The Role of CRM Applications in Customer Acquisitions for Consumer Finance, Microfinance, and Fintech Providers

Published by Cubic Author

Posted on 25/07/2024

Introduction to CRM Applications in Financial Services

Recognizing the client’s needs and preferences and doing something to address them are crucial tasks in a for-profit business. Accordingly, a user-oriented approach, which pays a great deal of attention to the clients’ needs, the way clients would like to obtain services, how to keep and increase clients’ interest or satisfaction, and how to guarantee their well-being, should be of primary importance. As a consequence, managing customer data and tracking every single interaction is very important. The main focus of Customer Relationship Management (CRM) is to establish and maintain long-term and profitable customer relationships. A CRM system enables the exchange of actual customer and potential customer knowledge among employees within an organization, in order to service the customer and to provide a complete understanding of the customer’s expectations and clients’ satisfaction.

According to Paurav Shukla, the main objective of any business is to find and retain customers profitably. This is especially true of businesses that provide services – the more interaction that businesses or service providers have with clients, the better for the business. Every interaction provides an opportunity to keep track of the client’s needs and expectations, discover new needs and preferences, and increase the knowledge of the client in order to improve each client’s individual situation. In the service sector, following the voice of the client to improve the services and products that the client is buying is essential.

Benefits of CRM Applications for Customer Acquisitions

Our research provides companies with information that helps them work faster and better with the current market environment, providing a large percentage of the benefits commonly available to the early adopters. Furthermore, our research delivers insights that are the common background knowledge that can facilitate various projects including M&A transactions, where companies would like to identify potential partners or targets, predict profitability, accounting, or capability of the potential targets providing employee situation and support status, for example. Globally described, the outcomes of our work provide regulated entities such as microfinance providers to use, as non-regulated business, silence periods and roadmap-style marketing campaigns for attracting clients and raising funds for countering customer drop-off profound business model changes to allow for serving different client segments with different loan services, for example.

As software companies develop feature-rich CRM applications, which are becoming the trend for startups, adoption of these tools allows traditional consumer finance companies, including consumer microfinance and fintech service providers, to improve their sales processes and increase or accelerate their customer acquisition. In this chapter, we define CRM quantities or module outputs that matter for the businesses that operate in this industry segment and the value that working with CRM applications provides. We use use case methodology for presenting the value of these applications, focusing on business assets or on business liabilities workouts. We provide various use cases for the businesses of numerous industry segments and person roles.

Key Features and Functionality of CRM Applications for Financial Institutions

The CRM applications that are developed do cover most of the critical aspects of a business that interacts with the customer or client. They are not designed to purely automate the activities for the sake of speeding up the internal processes. In essence, these are sales force focused automation tools to help generate records as a result of customer/client interactions. The achieved objective is to formalize the listening to the customer process that concludes in being able to acquire new customers within acceptable risk levels. It is no surprise, then, that currently, CRM tools are mixed up with Sales Force Automation tools. In each and every interaction that involves the client with the financial institution, the sales aspect is either explicit or implied.

CRM applications have evolved over the last 20 years. They are no longer just contact databases. They provide significant functionality that consumer finance, microfinance, and fintech providers can utilize in order to successfully acquire clients. Currently, all the well-known CRM software vendors provide an enterprise CRM platform that offers both Sales Force Automation and Customer Service functionality among others, and also includes sector-specific financial services functionality. These platforms continue to provide the best chance for business readiness, but they might be more expensive and more complex to manage than solutions that are designed specifically for microfinance and digital finance providers.

Case Studies and Best Practices in CRM Implementation for Customer Acquisitions

The CRM concept being a strategy rather than a tool, it is essential to allocate resources and financial investment concretely within expectations for making its strategy succeed. Here, the case study and the best practice of the CRM of general B2C companies are drawn as a reference. Normal types of CRM include Customer Acquisition, Customer Retention, Customer Maintenance, and Customer Growth. It originally referred to one-to-one relationship management, but today it is likely to be used to mean building relationships with a large number of customers. Specifically, the context of the CRM of the general company is interrelated in the above four to do the purchase of the consumer repeatedly. However, these rights have only become the basis value of the CRM, which originally starts to take over for individual users’ PII (Personal Identifiable Information) and individual records of transactions.

The adequacy of the CRM applications plays an important role not only in consumer users’ purchase, but also in the effective use of some functions such as yield and risk management, marketing, and selling of products. So, consumer finance lends money to users, evaluates the creditworthiness of the user, and sells credit insurance for risk management. It also takes users’ electricity and phone bill payments as collection in the course of credit payback. Microfinance lends money to such poor user groups as farmers and women’s groups, and it also evaluates the creditworthiness of poor users. So, it recruits and establishes self-help groups using financial education of the users, which is important because it is required to select users. Fintech recently uses the latest technology such as AI, Blockchain, and the internet for Fintech service areas such as P2P lending, Robo Advisor, Mobile bank, and Cryptocurrency. And its marketing strategy is to prefer millennials individually with high-tech vision.

Future Trends and Innovations in CRM Applications for Financial Services

Cloud-based services are expected to accelerate the spread of CRM technology towards smaller organizations. SaaS will lessen the pressure and timelines from the internal IT department because instead of internal platforms and software being the focus of attention and control, CRM will be provided as a service from the already purchased cloud infrastructure. Blocks and Systems versus individual applications are expected to become the dominant trend. The “together” approach will help reduce the integration needs and make the CRM-based solutions almost an out-of-the-box setup proposition. Another trend concerning both physical and digital businesses is the expected total customer contact channel control. To dramatically increase the consumer’s contact channel control, digital processing is used in scripting highly predictable and volatile consumer contact procedures. In most service procedures, the customer will introduce self-service effectively by utilizing consumer-facing and back-end systems connected by both APIs and business-to-business workflows.

Several trends might shape the future of CRM applications in financial services. One of the expected trends is built-in artificial intelligence enhanced customer service. The organizations will spend less time and money training call center people and supervisors. AI will accommodate consumer needs and answer almost 100% of the routine consumer questions right away and will suggest the certain directions of solutions for more than 95% of advanced customer issues. Humans, unsupervised, will handle just serious compliant issues on a one-to-one or one-to-many communications basis. Over time, AI will evolve into intelligent learning systems which quickly search all potential sources of errors or issues and will suggest the most appropriate solution to the current or potential problem. CRM technology will evolve from a primary single transaction support to a stock market’s NEO specialist of the consumer’s identity and trust.