers quietly pray for death as yet another series of impenetrable terms were flung their way by managers and vendors unwilling or unable to speak plain English. OLAP, Data Warehousing, ERP, P-CRM, drilling down, WAP, ADRI, on and on until the head droops and the mind craves anything, anything at all, that sounds like normal people talking to normal people. WHAT CAN CRM PRACTITIONERS DO? CRM believers can't undo the business cycle, which takes solutions to #2 above out of their hands. But they certainly can be in-house apostles for the importance of customers, and the more metrics they can attach to customer segmentation and retention, the better. And they can surely clean up - nay, they must clean up! - their linguistic act. They might also establish and keep 10 Commandments of 21st Century Marketing and Customer Relationship Management:

1) Respect the customer. 2) Abandon ethical neutrality, and only promote products that -at the very least - do no harm. 3) Understand that the medium is the message, and use media appropriately. 4) Know the differences between bribery and loyalty. 5) Be skeptical of marketing "scientism," including most forms of so-called market research. 6) Be a critical client and completely scrupulous vendor of all CRM-related products and services. 7) Become a privacy advocate, since invading your customers' privacy will put you out of business. 8) Let go of intrusive and obnoxious ways of contacting consumers, such as junk e-mail, outbound telemarketing, and viral marketing. 9) Learn that "brand" in the 21st Century is a stress-reduction strategy on the part of the consumer, not some ad agency hocus-pocus. 10) Know that we don't control technology - technology controls us. THE ELEVENTH COMMANDMENT There's an eleventh commandment: Fall out of love with CRM. Fall out of love with your products and services. Assuredly you must fall out of love with yourself. But fall in love, deeply in love, with your customers, the only thing in the business world worthy of such affection.

Banking: Introduction
Filed Under Retail Banking Retail Banking By Amy Fontinelle Whether you're new to the United States, a teenager or young adult opening an account for the first time, or you just want a better understanding of one of the main places to stash your money and start building wealth, this tutorial will tell you everything you need to know about how checking and savings accounts work. To get started with banking, you'll need to decide what bank you want to use and open an account. In this section, we'll tell you how to take these first steps. But first, let's answer the question that surprisingly, a lot people who are unfamiliar with banking still ask: Why use a bank in the first place? Next: Banking: Why Use A Bank? Table of Contents 1. Banking: Introduction

2. Banking: Why Use A Bank? 3. Banking: How To Choose A Bank 4. Banking: Check-Writing 101 5. Banking: Making Deposits 6. Banking: Debit Cards and ATMs 7. Banking: Managing Your Checking Account 8. Banking: Savings Accounts 101 9. Banking: Safeguarding Your Accounts 10. Banking: Conclusion
CRM in Banking

Introduction
This short paper analyzes CRM in banking industry based on the literatures available on customer relationship management. The short paper is structured in a way to understand what is CRM? How CRM is important in Banking? What are the benefits, disadvantages, strategy, costs, and impacts of customer relationship management in banking industry? What are the challenges faced by CRM in banking?

What is CRM?
Customer relationship management (CRM) is a co-ordinate approach in business to maintain the relationship between the firm and its customers to satisfy and retain the firms customer, in turn helps the firm to exist in business and to attract more customers by giving promotions and more comfort in doing business with the firm (This Little Piggy, 2012). Some of the common objectives of implementing CRM are to increase the customer service in order to retain them, increasing efficiency of the organization which helps the employees to maximize their skills in understanding their customers, to reduce the cost for running business which in turn increases the profit, and supporting the marketing department to understand the customer needs and make promotions based on the customers needs (Das 2012).

CRM in Banking
What is the need for CRM in banking and what is CRM in banking context is discussed in this section. The increased competition in the banking market, reduced customer loyalty, easiness in switching between banks for customers, and changing customer trends lead the banks to find a solution to attract and retain customers to increase their profit. In order to understand, manage, and serve the customer

requirements, the role of CRM comes into existence. The CRM helps in delivering the consistent and cost-effective service to their customers, develop products and services aligned to customers, and increase customer loyalty and long term value of the customer (Russ 2006). According to Saravanakumar (2009), CRM is all about maintaining a sustainable competitive advantage by serving existing customers and attracting new customers. In banking context, CRM is a system which has to deal with a large number of individual retail customers and has the analytical capability to manage the customer retention rates of the bank and to enable them to cross-sell their product effectively (Buttle 2009). The CRM supports bank in executing data mining techniques to understand the customers, and also to identify the prospects for cross-selling their products. The CRM also reveals the best way to communicate and market their cross-selling products to the prospect customers. The banks also want operational CRM to reduce costs by transferring service into contact centers and online (Buttle 2009). According to Das (2012), CRM architecture is of three categories, collaborative, operational, and analytical. The collaborative CRM deals with the communication between bank and its clients, the operational CRM automates certain processes in banking, and the analytical CRM analyze the customer information and generates the business intelligence to operate in the competitive banking industry (Das, 2012).

Benefits of CRM
The implementation of CRM in banking sector generates benefits not only to banks but also to the customers. According to Nelson (2012), the following are the prime benefits of CRM systems for the banks: improvement in customer service, value enabled cross-selling which in turn increase revenue, automation of banking processes, improved communication, better control on quality of customer details and product details, collection of customer data, effective surveys and marketing strategies. The CRM makes bank to focus on its customers to satisfy customer and make profits for the banks with the help of information and analysis tools of CRM. It increases the overall profitability of the bank like better infrastructure, easy training of employees, customer acquisition, retention, and profitability. The CRM increases the customer satisfaction which leads to the customer retentions. CRM helps the bank to achieve the centralization of information which helps the firm to manage and integrate process, people and technology. It helps the banks to understand the customers. CRM enables the bank to segregate the

customers into various segments and helps them to customize the service based on various segments. It helps bank in creating demands through multi-channel and multi-wave campaigns which in turn resulted in aggressive customer acquisition. It provides the bank employees with 360 degree view about their customers, which means the transparent transactions through a single window. This 360 degree view acts as a framework to accelerate the cross-selling of different products to the customers (Bligh 2004, MBA Knowledge Base 2012). The CRM increases the operational efficiencies and collaboration by automating the process and business activities which in turn reduces the process time and manual tasks. The multi lingual ability of CRM helps the bank to deal with the customers very easily. It also helped the bank in running campaign management and integrating the information about customers from various channel (Bligh 2004). The implementation of CRM leads to the building of central repository for all products offered by the bank, pricing of its products, competitive information, internal training material, presentations for sales, templates for proposals and marketing collateral. This repository helps the bank to improve its efficiency. This also improves consistency and transparency in the organization by giving 360 degree view of the organization to all employees. The CRM helps in fast and consistent decision making based on the data in repository and customer understanding aspects of CRM. It helps the organization to manage the leads and opportunities into business through proper follow ups and interactions. The operational inefficiencies can be reduced with the help of CRM. It integrates customer interactions through phone, fax, e-mail, online portals, wireless devices, ATMs, and face to face contacts with bank employees at the operational centers and also connects to relevant internal and external partners. All the above information can be used with business intelligence systems to do predictive analysis (Bligh 2004). The CRM in banking benefits customers by convenience banking like online banking, ATMs, mobile banking, etc. It helps the customer to give feedback and also helps them to know about more products which are beneficial to them (Bligh 2004).

Disadvantages of CRM
According to wisegreek (2012), one of the disadvantages of CRM is the wrong entry or missing to enter the information of the system may lead to misleading behavior of customers. CRM may change the work culture of the organization. CRM also leads to the frequent switching of customers between different

banks. Another disadvantage is the holistic integration of customer details is hard to achieve because of the complex magnanimity of banking industry.

CRM Strategy
The CRM strategy in banking is the direction and scope of the CRM initiatives of the bank over long-term to configure the CRM system in the challenging and competitive market to meet the needs of the market and stakeholders (Johnson 2006). In another way, the core of CRM strategy is the creation of mutual value to customers, employees, and banks itself (Chotani 2010). The aim of the bank in this challenging and competitive market is to attract and retain its customers through appropriate and personalized customer service. Based on the aforementioned aim, banks have the following three CRM strategies; acquiring, enhancing, and retaining the customers of the banks (Ramkelawon 2010). In acquiring strategy, CRM is used to make differentiation, innovation, and convenience in banking experience which may lead the banks to attract new customers. In retaining strategy, the role of CRM is to retain the existing and new customers by listening to their needs and innovating new products that create a value to their customers. In enhancing strategy, the role of CRM is to bundle the offers accurately, reduce cost, and improve customer service (Ramkelawon 2010). The basic strategy of CRM is the adoption of customer-centric organizational approach where the customers are separated into different segments, and each segment is tailored using certain behaviors and patterns, and with the coordination of banks various department improve the customer service and effectiveness (Bligh 2004). According to Ramkelawon (2010), the marketing environment is changing from mass marketing to target marketing and in the future it move towards individual or personalized marketing.

Impacts of CRM
Some of the visible impacts of the CRM on banking industries are discussed in this section. The impact of CRM on banks is positive and takes long time to value the impact. At the moment, the impact is very wide in the organization. The CRM has changed the view, process, and techniques of banking industry. But some studies say that the CRM has a negative impact on cost efficiency of banks. Based on the study done by Kumar (2009) on U.S, Commercial Bank Industry reveals that CRM implementation has a decline in cost efficiency, but at the same time it has a positive impact in profit efficiency. As an impact of CRM implementation, bank understands the dual value creation which is creating value for them by creating value for their customers. One of the greatest impact of CRM in banking is the realization of

effectiveness impact rather that efficiency impact, which means effectiveness of banks service is increased with high cost (Kumar 2009). The customer portfolio management (CPM) is an impact to banking business. As part of CPM, banks segmented markets, costing done based on activities, estimated the life time value of customers, and data mined to realize the strategically significant customers. Another main impact is on the customer relationship management and customer experience. The CRM creates a single window product details which enabled the employees to perform efficiently. It increases the speed of transaction and solving the customer queries. As an impact of operational CRM, the banks sales-force, marketing, and services are automated. Because of operational CRM, the cost of operation is reduced with extended service hours which means customers can perform transactions at home through online instead of going to bank without interacting with bank employees. It helps the sales-force to offer the appropriate products to appropriate customers without any complicated procedures.

Costs of CRM
The cost of CRM plays an important role in the success of CRM implementation and its effective use. According to Lombardo (2012), improper funding is one of the reasons for the failure of CRM. Lombardo (2012) breakdowns cost into hardware, software, customization, training, and support. Gartner (2004) classifies the cost of CRM into the following categories: software licenses, software maintenances, hardware, telecommunications, system integrators, software vendor professional services, internal staff, and others.

Challenges
The banks are looking forward to maximizing profit and mitigating risk along with its social responsibility. At present the banking market is a wide open, highly competitive and low growth environment. One of the main challenges is to focus the products from segmented customer base to accurate customer focused product bundling and pricing (Fst 2012). Another challenge is the shifting customer trends, where the banks are required to change products, process, and channels to attract customers (Fst 2012). The next challenge faced by CRM is the banks demand for automated, self-service transactions through internet, smart phones, and other latest communication technologies together with customer interactions at all the customer touch points (Fst 2012). Advanced and robust technology is the other

one for meeting all the real-time offer management and business communications to attain competitive advantage (Fst 2012). Another challenge is to integrate call centre with banks other communication hub to get the specialists advise who knows more about cross-sell and up-sell the banks products. The other challenge is to make the information centralized, accurate, and accessible real-time by all the employees of the bank (Fst 2012).

Conclusion
This short paper defines what CRM is and what its role in banking industry is. The paper provides lights into the benefits to customers and banks itself with the implementation of CRM. The paper mentions some of the challenges faced by CRM in banking to meet the demands of the competitive and changing world. It also glances through the disadvantages, strategy, costs, and impacts of customer relationship management in banking industry.

Bibliography
Bligh, Philip & Turk, Douglas 2004, CRM Unplugged: Releasing CRMs Strategic Value, John wiley & sons Inc. Buttle, Francis 2009, Customer Relationship Management Concepts and Technologies second edition, Butterworth-Heinemann Publications, Sydney. Chothani, Y. Pritesh &Siva, Arjun & Narayan, Lochan 2010, CRM in banking industry, Cool Avenues.com, viewed 2nd May 2012, < http://www.coolavenues.com/mba-journal/marketing/crm-bankingindustry?page=0,2> Das, Rahul 2012, Customer Relationship Management in Banks, Scribd.com, viewed 17th April 2012 <http://www.scribd.com/doc/89081445/10/BENEFITS-OF-CRM-TO-BANKS> Fst 2012, Meeting tomorrows CRM challenges in retail banking, fsteurope.com, viewed 5th May 2012, <http://www.fsteurope.com/article/Meeting-tomorrows-CRM-challenges-in-retail-banking/> Gartner 2004, Justifying CRM Costs and Boosting Return on Investment, Strategic Planning Series. Johnson, Gerry & Scholes, Kevan 2006, Exploring Corporate Strategy: Text and Cases, sixth edition, Financial Times/Printice Hall.

Krasnikov, Alexander, Jayachandran, Satish, & Kumar,V 2009, The impact of Customer Relationship Management Implementation on Cost and Profit Efficiencies: Evidence from the U.S. Commercial Banking Industry. Journal of Marketing, Viewed 24th April 2012 , <http://www.marketingpower.com/AboutAMA/Pages/AMA%20Publications/AMA%20Journals/Journal %20of%20Marketing/TOCs/SUM_2009.6/Impact_of_Customer_Relationship.aspx> Lombardo, Russ 2012, The costs of implementing CRM Solutions, Peak Sales Consulting, viewed 2nd May 2012, < http://www.peaksalesconsulting.com/Costs_Crm_Article2.htm> MBA Knowledge Base 2012, Need of Customer Relationship Management (CRM) in Banks, MBA Knowledge Base, < http://www.mbaknol.com/business-finance/need-of-customer-relationshipmanagement-crm-in-banks/> Nelson, Herbet 2012, Maximize Profits with CRM solutions for the banking industry, Ezine articles, viewed 5th May 2012, < http://ezinearticles.com/?Maximize-Profits-With-CRM-Solutions-For-TheBanking-Industry&id=7035627> Ramkelawon, Bhisham 2010, Customer Relationship Management as an Integrated Approach in the Banking sector, International Research Symposium in service management, viewed 2nd May 2012, <http://www.uom.ac.mu/sites/irssm/papers/Ramkelawon%20~%2053.pdf> Russ, Pat 2006, Customer Relationship Management in Retail Banking, eds.com, viewed 5th May 2012, <http://www.izdihar-iraq.com/resources/bankingconf07/bankconf_pdfs/ref_boses1_cust_relationship_mgmt_bkg.pdf> Saravankumar, S. 2009, CRM in banking, Articlesbase, viewed 28th April 2012, < http://www.articlesbase.com/banking-articles/crm-in-banking-1302680.html> This little Piggy 2012, what is CRM? viewed 17th April 2012, <http://www.thislittlepiggy.co.uk/crm_definition.htm> WiseGREEk 2012, What are the disadvantages of Customer Relationship Management? Viewed 24th April 2012, <http://www.wisegeek.com/what-are-the-disadvantages-of-customer-relationshipmanagement.htm> Posted by MAN at 03:55

Email ThisBlogThis!Share to TwitterShare to Facebook Labels: benefits of CRM, Challenges of CRM, CRM, CRM in banking, CRM strategy, Disadvantages of CRM No comments: Post a Comment Newer Post Older Post Home Subscribe to: Post Comments (Atom)

Search This Blog

Followers Blog Archive

2012 (2) o May (2) Review on BPM 3.0 CRM in Banking 2011 (8)

About Me
MAN View my complete profile Importance of CRM Systems in Modern Retail Banking "Central banks don't have divine wisdom. They try to do the best analysis they can and must be prepared to stand or fall by the quality of that analysis. This quote from Mary Kay Ash, founder of Mary Kay cosmetics shows the key to the wisdom of banks analysis. Like central banks, retail banks today recognize they must identify, attract and retain profitable customers. The question is how to do this. Banks, historically, have taken a non-holistic approach to customer management and customer service, offering products and services which satisfied the banks rather than the customers needs. Retail banks today recognize that this can no longer be the case. They must be able to react to the individual customers requirements for flexible, customized services and products that can be accessed through multiple channels. In other words, they must be competitive in a competitive market. Historic entrenchment, however, has made banks reluctant to enter into the banking CRM world which would allow front line branch personnel the ability to manage the customer with a holistic product

package. Knowing the customers needs at the initial point of contact allows for the ability to up-sell as well as cross-sell a full range of financial products and services. Within the past decade the move from physical branch to e-branch has been significant. No longer is your banker behind the tellers window or behind the desk in the office. Your banker may be your mobile phone, home computer or any other electronic device faceless and nameless. Generally, over one-half of a retail banks customers use some form of e-banking. It is not unusual for a customer, once an account is opened, to never have to visit the branch again. This begs the question: How do you increase the ROI on the electronic customer? How can you cross-sell or up-sell to an unseen customer? Though, a bank's senior decision makers fully understand the branch process and the necessity for it, they have somewhat less understanding of their electronic customer base. It is this gap in knowledge that in many cases causes a reluctance to institute a CRM system. There are concerns about expenses associated with the system, the ease at which the system can be accessed by front line personnel and the relinquishing of authority to the front lines. Even more frightening to the entrenched bank establishment is the relinquishing of choice to the customer themselves. How then, can a CRM system assist these retail establishments in increasing their ROI? CRM success in retail banking depends on measurable ROI over a short period. Expenditures and prospective earning over an established period of time must be defined. With this information the return from a CRM system can be measured. One significant issue for physical retail banking is the shifting peak periodsthe need to reallocate idle or untapped branch resources during peak periods will have a positive impact on ROI. An integrated CRM system can help to shift these resources through equal access to customer information. The concept of the process driven workflow in a retail bank needs a CRM system which can:

Capture customer data at the point of entry into the banking system the branch. Ensure that all customer information and history are accessible allowing the branch to foster the corporate identity of the organization. Provide quality information on each customer interaction that can then be accessed by senior management in timely reports which allow more refined analysis than previously available. Enable bank marketing to easily identify customer contacts by market segment and target correspondence to those customers most likely to acquiesce to the product or service offering. Ensure that the customers experience within the system is consistent across all channels.

The Banking CRM system also integrates the electronic customer identity into the organization. No longer is the face-to-face bank contact required to cross-sell or up-sell products. New product introductions, based on the current electronic customer profile, can be offered though the e-marketing channels. Managing the customer is what CRM is all about it allows the banking establishment to look at the full

basket of products offered by the institution and based on customer profiles offer the most profitable product to the most

ntegration Of Social Media With CRM In Banking And Financial Services

By Luisa Ruppert, Published on January 17, 2013
Tweet inShare

Many businesses across industries have integrated social media into their CRM systems early on; some better than others. Its not only about the adaptation but knowing how to leverage social media to get the best results and accelerate business growth. It is common knowledge that the financial sector was highly affected by the global economic crises. Most banks and other financial services providers sustained a substantial loss in customer trust and loyalty. Integrating social media into their CRM systems and putting a considerable amount of effort into social media strategies is one of the ways to rebuild that trust.
Challenges

One of the unique challenges for the entire financial industry is the vast variety of international and national laws and regulations that restrict the integration of social media in a few different ways:

Internationally operating banks face various laws that restrict them in one or more countries in actually integrating any type of social media with their CRM system. Industry-specific regulations limit financial institutions in giving financial advice online due to privacy concerns of their customers.

All of the available social networks have their own terms and conditions that contain regulations on companies communication with customers and prospects.

Due to these limitations, banks are reluctant to adopt any kind of social media as part of their communications strategy. Here are a few examples of what financial institutions might be worried about:

Degradation or loss of brand image. Negative feedback and controversial discussions on social media sites can damage the image of financial institutions. This is why it is crucial to have the right resources, expertise and a strategy in place when employing any type of external social media. Waste of energy and resources. Most banks make most of their profit through corporate banking and there is still a predominant opinion amongst the financial industry that social media is more for the individual than for corporations and therefore considered not to be valuable for revenue. Social media is only seen as a marketing channel. However, with a good strategy, it can be used for internal career development and recruitment.

Benefits

In making use of social media and tying their CRM system to social media networks, banks and financial service providers can get closer to their customers, corporate and retail, and find out how to improve services and products. This will positively impact their revenue if the right strategy is in place. Here are a few selected benefits:

New opportunities of designing customer-specific offers will emerge through the gathering and analyzing of big data via social CRM system Increased customer satisfaction through engaging with clients on social media platforms and easier management; For example: using social complaints management solutions integrated in CRM systems Encourage P2P (peer-to-peer) Support by establishing discussion forums and communities for customers and interested parties to exchange knowledge and profit from each other. A good suggestion might be to open forums for existing customers via a secure log-in to ensure a higher level of security This can be an issue when it comes to sensitive financial issues Considering banks lose over 60% of customers due to long response times of customer service and also over 30% of financial service customers switched providers in 2012 it would seem wasteful not to leverage social media as a low-cost substitution to re-build strong relationships with customers. After all Social customer service costs only 1/10 of customer service provided via phone.

6 Examples of banks successfully using social CRM

Even though the bank and financial industry are still reluctant to integrate social networks into their CRM, there are a few early adopters and best practice cases in most regions. Below is a brief selection: In the US American Express has recently delivered a very unique campaign enabled via social CRM. The program the bank developed with Twitter allows AmEx customers to link their bank accounts with Twitter, and by using specific hash tags, customers earn savings from designated partners. This long-term social and brand campaign is focused on rewarding existing customers and since its foundation is social CRM it has a high ROI on media and sales. Another example is Bank of America which uses their Twitter account to track customer relationships and reduce response time to inquiries. In the EMEA region the Spanish bank Caja Navarra provides customer support via Facebook, Twitter, YouTube and Skype and leverages communities to better understand their customers needs. The Jyske Bank in Denmark offers its clients interactive Q&A sessions via a social TV channel. The third European best practice case is First Direct, a UK subsidiary of the global HSBC bank, that leverages Facebook, after experimenting with their own platform, as a place for their customers to exchange advice and receive feedback from peers as well as from the bank itself. The German Deutsche Bank ended up with 27 new customer product ideas after asking their customers to vote on features they are missing in their portfolio. In APJ the CIMB Bank sees the integration of social media into their communication strategy less as a risk but rather as opportunity to engage their customers with competitions or by letting them decide what their next credit card layout will be. Considering the mentioned challenges above (and only a few were mentioned), the banking industry is still very reluctant towards any social media and it is unfamiliar territory, for most, as on-site customer service was always first priority. Since the evolution of the internet, however, and the rise of online banks (e.g. ING DiBa in Germany and ING Direct in the USA, now owned by Capital One) without physical locations connecting with customers and prospects in a costeffective way, online becomes even more crucial. In addition to that it is the changed customer, the social customer that banks need to react to. Generation Y, born early 1980s to the early 2000s, is growing-up to be the key market segment. This generation is doing business mobile on tablets and phones, tweeting the news and sharing customer reviews on the Internet. According to a recent study more than 40 percent of high-net-worth individuals younger than 50 viewed social media as an important channel for communicating with their banks. Young people today do not want to take the time to go to a physical location or wait hours on the phone to get service from their banks; if banks do not adapt to the fast-paced world of their customers they will not have a a lot of customers in the future.
We recommend:

IT Trends For 2013

How To Create A Culture Of Innovation

Are You Ready For The iWatch Gold Rush? 4 Questions To Ask

Useful Apps To Organize Your Work Day

recommended by Outbrain [?] Related Stories

A Recent College Graduate Is Helping Online Retailers Win The Price Wars For Good

By Ashley Lutz, Published on July 23, 2013

A Dartmouth graduate is using an idea from his senior economics...

Risk And Reality For Financial Institutions

By Rakesh Shetty, Published on July 23, 2013

Several years after the onset of the financial crisis in 2007, banks and financial institutions are continuing to reassess...

Subscribe To Free Updates

Get the best tips on Business Innovation delivered to your inbox each day. All fields required.
First Name

Last Name

Company

Phone

United States of America

An Offer For You

Learn More About SAP How SAP Can Help

Learn how your business can leverage the latest and innovative technologies.
Learn More About SAP > Learn More About SAP Solutions > Learn More About SAP for Technology >