Building a CRM from Scratch? Why That’s a Big Mistake for Banks

Customer experience is the primary differentiator for most banks and credit unions, and is highly dependent on CRM technology. Yet, too many institutions rely on 'builder' programs not tailored to their needs (or even to banking), impacting onboarding, cross-selling and more. Here is what institutions should know to ensure they take the right approach.

If you are a marketer at a financial institution reading this article, you already know “customer experience” (CX) is the single best way to build stronger, deeper, longer-term relationships with borrowers and depositors. You also know customer relationship management (CRM) and customer engagement platforms offer the tools to upgrade your onboarding experience, cross-selling capabilities and retention programs.

But which type of CRM and customer engagement platform is best? And how can you tell?

Five years ago, the latest and greatest CRM and engagement platforms were “builder” platforms. They contained the building blocks to unify sales and marketing, store customer and prospect information, track prospect interest, initiate marketing messages and campaigns, and nurture prospects on their journey to become customers.

Financial institutions that turned to these platforms were not buying software already fitted to their unique business, they were buying a platform that could be fitted to their unique business. In that sense, using a “builder” platform is like buying a box of used Lego off eBay. You’re getting a raw resource — albeit one with predefined parameters — with which you must chart a path from what you want to build to the actual pieces you have in-hand.

When financial institutions use these general-purpose CRMs they face two unknowns. First, they are still defining what customer experience upgrades create their desired business outcome. Second, they don’t know what the platform can and can’t do.

The situation leaves them beholden to third-party consultants as guides for a process that drags on — usually double the time it should take and costing hundreds of thousands more than is necessary. All for a platform the institution has yet to confirm will provide the actual return on investment (ROI) sought in the first place.

Two Different Approaches:

While it may be tempting to purchase a ‘builder’ platform, consisting of distinct parts, a CRM designed for a financial institution’s specific needs has many advantages.

Financial institutions don’t need a platform where the first months of implementation are spent simply explaining what a checking account is to a consultant. They need a platform that already understands checking account onboarding, borrower retention, banking product usage and e-statement enrollment.

This type of platform mitigates risk from unknowns. It is already industry-tailored for customer experience in banking. And, because it is, institutions don’t need to figure out what the platform can do. You only need to define your institution’s unique flourishes for your customer experience strategy.

Characteristics of Purpose-Built Platforms

A purpose-built CRM platform — especially one designed and tailored with direct input from financial marketers — has several advantages over other options.

One is the ability to scale, especially when a bank or credit union seeks to provide an upgraded experience through personalization. That goal translates to a significant multiplication of manual work. But with a purpose-built platform, the provider works closely with Marketing Directors, Heads of Retail Banking, Experience Officers and Digital Officers to incorporate their expertise into the platform so that best practices carry through to each marketing journey and email.

In addition, a platform molded for and by banks and credit unions means no coding and no consultants. It comes with banking-specific capabilities built in, including:

  • Data integrated from all major core systems.
  • Personalized messaging to borrowers, coming from retail branch managers — not just at the brand-to-customer level.
  • Agency-quality marketing assets — print, email, and social media — written with the correct industry terms.
  • Marketing journeys already populated with those assets — based on consumer insights — for onboarding, reboarding, cross-selling, and loan retention (i.e. cadence, message/copy, timing).
  • Agency-quality newsletters for current depositors and borrowers.
  • Compliance management functionality, including vendor-management compliance.

Define Your Differentiators

When financial marketers are not focused on reinventing the wheel, they can focus on defining unique experiences for onboarding or loan retention. They also can focus on strategic initiatives that set the marketing and retail banking departments up for success, especially as they support growth and revenue goals of the overall institution.

Defining when staff engage a new depositor is a good example of a unique customer experience flourish. As a depositor works through onboarding, an institution can decide if the end-goal of an onboarding journey is a meeting with retail staff, or if they want onboarding to be fully self-service unless the depositor’s progress stalls.

Another example is auto loans that are near payoff. Will staff engage in response to an initial show of interest in a retention email? Or will the borrower go through a journey first? Depending on the product, and on the service culture of the institution, banking organizations are set up to reach their desired version of member or customer experience.

A Race To The Top:

A major downside of generalized technology is your institution will be stuck adapting it to banking instead of winning the customer experience competition.

Competition puts a finer point on the need for industry-tailored technology. Your institution can’t be stuck defining the basics of your business in a generalized tech platform while your competitor offers better CX to borrowers. If a bank or credit union notices new competition for consumer loans, for example, CX customization is a dial it can turn to win loans — thus mitigating competitive pressures on rates.

Another example: If the competition tends to favor email-heavy, no-staff-involved borrower engagement, an institution can customize its retention engagement to initiate staff outreach earlier, upgrading the interaction with the consumer relative to the experience offered by the competitor.

Become Customer Centric

Every business needs to gather information from its customers to help serve their needs. To boost a personalized engagement strategy while maintaining trust, one in four CMOs in 2021 has turned to zero-party data — data gathered directly from the consumer — according to Forrester.

A CRM platform with voice-of-the-customer (VoC) functionality allows financial institutions to collect feedback on borrower and depositor experiences and to gauge their next interest. Such modules should be industry-tailored because financial institutions need to write responses back to pertinent CRM fields for borrowers and depositors — fields that can be translated to marketing actions, such as triggering automated marketing journeys.

For example, banks and credit unions can leverage VoC capability to more easily and accurately:

  • Gain usable data around the aspects of a customers’ or members’ life that overlap with ways your institution can serve them.
  • Ask about specific financial needs so you can deliver timely communication around the most relevant products and services.
  • Gauge peoples’ perceptions of products, and of digital and in-person experiences, so you can drive more personalized communication and better determine the next-best engagement.
  • Establish clear feedback loops between consumers and relationship managers (e.g. loan officers), so you can continually elevate the overall experience by deploying the most effective communication strategies.

Compliance and the Cost of Inefficiency

While compliance is usually regarded as a risk management function, it can constrain borrower and depositor engagement when manually managed across marketing campaigns.

The most effective marketing takes place when messages are personalized to a borrower’s or depositor’s financial situation. Institutions leveraging marketing automation in this way deliver more relevant communications and provide a differentiating experience in which customers are supported in advancing a better financial future.

Growing personalization, though, often means more emails across data-defined groups. Bankers and credit union leaders often call regulation “death by a thousand needles.” Add scale to the regulatory burden and it really will kill marketing-compliance operations without proper technology.

A system that automates marketing-compliance integration vastly cuts down on email-heavy interactions between Marketing and Compliance. It removes a significant source of operational drag that slowly siphons away profit.

Farther Down the Road

When it comes to choosing CRM and engagement platforms, financial institutions have two options: an engine that’s ready to run or a set of engine parts. While starting with just parts has its appeal — you can realize your vision for CX engagement, and build the platform out as you go — you accept significant risk in terms of cost, time and failure to reach ROI.

Most institutions that set out to improve customer experience need both a CX playbook and the right technology. Without a vision for what CX should look like, there is no schematic for assembling their custom engine. Total Expert has your vehicle ready to get the journey started. You can always change your speed, change your destination, or change the color of the car.

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