Know thy customer

CRM has been a phrase that is loaded with perceptions, mostly of vendor hype and memories of massive cost and failed projects. In the days after the Y2K disaster fizzled out into the damp squib that it was many vendors seemed to be looking around for something to hang their hype machine on and CRM became the vehicle of choice. It was into this environment that FNB Corporate Bank marched bravely on a mission to streamline its business process and create a knowledge base from all the information around its 6000 odd clients.

FNB Corporate in its current form emerged from the merger of Rand Merchant Bank and First National Bank in 1998 where both organisations had corporate banking divisions and there was substantial overlap between the different divisions.

The end result was that FNB Corporate emerged as an organisation focused on providing banking services to the high end of corporate South Africa in addition to other financial services organisations and government.

Chris Kotze, Executive Director at FNB Corporate, explains that following the merger it was essential for the new entity to re-establish its focus. Following a thorough analysis of the bank`s operations, the conclusion was reached that a key asset of the organisation was the information that it held on each of its clients.

"The problem we faced was that the organisation was very product and branch focused, and, as a result, we didn`t fully understand the breadth of interaction that we were having with the client," says Kotze.

"In addition, our marketing department was looking to leverage the client information in a more targeted marketing campaign, but considering that we didn`t even have a consolidated client list, let alone a database that could be effectively mined for information, we had to act quickly to rectify the situation," he continues.

The bank then looked at what it required from its client information and identified that in, order to better meet the needs of the clients, it needed to first have a unified view of the client, understand what segments client fell into both in terms of the industry as well as the size of the client`s organisation, and only then could it really start to define what the needs of the client were. This lead the bank onto the route of looking at better ways of managing its information and it was at this point that it looked at where most of the client information was stored - this was with the client portfolio executives (CPEs).

The problem was that the information was scattered across computer records, paper files and the personal knowledge of the CPEs. Having that amount of information stored in sources controlled by people who could give in their notice at any time is not a situation that it was willing to bank on. The search was therefore on for a system that would consolidate this information and allow proper access to it at any time.

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"In the middle of 2000 we looked around to see which companies were offering solutions that would meet our needs and we came up with a list of over 600 companies. Most of these were unsuitable or were simply punting vapourware," Kotze comments. "We managed to cut it down to a list of 12 vendors that we considered had real potential and from there selected a shortlist of 5 vendors."

"In order to ascertain which offering would be most suitable for the needs of the company, we looked at the daily activities of a CPE, mapped these actions and then asked the short listed vendors to provide a demonstration on how they could automate the interactions of a CPE on a daily basis."

Kotze notes that it was during this process that they started to get the line: "Oh you guys want a CRM solution." But he maintains that this was not part of the equation at all. There were clearly defined business needs that needed to be addressed and it is this focus that probably saved the bank from joining the chorus of failed CRM projects.

"From the five short listed candidates we decided to choose the Siebel offering for a number of reasons, including the ability of the product to deliver what was required and substantially more above and beyond that, as well as the massive market share that Siebel had at the time."

"One of the success factors of the project was the fact that FNB Corporate got the system up and running with limited functionality first and slowly introduced new functionality as and when it was needed. The first step was to create a consolidated client list This list brought together all the information the CPEs had about their clients and, in order to ensure that they did not feel disenfranchised by the new system, the company linked an incentive programme to the data capture initiative," he continues.

This focused the CPEs on the task at hand and ensured that the maximum amount of data was entered into the system. Kotze adds that the aim has been to roll out new functionality every three months and this process is still continuing.

"While we were confident in the success of the project, there were those higher up in the group who had been seeing all the negative media coverage about CRM projects and were therefore sceptical about continuing to invest in a project of this nature."

"In order to counter this we had to get personal commitment from all of the mangers within the business. This commitment has ensured that the system has been a success and continues to add benefit to the business on a day to day basis," Kotze explains.

One of the areas that received early attention in the development of the system was the ability to create a comprehensive pricing system for all the clients.

Martin Taylor, head of pricing at FNB Corporate, explains that the problem the organisation faced was that, because of the size of the organisations that bank with FNB Corporate, its clients had a multitude of bank accounts and not all of them were linked to the parent company.

This meant that, even though the CPEs were spending a substantial amount of time updating the pricing information on the accounts they were responsible for, only about 30% of the accounts were being updated in terms of pricing on an annual basis.

While the accounts that were not updated were not the primary accounts for the clients they were quick to pick up on pricing inconsistencies and were using the accounts that had the lowest fees, saving money for the clients but costing the bank service revenues.

The bank therefore embarked on a programme to link all accounts to the client profiles. This enabled it to not only ensure that all accounts were being looked after by the correct CPEs but also that all account information could be updated accurately on an annual basis.

Taylor adds that, while other parts of the system were difficult to evaluate on a return on investment basis, the pricing system showed clear ROI for the bank measured against multiple criteria.

"We estimated that previously the CPEs were spending about three months to do pricing analysis on their clients` accounts and update the information. This process now only takes about two weeks. The increased productivity, in conjunction with the ability to update the pricing on all accounts, has netted in the region of R15 million on an annual basis for the bank, completely covering the initial expense of implementing Siebel, " says Taylor.

While the initial functionality in the system was focused around fixing processes inside the bank that were hindering progress towards a customer-centric organisation, strong buy in from the business units meant that demands were being made for additional functionality.

Kotze explains that, because the team managing Siebel is relatively small and does not really have much of its own budget, the business units have to cover the costs of additional functionality.

In order to drive this, the company put processes in place to allow the different business units to make an informed decision about the cost vs. the expected benefits.

"The business units spec the functionality and then the Siebel team goes to the market to find the best price for the changes that need to be made. Once this has been ascertained, the business unit makes the decision about whether it is going to see a suitable return on investment."

However, because of the demand from the different business units, the team has to prioritise which projects will happen first and which can be put on the back burner so that the business as a whole can derive maximum benefit from the enhanced functionality.

In addition, the more client-centric view of the organisation has enabled the CPEs to identify business opportunities for other units inside the FirstRand Group, such as Discovery Health, Momentum or WesBank. This cross-selling strategy has not only provided the group with more business opportunities but has also enabled the CPEs to provider a greater scope of service to their clients. "Success is a contagious thing and word of the benefits that FNB Corporate has derived from the implementation has spread to other parts of the FirstRand Group," says Kotze. "Other corporate focused divisions are looking at leveraging the system that has been deployed to drive benefits for their organisations."

There are several lessons that any organisation can learn from the experience of FNB Corporate in the deployment of a CRM solution. Firstly, understand exactly what it is that you are trying to achieve in the short term as well as in the medium term and ensure that you can justify the project based on benefits that are fairly immediate. If you have to bank on long term benefits you could well end up with a white elephant.

Secondly, take small steps. The approach taken by FNB Corporate of adding new functionality on a regular basis would seem to be a good approach as it ensures that the benefits are seen by the users on a relatively immediate basis, building faith in the system.

Lastly, the buy in from the business is the most important part of a successful project. The fact that the different business units within FNB Corporate have seen the benefits and are actively thinking of ways to get benefits from leveraging the system ensures that the system delivers business benefits, not just functionality that no-one needs.

"CRM can be a vital tool to any organisation, but only if the business drives the solution and the expectation isn`t created that the technology will solve business problems all by itself," closes Kotze.