Dynamics crm for_retail_banking_white_paper_prerelease

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

www.microsoft.com/crm

Contents
Introduction: Opportunities and Challenges ............................................................... 3

Business Agility in Retail Banking ................................................................................ 5

What is Relationship Banking? ..................................................................................... 5

Benefits of CRM and Customer Metrics for Retail Banking ........................................ 7

Channel Renewals and the Customer Experience ........................................................ 7

Why 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............................................................................................................... 14

Choosing the Right CRM Vendor ................................................................................ 15

Conclusion .................................................................................................................... 16

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Microsoft Dynamics CRM for Retail Banking

Introduction: Opportunities and Challenges
For retail banks in both developed and emerging markets, globalization, market growth, increasing
regulatory requirements, heightened customer expectations, and intense competition present increasing
challenges. In addition, 20 years ago a typical retail bank offered 3-6 products. Today, it features 300-500
products. It had 3 business units (Corporate, Small and Midsized Business, and Individual); today, banks
can 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 that
too often is not met by legacy technology, which in most banks is based on traditional products and
disconnected systems. Because their business systems and information exist in silos, many banks simply
do not have the agility they need to adapt operations to meet the demands of a changing business
environment.
Channel renewals present another challenge—and another opportunity—to improve business growth for
retail 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 and
retail 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 in
emerging markets such as Eastern Europe and Latin America. Consumers and small businesses still go to
branches and contact the bank through tellers to cash or deposit payments. Banks then use this customer
information as an opportunity to cross-sell other services and products.
However, a trend in more developed countries shows consumers and small businesses using alternative
channels, such as client Internet sites and mobile devices, to communicate with the bank. In this case, can
the branch still serve as a cost-effective channel for delivering and selling services? Are banks ready for
this scenario? From an operational standpoint, branch managers still must motivate branch personnel to
deliver superior customer service, while following the bank’s strategic goals for growing business and
reducing operational costs.
Technology can empower retail banks to keep pace with these challenges. To date, the IT infrastructure
within 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 incomplete
customer view, manual sales processes, disconnected operations, and poor client communications,
leading to lower customer satisfaction. To stay competitive now and in the future, retail banks
need to concentrate on critical business tactics necessary to find, acquire, and keep their client
base. They also need to find ways to increase efficiency, improve customer satisfaction, and
generate better returns on investments.
Back-office operations, such compliance management, credit-card processing, or opening and closing
accounts, offer a great opportunity for retail banks to improve processes using Customer Relationship
Management (CRM) strategies and solutions. Effective CRM can enable retail banks to measure customer
value and help them explore challenges and opportunities for developing business models for managing
customers, products, and services.

3

MICROSOFT DYNAMICS CRM FOR RETAIL BANKING

This paper provides Microsoft customers and partners with examples of how Microsoft Dynamics™ CRM
can benefit banks that focus on consumers and small and midsized businesses. The goal is to outline
current and future needs for CRM in retail banking and describe how Microsoft Dynamics CRM
facilitates long-term success and sustainable competitive advantage by adding value to every point
of 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 the
banking industry new tools, advanced feature enhancements, and robust platform capabilities. The recent
release of Microsoft Dynamics CRM 4.0 delivers a platform that is more flexible than ever, providing
innnovative technologies and a wide range of capabilities that allow financial institutions to strengthen
customer relationships.

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Business Agility in Retail Banking
Retail banks need to adapt quickly to changing market and business needs, continue to seek additional
revenue, and improve operational efficiency. With millions of customers and hundreds of thousands of
daily 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 managed
through business agility, flexible load balancing, and superior business process management.
Achieving optimized client service, improved operational efficiency, and higher profits presents significant
technical challenges. To meet these demands, Service Oriented Architecture (SOA) provides a technical
platform that delivers the agility required in retail banking. This paper includes a discussion of SOA that
illustrates how it can support an agile business environment for retail banks.

Figure 1: Business development and customer value

What 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, how
those customers choose to interact with the bank, and their financial behavior. Relationship banking
depends on both a complete view of customer information and history and the ability to build customer
value metrics and business intelligence based on customer data.

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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 with
a 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 customer
to a different agent and requiring them to re-provide account information or wait for the agent to access
multiple systems. Millions of Euros are wasted each year, a few seconds at a time, when an agent is forced
to re-enter or search for basic customer information such as an account or credit card number. When
retail banking and branch operations and business intelligence cannot be transferred from one interaction
to the next, the sum of lost opportunity is staggering.
The road to transparency begins with data infrastructure—the rationalization and transformation of the
organization to a customer-centric business.

Figure 2: Traditional Banking vs. Relationship Banking

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Benefits of CRM and Customer Metrics for Retail Banking
Both the measurement of customer value metrics and customer segmentation are essential for retail
banks that want to offer customers superior services and products. They are the two pillars that improve
operational 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 their
business development model and building business strategies based on customer value management. As
a result, CRM solutions are gaining increased attention as a means to providing retail banks with tools
that 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 client's 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

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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 chooses

The banking community is aware that channel renewal, combined with a customer-centric approach, can
provide a powerful platform for better serving customers and building superior business strategies
that improve sales and marketing effectiveness. CRM in retail banking can increase the value of customer
service and enable banks to offer better products by effectively using customer information, regardless
the channel that the customer chooses.

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Why Microsoft Dynamics CRM?
CRM solutions can address many areas of immediate focus for retail banks, including branch sales
operations, 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 of
capturing, processing, and sharing customer data and business information across multiple channels and
multiple business units. A customer-centric bank makes customer information the centerpiece for
business 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 to
access a unified view of a given customer and collaborate effectively. And when employees spend the
bulk of their time chasing down scattered information, they cannot fully manage risks, make strategic
business decisions, determine the best way to serve the customer, and ensure compliance with new
regulations.
We asked numerous banking customers why they chose Microsoft Dynamics CRM as the solution that
could 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-entry

Banks are obviously looking for new systems that combine different requirements across all business units
and work together to improve response time, integration, user adoption, and reporting and analysis.

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While banks often have a well-structured sales process in place, back-end IT systems do not give them the
support 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 business

Business Process Management
Effective business process management enables retail banks to focus on customers and optimize
customer processes, which in turn gives them a competitive position in the global and transparent market
and helps them increase revenue. That is why a CRM application cannot be an isolated solution, but rather

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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 processes

Orchestrating all client interactions and business processes presents retail banks with a major
challenge. A CRM system is one of the main prerequisites for gathering the intelligence needed for
excellent orchestration. Banks also need a flexible CRM process infrastructure that enables them to react
quickly to customer needs, market changes, and business requirements.

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Return on Investment
Management 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 earnings
over a certain period must be defined, and the return flow from a CRM investment should ensure that a
project is headed in a right direction.
The load management in retail banking presents a technical challenge; shifting peak period workloads
toward untapped resources in branches, remote call centers, or outsourced partners will increase ROI, but
they require a collaborative platform and a tightly integrated application solution. Similar challenges apply
to 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 diverse
units and people together, while integrating fully with core-banking business and introducing flexible
processes. By implementing Microsoft Dynamics CRM, retail banks can realize tangible benefits that drive
faster 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.

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Service Oriented Architecture (SOA)
Decision makers for financial institutions want a single desktop view that integrates services and
information across multiple applications, including core banking, intranets, and the Internet. Microsoft
Dynamics CRM provides all business groups with a personalized, role-based view of business data and
customer 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 the
flexibility 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-balancing
In addition, Microsoft Dynamics CRM extends SOA technology to provide real-time connectivity and a
multitude of offline capabilities that enable staff to conduct business when they are travelling or
when host communications are not available. This means that the bank also benefits from lower cost of
ownership, 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

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Familiar Look and Feel and 360° Client View
Microsoft Dynamics CRM delivers a complete set of tools and functions in a single user interface that
works as a natural extension of Microsoft Office Outlook®, without sacrificing the requirements for
financial transaction entry that users need in a banking application. Features that include a 360° customer
view, campaign management, and integration with Microsoft Office system applications help improve
service delivery capabilities. By combining a familiar user experience with built-in tools that are easy to
learn and use, banks can increase user adoption, reduce training costs, and empower employees to work
the way they want. In addition, Microsoft Dynamics CRM provides a single solution to help agents provide
improve 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

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Choosing the Right CRM Vendor
To implement a successful CRM solution, a bank needs to establish a long-term partnership with the
vendor that ensures they can meet long-term CRM objectives and investments. The vendor needs to
provide significant commitment and resources that help ensure successful implementation and future
application improvements. The right vendor will use a partner network of international expertise to
support 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 partners
The bank needs to establish formal ROI, TCO, and performance criteria for the new system; the vendor
deployment plan should include a proposed commitment to achieving these goals. The proposed
commitment 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 standard
hardware platform–for example, Intel. Equally important, the proposed configuration needs to include
sizing recommendations for current and future load at expected business growth rate, accomplished
through simple upgrades of hardware and infrastructure that do not require replacements.
The proposed solution and configuration should demonstrate a reasonably high level of availability and
scalability at all times, excluding scheduled maintenance and backups. The overall system design must
take 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 can
be achieved efficiently and at a reasonable cost.

15


Conclusion
Retail banks recognize the need to identify, attract, and retain profitable clients, but often lack a full or
holistic view of their customers. In addition, client demand for flexible, customized services and products
that can be accessed through multiple channels has leveled the competitive playing field. Banks are
looking for solutions that will empower branch personnel to make smarter decisions at the point of
contact, provide them with a complete customer view that fuels greater customer intimacy, and support
their 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 take
the plunge. They are concerned about high costs, user adoption, and the risks associated with time spent
deploying a CRM system that addresses these needs.
There is a solution. Microsoft Dynamics CRM provides holistic client information views and intuitive
prospecting and relationship management tools that are a natural extension to the Microsoft Office
system. With Microsoft Dynamics CRM, your staff can find your best clients and offer all customers the
right service at the right time.
Through Web services and native SOA architecture, Microsoft Dynamics CRM can aggregate data from
disparate sources to provide a fully integrated, 360° customer view that includes client profiles and
histories, portfolio accounts, relationships, households, and support records—all from a central location
and within a familiar user interface. Your staff can focus on immediate and long-term goals for clients and
increase wallet share through improved internal collaboration and business process management, critical
business alerts, and shorter sales cycles.
Microsoft Dynamics CRM also offers a cost-effective, flexible CRM solution that delivers measurable ROI
by helping drive sales and customer loyalty without high ongoing costs. Because Microsoft Dynamics
CRM is built on the Microsoft platform and utilizes SOA technology, your organization can implement and
integrate the solution into your existing systems efficiently and cost-effectively.

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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
www.microsoft.com/dynamics

The 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 of
Microsoft, 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 THE
INFORMATION 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 may
be 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 these
patents, 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 the
United States and/or other countries.
The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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