Maximizing customer relations in the Middle East's banking sector (page 1 of 4)

A perspective by Ayman Abouseif, Oracle Corporations

The fact remains that although both private customers and businesses in the region provide their banks with comprehensive information about themselves, their preferences and spending habits - information that is frequently updated through interaction and transactions - this detailed data is largely being ignored. Even Middle East-based banks that are considering CRM initiatives may be failing to use and integrate this valuable resource within the new system to maximize the return for their shareholders.

Increased Customer Awareness

Certainly regional banks are spending both time and resources to analyze their customers. The challenge is in retrieving customer data from a mere operational level, and integrating it into the strategic budgeting and planning process. Banks also need to increase their analysis of the customer as a complete but individual entity. In order to be consistent, the organization needs to determine which business units 'own' customer analysis, and how this information is shared. In the retail banking unit, analysis may be 'owned' by the marketing department, but marketing's analysis criteria may not be understood or supported by the bank's customer service staff.

Many banks in the Middle East tout their superior understanding of their customers and the shareholder value they contribute, but how many really understand and consider the costs to the bank of the transactions the customer undertakes across all the lines of business?

A greater understanding of customer interaction is vital to develop the maximum return from any customer. Given the cost differences between different banking channels, from branch to e-banking usage, banks must know which channels each customer uses to more accurately assess the cost of doing business with that person or company. Just because
two customers appear to be similar - such as, they share the same personal attributes - professional, middle-aged, married men living in an affluent neighborhood, it does not mean they will transact with their bank in the same or similar manner, or hold similar products with similar balances. Why, then, does the traditional marketing approach used by many regional banks segment these men the same way?

The sheer volume of data involved is one of the reasons that the assessment of individual customer profitability has always been difficult. Advances in technology have helped - storing and processing the data for thousands or even millions of customer accounts is no longer something that requires the expense of massive mainframe computers.

Knowing the Individual

Really understanding each customer and his preferences is one of the fundamental challenges facing regional banks today. Each unique account holder decides how many transactions to initiate, selects a preferred channel for each transaction, sets levels for current account balances, and makes investment decisions. By the same token, the customer is also in charge of a number of other often negative impacts: customer defaults or late payments have a major influence on the profitability of any loan book, while credit card income is driven by repayment profile, bad debt and take up of payment protection insurance. These factors can vary considerably from client to client, forcing banks to capture, store and analyze, at a very detailed level, large amounts of data related to the customer.