CRM Vendor Options and Tools Proliferate for FSPs

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1 Markets, K. Collins Research Note 29 April 2003 CRM Vendor Options and Tools Proliferate for FSPs As customer relationship management solutions proliferate for financial services providers, cutting through vendor hype is key. Matching vendor solutions to the FSP's vision and CRM requirements are critical for selection success. Core Topic Financial Services: Financial Services Architectures and Emerging Technologies Key Issue Which traditional and emerging vendors and applications will meet FSPs' key operational and decision-support needs? Early customer relationship management (CRM) tools were cross-industry offerings from horizontal vendors. Recognizing that financial services providers (FSPs) preferred vendors that understood their industry and offered more industry-specific functionality, many vendors developed financial-servicestargeted marketing collateral and product demonstrations, and began to verticalize their solutions. The vendors began by leveraging financial services data models and, increasingly, are looking to incorporate financial services best practices, functions and business processes. Today, there are many CRM solutions for FSPs to consider. These come from a variety of origins, including the CRM suite vendors, front- and back-office financial services application vendors, CRM framework vendors, analytic providers and specialty vendors focused on niche markets (see Table 1 and "Which Style of CRM Application Is for You?"). Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Table 1 Vendors With Solutions for Financial Services Industry Sectors Solution Type Retail Finance Institutional Finance Wealth Management Life/Property and Casualty Insurance CRM and Enterprise Suite Front-Office Back-Office CRM Framework Analytic Amdocs, Onyx Software, PeopleSoft, Siebel Systems Argo Data, DWL, Harland, London Bridge, S1, Webtone Fidelity, Fiserv, Metavente, Iflex, Jack Henry, Systems Access, SAP, Temenos AIT, Chordiant, Eontec, Pegasystems E.piphany, Harte- Hanks, Nuedge, SAS, Teradata Onyx Software, PeopleSoft, Siebel Systems S1 SAP, SunGard Onyx Software, Siebel Systems Amdocs, Onyx Software, Oracle, PeopleSoft, Siebel Systems DWL SAP, SunGard J.D. Edwards J.D. Edwards AIT, Chordiant, Pegasystems E.piphany, SAS Institute, Teradata Specialty MarketSoft Interface Software Financial Profiles, Front Range MarketSoft Source: Gartner Research (April 2003) CRM and Enterprise Suite Vendors: These vendors offer solutions that contain CRM functionality across sales, service and marketing, although they are typically stronger on the operational CRM (such as sales and service) than analytical CRM (for example, marketing and analytics). Traditionally, these are cross-industry vendors that have varying degrees of verticalization in their solutions. Siebel Systems was one of the first vendors to develop a financial services CRM offering, and has the highest degree of verticalized CRM functionality of the CRM suite vendors (Siebel 7 Finance supports retail finance, insurance and institutional finance). Onyx Software has gained traction in the asset management space and, more recently, in banking/insurance. It has broadened its vision and solution for financial services. PeopleSoft is beginning to verticalize its capabilities, first around retail banking and insurance. Amdocs is well positioned to renew its focus on financial services through its recent acquisition of Xchange's assets by integrating it with its Clarify CRM solution (both had strong penetration in financial services). Oracle has a strong financial services client base with its data warehousing and finance solutions, but has yet to cross- 29 April

3 sell its CRM solutions. Other vendors include Pivotal, which focuses on the midmarket (see "CRM Suite Magic Quadrant 2003: Business-to-Consumer" and "CRM Suite Magic Quadrant 2003: Business-to-Business"). When to Consider: If your FSP is looking for depth in operational CRM functionality, but is not interested in replacing other frontoffice functionality; if your FSP has other CRM or non-crm solutions from the proposed vendor (such as data warehouse, corporate performance management, human resources). When to Consider Alternatives: If your FSP is looking for depth in analytical CRM or solutions that are more integrated with the front- and back-office financial services applications. Front-Office Application Vendors: These vendors have their origins in front-office financial services applications, such as online banking and branch automation. Their strengths are in integrating CRM functionality with front-office applications that support vertically focused sales and service business functions (such as loan origination, insurance rating/quoting). Given their financial services heritage, these solutions support good integration to back-end legacy systems. Their potential lies in multichannel integration and channel management, as well as expanding to support other industry sectors. These solutions have less depth in marketing and sales than the CRM suite providers. S1 and Webtone have their origins in Web channels and Internet banking. Through acquisition, they have acquired branch automation, improved marketing and analytics and expanded call center capabilities. Webtone offers an integrated CRM suite that has the potential to build on a its strong heritage and brand recognition with the Broadway and Seymour branch automation solution that Webtone acquired from SAIC, but has faced difficulties finding an enterprise buyer during tough economic times to effectively demonstrate its potential. S1 has many tactical and primarily small CRM implementations from its origins in the different acquired companies' solutions, but has just released an integrated CRM offering, S1 Enterprise. Harland has an established presence in the marketing area, particularly for midsize banks, but is extending its capabilities into the touchpoints with different solutions aimed at the midsize (Touche) and large (Encore) bank marketplace. DWL comes from an insurance application background but has developed DWL Customer, which pulls data together to create a 360-degree view of the customer and enable customer profiling. It is gaining traction in insurance and credit cards. Other vendors include Argo Data Resources and London Bridge. When to Consider: If your FSP is looking for an integrated frontoffice solution, a reduction in front-office applications, a vendor 29 April

4 with strong experience in legacy system integration or channelspecific applications. When to Consider Alternatives: If your FSP is looking for strong analytical CRM capabilities, greater depth in sales capabilities or prefers CRM solutions to front-office financial applications and their associated functions. Back-Office Application Vendors: These vendors include core system vendors and core processors that have developed CRM functionality for the front office to generate new revenue streams. The value proposition of these vendors' CRM solutions is the ability to leverage data that exists in core systems, providing back- to front-office integration with the ability to leverage realtime transaction streams. These vendors also have known expertise and experience in financial services markets. Although these solutions enable greater data access, they typically do not provide best-of-breed marketing and advanced analytic capabilities. In general, these vendors have struggled to have their CRM value propositions recognized by FSPs. Alltel Information Services, recently acquired by Fidelity, offers a CRM solution for large banks. Jack Henry provides two CRM solutions: for midmarket and large banks. Others in this space include Iflex, SunGard, Systems Access and Temenos. SAP, which has a CRM suite, core systems (banks and insurance) and ERP, offers the broadest potential for integrating CRM with other financial and enterprise applications. However, outside of Europe, SAP has not penetrated the financial services market with its enterprise solution. Similarly, Metavante and Fiserv have extended their capabilities to include CRM. Because these outsourcers process data for many large banks, these vendors are ideally situated to offer CRM solutions and services, particularly to regional banks with limited resources. The provision of effective CRM solutions can be a retention factor for these core-processing clients. Given the costs associated with data access by their bank clients, many midsize banks are turning to these providers for CRM solutions. Fiserv offers several CRM solutions through partnerships with Sedona and Doubleclick/Protagona for midsize FSPs, and through its data warehousing division InformEnt to larger FSPs. Metavante offers a CRM solution through its original equipment manufacturer partnership with Onyx (for contact management) and its recent partnership with Nuedge (marketing and analytics). When to Consider: If your FSP is using or considering using the vendor for core systems or core processing services, is looking for easy integration and has basic functionality requirements. When to Consider Alternatives: If your FSP is not using the vendor for core processing and has no desire to do so. 29 April

5 CRM Framework Vendors: These vendors provide a platform, typically Java 2 Platform, Enterprise Edition, from which to build CRM components. These solutions provide a middle-of-the-road approach between building in-house vs. buying a packaged application. Because there is 60 percent or greater customization of these solutions, they also enable FSPs to develop financial application components to integrate front- and back-office processes (such as loan origination or underwriting). As more FSPs evaluate the build vs. buy decision, FSPs can use these solutions to build more-customized yet open solutions with a quicker time to market, by leveraging the vendor as a partner and using its CRM components. Chordiant offers the capability to build CRM components and, unlike most of the CRM suite providers, is strong in the marketing area through its acquisition of Prime Response. It primarily focuses on retail financial services, with implementations in insurance and banking, with greater traction in Europe than North America. J.D. Edwards offers a similar capability, but focuses on the corporate financial services marketplace through its acquisition of YouCentric. To move effectively into the business-to-consumer financial services market, it will need stronger marketing and analytic capabilities. AIT's Microsoft-based solution Portrait offers a similar approach for retail FSPs (banking and insurance). It also has gained more traction in Europe than North America. AIT is struggling to overcome the effect of its financial woes and gain traction in the market. It has reorganized and committed to focusing on the financial services market. Other vendors include Eontec and Pegasystems. When to Consider: IfyourFSPistryingtomakeabuildvs.buy decision after finding no prepackaged solutions that meet its requirements. When to Consider Alternatives: If your FSP does not have the resources to support the building of its own solution, even in conjunction with a partner, or is looking for more than 40 percent of a solution "out of the box." Analytic Vendors: These vendors typically do not offer operational CRM modules, but come from a data warehousing or analytic perspective. They leverage financial services data models to create marketing and analytical CRM solutions that specifically target financial services. These also include peripheral but related analytic CRM applications, including customer profitability analysis, business intelligence and corporate performance management. SAS and Teradata are the two major vendors verticalizing CRM and related analytical solutions for financial services (banking and insurance). Teradata offers a profitability solution (Value Analyzer) and a business intelligence solution (Behavior Explorer), targeted to banks and 29 April

6 insurance companies, that complement its marketing solution and leverage its financial services data model. SAS offers its Banking Intelligence solution (insurance to follow) that combines industry-specific CRM analytics for credit scoring, retention and cross-selling, as well as with other industry-specific analytical capabilities. E.piphany is considered a CRM suite vendor; however, its heritage and strength comes from marketing and CRM analytic solutions. E.piphany just released a version of Interaction Advisor, which is focused on retail financial services to drive retention and cross-selling during inbound customer communication. Harte-Hanks has a solution for event triggering in banking. NuEdge has a strong solution focus on midmarket financial banks. Although other marketing automation vendors (such as Unica) have gained significant traction in financial services, they do not offer vertical-specific solutions. When to Consider: If your FSP is looking for vertical focus and strength in marketing and analytics, or the ability to seamlessly leverage these into customer interaction (E.piphany). When to Consider Alternatives: If your FSP is looking for an operational CRM solution or an integrated CRM suite (E.piphany is the exception, but consideration strongly depends on the customer's vision for such integration). Specialty Vendors: These vendors focus on one functional area, such as marketing, sales or service (most of these are not industry-specific), or a specific financial services sector. There are many niche CRM solutions on the market that focus on key financial services sectors, such as high-end investment, including wealth management. For example, Interface Software offers a business-to-business CRM solution Interaction 5 that provides relationship intelligence and is well-suited for the highend investment industry. Financial Profiles and Front Range Solutions target CRM solutions for the wealth-management arena. Other specialty vendors focus on improving or linking cross-functional business processes. For example, MarketSoft offers a lead-management solution that supports high-value business processes for customer retention and cross-selling in financial services. When to Consider: If your FSP is looking for specific solutions that offer a good fit for the specific capabilities required in the targeted sector. When to Consider Alternatives: If your FSP is looking for a broader solution set that can be used in multiple lines of business. 29 April

7 Gartner believes that more vendors will enter the financial services CRM market, particularly in underserved markets outside of retail finance, such as insurance, investments and institutional finance. Bottom Line: As more financial services customer relationship management solutions become available, due diligence regarding solution selection becomes increasingly important. Vendors are not created equal and one size does not fit all. Financial services providers should choose vendors whose solutions match their corporate vision and business models (such as retail or institutional), and support included lines of business (for example, banking, mortgage, insurance, investment, credit card). Vendors selected should provide the best "cultural" fit, balancing risk tolerance, available resources, IT requirements and needed functionality. Doing so will significantly lower the potential for CRM failure and enable the FSP to more-effectively leverage these solutions to support corporate business goals. 29 April