Australian banks failing to capitalise on CRM

Australian banks are lagging well behind world standards when it comes to using customer relationship management (CRM) technologies, and recent attempts to use CRM as a cost-cutting exercise may be doomed to failure, according to industry experts.Last week, the Commonwealth Bank announced plans to overhaul its entire customer strategy, and said technology would play a leading role in that change.

Australian banks are lagging well behind world standards when it comes to using customer relationship management (CRM) technologies, and recent attempts to use CRM as a cost-cutting exercise may be doomed to failure, according to industry experts.

Last week, the Commonwealth Bank announced plans to overhaul its entire customer strategy, and said technology would play a leading role in that change. While CommBank will invest an additional AU$620 million in the new project, it also plans to cut its back-office headcount by around 3,700 employees. Neither consumer advocates nor the financial market have been impressed by the plan.

One regional bank which has invested heavily in CRM argues that using it as a cost-cutting measure and reducing staff in favour of technology won't lead to happier customers.

"The whole goal [of our CRM project] is to reinvest any gains in customer satisfaction," said Steven Parker, head of customer sales and service for consumer banking at Standard Chartered Bank in Hong Kong. "Everything has been reinvested in services."

SCB's CRM deployment project, which began in August last year, is already showing benefits. Since the system was rolled out in Hong Kong and Singapore, overall customer satisfaction rates have risen by 6 per cent, and the sales conversion rate amongst affluent customers (a fairly large group in Hong Kong) has risen by 56 per cent, Parker said. No staff have been cut as a result of the rollout, and there are no plans to do so, he added.

Australia dominates the regional market for CRM products, accounting for almost half of the $US1.2 billion spent on CRM in Asia-Pacific in 2002, according to IDC. Following that trend, local financial institutions have increasingly broad expectations in technology as a means of maintaining customer relationships -- but the evidence suggests they are yet to achieve the maximum benefit from them.

The most recent internal survey conducted by CRM vendor Siebel Systems amongst its global financial services clients found that those using CRM increased customer retention rates by an average 18 per cent. Customer satisfaction rose by a similar amount.

While most Australian banks have rolled out a number of CRM projects, few have boasted success rates anywhere near that level. National Australia Bank, which has been cited as the most advanced CRM implementation locally, said in May that CRM was behind a rise in market share -- but one of just 0.3 per cent. Westpac has invested AU$200 million in its own CRM system this year, but that project is still being deployed.

Some local financial institutions have benefited from rolling out CRM suites. AMP reduced lead distribution time to its financial services partners from 30 days to 2 hours and improved planner productivity by 500% as a result of introducing a new CRM system.

Angus Kidman visited Hong Kong as a guest of Siebel Systems.