Dynamics crm for_retail_banking_white_paper_prerelease

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

Performance

http://www.microsoft.com/crm

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Microsoft Dynamics CRM for Retail Banking

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.

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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.

Products Business processes Collaboration and projects

Bank process

Core banking and back office

Branch management

Customer services

Complaint management

Analysis tools (KPIs)

Customer segmentation

Document management

Sales process

Market and potential analyses

Business development

Customer process

Promotion

Acquisition

Contracting

Servicing

Up-Selling

Partner process

Partner platform (extranet/intranet)

Tips and market information

Community Forum portal & self-service

Cooperative processes

Collaboration and support

Controlling and accounting

Wholesale

Business and CRM Data in Retail Banking Driven by Customer Value

Service-Oriented Architecture

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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.

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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.

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The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

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