Financial services institutions worldwide spent over $5 billion on customer relationship management (CRM) technology in 2003 and investment will grow to $7.1 billion by 2008, according to research from TowerGroup.
The analyst firm predicts that CRM-related IT spending growth in commercial banks will continue to be healthy over the next four years with an expected compound annual growth rate for these technologies of 6.2 per cent. That's ahead of overall IT spending which is set to rise at 5.8 per cent for commercial banks globally.
Kathleen Khirallah, senior analyst at the retail banking practice at TowerGroup and author of the research, says "The race to acquire, retain, cross-sell and maximise the value of a customer base may have diminished in media visibility, but not in importance to financial institutions".
Tower argues that following a boom period in the 1990s, investment in CRM swung away from customer knowledge technology - such as customer data repositories, business intelligence and decision support systems - and toward customer interaction technologies, but the coordination of both areas is required for effective CRM.
The three major IT investment areas within commercial banks include customer knowledge technologies, which represent 6 per cent of total IT spending, customer interaction technologies, which represent approximately 40 per cent and core processing systems which takes up half of total IT investment.
"As long as banks expect that growth in their institution will occur organically, customer knowledge technologies for CRM will continue to garner IT investment", adds Khirallah.