Abbey National is developing a window on the customer that can be used across all non-life contact channels. Francis Higney reports
The UK financial services industry is involved in a race. It's a race that costs millions of pounds to enter, but one where the prize is huge and on which the success or failure of many businesses are hinged.
It's a race to develop a system to help organisations discover who their customers are, what they want and the ability to deliver solutions across the whole of the business.
And the route this race takes? Customer relationship management (CRM).
Software solutions systems have been around for some time now. Over the past five years they have evolved in tandem with the financial services industry as it has moved from single distribution channels - for example, a broker-only general insurer - to a multi-channel business. CRM systems have become necessary in order to respond to the needs of customers as they are now approaching organisations in a number of ways - through brokers, high street banks, independent financial advisers, the internet and by telephone.
Insurance companies and banks have been in the forefront of using the existing technology and developing it for their needs. Abbey National reckons it is at the forefront of CRM innovation, and non-life insurance is a key beneficiary.
Abbey's insurance marketing director John Grimbalderstone has his own ideas of where the advantages could lie. "A central database will tell us about each individual policyholder's dealings with the entire bancassurance network. We will know what products he holds and what his profitability rating is.
"It will then be down to the product development and marketing managers in the areas to identify the most likely products the customer will want to purchase."
Potentially, this could be delivered in a packaged form offering insurance deals.
"We already give added value vouchers for wine purchase, short break holidays and similar incentives. The CRM system will enable us to look at an individual customer's lifestyle and decide which added value feature would be most likely to tempt him in," adds Grimbalderstone.
"It will also help us with borderline claims. We can identify a customer's value to us and that could shape our decision on whether a claim is paid or not.
"It also will help us identify which customers to give the best levels of service to. Our most profitable and loyal customers will be placed at the head of the priority work flow."
Perhaps the most useful part of the software is the series of prompts to the front-end user.
However, according to vice president of CRM solutions at Cap Gemini Ernst & Young (CGEY) Keith Ashworth: "Most organisations don't use this type of software in anger." CGEY is advising Abbey on the CRM system.
Too often, he says, the information is received by the wrong person within the organisation and the lead is often lost within the system, and a new selling or renewal opportunity is lost.
"The key is pulling all the information together and taking it across all channels in the whole organisation," he says. "This multi-channel approach gives the bank the opportunity to manage people in an efficient manner."
The first phase of the Abbey National initiative will be rolled out towards the end of this year. This will involve having the whole of the customer's contact history with the firm being made available on the front screen for all staff to see.
The system's initial deployment will be in branches and call centres and will provide a "window on the customer".
"By having all the contact history on screen the staff member will be able to accurately allocate service and conduct sales arrangements. Customers will see that contacting Abbey National is easy.
"We know what they want no matter where the point of contact and do what we say we will do," adds Richard Paterson who heads the dedicated CRM team on the One on One project.
It is the organisation-wide compatibility that allows this CRM software solution to steal a march on some of its rivals.
The first organisations to cross the finish line in the race to develop a truly integrated CRM system will reap the reward of being able to tie-up their customer base to their range of products.
It will also allow them to anticipate changes in customers' circumstances and facilitate a more focused sales campaigns. Crucially, all this information will be available to staff operating throughout the organisation and no opportunity to enhance the relationship with the customer is missed.
Research shows that a 5% increase in customer retention yields a profit, in net present value terms, of between 20% and 125%.
The race is on, therefore, to establish and maintain individualised relationships with customers to enhance loyalty and retention. That means providing consistently high levels of customer service, regardless of the way a customer interacts with an organisation.
"All CRM systems over the last five years have been trying to give an operational single view of the customer no matter which channel the customer chooses to meet the organisation through.
"So no matter what the point of contact the member of staff will know everything about that customer's dealings with the organisation," says Andrew Duncan, lead partner in insurance at PWC consulting.
All the major financial services firms are currently engaged in a project they hope will make this a reality. They are striving to service their existing customers better. But what they are really interested in is cross-selling other products.
"Nobody is where they want to be yet because it's a very difficult technology to implement a single view of the customer," adds Duncan. N
How Abbey is going to make CRM work
Abbey National Retail Bank purchased the Siebel eFinance software package with the intention of integrating its huge 15 million current account customers on one business-wide system.
Siebel is generally accepted as being the market leader in delivering this type of technology.
The project with Abbey National represents Siebel Systems' largest retail use of e-business in the UK and one of the largest in Europe to date.
The software is the foundation of Abbey's ambitious One on One programme, rolling out this year and next. One on One allows the bank to treat its customers as individuals by holding a comprehensive view of them in one system across both branch and call centre channels.
This single view will include all customer details, product holdings and contract history and will issue prompt messages.
It intends using the software to achieve greater profits in three ways:
by anticipating financial needs and delivering on promises; by increasing sales productivity and last, by increasing the number of profitable customers through improved cross-selling and retention.
But why choose this particular system?
Andrew Barton, the director in charge of customer relationship management at Abbey National Retail Bank explains:
"What we didn't want to do was take delivery of a solution that we would have to tinker with too much. We wanted a system that delivered `out of the box' functionality."
However, he will still be left with the task of integrating Siebel with the existing Abbey National legacy systems. That's why Abbey has called consultants Cap Gemini Ernst and Young.
"The implementation of this part of the programme certainly throws up some major challenges," says Barton. "There are a lot of legacy systems that need to be connected involving a large data migration and it is important that the customer is not inconvenienced during the ongoing process."
This will be achieved through middle ware technology, which is an integration layer between the front end system (Siebel) and the legacy systems.
Abbey National will be migrating information from existing customer databases until, ultimately, Siebel becomes the single database for the company.
PWC Consulting insurance partner Andrew Duncan says: "There are probably no other banks or insurance companies attempting this across the whole of their business lines. It's the way of the future."
How the data supplied by the CRM system is translated into customer care and product sales within Abbey's insurance sector is still under consideration.