CRM for community banks

Known for their loan application consideration and customer-oriented service with a particular human touch, CRM for community banks have long been the life and blood of most counties throughout the U.S. But as the industry is getting consolidated and dominated by megabanks (giant banks with $100+ bn. in assets), smaller institutions have got in a tight corner. In fact, in 1995 megabanks controlled only 17% of all banking assets. However, these days their market share grew to 59%, which significantly aggravated the market position of local institutions – their market share plummeted from 27% to 11%. In particular, each of the four massive banks (JPMorgan Chase, Wells Fargo, Bank of America and Citigroup) have grown bigger than all U.S. community banks put together. In this highly competitive landscape, acquiring new customers and retaining current ones becomes rather challenging.

Although community banks may be physically closer to their customers, megabanks are currently heavily investing in technology to imitate proximity characteristic of local banks. The majority of bigger financial institutions are taking advantage of high-tech banking software for marketing, sales, customer support and more to handle the entire customer lifecycle. For example, JPMorgan Chase has collaborated with more than 100 fintechs to introduce innovative banking solutions to customers. Other major banks, such as Wells Fargo, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley have similar investment strategies focused on collaboration with fintechs. Thus, to protect their market share, community banks should reconsider their current business processes and map out an effective customer-oriented strategy.

With a banking CRM, community banks can further enrich their knowledge on customers by consolidating all ever gathered insights in one place. A bank’s staff can access this database any time to get a complete customer profile with information about personal preferences and all latest transactions. As a result, employees can make only relevant offers based on historical behavioral data in customer profiles. Since the memory can play employees false, CRM will also help to establish systematic and timely communication to see into each customer relationship.