Ensight study: CRM in the Romanian Banking System
ENSIGHT MANAGEMENT CONSULTING S.R.L. - 1 November 2011
Ensight Management Consulting has conducted a study about the Customer Relationship Management (CRM) in the Romanian banking system, in order to analyze the current situation and to identify possible future trends in short and medium term.
The study 'CRM in the Romanian Banking System' proves that, even if several years ago talking about Customer Relationship Management (CRM) in banking did not make too much sense, nowadays this topic is on every bank's agenda. The Romanian market has rapidly caught up with international trends in this area and we can say that, finally, CRM is no longer a stranger for banks active on the Romanian market. On the contrary, the topic is quite 'hot' and every bank has already implemented some sort of CRM solutions, from very simple to very sophisticated ones.
From the methodological standpoint, the study was conducted through semi-structured, face to face interviews with top management representatives of 13 banks operating on the Romanian market. The interviews took place between April and July 2011.
'We believe that this study regarding the status of CRM implementations in the Romanian banking system is highly relevant and can provide great insights into what has been done, how, with what results and also into what can be improved and further developed. Our study is meant to bring to light the main characteristics of CRM implementations in banks and also to discuss key success factors, best practices and future possible developments in this area', said Robert Maxim, Managing Partner with Ensight Management Consulting.
As far as the representativeness of the research is concerned, we used two keys for validation:
- Aggregated market share of respondents in terms of assets (2010). The aggregated market share in terms of assets of our respondents was 62,20%* of the total market. Considering this figure, we can assert that the relevance and representativeness of the results of our research are very high and trends observed can be extrapolated to the entire market.
- Aggregated number of retail clients of the respondents (2010). In terms of total number of retail clients, the interviewed banks have an estimated pool of ~14 million retail clients. Thus, we may state that our research is highly relevant and representative for the entire banking system in Romania.
Results
Most CRM implementation initiatives began in 2009-2010, during the economic crisis, which demonstrates that, in fact, CRM has proven to be an attractive solution for banks that have shifted from attracting new clients to retention of the existing ones, as a result of harsh conditions on the market.
Our study shows that most implementations last for 6-12 months especially if we speak of medium-sized banks and implementations of several isolated modules. On the other hand, when we look at several very large banks we can find implementations which last for up to 4 years.
Our research shows that many banks opted for internally developed solutions, mainly for cost reasons. The smaller banks usually cannot absorb the high cost of external CRM software. They usually want to implement only several modules and isolated CRM applications. However, the largest banks show a tendency to use international providers of packaged CRM solutions.
Cost, compatibility with other systems and customization possibilities rank first in the applied criteria for CRM software provider selection.
So far, only 58% of the interviewees recognize the strategic relevance of CRM implementations.
According to the survey, respondents perceive CRM implementations as opportunities to increase revenues, but often neglect the cost-efficiency opportunities that CRM systems might bring.
Integrating customer information, cross-selling/up-selling and increasing service quality are the top 3 objectives of CRM implementations. Customer satisfaction and customer loyalty still receive little attention (33% and 25% respectively).
Banks which measured customer satisfaction before and after the CRM implementation indicated a moderate to significant increase in customer satisfaction. So far, only 15% of the investigated banks have implemented a loyalty system integrated with their CRM, and an additional 23% intend to do it in the near future.
In terms of benefits, banks indicated better knowledge about the customer, cross-selling, better performance of sales force, increasing conversion rates in sales, better targeted marketing campaigns and increasing service quality as key benefits of CRM implementations.
The key success factors of CRM implementations are: internal human resources (64%), external consultants' support (56%), quality of the technical solution (45%), change management capabilities (36%), system customization (36%) and financial resources (18%).
In conclusion, we may say that today, more than ever before, the ability to maximize customer loyalty through close and durable relationships is critical to banks' ability to grow their businesses. Although the Romanian banking market is still in an incipient phase in terms of CRM, we can predict that this area will know its own boom in the following couple of years.
As full-CRM implementations are achieved, the results and benefits will become visible for everyone who might still doubt the ROI of such initiatives. This trend is even more striking if we compare it with Western markets where CRM in banking was already a topic at the beginning of the century.
To build stronger customer loyalty, banks need improved customer knowledge to develop products and deliver services targeted at specific market segments resulting in more directed marketing, sales and service tactics.
Customer loyalty that drives organic growth can only be built through a consistent customer experience. This means understanding each individual customer's needs and preferences. One of the largest challenges banks face is how to better understand their customers and provide personalized customer service, including 'exception management'.
* National Bank of Romania, Annual Report 2010
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