CRM Adoption Takes on New Urgency at Community Institutions

Facing stiff headwinds against data-savvy competitors, community banks and credit unions recognize the need for systems that can provide detailed insights into consumer needs and the analytics to better meet those needs. But they also want the software to be on their terms.

Like all community-focused institutions, credit unions face unprecedented challenges from an ever-growing cadre of non-traditional digital players. And that’s on top of traditional competitors they face. To succeed, credit unions and banks must maintain the loyalty of existing members and grow those relationships while also winning over the hearts and minds of new consumers with a great experience.

Although they have often been early adopters of customer-facing technologies, many credit unions, particularly the smaller ones, have not felt the need to embrace customer relationship management (CRM) systems so far. Research from Callahan & Associates found that 60% of 223 credit unions surveyed did not have a CRM system in place.

That picture looks to be changing soon.

Of the institutions without a CRM system, half said they were budgeting for one. Of the those, nearly a third (30%) hoped to have the application implemented within a year. Almost one in five (18%) expected to have their solution in place within six months.

This urgency may originate from adoption of strategic goals to enhance member experience as a way to boost both growth and retention rates. It also reflects a growing understanding in the industry that the volumes of member data accrued by credit unions will only be of value if they can be operationalized to support a relationship-based sales and service model.

Institutions without a CRM — and those not planning to implement one — tend to be smaller in size. Economies of scale and institutional complexity have an influence on CRM implementations, with larger institutions being further down the path to CRM usage.

The 40% of credit unions that have implemented CRM systems are using them to streamline and optimize all member-facing processes, uncover new sales opportunities, and enhance service experiences. The Callahan research explored how credit unions select CRM solutions and how well these solutions are meeting their needs, including top reasons for satisfaction and dissatisfaction with the systems.

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Top Measures of CRM Success

Two factors stood out as indicating CRM success among the credit unions polled: Member engagement and staff productivity improvement. Although it shows slightly lower in the chart, “member engagement” was reported as a key priority by every organizational department represented. Here are how respondents ranked success factors for CRM systems:

  1. Improvements in staff productivity
  2. Greater engagement
  3. Wallet share growth
  4. Increased retention of relationships
  5. Loan growth
  6. User adoption
  7. Business intelligence team insights
  8. Higher member service ratings

As banking relationships move to digital more and more, maintaining engagement is an important goal for credit union leaders, who want to replicate a hyper-personal and engaging in-branch experience across all channels. By using CRM for member engagement, they hope to provide consistent, advice-based interactions across all channels, bridging the problematic “digital divide” — the gap in satisfaction between digital-centric and branch-dependent customers identified in J.D. Power’s 2018 U.S. Retail Banking Customer Satisfaction Study.

In credit unions where IT and analytics were identified by Callahan as CRM “power users,” staff productivity improvement was seen as the key measure of CRM success. Having to work with aging and inflexible back-office systems can erode staff productivity and take the focus away from building member relationships. For credit unions facing this challenge, using CRM as a central data repository is a proven strategy to enhance staff productivity enterprise-wide.

Other success criteria included increased member retention and wallet share and loan growth.

Ease of Use Key Factor For Institutions Adding CRM

When CRM implementation plans were discussed with credit union executives, 90% indicated that they did not intend to hire additional staff to manage the CRM system. Tracking that finding, very few credit unions were using, or planned to use, a home-grown solution. Overall, these results suggest that a vendor-provided solution with little operational complexity was the preference for the majority.

When selecting a CRM, ease of use and a turn-key solution were cited as top priorities, especially for smaller credit unions. Software-as-a-service (cloud-based) solutions managed by experienced vendors are the likely preference for credit unions that face resource constraints. Vendor reputation was also listed as one of the most important criteria for CRM selection. The study indicated that vendor engagement was a strong predictor of CRM success. Also important was entering into the selection process with a pre-defined CRM strategy.

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Top Areas of CRM Satisfaction/Dissatisfaction

Among all the CRM-using institutions surveyed, the three CRM system features with the highest (extremely satisfied) ratings were:

  1. Security and encryption protocols (33%)
  2. 360-degree member view (24%)
  3. Member engagement history (24%)

Conversely, when credit union executives were asked which common CRM features they were most dissatisfied with, those most frequently cited were:

  1. Operational data flow between departments (13.2%)
  2. Access to member documents (10.5%)
  3. Reporting capabilities (10.5%)

Taken together, these two lists give a strong indication of how financial institutions prefer their CRM systems. What links several of these factors is a desire for the software to be used across departments, as an enterprise-wide source of actionable member data. Historically, many CRM systems were used as point solutions, mostly by marketing or service departments. Today, credit unions and banks expect to use CRM more broadly and to derive more value from it. That means enterprise content management (ECM) integrations, inter-departmental workflows, and robust reporting capabilities are all on the “wanted” list.

The Callahan research indicates the search for a CRM system is driven by both human factors (member engagement and staff productivity) and attention to pragmatic concerns like time to implement, total cost, and resources required. Credit union respondents identified increased tracking and reporting capabilities, system integrations, and ease of use as critical areas for them in their CRM systems. These priorities reflect a broader, industry-wide awareness of the need for advanced data analytics to empower relationship- and insight-driven sales and marketing to drive growth.

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