There was a time not so long ago when client-oriented technology solutions, such as client relationship management, were integral to any pri...

There was a time not so long ago when client-oriented technology solutions, such as client relationship management, were integral to any private bank's business improvement plan. Now CRM is likely to fall into one of two categories. One, where a bank has already spent millions but is still trying to eke out the benefits of CRM. Two, where a bank is still grappling with the implementation of relationship management tools but now is left with a very restricted budget and resources to get it right. Either way, top management must tackle the challenge against a fiercely competitive market, where client management excellence is the key to retaining and winning clients, as well as generating income.

Crucially, to successfully manage a private client business today, management must answer several fundamental questions: Who are our customers? What assets do they have? How did they get their wealth? Who do they share it with? What is their risk profile? What are their potential needs? What is our share of their wallet? How profitable are they for us?

One could go on. Sadly, few institutions can answer these questions due to the lack of coherent client relationship management information and tools. Indeed, private banks have failed miserably in the last few years to harness CRM. This experience has been expensive, both in terms of cash and man-hours. Crucially, the failure is most often caused by relationship managers rejecting the system, the very people whom it was intended to benefit.

Rather than blame technology for not delivering the expected benefits, one needs to think more about the approach. In our experience, the causes for sub-optimal results with CRM in wealth management are due to a few primary and recurring causes:

Inadequate involvement of the users

Resulting solutions are over-engineered and overly complex

Lead times to implementation are too drawn out

Inadequate attention to the human aspects

One needs to think about 'employee buy-in' through actively involving relationship managers early in the development process to win their hearts and minds. We have found that building up the overall implementation in a series of micro projects, addressing each stage of the system and its benefits, is helpful. Through this, one can then build on system functionality through direct consultation with the end users, and this interaction gains both their acceptance, understanding and early adoption.

First step in the development program β€” rather than asking relationship managers to start collating information about their clients from scratch and keying this into some new corporate database β€” is to start by providing them with access to the client information already stored in the back office. Once this would have required them to have been trained as data mining experts. Today this can be unlocked by using emerging standards in technologies such as XML to extract, segment, merge, format and disseminate client account and transaction information and get it to RMs' desktops in a user-friendly and simple way. Done properly, this should take three to four months. Indeed, a bank can even stop here with the basic information at RMs' fingertips. If used properly, this alone could lead to huge advances in client management.

If management decides to continue, the second step is to give a slice of this information to clients as well β€” putting client statements and portfolio reports online. Here web technology facilitates the prudent use of secure internet procedures and software. This enables the internet to be an effective way to communicate sensitive information with a private client in a highly private manner. This second stage takes, in our experience, another month or so to implement. By this point, the total project timeline is now at six months. Critically, the process is a rolling implementation schedule with rapid returns on investment. At this stage, the clients are benefiting directly too.

What next? It's a question of building on the functionality. One possibility is to allow RMs to add to the information that has been given to them. For example, an online diary and a meeting aide memoire (a simple call report) based on design input from the users. They can then feel in control of their meeting schedule and can also use the call reports to log what follow-up is required and trigger e-mails to colleagues. This will take about six months to get everyone using the system for call reports, depending on how sensitively the human issues are tackled.

In the third stage, one can start to get more sophisticated about account planning and activity management. The aim at this point can be to become positive in managing the client-facing staff by incorporating functionality in the system to automate management processes, such as setting and monitoring performance targets β€” for example calls, revenue, profitability. This can often be integrated efficiently with an appropriate scheme for performance-related compensation.

Hence, 15 to 18 months into the project, a bank has not only developed a client relationship management system, but much more importantly, it has fully functioning business processes that have transformed RMs, the quality of client service and the profitable client interaction with the bank.

This may sound like a fantasy. We would tend to agree if we did not have experience that suggests otherwise. It can be done. There are a growing number of new approaches in technology that create real benefits at a pace previously not experienced. They are underlined by three things: remaining strategic in one's overall objectives; keeping it simple with a focus on critical needs (not all); and following a path of series micro projects, prioritised on a combined assessment of their value to business as well as time and effort required.

The words may make it seem so easy. But so can the execution!

Arun Sarwal is a strategy consultant and member of the Scorpio Partnership advisory panel. His business specialisation revolves around business solutions for private client and asset management units. Arun is also a director of KURTOSyS.