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Everybody talks about the Internet economy and the new economy. Another au courant buzzword making the rounds is "the customer economy.- It-s a term you will see on Web sites, in press releases and marketing materials underscoring that customers call the shots and the importance of building customer loyalty not only through products, but through superior service, content and advice. As financial service companies are learning, it-s a concept that-s easier said than done, but it-s a reality that-s compelling them to constantly redo their Web sites.

Our cover story explains the current thinking at several leading financial institutions embarking on building their second generation Web sites by focusing on 'the customer experience." See, ' Financial Institutions Get Down to the Nuts and Bolts of Web Site Creation," . Major investment firms like State Street Global Advisors and Barclays Global Investors are turning to focus groups and usability labs to test customer reactions. And they-d better. New third-party portals like MutualFunds.com are intent on disintermediating fund supermarkets like Charles Schwab-s OneSource, from their customers.

We hear all the time that brokerage houses are too transaction-oriented and that they need to pay more attention to relationships. Or, that financial services institutions (FSIs) are organized by products with information on customers stored in isolated silos (a.k.a. databases). With the walls coming down between securites, banking and insurance, FSIs are free to cross sell all products but much of their data is trapped in legacy systems. To be more customer centric, they must create a 'unified view" of the customer that captures and tracks customer preferences so they can personalize their sales. One popular category of software now is called 'customer relationship management" or CRM. While there are many definitions, the most basic is to help firms manage their customer interactions'whether that be voice (call center), e-mail, fax, or Web chat. Sounds reasonable but a financial services firm needs to install and integrate many components to track customer behavior across multiple channels and they musn-t underestimate voice. While dot.coms would like to turn all the calls into e-mails, in fact, the ratio of voice to e-mail volume is 10 to 1, notes John Jay Fruin, president of Leveraged Technology Inc.-s integration services.

CRM technology is so fragmented that one vendor told me he tracks 350 products, ranging from automatic call distributors and interactive voice response units, to e-mail response systems, contact management, Web chat, Web collaboration software, customer analytics, campaign management and marketing databases.

Because they need to go live quickly, start ups, especially dot.coms, are flocking to application service providers ASPs that can deliver CRM through a hosted-subscription based model, without requiring huge capital outlays. See, ' ASPs Adapt CRM to Financial Industry," . A number of ASPs specializing in CRM are emerging, along with the large horizontal players such as Oracle, PeopleSoft and Siebel, pursuing Fortune 1000 companies too. But many lack the domain expertise in financial services needed to customize the applications. So inevitably it-s up to the financial insitution and their systems integrators to figure this out.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio

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