By | February 9, 2018


During the last few years we have witnessed a continuing trend toward integration of the financial services industry. To offer customers a complete range of financial services, many banks and insurance companies merge, or launch collaborations for the joint distribution of their products. Examples of this development in German-speaking countries are the mergers of Dresdner Bank and Allianz insurance as well as that of Credit Suisse and Winterthur insurance.

On the other hand, the financial services industry is in the middle of a structural change, a

“deconstruction” of the value chain. Increasing competition and customer demands require com- panies to focus on core competencies in order to deliver better value for their customers.

Moreover, many companies are embarking on the concept of customer relationship man- agement (CRM) that has the potential for a positive impact on the cost–revenue ratio by align- ing the company with its customers and focusing resources on high-value customers.1 Although many companies have successfully implemented certain aspects of CRM, an integrated ap- proach to CRM in financial services alliances remains to be developed. Most alliances confine themselves to the joint distribution of products without an intensive exchange of knowledge about customers or the performance of sales, service, and marketing activities. According to The Economist, “Many CRM systems used by financial conglomerates cannot even tell whether a banking customer also has, say, a mortgage or a stock broking account with its various sub- sidiaries” (The  Economist 2003).

The research questions we want to answer with this paper are: What are the current challenges faced by CRM in financial services alliances and what are the reasons for these challenges? Having discovered that the challenges largely stem from the supporting information systems infrastructure, we want to answer the question, How can these challenges be addressed by focus- ing on the support of information systems?

Using case study research, we analyze five financial services companies that are part of differ- ent financial services alliances and present the discovered challenges and recommendations on how to address them.2 To further detail the recommendations and to illustrate how they can be set into action, we present a best-practice case study of MLP, a leading financial services alliance in Europe. This case study can serve as best-practice example for the design of CRM systems in such alliances.

The next section introduces the theoretical background to financial services alliances and cus- tomer relationship management. We also introduce the concept of business engineering as the analytical framework of our research. The third section delineates our research methodology, with the fourth section presenting the results and recommendations for the improvement of CRM in financial services alliances. In the fifth section we show how these recommendations can be realized by means of the MLP best-practice case study. Finally, we summarize our findings and present further research opportunities.


The Emergence of Financial Services Alliances

The major trends have led to the emergence of financial services alliances. First, customers increasingly demand a comprehensive coverage of their financial requirements. This forces fi- nancial services companies to offer customer support for every financial requirement, ranging from account management to life insurance and the granting of a home loan, realizing the idea of “one-stop finance,” which is also termed “bancassurance.” The integration of different financial services is often realized by specialized companies (relationship managers) that have direct con- tact to customers as distribution intermediaries (Figure 6.1) (Lehmann 2000).

Second, threats from new and aggressive market entrants (Knights et al. 1993) as well as constantly growing customer requirements force financial services companies to focus on core competencies (Prahalad and Hamel 1990) to remain competitive. This development has given rise to a deconstruction of the industry, with specialized companies or business divisions (product providers) focusing on the delivery of specific products and services.

Figure 6.1    Trends in the Development of Value Chains in the Financial Services Industry

Trend 3:

Outsourcing of transaction processing

Trend 2:

Disintegration on supply side

Trend 1:

Integration on customer side

Third, financial services companies increasingly outsource transaction processing to external

transaction processors in order to focus on their core competencies (The Economist, 2003).

To overcome the contrariness of these trends—especially of service integration and focusing on core competencies—networks consisting of relationship managers, product providers and trans- action processors have emerged (Hagel and Singer 1999; Heinrich and Leist 2002; Lehmann 2000). While each network company can focus on the delivery of a specific product or service, the objective of the entire network is to support customers in their specific customer processes (Österle 2001), for example, building a house, receiving an inheritance, or moving. These cus- tomer processes often require several financial services as well as additional nonfinancial ser- vices. For example, moving may require finding an appropriate house, a home loan to buy the house, and household insurance. The ultimate objective is to support customers in every single step of a customer process to ensure a true “one-stop” experience.

In this paper, we focus on the coordination challenges faced by relationship managers and product providers.

An Analytical Framework Based on Business Engineering

To structure our analysis of existing challenges in these networks, we use concepts from business engineering (BE) as our analytical framework. Business engineering is the transformation of enter- prises from the Industrial Age into the Information Age by means of procedure models, methods, and tools (Österle 1995). To control the transformation complexity, a division into several levels is often suggested (Ferstl and Sinz 1998; Scheer, 1995). Österle and Blessing (2002) propose three levels of business engineering: strategy, process, and system, each dealing with different business questions:

  • On the strategy level, decisions regarding the long-term development of an enterprise have to be made. This comprises decisions on strategic alliances, company structure, market ser- vices offered, customer segments addressed, and distribution channels.
  • Within processes, strategic decisions are implemented. A process produces a company’s services through the execution of a number of tasks with defined inputs and outputs. Ques-

tions to be answered in process development concern the planned process outputs, the opti- mal sequence and distribution of tasks, and process management.

  • The execution of processes is supported by information systems (IS) in the form of applica- tion software. The foundation for information systems is information technology (IT), con- sisting of hardware, networks, and operating systems software.


In this chapter, we describe the challenges facing CRM in financial services alliances on each business engineering level.

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