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Bankers understand the power of numbers. That's why, as experts in applying the cold calculus of dollars and cents to business spending decisions, they are a notoriously tough sell when it comes to buying technology.
Now that Customer Relationship Management is all the rage, banks are devising ways to measure their return on investment in CRM technology. Under the gun to boost revenues while cutting costs, executive decision-makers are looking for hard, quantifiable evidence that their shiny new data mart, customer profitability application or channel integration platform ultimately supports the bottom line.
"We want to test this technology and see if it really works;' says Geoff Ables, vice president of target marketing for $237 billion-asset First Union Corp., Charlotte, NC.
The challenge, however, is to develop good metrics for evaluating what is a largely intangible condition-how banks and their customers are relating to one another. Although the conventional ROI criteria used to cost-justify other technology purchases, including system speed, throughput and price to performance, remain pertinent, they don't tell the whole story. That's because the CRM payoff may be months or years in the making, as banks build ever-deepening reservoirs of customer information to personalize their products and services, and to reach out to the most profitable customers.
"There's a real void in the industry on how to produce a credible business case for big technology investments," says Jane Jelenko, national industry director of banking and finance at KPMG, New York. "But new metrics are needed that relate to the impact on overall bank profitability and, ultimately, to stock price and shareholder value."
Why buy?
Before buying a piece of technology, banks must first determine what they hope to gain from it. That's a problem, experts say, because organizing business lines around customers rather than products is still an evolving concept in banking.
That's begininng to change, however. For example, whereas bank call centers were once fixated on such factors as how fast customer service representatives can handle calls, now the focus increasingly is on how many times customers are transferred before the questions get answered.
This ability to close customer inquiries "on first contact" is a key driver of satisfaction, adds John Goodman, president of Technical Assistance Research Programs Inc., an Arlington, VA-based...