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  • 1. Performance Microsoft Dynamics CRM Solutions for Retail Banking White Paper Setting new standards that enable retail banks to attract, retain, and service customers with superior speed, efficiency, and satisfaction. Date: January 2008
  • 2. ContentsIntroduction: Opportunities and Challenges ............................................................... 3Business Agility in Retail Banking ................................................................................ 5What is Relationship Banking? ..................................................................................... 5Benefits of CRM and Customer Metrics for Retail Banking ........................................ 7Channel Renewals and the Customer Experience ........................................................ 7Why Microsoft Dynamics CRM? ................................................................................... 9 Business Process Management ........................................................................................................................................... 10 Return on Investment .............................................................................................................................................................. 12 Service Oriented Architecture (SOA) ............................................................................................................................... 13 Familiar Look and Feel and 360° Client View............................................................................................................... 14Choosing the Right CRM Vendor ................................................................................ 15Conclusion .................................................................................................................... 16 2 Microsoft Dynamics CRM for Retail Banking
  • 3. Introduction: Opportunities and ChallengesFor retail banks in both developed and emerging markets, globalization, market growth, increasingregulatory requirements, heightened customer expectations, and intense competition present increasingchallenges. In addition, 20 years ago a typical retail bank offered 3-6 products. Today, it features 300-500products. It had 3 business units (Corporate, Small and Midsized Business, and Individual); today, bankscan have 25 and more business units for each market segment.These pressures impact all aspects of bank operations, including mortgages, personal loans, credit cards,and savings and checking accounts. Increasing transaction volumes require operational performance thattoo often is not met by legacy technology, which in most banks is based on traditional products anddisconnected systems. Because their business systems and information exist in silos, many banks simplydo not have the agility they need to adapt operations to meet the demands of a changing businessenvironment.Channel renewals present another challenge—and another opportunity—to improve business growth forretail banking. Consumers are readily accepting alternative channels to paper-based-transactions.Equipped with systems that help them deliver the right information at the right time, commercial andretail banks can realize business growth without the expense of adding staff.At the same time, branch expansion is becoming a primary growth engine for retail banks, especially inemerging markets such as Eastern Europe and Latin America. Consumers and small businesses still go tobranches and contact the bank through tellers to cash or deposit payments. Banks then use this customerinformation as an opportunity to cross-sell other services and products.However, a trend in more developed countries shows consumers and small businesses using alternativechannels, such as client Internet sites and mobile devices, to communicate with the bank. In this case, canthe branch still serve as a cost-effective channel for delivering and selling services? Are banks ready forthis scenario? From an operational standpoint, branch managers still must motivate branch personnel todeliver superior customer service, while following the bank’s strategic goals for growing business andreducing operational costs.Technology can empower retail banks to keep pace with these challenges. To date, the IT infrastructurewithin banks often has not grown by design, but rather in response to changing business needs,geographic expansion, and government regulations. The result is a mix of legacy systems, applications,business silos, duplicated customer data, and fragmented customer views.Failure to incorporate data from disparate systems into business processes results in an incompletecustomer view, manual sales processes, disconnected operations, and poor client communications,leading to lower customer satisfaction. To stay competitive now and in the future, retail banksneed to concentrate on critical business tactics necessary to find, acquire, and keep their clientbase. They also need to find ways to increase efficiency, improve customer satisfaction, andgenerate better returns on investments.Back-office operations, such compliance management, credit-card processing, or opening and closingaccounts, offer a great opportunity for retail banks to improve processes using Customer RelationshipManagement (CRM) strategies and solutions. Effective CRM can enable retail banks to measure customervalue and help them explore challenges and opportunities for developing business models for managingcustomers, products, and services. 3 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 4. This paper provides Microsoft customers and partners with examples of how Microsoft Dynamics™ CRMcan benefit banks that focus on consumers and small and midsized businesses. The goal is to outlinecurrent and future needs for CRM in retail banking and describe how Microsoft Dynamics CRMfacilitates long-term success and sustainable competitive advantage by adding value to every pointof contact with customers.The Microsoft Dynamics CRM platform has become a leading solution for the financial services industry.With ongoing investments in innovation based on customer feedback, Microsoft Dynamics CRM offers thebanking industry new tools, advanced feature enhancements, and robust platform capabilities. The recentrelease of Microsoft Dynamics CRM 4.0 delivers a platform that is more flexible than ever, providinginnnovative technologies and a wide range of capabilities that allow financial institutions to strengthencustomer relationships. 4 Microsoft Dynamics CRM for Retail Banking
  • 5. Business Agility in Retail BankingRetail banks need to adapt quickly to changing market and business needs, continue to seek additionalrevenue, and improve operational efficiency. With millions of customers and hundreds of thousands ofdaily transactions, any retail bank needs to constantly analyze its market and customer requirements,allocate tasks and resources, and optimize products and business processes to meet new demands.Market dynamics, capital equipment expenditures, labor costs, and staffing volatility can all be managedthrough business agility, flexible load balancing, and superior business process management.Achieving optimized client service, improved operational efficiency, and higher profits presents significanttechnical challenges. To meet these demands, Service Oriented Architecture (SOA) provides a technicalplatform that delivers the agility required in retail banking. This paper includes a discussion of SOA thatillustrates how it can support an agile business environment for retail banks. Figure 1: Business development and customer valueWhat is Relationship Banking?The strategies retail banks need to enhance services, renew delivery channels, improve risk management,and increase operational efficiency are based on knowing what their customers want from them, howthose customers choose to interact with the bank, and their financial behavior. Relationship bankingdepends on both a complete view of customer information and history and the ability to build customervalue metrics and business intelligence based on customer data. 5 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 6. At the same time, banks need to create transparent operations that will allow internal units to collaborate,free financial agents from worrying about technology, and make customers feel that they are dealing witha single organization aiming to support their financial needs.As a case in point, almost everyone is familiar with the phone support example of transferring a customerto a different agent and requiring them to re-provide account information or wait for the agent to accessmultiple systems. Millions of Euros are wasted each year, a few seconds at a time, when an agent is forcedto re-enter or search for basic customer information such as an account or credit card number. Whenretail banking and branch operations and business intelligence cannot be transferred from one interactionto the next, the sum of lost opportunity is staggering.The road to transparency begins with data infrastructure—the rationalization and transformation of theorganization to a customer-centric business. Figure 2: Traditional Banking vs. Relationship Banking 6 Microsoft Dynamics CRM for Retail Banking
  • 7. Benefits of CRM and Customer Metrics for Retail BankingBoth the measurement of customer value metrics and customer segmentation are essential for retailbanks that want to offer customers superior services and products. They are the two pillars that improveoperational efficiency and enable banks to develop sustainable and healthy growth and revenue increase.To date, few retail banks have realized the full potential of including customer value metrics in theirbusiness development model and building business strategies based on customer value management. Asa result, CRM solutions are gaining increased attention as a means to providing retail banks with toolsthat include:  Customer profiles that allow agents and relationship managers to capture client information at every contact point, helping them build strategic customer knowledge and insight over time. Account managers can anticipate changes in each clients life cycle and the market to make appropriate offerings, resulting in reduced sales time and increased wallet share.  Campaign management supported by real-time messaging, built on efficient customer segmentation and automated marketing lists. Marketing units can generate effective and measurable campaign activities to maximize campaign response across all channels and increase the number of leads and opportunities.  Data warehousing and business intelligence that provide decision makers with fast, deep access to the customer profiles and information they need to plan and develop successful strategies that increase revenue and return on investment.  Automated workflow and business process management that enable banks to capture and monitor every opportunity detail, provide and revise quotes, and efficiently create and process customer agreements once a proposal has been accepted–with little or no human interaction, and at the same time increase customer knowledge.  Connected, consolidated data and systems that provide comprehensive information about the complete portfolio of products held by each customer, increase service consistency, and enable operational efficiency and collaboration across multiple units for higher customer satisfaction and better customer retention.  Management functions and tools that drive confident decision making based on deep visibility into integrated customer data, helping branch management and personnel better manage sales and conduct local events and marketing campaigns.  An effective complaint management system designed to help retail banks identify areas that need change and allow clients to provide input relevant to service and product improvement, giving banks a second chance to serve and satisfy dissatisfied clients, strengthening customer relationships, and increasing customer retention.Channel Renewals and the Customer Experience Banks that deliver a consistent customer experience across multiple channels build and reinforce customer confidence. Effective CRM is aware of all interactions, regardless of service channel. It allows the bank to transfer relevant knowledge gathered through one channel and re-use that knowledge for any other channel that the customer chooses. For example, data entered by a 7 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 8. customer on an Internet-based loan application can be transferred in real time to a contact service agent’s desktop when the customer calls the bank service number or visits the branch. Figure 3: Excellent service through any channel that the customer choosesThe banking community is aware that channel renewal, combined with a customer-centric approach, canprovide a powerful platform for better serving customers and building superior business strategiesthat improve sales and marketing effectiveness. CRM in retail banking can increase the value of customerservice and enable banks to offer better products by effectively using customer information, regardlessthe channel that the customer chooses. 8 Microsoft Dynamics CRM for Retail Banking
  • 9. Why Microsoft Dynamics CRM?CRM solutions can address many areas of immediate focus for retail banks, including branch salesoperations, customer segmentation, cross-selling and up-selling opportunities, marketing automation,campaign management, customer service, complaint management, collaboration, and business analytics.To maintain competitiveness, retail banks need a faster, more accurate, and more complete way ofcapturing, processing, and sharing customer data and business information across multiple channels andmultiple business units. A customer-centric bank makes customer information the centerpiece forbusiness decisions at all times, which means that a CRM system must provide tools that enable fast,flexible access and management for customer information.A siloed approach to information gathering and data management makes it difficult for personnel toaccess a unified view of a given customer and collaborate effectively. And when employees spend thebulk of their time chasing down scattered information, they cannot fully manage risks, make strategicbusiness decisions, determine the best way to serve the customer, and ensure compliance with newregulations.We asked numerous banking customers why they chose Microsoft Dynamics CRM as the solution thatcould address these challenges. Here are the top reasons:  Intuitive user interface that maps to the Microsoft® Office system  Proven integration with Microsoft applications  Improved flexibility and ability to integrate with other systems and platforms (superior architecture based on SOA)  Increased user adoption; rather than struggling to learn a new CRM application, personnel work within a familiar Microsoft Office system interface  A large number of partners that know the technologies and can develop new functionality  Microsoft as a reliable vendor that provides banks with a clear roadmap to future development and software releases  A platform that delivers a low(er) total cost of ownership (TCO) from end to end (purchase price, licensing cost, development cost, support and maintenance cost)  Flexible workflow tool that can be used across all business units  Integrated business intelligence and reporting tools for management and auditors  Flexible tools designed for knowledge workers who do not do everything the same way every day  Reduced training costs, because Microsoft Dynamics exposes all client information in one portal and offers intuitive workflow capabilities  Easy integration with legacy systems and disparate applications that eliminate data re-entryBanks are obviously looking for new systems that combine different requirements across all business unitsand work together to improve response time, integration, user adoption, and reporting and analysis. 9 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 10. While banks often have a well-structured sales process in place, back-end IT systems do not give them thesupport and agility they need to continuously improve business processes.With Microsoft Dynamics CRM, banks can realize:  Greater process efficiency: Employees use an integrated, automated approach to aggregating data from different applications, multiple channels, and all business units to provide dynamic updates to customer records. By eliminating or reducing manual intervention, banks can improve efficiencies and reduce the frequency of errors.  Expand business opportunities: By taking advantage of new analytics capabilities offered through the Microsoft Dynamics CRM platform, business development managers and decision makers gain deeper insight into customer interactions, sales processes, and business opportunities, helping them increase sales and marketing effectiveness.  Increased productivity: Microsoft Dynamics CRM works like and with the familiar Microsoft Office system, reducing learning curves for bank personnel and ensuring higher acceptance. Regardless of where they sit within the organization, people can get started quickly and use the system every day without losing their focus on what’s most important. Microsoft Dynamics brings together people, processes, and technologies to increase business productivity and effectiveness. Figure 4: 360° views of client and businessBusiness Process ManagementEffective business process management enables retail banks to focus on customers and optimizecustomer processes, which in turn gives them a competitive position in the global and transparent marketand helps them increase revenue. That is why a CRM application cannot be an isolated solution, but rather 10 Microsoft Dynamics CRM for Retail Banking
  • 11. should optimize and integrate all processes across all departments to create a 360° customer view.Equipped with the right CRM system, the bank can put the customer at the center of universe. Figure 5: Orchestration of business processesOrchestrating all client interactions and business processes presents retail banks with a majorchallenge. A CRM system is one of the main prerequisites for gathering the intelligence needed forexcellent orchestration. Banks also need a flexible CRM process infrastructure that enables them to reactquickly to customer needs, market changes, and business requirements. 11 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 12. Return on InvestmentManagement has the full right to ask, ―What are the benefits of implementing a CRM system?‖CRM success depends on measurable ROI over a short period. Expenditures and prospective earningsover a certain period must be defined, and the return flow from a CRM investment should ensure that aproject is headed in a right direction.The load management in retail banking presents a technical challenge; shifting peak period workloadstoward untapped resources in branches, remote call centers, or outsourced partners will increase ROI, butthey require a collaborative platform and a tightly integrated application solution. Similar challenges applyto banks that are growing rapidly and need to integrate resources from recent acquisitions.Microsoft Dynamics CRM offers process-driven workflow and integration capabilities that bring diverseunits and people together, while integrating fully with core-banking business and introducing flexibleprocesses. By implementing Microsoft Dynamics CRM, retail banks can realize tangible benefits that drivefaster ROI:  Core data and customer visit information are captured both at the front office and directly through the CRM system, increasing efficiency and eliminating most paperwork for all business units.  By providing management with high-quality information, Microsoft Dynamics CRM facilitates accurate and timely reports and sophisticated analyses that support better planning and forecasting.  Customer contacts and correspondence are managed through a centralized database and automated support process, helping ensure cohesive and consistent customer service across all channels.  Customer communications reflect an efficient, high-quality firm. Along with easy access to complete customer information and history, Microsoft Dynamics CRM includes communications templates that can help banks establish a clear corporate identity and standard guidelines for communications. 12 Microsoft Dynamics CRM for Retail Banking
  • 13. Service Oriented Architecture (SOA)Decision makers for financial institutions want a single desktop view that integrates services andinformation across multiple applications, including core banking, intranets, and the Internet. MicrosoftDynamics CRM provides all business groups with a personalized, role-based view of business data andcustomer processes to help retail banks build and deliver high-quality services and products.Microsoft Dynamics CRM is a scalable solution based on SOA and Web services, giving retail banks theflexibility to customize processes and workflows to meet precise organizational needs. It provides:  An enterprise repository for common components, functions, and data elements used across channels and applications  A process-oriented management system that lets organizations easily create, extend, reuse, and deploy workflows and business processes across channels and applications  Cross-application features such as reports, benchmarks, alerts, and auto-enrollment to enable business decision makers and management to build more accurate plans, increase process efficiency, and ensure load-balancingIn addition, Microsoft Dynamics CRM extends SOA technology to provide real-time connectivity and amultitude of offline capabilities that enable staff to conduct business when they are travelling orwhen host communications are not available. This means that the bank also benefits from lower cost ofownership, competitive agility, and rapid deployment of changes and customizations. Business and CRM Data in Retail Banking Driven by Customer Value Bank process Customer process Partner process Core banking and back office Promotion Partner platform (extranet/intranet) Branch management Tips and market information Customer services Acquisition Community Forum portal & self-service Complaint management Cooperative processes Analysis tools (KPIs) Contracting Collaboration and support Customer segmentation Controlling and accounting Document management Servicing Wholesale Sales process Market and potential analyses Up-Selling Business development Service-Oriented Architecture Products Business processes Collaboration and projects 13 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 14. Familiar Look and Feel and 360° Client ViewMicrosoft Dynamics CRM delivers a complete set of tools and functions in a single user interface thatworks as a natural extension of Microsoft Office Outlook®, without sacrificing the requirements forfinancial transaction entry that users need in a banking application. Features that include a 360° customerview, campaign management, and integration with Microsoft Office system applications help improveservice delivery capabilities. By combining a familiar user experience with built-in tools that are easy tolearn and use, banks can increase user adoption, reduce training costs, and empower employees to workthe way they want. In addition, Microsoft Dynamics CRM provides a single solution to help agents provideimprove customer service, generate new business, and work more efficiently.Microsoft Dynamics CRM enables retail banks to:  Manage customers’ financial profiles  Establish a financial sales and service culture  Develop an investment and profitability plan  Develop a revenue plan based on customer and product knowledge  Integrate thoroughly with core banking applications Figure 6: One solution that delivers the information you need, the way you want 14 Microsoft Dynamics CRM for Retail Banking
  • 15. Choosing the Right CRM VendorTo implement a successful CRM solution, a bank needs to establish a long-term partnership with thevendor that ensures they can meet long-term CRM objectives and investments. The vendor needs toprovide significant commitment and resources that help ensure successful implementation and futureapplication improvements. The right vendor will use a partner network of international expertise tosupport the bank throughout its CRM journey. Expectations include:  Long-term commitment from the vendor, along with a clear roadmap that spans product innovation and support for continuous applications improvements and healthy growth of customer and partner networks  Skills transfer to bank personnel across the organization, which helps ensure vendor independence and helps the bank achieve self-sufficiency during the project implementation  Regular training of customers and partners to support updates and customizations, helping ensure easier, more cost-effective upgrades to new versions of the application  A large community of partners and vendors that ensure platform and infrastructure expertise, along with business process consulting services that free the bank to choose implementation and maintenance partnersThe bank needs to establish formal ROI, TCO, and performance criteria for the new system; the vendordeployment plan should include a proposed commitment to achieving these goals. The proposedcommitment also should include assumptions about the number of concurrent users, accounts, clients,and the number and types of transactions, as well as estimated hardware and maintenance costs.The hardware configuration proposed by the vendor should be based on an independent and standardhardware platform–for example, Intel. Equally important, the proposed configuration needs to includesizing recommendations for current and future load at expected business growth rate, accomplishedthrough simple upgrades of hardware and infrastructure that do not require replacements.The proposed solution and configuration should demonstrate a reasonably high level of availability andscalability at all times, excluding scheduled maintenance and backups. The overall system design musttake into consideration the need for redundancy at the main site through the support of cluster or Web-farm technology, backup server(s), and redeployment technology, so that a high-availability system canbe achieved efficiently and at a reasonable cost. 15 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING
  • 16. ConclusionRetail banks recognize the need to identify, attract, and retain profitable clients, but often lack a full orholistic view of their customers. In addition, client demand for flexible, customized services and productsthat can be accessed through multiple channels has leveled the competitive playing field. Banks arelooking for solutions that will empower branch personnel to make smarter decisions at the point ofcontact, provide them with a complete customer view that fuels greater customer intimacy, and supporttheir ability to up-sell and cross-sell a full range of financial products and services.Though decision makers understand the value of this comprehensive approach, they are hesitant to takethe plunge. They are concerned about high costs, user adoption, and the risks associated with time spentdeploying a CRM system that addresses these needs.There is a solution. Microsoft Dynamics CRM provides holistic client information views and intuitiveprospecting and relationship management tools that are a natural extension to the Microsoft Officesystem. With Microsoft Dynamics CRM, your staff can find your best clients and offer all customers theright service at the right time.Through Web services and native SOA architecture, Microsoft Dynamics CRM can aggregate data fromdisparate sources to provide a fully integrated, 360° customer view that includes client profiles andhistories, portfolio accounts, relationships, households, and support records—all from a central locationand within a familiar user interface. Your staff can focus on immediate and long-term goals for clients andincrease wallet share through improved internal collaboration and business process management, criticalbusiness alerts, and shorter sales cycles.Microsoft Dynamics CRM also offers a cost-effective, flexible CRM solution that delivers measurable ROIby helping drive sales and customer loyalty without high ongoing costs. Because Microsoft DynamicsCRM is built on the Microsoft platform and utilizes SOA technology, your organization can implement andintegrate the solution into your existing systems efficiently and cost-effectively. 16 Microsoft Dynamics CRM for Retail Banking
  • 17. Microsoft Dynamics is a line of integrated, adaptable business management solutions that enables you and your people to make business decisions with greater confidence. Microsoft Dynamics works like and with familiar Microsoft software, automating and streamlining financial, customer relationship, and supply chain processes in a way that helps you drive business success. U.S. and Canada Toll Free 1-888-477-7989 Worldwide +1-701-281-6500 information contained in this document represents the current view of Microsoft Corporation on the issues discussed as of the date of publication.Because Microsoft must respond to changing market conditions, this document should not be interpreted to be a commitment on the part ofMicrosoft, and Microsoft cannot guarantee the accuracy of any information presented after the date of publication.This White Paper is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, AS TO THEINFORMATION IN THIS DOCUMENT.Complying with all applicable copyright laws is the responsibility of the user. Without limiting the rights under copyright, no part of this document maybe reproduced, stored in or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying,recording, or otherwise), or for any purpose, without the express written permission of Microsoft Corporation.Microsoft may have patents, patent applications, trademarks, copyrights, or other intellectual property rights covering subject matter in this document.Except as expressly provided in any written license agreement from Microsoft, the furnishing of this document does not give you any license to thesepatents, trademarks, copyrights, or other intellectual property.© 2008 Microsoft Corporation. All rights reserved.Microsoft, Microsoft Dynamics, the Microsoft Dynamics Logo, and Outlook are registered trademarks or trademarks of Microsoft Corporation in theUnited States and/or other countries.The names of actual companies and products mentioned herein may be the trademarks of their respective owners. 17 MICROSOFT DYNAMICS CRM FOR RETAIL BANKING