How financial services firms can use customer-centric strategies and CRM tools to maximize the value and loyalty of their client base.

1. How to Survive—and Thrive—in a
Challenging Market
How customer-centric strategies can help financial services firms
weather market volatility and economic uncertainty.
In these uncertain economic times, many financial services firms are
Abstract
feeling the pinch from massive write-downs, high market volatility
Volatility often presents
and reduced staff and budgets. But even in a time of uncertainty and
opportunities. In this guide,
contraction, smart financial firms can find opportunity and growth. The
we outline strategies you
secret lies in the invaluable assets financial services firms already have:
can implement to avoid the
their customers.
negative effects of market
In this white paper, learn how financial services firms across the industry volatility and find new ways of
and around the globe can use customer-centric strategies and CRM tools generating revenue from your
to maximize the value and loyalty of their client base, gain insight into single greatest asset, your
new areas of opportunity, and do more with less, not only surviving, but current clients.
thriving, in a time of market volatility and economic uncertainty.
About the Author
Jason Rushforth is President of Front Office Solutions–overseeing sales and marketing
for CDC Software’s CRM and complaint management solutions. He is known for his
keynote speaking engagements for such events as the Wealth Management Forum and
webcasts with Wall Street & Technology and TowerGroup, and he frequently contributes
to industry articles in publications such as CRM Magazine.
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2. Introduction: Tough Times Call for Strategic Moves
Few will deny that financial markets in developed countries worldwide have taken a lashing in recent years with
financial services institutions (FSIs) taking the brunt of it. The numbers say it all: Around the world, FSIs have
written down billions of dollars of securitized assets—and the fallout continues. Whatever you label it or how
soon you think it will end, there’s no question that FSIs are grappling with a very challenging time and a difficult
road to recovery.
If any word best characterizes current market conditions, “uncertainty” may be it. FSIs may not be pessimistic,
per se, but at a minimum they are cautious, as uncertainties abound: regarding consumer spending, commodity
prices, construction costs, interest rate changes, GDP growth, inflation, and more. The sub-prime mortgage crisis
has resulted in increased trading volumes and an upsurge in volatility, such that unpredictability has become a
dominant theme in both financial markets and the financial services industry.
How are FSIs dealing with the uncomfortable combination of losses, volatility, and
widespread uncertainty? First, job cuts have become a necessity for many firms
In addition to
as they try to reduce costs: it’s no secret that tens of thousands of jobs have been
job and budget lost across the industry. Accompanying these job cuts, many FSIs are engaged in
belt-tightening almost across the board, trying to cut expenditures as they attempt to
cuts, a wave of
recover and brace for whatever. A wave of consolidation and downsizing has passed
consolidation and through the financial services industry, which poses additional challenges for FSIs
attempting to find their feet following a tough series of quarters. The ripple effects are
downsizing is
stretching across lines of business and around the globe, and everyone’s feeling the
passing through the pinch.
industry. Unfortunately, internal problems are just the tip of the iceberg. Market volatility,
economic uncertainty, and negative headlines have made clients skittish—about
their finances, and about their financial services providers. Consumers, businesses,
investors, and institutions alike are rethinking their financial strategies and partners, concerned about the hit
their own finances have taken or could take as a result of the current economic situation. As they do so, the
knowledge that their financial service providers are snowed under by issues and losses arising from the credit
crunch may lead some clients to question whether their best interests are really top of mind for their FSIs at
the moment. A lack of client trust and loyalty is the inevitable result—and one with the potential to have a more
lingering effect than short-term write-downs and losses. Erosion of their client base and client confidence could
present serious long-term problems for FSIs. As a result, it’s imperative that FSIs give clients the increased
attention they need in these times of uncertainty—in spite of reduced staff and budgets and a multitude of other
issues and distractions arising from current conditions.
Financial services firms that take their focus off of customer satisfaction at this time risk more than losses: they
miss out on a compelling opportunity. The fact is that existing clients are the secret to weathering the current
storm for FSIs. With new client acquisition costs far exceeding retention costs and difficulty attracting new clients
in an uncertain and volatile market, it does not require advanced calculation to understand why FSIs should be
looking to their client base as a cost-effective source of revenues. Similarly, with the economic volatility and the
reduced availability of private equity funding, most FSIs will need to look internally, rather than externally, for
additional sources of revenue, focusing on organic growth.
To survive and thrive in volatile markets and an uncertain economy, financial services firms need to pair their
downturn investment strategy with a thoughtful and strategic approach to building, extending, and unlocking the
value in FSIs’ client relationships. The tools to implement these strategies are client relationship management
(CRM) solutions.
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3. Using Customer-Centric Strategies to Survive and Thrive
FSIs need strategic responses to current market conditions that innovate on all three fronts: process, culture,
and technology.
The concept of “customer-centricity” has been steadily gaining traction inside and outside of the financial
services industry. More than just a feel-good concept, when taken seriously, customer-centricity is a model that
can profoundly impact a business’ processes, culture, and technology. Customer-centric strategies dictate that
the customer be considered as the focal point around which a business structures its way of doing business.
The goal is to not only deliver a more satisfying customer experience, but provide greater customer insight and
value to the firm, thereby improving profitability.
Given that retaining customers, finding new avenues for organic revenue growth, and improving performance
despite cuts are among financial services firms’ most urgent needs under current economic conditions,
customer-centric strategies offer compelling advantages to the industry, now more than ever.
So how can customer-centric strategies help FSIs survive and thrive under tougher economic conditions? As
the concept suggests, it all centers on the client.
Get Closer to Your Clients
As clients react to negative headlines, economic uncertainty, and market volatility, FSIs cannot afford to keep
them at a distance. In fact, they need to get closer to their clients than ever before.
Customer-centric strategies are predicated on the establishment and ongoing
True client value is enrichment of customer knowledge and the need to collect and apply this knowledge
intelligently at every stage of interaction. This means not only getting to know your
not always direct or clients better, but having the tools to help you take advantage of this knowledge
obvious from basic where and when it offers the most value. To accomplish this, FSIs need to use CRM
systems to their true potential: not just as data systems, but as the technological
account data. enablers of customer-centric business strategies.
Building up this customer knowledge begins long before an individual or organization becomes a client,
from the moment they are identified as a prospect. Using CRM marketing tools, FSIs can build out prospect
profiles that combine market data and publicly available information with behavioral responses and information
provided by the prospect through each marketing or sales interaction. Using this information, the FSI can more
effectively segment its audience and target its marketing activities, engaging the prospective client with high
personalization and relevance from the earliest stages of the relationship.
When a prospect becomes a defined business opportunity, this rich CRM profile ensures no FSI employee need
ever walk into an opportunity blind.
With comprehensive information about the prospect, past interactions, and the lead source, FSI personnel have
the background they need to position their products and services more effectively and win the business.
When a prospect becomes a client, the real relationship management begins. FSIs need to implement
consistent and reliable processes to ensure that the drive to acquire customer knowledge does not drop off
at the point that the business is won, but instead intensifies. During and after client on-boarding, FSIs need to
use CRM workflows to build out deeper client knowledge and strengthen the relationship, using a CRM-defined
relationship plan to ensure regular touch-points and continually refresh and add to their client intelligence.
Under tougher market conditions, this holistic view of the client and regularity of contact becomes invaluable.
Not only does the firm have a complete and current view of the client, but also an established relationship to
leverage. This provides opportunity to the firm on multiple levels.
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4. First, FSIs with a 360-degree view of clients provided by rich CRM data can more accurately assess actual
and potential client value. This value is not always direct or obvious from basic account data. For example, a
client that represents modest business to a wealth management firm might be part of a household that overall
represents major profits to the firm, or a client associated with a minor institutional asset management account
might have influence over several other accounts. A client firm might represent significant revenues to a mutual
fund wholesaling firm, but it could be that only a few branches or individual broker-dealers are the true sources
of this value. The same client might be a “tier 5” asset to one area of an FSI but a “tier 1” customer to another
of the firm’s lines of business. Furthermore, a client might have a moderate direct impact on revenues but
could be bringing in exponential value by referring other clients to the firm. With the proper application of CRM
technology and strategy, all of these different facets of client value can be made clearly and easily discernible
within the system.
Applying this knowledge, the FSI can ensure that it keeps its focus on clients with
The same CRM an understanding of their true overall value to the firm, making it clear exactly which
clients are most critical to the firm’s bottom line. As economic conditions impact
tools that help their customer base, this can also help FSIs take a longer-term and better-informed
FSIs increase the approach to navigating the downturn. For example, a commercial bank may want to
be particularly flexible with certain business customers, renegotiating their lending
value of their client terms with a view to keeping the bank’s most valuable clients for the long term,
relationships can rather than losing them to short-term market swings.
Furthermore, as they look to increase revenues from their existing client base,
also help them FSIs that have rich client profiles are also better positioned to identify new revenue
serve clients more opportunities by up-selling and cross-selling products and services. Given the
significantly lower cost of selling to existing clients versus acquiring new ones,
cost-effectively. this can prove a very cost-effective approach to revenue growth. With useful fields
indicating information such as the percentage of client’s available assets held with
the FSI and deep information about client attributes and interests, FSIs can apply strategic plans to expand and
deepen their share of wallet with the client, up-selling and cross-selling the most relevant products and services.
Regular touch-points established through a CRM relationship plan provide the perfect venue for exploring client
interest and introducing new offerings. The items discussed and client reaction can be clearly noted within
the CRM system to ensure clients are not offered the same products and services by different parties or at
successive meetings unless appropriate.
Similarly, a good relationship plan and comprehensive client profile are of tremendous value in identifying clients
at risk in a time of uncertainty. Regular touch-points give the FSI the opportunity to gauge client sentiment and
address any concerns proactively. Thorough profiles that aggregate data across different areas of the firm are
also essential to distinguishing true risk from false alarms. For example, a client withdrawing from one type
of investment product may be keeping the funds within the same financial institution and merely moving to a
different kind of product or strategy in response to market volatility—or they may be in the process of switching
to a competing financial services provider. The ability to differentiate between the two scenarios and react
accordingly is a function of having a true 360-degree view of client interactions across all areas.
As these customer-centric approaches suggest, client intelligence is an FSI’s true goldmine in tougher times.
It should come as no surprise, then, that TowerGroup has noted that FSIs have been “advancing strategies
involving holistic integration of data and function, client-centric approaches, and a continuing quest for revenue
growth,” indicating the close connection between these three concepts. Technology plays a fundamental role in
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5. facilitating these approaches: the analyst group goes on to note that client and business intelligence solutions
fulfill multiple purposes, putting them at the top of FSIs’ technology initiatives.
Getting closer to clients is the smart way to grow revenues in a time of economic contraction: as you increase
your value to them, you increase their value to you.
Do More with Less
As FSIs deal with the cut-backs that are the inevitable result of massive write-downs and volatile markets, they
are increasingly faced with the challenge of trying to do more with less due to lower budgets and fewer staff. At
the same time, expectations remain demanding: clients and stakeholders alike demand that FSIs find ways to
perform despite these constraints.
Providing high-quality client experiences is understand-ably challenging when trying to operate with reduced
resources. Yet as previously noted, the risk of losing clients in a time of uncertainty and skittishness is very real,
and failure to keep focus on customer needs and sentiments could significantly worsen the long-term impact
for FSIs of what should otherwise only be a temporary economic set-back. Hard-earned customer relationships
could be quickly lost if FSIs provide inferior service due to cut-backs.
How can FSIs improve customer service while cutting costs? The reassuring answer is that the same CRM
tools that help FSIs increase the value of their client relationships can have an indispensable side benefit here:
they can also help FSIs serve clients more cost-effectively.
Some cost-saving insights that can be uncovered through CRM have already been
Deep CRM data hinted at in this paper. When FSIs understand client interests and attributes, for example,
they can focus their efforts more strategically, reducing wasted expenditures on poorly
is a treasure trove targeted marketing campaigns and sales efforts. CRM data can be used to more
that can be mined effectively segment clients and prospects to improve the relevance and success of sales
and marketing activities. In the same vein, CRM systems that provide users with an
to uncover new instant understanding true client value can be helpful in determining the level of service
product or service appropriate for an account. This need not mean providing inferior service to any client;
nonetheless, it is important for an FSI to understand when the cost of serving a client is
ideas and revenue out of alignment with the value of the client to the firm, so that it can assess whether a
streams. better solution or more appropriate fee structure could be offered to the client to keep
them profitable to the FSI. Such insights can help FSIs prioritize their expenditures and
focus reduced budgets on the most effective activities.
Some of the greatest cost savings from CRM, however, come from the automation and process streamlining
achievable with CRM tools. To really look at how customer-centric strategies can be embedded within their
organizations, FSIs need to drill down to the level of client-facing processes. Greater speed, consistency, and
efficiency in these processes benefits the client as much as it does the firm, so fine-tuning and standardizing
client-facing processes is a natural part of implementing a customer-centric strategy. Using a flexible CRM
system, FSIs can build these optimized marketing, sales, and client services processes right into the system,
automating formerly manual tasks and streamlining the flow from one step to the next. Workflow tools define
exactly what needs to be done as part of each process, eliminating confusion. For complex processes involving
multiple stakeholders, steps can be automatically assigned and can run concurrently or in succession, as
appropriate, allowing for smoother collaboration and time savings. Multiple individuals can serve a client as part
of the same process in a coordinated manner, because every person is kept fully informed through the CRM
system’s centralized point of reference. At any time, team members or executives can check the CRM system
to see exactly what stage a deal or process is at, allowing for better coordination of personnel and resources, as
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6. well as more accurate and hassle-free revenue forecasting. This allows for greater efficiency and productivity,
effectively allowing firms to do more with less.
Recent analyst opinion supports the contention that automation, process reengineering, and streamlining are
key to responding strategically to the current economic conditions. TowerGroup, in their report, The Tower
Group Top 10: Business Drivers, Strategic responses, IT Initiatives in Financial Services, noted that “a spate of
downsizing and consolidation” would be the result of “recent losses and persisting uncertainty”:
Savvy FSIs will reduce their expense base more effectively by fundamentally reengineering their business
processes…. Streamlining to gain cost efficiencies and agility is essential. However, downsizing alone cannot
lead FSIs to greatness. As the industry evolves with electronic transaction flows, automation, interconnectivity,
and online service capabilities have become a necessity.
As this passage suggests, both process and technology are critical to survival. Downsizing without
accompanying efforts to refine processes and use automation and interconnectivity to offset cuts will leave FSIs
unable to operate resiliently. This could explain why, in spite of budget cut-backs in other areas, many FSIs are
increasing their technology budgets: it seems clear that technology is essential to enabling FSIs to succeed
in spite of the cut-backs. As FSIs examine where they can focus their technology budgets to give them the
greatest advantage under current economic conditions, a CRM system’s ability to support both cost efficiencies
and new revenue opportunities make it worthy of serious consideration.
Find Creative Revenue Opportunities
Cost-cutting is critical to weathering a downturn. But is it enough to help FSIs thrive in the long term? As FSIs
seek new ways to grow organically, not only in response to the credit crunch, but also to competitive and
general market pressures, they are increasingly under pressure to find these “creative” new streams of revenue.
Luckily, this is another area in which good client intelligence can provide immense value.
In addition to helping pinpoint opportunities with individual clients and position relevant products and services to
increase up-selling and cross-selling success as described above, deep CRM data is a treasure trove that can
be mined to uncover new product or service ideas and potential revenue streams. As FSI personnel engage in
regular interactions with clients according to the relationship plan managed within the CRM system, they have
regular opportunities to listen to client concerns or feedback that can help identify product or service gaps and
generate ideas for new offerings. Similarly, if an FSI is considering a new offering but wants to test the idea
before investing in it, close client relationships and regular planned interactions provide greater opportunity to
solicit input and gauge interest—potentially creating a built-in market for the offering before it even launches.
Similarly, FSIs that focus on strategically building up client intelligence have the perfect information within
their CRM systems to perform advanced analysis to spot trends and identify important correlations that can
help them gain insight into potential opportunities. For example, looking at the common attributes of their most
valuable clients could help FSIs focus on new offerings for these clients; it could also provide insight into how
they might replicate their success with these clients in other accounts. Analyzing trends around revenue sources
and customer retention rates can help FSIs see exactly the ways in which market volatility and economic
uncertainty are hitting their firm—and their clients—and react more strategically, stopping negative trends in
their tracks before it’s too late and spotting positive trends they can take advantage of before the competition.
With the client data to uncover new ideas and the client relationships to help test and validate them, FSIs can
identify more creative revenue opportunities and pursue them with lower risk.
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7. Benefit from Globalization
Today, many FSIs operate on a global basis. For most, the process of becoming a global business has had
its growing pains. Many firms have struggled with the challenges of growing through mergers and acquisitions,
trying to combine disparate systems, processes, and cultures; others have faced similar challenges when
expanding organically into new markets with new regulations and considerations. For a lot of FSIs, achieving
their vision of operating as an effective global business is still a work in progress.
Challenges aside, the current economic situation offers a perfect illustration of why “going global” can offer great
benefits to FSIs. As interconnected as world economies are, events that work to the detriment of one country’s
economy often bolster another. While some countries are bracing for another couple of uncertain and volatile
years economically, others are seeing continued growth.
What this means is that a diversified global FSI with the resources and infrastructure to support strategic pursuit
of worldwide opportunities is in a perfect position to mitigate the effects of the sub-prime collapse. This is
where the rubber meets the road for global FSIs: do they have the systems in place to take advantage of these
conditions? Those that do can place their focus on regions of growth and significantly offset the impact of the
downturn.
Used in tandem, global strategies and customer-centric strategies may just offer FSIs the greatest advantage
yet. Naturally, regardless of their region of operation, FSIs can use the aforementioned customer-centric
strategies to deepen their customer relationships, maximize the value and opportunities from their client base,
and cut costs through process optimization and automation. But when taken to the global level, the opportunities
made possible through this scenario expand dramatically.
For today’s FSI, a true “360-degree” client view is a global 360-degree client view: one that reveals worldwide
value, opportunities, and connections. Using this view, an FSI’s operations in India or Russia can see which
businesses and individuals the FSI has relationships with in other regions and use this information and
relationship to help build new business in their region. The simple fact is that just as FSIs have gone global,
so have their clients—opening up a wealth of new opportunity. For example, a manufacturing firm that is the
client of an FSI’s commercial banking unit in the U.S. may well have plants in India or China. Using its global
CRM view, the FSI’s commercial banking units in those regions could use the U.S. relationship to approach the
overseas operations about equipment finance or lending opportunities, with the existing relationship as their
foot in the door and competitive advantage. In this way, FSIs can build their relationships with clients globally,
expanding the relationship on a whole new level and taking it to new heights of loyalty and profitability.
As FSIs look for creative ways to grow under current economic conditions, the smart ones will think beyond
the confines of their region. By taking customer-centric strategies to a global level, FSIs stand to benefit in an
unprecedented manner from the efforts and investments they have made both in international expansion and in
their client relationships.
Conclusion: The Time to Act Is Now
While FSIs are bound to take different approaches to weathering current economic challenges, what seems
indisputable is that they will have to take decisive action of some kind to effectively survive them.
In this white paper, we have presented numerous different ways in which customer-centric strategies can help
FSIs grow revenues and cut costs to help counteract the negative effects of this volatility and uncertainty:
by deriving greater value from their client base, by increasing productivity and streamlining processes, by
finding creative revenue sources, and by taking advantage of existing relationships to exploit global pockets of
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8. opportunity. We contend that by using CRM to implement these customer-centric strategies, FSIs can not only
survive a downturn, but thrive in it.
While it is critical that they act immediately to embrace customer-centric strategies, FSIs can rest assured that
such a move is neither a quick fix nor a short-term solution. By introducing tools and strategies that provide
more client focus and insight, FSIs are taking part in a seismic shift in the industry away from product-focused
operations toward customer-centric ones. Even if steps taken now are in aid of an immediate need arising from
current market conditions, FSIs should not be short-sighted: they should take care to reengineer processes to
be effective over the long term as well, and choose flexible, powerful supporting solutions that will evolve with
their customer-centric strategies. In doing so, they will not only empower their employees to derive value and
growth that will help weather the downturn, but create a resilient platform for ongoing insight and returns from
their customer-centric strategies.
Pivotal CRM for Financial Services
Pivotal CRM for Financial Services offers comprehensive, integrated, industry-specific capabilities that increase
insight into operational performance, streamline processes across the firm, and improve responsiveness to
client demands. With discrete CRM offerings for institutional asset management, mutual fund wholesaling,
capital markets, private banking/wealth management, and commercial banking, Pivotal CRM for Financial
Services puts critical relationships at the core of organizational strategy in a way that fits the unique business
processes of financial services firms.
With financial services firms around the world using Pivotal CRM solutions, CDC Software has proven time
and time again its ability to meet the needs of the industry. The Pivotal CRM approach ensures a faster
implementation with a lower total cost of ownership by delivering financial services solutions on the scalable
and flexible Microsoft® platform, which supports easy customization, integration, and deployment. Financial
services firms can rapidly and cost-effectively adapt Pivotal CRM to meet changing compliance and operational
demands and grow with their business—meeting their business needs today, tomorrow, and in the future.
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