CRM – Customer Relationship Management – has become the buzzword of promise for banks in the new era of financial services.

Due to mega-mergers, an influx of non-bank players into the market and the increasing dissatisfaction expressed by customers, banks are trying to regain that Main Street U.S.A. business feel where every teller knows each customer by name.

The problem, of course, is that except for a very few, very small banks, knowing every customer by face is impossible. Enter technology and the possibility of an information-spewing terminal that lists the relationship a customer has with a bank for the teller to read, comprehend and transform into tailored product suggestions or services sure to impress the customer and leave all parties involved with a warm and fuzzy feeling.

But despite the many possibilities it presents, many banks are relying too heavily on technology to solve all their customer relationship problems, according to Gartner Financial Services in Durham, N.C.

“From Gartner’s perspective, CRM is not a technology or a set of technologies, even. It’s a business strategy which has been enabled by technology,” said Kimberly L. Collins, a senior research analyst at Gartner. Before banks go out and try to purchase systems from vendors, they should determine what type of institution they are and where they want to go in the future.

“Are you retail? Are you focused on corporate relationships? Get a vision of where you want your business strategy to go and what that means to your customers. How do you attract and then retain profitable customers? How do you start to increase profitability by extending those relationships?” Collins asked.

Next, banks need to focus on which areas they want to work on first since it’s costly, and in many cases nearly impossible, to implement all the possible projects at once. While it’s tempting to purchase a CRM system that maximizes the amount of information culled from customers, Collins advises caution.

“Without that business strategy you’re pulling in stuff randomly and you don’t know whether the information you’re pulling in is going to be useful or merely information glut that has no relevance to what it is you’re trying to do” she said.

Another risk in deploying a CRM project occurs if there isn’t total acceptance of the project by the staff, especially from at the executive level, which nearly always results in disaster, said Collins. That’s because CRM necessitates cultural change within an organization, not just plugging in a new software system. If executives aren’t willing to invest the time as well as money it takes, it’s very hard for one department to “champion” the idea, she said.

For South Coastal Bank in Rockland, deploying a CRM strategy was part of a two-year sea change within the organization. The bank, formerly known as Rockland Savings Bank, was facing antiquated systems and operations.

“We revamped everything,” said Susan Lincoln, senior vice president of retail banking. “We’re in the process of installing a new operating system, updating all of the equipment. This operating system will allow the tellers and the customer service staff easier access to customer information so that as they’re waiting on customers, they’ll understand who this customer is and what products they have with the bank as well as what suggested products these customers should consider,” she said.

But according to Lincoln, the idea of customer-centricity has always been with the employees on “the front lines.” Turnover in the teller area has been as low as once every three or four years, which for any bank is extraordinary.

‘Always in Touch’
For South Coastal, part of their strategy is to get their loyal customers to think of the bank when they need a product. In the last two years, the bank has started to catch up to other institutions in terms of product offerings like small business checking accounts and hopes to deploy an Internet banking component soon. But in addition to employee satisfaction, success in this area requires employee knowledge.

“I think training is very important and it’s going to manifest itself differently whether you’re in a contact center or a branch. The information presented will be different on the Internet, via e-mail; all those mechanisms are very different,” said Collins.

For that reason, South Coastal has held comprehensive training sessions for all employees, from the switchboard operator to the tellers. Lincoln said the training isn’t focused on the “sell, sell, sell” theory but rather understanding what the customer needs, whether that happens to be a product or a service.

For Middlesex Savings Bank, a $2.5 billion-asset bank in Natick, the concentration is on setting up a CRM tool that will serve the bank into the future as it continues to grow.

“As a community bank, Middlesex Savings Bank has always known its customers quite well. There are many banks that, through mergers or acquisitions and so forth, don’t know their customers as well and are using an application like this to try to get to know their customers better,” said William G. Wilkinson, executive vice president and chief operating officer.

“We really want to do this so as we do grow, we retain that view of the customer we had and we can also make more intelligent recommendations, whether they’re sales or service recommendations, to our customers,” said Brian D. Lanigan, senior vice president.

Middlesex targeted CRM in its strategic planning last year. In April, the bank began the project, which it hopes to employ as a pilot program in its call center and one of its branches by early February.

While it’s easy to view CRM as simply a new way of pushing products, it also can be used to save customers money. Because Middlesex is a state-chartered bank, it offers a free checking account for those aged 18 and under and 65 and older.

“Well, it’d be nice if you were walking in and you were 65 years old and we’d notice you haven’t had one of these accounts. We could [ask] you, ‘[Do you] you realize you’re eligible for this account?’ That would be very good customer service to let these people know that this account is eligible for them and they can convert their existing checking account,” said Lanigan.

But while information sharing among departments is great for service and time-saving, it may prove too distracting if it isn’t managed carefully.

Boston-based Eastern Bank, at $3.4 billion in assets, has grown substantially over the past few years and is now trying to get a handle on how to implement all the ideas encompassed by CRM.

“We believe that CRM is a multitechnology platform that involves everything from account management to contact management and in order for us to be truly effective with our customer, we can’t allow the technology to supplant the personal contact but actually to enhance it,” said Lloyd Hamm, executive vice president in charge of technology at Eastern.

For Hamm, the single most important feature for the technological side of CRM is ease of use for the end user, whether that’s a teller or a loan originator. “And it has to be accurate in terms of the data that’s in there,” he said.

Tailoring the platforms so that tellers see only what is beneficial to them and loan officers see what they need access to is a challenge. But even with all the technological challenges, Hamm feels the biggest one is the cultural change required to implement successful CRM. “The technology is the easiest part of the solution,” he said.

But understanding all that CRM encompasses can be boiled down very simply, according to Collins at Gartner.

“In essence, CRM is, in some sense, about fooling their customers into thinking they’re getting great value while [the bank is] still getting it themselves,” said Collins.