Keep your profits up by knowing your customers -- here's where CRMs will help

These days, the phrase "knowing your customer" directly ties in to your bank's bottom line. But as your bank expands to meet growing customer influxes, knowing exactly who your customers are becomes no small feat, even for a small-sized bank.

Enter the new wave of customer relationship management systems (CRMs). Sure, CRMs aren't new to the banking scene, but more recent models of the technology permit greater data collection beyond marketing purposes. Industry experts tell Eli how the right CRMs help you get to know your customer -- and become more profitable to boot.

How The Systems Work: A solid CRM system will incorporate several features that enable bankers to better know their customers, relays Horn. She says these features include:

* Information feeds from multiple data sources;
* Data that has been matched and verified against postal tables;
* Ability to capture and store transaction data, which enables management to understand how customers are using bank services;
* Ability to monitor and trigger alerts for transaction behavior changes, which could indicate fraud or a change in the customer's personal circumstances;
* Models to measure customer profitability; and
* Ability to update data at frequent intervals.

Stay Focused Despite Growth: Using a CRM to better understand your customers' needs gives you a competitive advantage that other banks can't match. "Timely customer data in a centralized repository will improve customer service and allow better decision-making," asserts Kathy Horn, director of operations for San Antonio-based Harte-Hanks, Market Advantage Division.

As your bank grows, so will your need to stay on top of customer knowledge. "As we get more customers, we just don't know everyone who comes in the door anymore," says Paul Hollen, executive VP at Charleston, SC-based Southcoast Community Bank. "With the regulatory changes, we really need to be capturing that data and keeping it current," he adds.

While it's always daunting to justify a technology purchase to management, banking specialists stress that there are affordable CRM software packages on the market today. When considering a CRM program, the best place to start is deciding how you would use the CRM process to meet your goals over the next several years, stresses Horn.