Robert Joyce understands complex relationships. A former salesman and now managing director of corporate relationship management at The Bank of New York, Joyce completed a CRM deployment in March that gives the firm's 1,650 sales employees in 30 countries a single, consolidated view of each customer's interactions with the bank.

This all-encompassing view is typical of a new trend designed to counteract the effects of two decades of massive consolidation in the financial services industry. A wave of mergers and acquisitions fragmented and compartmentalized customer information, making it difficult to know what each business unit was doing or to track customer interactions.

In the relationship-driven business of financial services, that spells trouble. A narrow view of the client makes interaction impersonal, and when a salesperson doesn't know a customer's buying habits, it's far more difficult to pitch new products that speak to the customer's needs.

Full Customer View

When it comes to CRM software, financial services, unlike manufacturing or retail sales, is a completely information-based industry, according to Mindy Propper, an analyst at BearingPoint. Buying preferences, family needs and retirement plans are among the many bits of information that must be meticulously tracked so financial services firms can tailor products to individual needs.

But despite huge investments in CRM, very few resources have been focused on enhancing the customer experience, according to a recent survey of financial institutions by BearingPoint. In fact, 42 percent of the 174 companies surveyed still interact with their customers within product silos.

Propper says much of the customer disconnect is the result of developing CRM projects from the inside out and not the outside in -- in other words, disregarding what the customer might want in favor of what the business wants.

That was what Bank of New York, a US$6.3 billion company, was attempting to overcome with its $10 million CRM project. Over the past decade, the bank has made more than 80 acquisitions, which have resulted in almost as many new product lines, Joyce says.

Bank of New York had 10 sales-tracking systems, the majority of which consisted of rudimentary tools, such as handwritten address books, Lotus Notes programs or Excel spreadsheets.

"We ended up with a slew of disparate sales forces throughout the globe in different product areas. We didn't have one place where we could look to see what we were doing with a client or what the opportunities were with a particular client," Joyce says.

The Bank of New York chose Siebel Systems' eFinance software to tie that customer information together. Joyce says the project was a success because he spent an "inordinate" amount of time getting user buy-in. Yet there was still resistance from sales and business managers, who didn't want to give up their customer data or switch to another system for tracking it.

"The important point on how we got around that issue was to use both the carrot and the stick," Joyce says. He also kept the project focused only on the sales force, with no call center or back-office administration tie-ins, in order to avoid scope creep.

Data Overload

Kathleen Khirallah, an analyst at TowerGroup, says the financial services industry is ahead of the curve in its use of CRM software, but it also faces far greater challenges than other industries in getting to a single view of the customer across the entire institution.

"I don't think they're providing lip service to the principles of CRM. I really do think banks understand working with customers well is critical to their success," Khirallah says. "It's kind of the blessing and the curse. They're good at it, but there's just so much that they have to coordinate, there are challenges along the way."

Smaller companies might have an internal culture that supports customer service, even without the software to automate those services. Larger financial services firms, however, have to use software to deal with far more information to give the illusion of a personal touch.

"Really large institutions that rely on software and have made those investments sometimes don't have that service culture. So they have other challenges," Khirallah says.

Robert Haggerty, an analyst at TowerGroup, says firms that perform best in financial services are ones that cultivate and manage relationships. Whether it's banking, brokerage, investment management or insurance services, it's critical to understand and retain information about customers, he says.

Haggerty says automation of data life-cycle management is the crucial next step, when customer representatives will be automatically alerted to events in the consumer's life. Once the salespeople have that initial information about a customer, he says, "they'll have a good excuse to call and get a sale out of it."

Financial Services

Financial Services CRM Maturity Level: High

Maturity rating by Barton Goldenberg, ISM.

ROI Grade: D Grade based on positive ROI in case studies analyzed by Nucleus Research Inc. Special Characteristics: Decades of industry consolidation scattered customer information among business units and systems. The goal now is to unify that data, creating a single view of the customer. For example, buying preferences, family needs and retirement plans must be tracked so financial services firms can tailor products to customer needs.

Key Vendors: Chordiant Software, Metavante, Onyx Software, Pegasystems, PeopleSoft, Pivotal, S1, Siebel Systems

Market Watch: Worldwide CRM license revenue is predicted to grow from $416M in 2003 to $517M by 2008.

Gartner Dataquest, March 2004