CRM, also known as Customer Relationship Management, has been a widely recognized term in the business world for several years. However, the exact meaning of the acronym may not always be evident. In essence, CRM refers to the comprehensive set of practices involved in efficiently managing customer interactions, encompassing various aspects such as marketing, sales, and customer service. This holds true for diverse industries, including the banking sector, where CRM plays a crucial role in fostering positive customer relationships and optimizing business outcomes.

It can be applied broadly or very specifically depending on which industry you’re working in. 

In banking, CRM helps banks manage their relationships with existing clients as well as attract new ones by focusing on key issues such as customer retention and acquisition strategies. 

For example, one of the most important aspects of CRM for bankers is capturing information about current accounts so that they can offer better-informed advice and personalized products to these customers in the future. This means building up an extensive knowledge base about individual

What is a CRM in the Banking Industry?

Customer relationship management (CRM) is a necessity in any customer-focused industry. For banks, it’s an especially useful tool for meeting sales and marketing goals and exceeding customer expectations.

CRM software is a tailored solution that helps banks implement customer-centric strategies. Under one system, bank tellers and employees can:

• Store customer data such as contact information, products used, and interactions.
• Schedule appointments, send personalised emails and respond to social media posts.
• Update customer profiles in real-time with notes or new information.
• Visualise, nurture, and manage leads in their sales pipeline.
• Create reports that analyse customer behaviour, marketing campaign performance, and more.

The importance of CRM in banking

Frequently, bankers understand what CRM stands for and how it functions. Yet, not all realize the importance of CRM in banking and don’t integrate such systems in their businesses. It looks that your bank can be lucrative even without a CRM but don’t confuse yourself as customer-focused products boost everything related to the interaction process significantly. We can mark three key utilities of CRM:

• To retain potential and existing clients. It would be distressing to neglect a customer after a strong promo campaign, wouldn’t it? CRM facilitates tracking and remembering all leads like phone calls, emails, and other requests from users.
• To control employees and set standards. While staff in banks without CRM handle various accounting methods like Excel or even their own memory, all-in-one solutions get rid of chaos and bring everything together. This enhances the performance.
• To collect data and consolidate it. Management tools establish unified databases which combine essential information like contacts and orders. With CRM, it is possible to analyze and plan the sales process more accurately.

One of the benefits of CRM in the banking sector includes a kind of guidelines for bank owners. If you start your first business and don’t know how to interact with clients, ready packages will be suitable. 

In this case, you borrow developers’ vision who rely on the best world practices and CRM standards. Nevertheless, consulting with professional development teams is the best option for new managers and chief executives. We suggest all-in-one services for all who need advanced CRM in banking. We come with comprehensive analysis, consultations, and full-stack development of custom personalized systems.

Banking CRM Use Cases

A Customer Relationship Management (CRM) system is a versatile solution that can be utilized in various areas, including marketing, sales, and customer support, making it an ideal tool for businesses of all kinds.

In addition to managing customer data, banks must also develop plans to attract and retain customers. With Banking CRM, these institutions can move beyond transactional data to gain insights into their customers, anticipate their requirements, and comprehend their challenges.

Below are some instances of how banks can enhance their marketing, sales, and service efforts by utilizing CRM:

Segmented Marketing

How does that saying go? It costs twice as much to acquire a new customer as to keep an existing one? Banks can use their CRM systems to segment customers based on their account information, engagement history, the types of services they use, etc. 

They can build campaigns with messaging that resonates. Competition for customers is high, so relevant offerings and cross-sell opportunities are crucial for keeping existing customers engaged with your institution.

Rethinking Processes for Profits

Banks struggling to maintain profitability must look beyond the short term to understand how current processes affect profitability. A banking CRM can turn instinctive decision-making into data-backed decision-making to build this new reality.

One way to do this would be to create reports in the CRM that reveal which services are profitable and which are not. 

For example, how many customers are actively using service “A”? Is it an initiative worth saving, or does it cost the bank more to keep it going over time? Is the process working if the bank encourages representatives to sign up customers for this service and they’re not using it? Would it make more sense to target different kinds of accounts during a different stage of the financial process?

It’s hard to tell if you don’t have the concrete data to reveal these trends.

A CRM can point out process gaps and help the bank standardize new, more effective processes across all branches. 

For example, banks can alert sales staff when a customer hits a specific milestone and is ready to have a conversation about additional services using an automated workflow. 

As a result, not only would the sales team save time with repeatable processes, but the services they sell also would maintain better longevity and profitability over time.

Personalization and New Opportunities

Regardless of the conveniences of digital banking, there’s nothing quite like the power of human-to-human interaction, especially if it comes at the perfect time. Service representatives can use CRM to make the customer feel valued while also opening the door to new opportunities.

For example, the bank could set up a CRM to alert service staff when a customer has a significant life event. Did they recently turn 65? The rep can reach out to say happy birthday and remind them that it’s time to start thinking more seriously about retirement. 

Did the customer recently get married? The service rep can forward that information to the mortgage department. Using the analytics provided by banking CRM, customer service can evolve to a more personal (and profitable!) level.

The CRM can even improve personalization at the digital level. The tools provided by a CRM can be harnessed to initiate digital transformation and scale operations to the customers’ demands. That translates to faster banking, better mobile and Web experiences, and happier customers overall.

Challenges of CRM in the Banking Industry

Just like any other business, banks face several challenges when looking to adopt CRM software.

Data Security

The banking industry is very sensitive to data security and aims to deliver extra control over access to their records. Besides their clients’ personal information and account records, the entire banking system should be protected against cyber-attacks and malicious software.

Modern CRM platform providers are well aware of these concerns and provide excellent security measures, from role-based access permission to encrypted transactions and data backups, to ensure a high level of information security.

Integration with the Existing Tech Stack

Pretty much every financial and banking organization has a legacy IT infrastructure and tech stack that might be complicated to interfere with. This is because most outdated software wasn’t built to work together with the modern CRM systems. 

However, it means that any bank can integrate new solutions with the existing ones without any data loss and system failures. 

The excellent news is CRM specialists can help you seamlessly integrate a CRM system of your choice into your company’s infrastructure and make sure the new solution works perfectly. 

So when does the banking industry need to consider CRM adoption? The answer is pretty simple – ASAP because lack of data visibility provided by CRM can cost your organization losses in clients and profits. 

Moreover, lack of customer-related information doesn’t allow you to thoroughly analyze your customers’ behavior and provide them with the quality of services they seek.

Perhaps the biggest challenge for banks looking to adopt CRM is the concern about data security and controlled access. The good news is, CRM providers are aware of these concerns and have instituted security measures to address them.

In the past, most banks would have defaulted to an on-premises solution out of fear of security gaps. However, now is the age of the Cloud, and CRM security has been beefed up to meet the challenge.

CRM systems offer granular, role-based permissions for security and access. The CRM administrator can set these roles to ensure only specific parties can access certain pieces of information. In addition, licenses can be applied to individuals or entire teams.

Encrypted transmissions, data center backups, and session time-outs are just a few of the ways CRM companies ensure the security of Cloud data. 

Therefore, it’s essential to have a conversation with the CRM provider to understand the security features of their specific solution.

Another challenge with CRM for banks is the integration of a CRM with existing systems. While aligning the CRM to your other systems streamlines data management, it can also become highly complex (and expensive) if you’re trying to combine two tools that weren’t built to work together. 

Again, the best way to sidestep integration challenges is to be upfront about your existing solutions, ask the provider about integration options, and find out how those integrations may affect your final costs.

The Business Benefits of Using a Banking CRM

CRMs are essential in every industry, but for banking, in particular, they can help organizations deliver more personalized customer experiences.

According to a global study of financial service customers, Accenture found that 67 percent are willing to provide more information to banks if it means they will receive new benefits, and 71 percent said they would use entirely computer-generated support for their banking processes.

Since customers are ready and willing to share their information with their banks, there’s no reason not to implement a CRM that can achieve the following benefits:

Leverage a 360-Degree View of Every Customer

A banking CRM is a consolidated system that can integrate with your other banking software programs to provide a single view of every customer account. 

From depositing at an ATM to requesting information about a specific type of loan, every pre-determined action a customer takes can be recorded in your CRM. 

This makes it quick and easy to gain deeper insights into their habits and personal preferences, which can help you align certain products to their financial goals.

Improve Customer Retention

With customers opting for online banking solutions instead of in-person experiences, strategizing a way to foster long-term relationships can be difficult for many organizations. 

With a banking CRM, there is a great deal of data available right at your fingertips, which can be used to deliver personalized services proactively. Since your CRM enables you to record customer notes and personal information, you can enhance every experience. 

For example, suppose a bank teller adds a message to a customer profile that says they were asking questions about a specific type of loan. In that case, the loan department can follow up by emailing them helpful resources that explain their options. Showing your customers that you’re listening to them and making efforts to improve their experience at your bank is a strategic way to promote loyalty.

Enable Quicker Processes

With a single, unified system, any bank employee can access a customer profile to get up to speed on an account quickly. 

For example, if a customer contacts a call center, the employee they speak with can make real-time updates to their profile in the CRM. 

When the customer visits their local bank branch, the bank tellers will see notes from their interaction with the call center. This can eliminate duplicate conversations and provide the bank teller with a holistic understanding of the customer’s situation.

Use Insights to Improve Sales and Marketing Efforts

The data in your CRM can be compiled into reports so you can gain a much deeper understanding of your customers. 

From there, you can identify trends, successful campaigns, and areas for improvement that will help you anticipate customer needs and tailor your future marketing efforts. 

You can also use the data in your customer profiles to pinpoint areas for cross-selling and upselling. For example, suppose a customer deposits the bank. 

In that case, the teller can fully view their profile and notify the customer of new products they may be interested in or qualify for, such as a platinum credit card.

Make Your Staff More Productive

With all customer information available under one CRM system, there’s no need for employees to search through emails or check multiple platforms for the answer to a quick question.

Repetitive administrative tasks are eliminated, so employees spend less time scrounging through data and more time fostering client relationships. 

According to Nucleus Research, sales representatives saw a productivity increase of 26.4 percent when social networking and mobile capabilities were utilized in their CRM. Users can also access a CRM from any device, such as a laptop, desktop, or smartphone, meaning there’s no limitation to where and when data can be viewed.

CRM in banking: Adjusted solutions VS Custom software

When it comes to choosing the product, you will face what is better for the business. Developers distribute their software as ready-made applications or as a service on creating the app you exactly need. Eventually, it comes to your purposes. For example, some businesses realize the importance of CRM in banking, but they are happy with standard tools while other companies require tailored stuff for unusual needs.

Out-of-the-box products

Ordering such a system is similar to getting a standard sandwich in SubWay. You contact developers and pay for their CRM, which is the same for all buyers. Usually, you can change nothing and have to adopt precisely what you receive. 

A ready-made project on CRM in banking represents a set of the most general features required by the industry-related customers (say, accounting software or telephony), so be sure to check the tools provided and think about how they suit your business.

Custom products

Instead, cooperating with a development company that creates CRM specifically for your bank is similar to building your beloved sandwich. Tailor-made solutions are excellent when you need many tools or, oppositely, don’t want to overpay for unnecessary features. 

Custom CRM in banking is designed for each client, so you can specify everything to ensure that the final software application will fit. Personalized products are also cost-efficient as they don’t have monthly or annual fees and expensive upgrades.

CRM solutions are no longer limited to just the retail or business verticals; instead, they are now essential for any entity that offers goods or services. Business banks share a fundamental challenge with their customers: 

Banking is now a customer-driven world when it comes down to it. Banks that understand and serve the individual needs of their customers best will succeed, while those who still use sticky notes to keep track of accounts will lose market share and fade away. Adopting a banking CRM is critical to serving your customers at every point in the sales funnel, so don’t get left behind.

Martin Gessner

Martin Gessner is the Founder of Focus on Force.

He has spent over 10 years working in various Salesforce roles including business analyst, project manager, consultant and solutions architect. Along the way he has earned twelve certifications, published "The Salesforce Career Playbook", and helps Salesforce professionals learn more about Salesforce, develop their career and prepare for certifications.