Faced with Higher Costs, Banks Turn to Microsoft Dynamics CRM

Along with a Starbucks, it is pretty much guaranteed that there are multiple bank branches on every corner in the metropolitan areas across the country. Depending on what part of the U.S. you’re in, the bank brands will differ, but it’s nearly impossible to not run into them in central business districts. A Wall Street Journal article from earlier this month focuses on this topic and points out that the number of bank branches in the U.S. has actually doubled over the past thirty years. Expanding beyond downtowns and affluent areas, banks have done a good job of strategically targeting the next high growth area in their community footprints. The WSJ notes that banks also expanded into poor areas as they received encouragement to do so from the government due to the passed legislation of the Community Reinvestment Act in the 1970s. Such significant growth of the bank branch network has resulted in the banking sector experiencing a decline in new branches merely three times over the past 77 years according to the FDIC. Today’s environment is a different story, however, as the industry is in the midst of a monumental transition to less branches being built and operated.


It is anticipated for this downward trend to pick up steam going forward, particularly in smaller communities according to the WSJ. Since the financial crisis and even of late, bank performance has certainly improved with banks earning over 19% more in 2012 than they did in 2011 per the FDIC. Nevertheless, a multitude of obstacles, including the slow-growing economy, the historically low interest rate environment, higher regulatory costs, and more stringent capital adequacy requirements, is pressuring banks to contain costs and shutdown many bank branches. Simon-Kucher even goes so far as to say that around one-third of bank branches may not even be profitable. Furthermore, in 2012 alone, over 2,000 branches were closed according to SNL Financial. As a result, the overall number of bank branches in the U.S. is at its lowest number since 2007 and expected to drop to the year 2000 levels over the next decade per research from AlixPartners.

The WSJ also mentions another reason for the sudden halt in bank branch development: the change in consumer preferences as they continue to embrace conducting their banking online or via a mobile device. While this trend has certainly been noted before on the Customer Effective blog, I was unaware of the specific stats cited by the WSJ from AlixPartners. Currently, in-branch visits make up only 14% of banking transactions. On the other hand, online banking now accounts for 53% of banking transactions.

Though banks are going to be shutting down more branches and the retail delivery model is undergoing a radical transformation, bank sales executives will still have aggressive sales targets and bank leadership will expect staff to do more with less. The fact that customers are more inclined these days to bank online makes it quite challenging for relationship managers, loan officers, business bankers, and personal bankers to cultivate deeper relationships with their book of business. Sales personnel will have to be more organized than ever as they potentially will have less face time interactions with customers at the branch.

Not to worry, bankers can rely on Microsoft Dynamics CRM along with the high-powered Customer Effective: Banking add-on to stay abreast of important events related to their client’s accounts, including recent service inquiries across all bank channels, high dollar withdrawals, large loan paydowns, and CDs or loans up for renewal. As seen below, bankers can have real-time visibility into the health of their sales pipeline so that they know where to spend most of their time and have the appropriate bank specialists ready to assist with the close and expedite the sales cycle.

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Just as their customers are using user-friendly technology to make their banking experience more convenient and easy, banks sales and support staff can use CRM technology to make their workday more stress-free, collaborative, and lucrative! Whether it’s an impromptu call from one of their best clients or an unexpected drop-in from a frustrated customer, CRM helps the bankers be more prepared to discuss the account in question and come across as especially familiar with the relationship’s other goals and need for other valuable products and services. Although it’s indisputable that online banking will continue to grow, people never forget “Wow!” service level moments. As a result, the next time a life changing event occurs for the customer, he will be more inclined to return to the branch or contact the specific employee that was a tremendous help to him the last time. While not always apparent at first, routine interactions with customers can have a lasting effect and open the door to multi-million dollar relationships. For that reason, bankers should continue to use CRM to their advantage.

To receive more information on how Microsoft Dynamics CRM and the Customer Effective: Banking accelerator can help your Bank deal more effectively with increasingly higher costs in an increasingly complex and commoditized market environment, please contact Customer Effective.

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