By Randy Rodriguez, Bluewolf
One word summarizes today's banking climate: volatile. Bank CEOs are focused on capital markets, fall-out from the subprime debacle, and the pace of merger and acquisition. FDIC's last Quarterly Report for 2007 points out the realities facing today's banking leaders. With banking quarterly income at the lowest levels in 16 years, eroding margins, earnings volatility, non-current loans rising and one in four banks losing money, IT managers will continue to face enormous challenges in 2008.IT managers project that security and compliance requirements will be the top priority for 55 percent of banks in 2008, reducing budgets for marketing, product and relationship initiatives. Although 45 percent of banking managers cite customer relationship management (CRM) as a top priority, most agree that a growing percentage of the IT CRM budget risks being siphoned. With the pressure on full blast, IT managers are facing a challenging dilemma: "How can I get more done with less?"
Today's bank IT managers face a myriad of challenges as virtualization expands and ID theft issues become increasingly rampant. Customers demand assurances that their banks can be trusted to secure their data. Informed and tech-savvy consumers expect their bank to handle remote deposits, nationwide ATM and debit card services, online banking and electronic bill paying from multiple physical and digital locations. Therefore, fraud detection/prevention, Sarbanes Oxley (SOX) and other regulatory compliance and ID/data security issues have become even more mission critical for the banking CIO.
Banking's dependence upon transactional systems for deposit, lending, mortgage, credit card and other products have often left them unable to understand the overall value of a retail customer and to build relationship strategies to cross-sell along bank product lines. With compliance and security projected to consume an increasingly large chunk of a bank's IT expenditures, how can the IT manager answer to the various business heads and product managers hungry to maximize the value of each retail customer relationship?
Savvy IT managers have made a smart move, turning to Software as a Service (SaaS) solutions to drive retail customer relationship and marketing strategies. A successful SaaS program can enable the bank IT manager to remain committed to compliance and security challenges, while expanding support for customer retention, pricing personalization and product bundling.
The return on investment figures for SaaS-based CRM solutions are powerful. For example, industry analyst firm Forrester Research cites a 170 percent return from one bank's CRM deployment of Salesforce.com, one company that provides SaaS solutions. Forrester concludes that the SaaS model enables internal IT budgets to fund regulatory, security and compliance management while enhancing customer relationship strategies.
SaaS solutions enable product, marketing and IT to deliver in highly dynamic environments built upon a multi-tenant, or "many to one," delivery model.
What benefits are attainable from SaaS-based CRM solutions? They allow bank IT managers to: • Manage customers through call reports, pipeline management and relationship plans; • Manage internal referrals in a centralized location, which enables broader collaboration; • Provide a 360-degree view of a customer from both a business and private wealth perspective; • Enable global knowledge sharing across multiple product lines; • Integrate with monolithic legacy systems to enable consistent views of the customer; • Focus on the relationship-not transactional-aspects of the bank's customers; • Build internal referral solutions, enabling more intuitive product marketing and pricing strategies; • Enables banks to meet the challenges of regulatory, security and compliance while continuing to devote resources to supporting essential but often lower priority customer retention strategies.
The right combination of bank involvement, SaaS consultative leadership and a well-chosen SaaS strategy will create a balanced IT environment that stretches budgets while allowing banks to remain committed to meeting core services around the continued volatility projected for 2008. Randy Rodriguez is managing director, financial services innovation, with Bluewolf, provider of on-demand software services.