The heyday of customer relationship management (CRM) may be long gone, but reports of CRM's demise are greatly exaggerated. New research from TowerGroup finds that while the rate of growth may be off from the high levels experienced in the 1990s, financial services institutions worldwide spent over $5 billion on these technologies in 2003 an investment that will grow to $7.1 billion by 2008.
"The enduring strength of the CRM concept will continue to produce value for financial institutions around the globe in 2004," said Kathleen Khirallah, senior analyst in the Retail Banking practice at TowerGroup and author of the research. "The race to acquire, retain, cross-sell and maximize the value of a customer base may have diminished in media visibility, but not in importance to financial institutions."
Highlights of the research include:
Following the CRM boom of the late 1990s, the pendulum swung away from customer knowledge investments (such as customer data repositories, business intelligence and decision support systems) toward customer interaction technologies (including all bank delivery channels). However, to be effective, a CRM business strategy requires the coordination of both areas.
Over the next few years, TowerGroup expects CRM-related IT spending growth in commercial banks to be healthy. The anticipated compound annual growth rate (CAGR) for customer knowledge technologies will be 6.2 percent, which compares favorably with the overall IT spending rate of 5.8 percent for commercial banks globally.
Although IT spending on customer knowledge technologies is positive at 6.2 percent, not all regions of the globe invest in these technologies in similar patterns. Some regions will focus primarily on data repositories and business intelligence, while other regions will have moved beyond those basics to focus more heavily on decision support systems that add value to the data repositories.
Within commercial banks, the three major IT spending categories include customer knowledge technologies, customer interaction technologies and core processing systems. Customer knowledge technologies represent 6 percent of total IT spending, while customer interaction represents approximately 40 percent and core systems 50 percent.
"As long as banks expect that growth in their institution will occur organically, customer knowledge technologies for CRM will continue to garner IT investment," Khirallah added.For more information on TowerGroup's report, "IT Spending on Customer Knowledge Technologies: Healthy Increases Across Most Regions," contact TowerGroup at (781) 292-5200 or email@example.com.
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