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March 6, 2000

New CRM Tools Help Financial Institutions Diversify
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Though Huntington is only halfway through the process of rolling out its new CRM system, Wagner, like other IS managers at finance companies, says the tools weren't installed to save money, but to help Huntington make more money--and survive.

"The financial industry is really moving fast on mining tools to up-sell, cross-sell, or next-sell its products," says Rich Hebert, CEO of iSky Inc., which operates outsourced customer-care services for financial institutions and other companies.

Meridien's Bradway estimates that more than 400 vendors offer some form of CRM product--and analysts and industry executives say the financial industry is the largest purchaser of the products, rivaled only by telecommunications companies, which are also experiencing deregulation.

Bradway says he expects spending on CRM software and services to surge 21% this year, up from a 14% growth rate last year. Meridien estimates sales of CRM software will rise from $3.91 billion in 1999 to $6.85 billion in 2003.

Innovations in CRM applications are adding to the growth, Hebert says. In the last year, CRM tools have started providing product-profitability analysis in real time. Agents can call up an array of information on customers, then use analysis tools to generate the most profitable offer while the customer is still on the phone. In the past, such information had to run overnight in batch operations. And many CRM applications now offer Web-site support.

But implementing the latest CRM tools is not without challenges. Wagner says integrating with the company's core applications and extracting legacy information is an exercise in unending problem solving. "Every time we turn a corner, there's another big challenge," he says.

Still, the tools make it easier than ever to get information to employees. Dennis McIntosh, executive VP for SBLI Mutual Life Insurance Co. of New York, says Epiphany Inc.'s E.4 software is like a plug-and-play data warehouse, which is helping the company get its CRM system upgraded quickly. The deployment, which began in November, is slated to go live this month.

SBLI switched from being a nonprofit life insurance company for savings banks to a for-profit insurance company at the start of this year. A sophisticated CRM system is crucial to making the company ready for cutthroat competition in the for-profit world. As a nonprofit, SBLI had developed only rudimentary information systems, with little CRM capability.

While McIntosh wouldn't reveal his company's CRM costs, Bradway says analytical CRM tools can run $200,000 to $500,000. Consulting services are highly variable, but can add significant costs.

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