Investment in customer relationship management technologies by retail financial institutions will drive healthy growth through 2005, according to research from the retail banking service of the TowerGroup.
Financial institutions will take a front seat in spending on CRM-related information technology, driving an expected compound annual growth rate of 6 percent for the category between 2001 and 2005, according to the study. The study is titled “CRM IT Spending: What Are Retail Financial Services Institutions in North America Spending on Customer Knowledge Technologies?”
TowerGroup estimates that IT spending on the customer knowledge side of CRM — which includes data warehousing, analytics and knowledge distribution — will be $4.3 billion worldwide for 2001. Just over half of that will be spent in North America.
The study also found that while knowledge distribution technologies now account for just 19 percent of the customer knowledge area, they would experience the most rapid growth, 7.8 percent, through 2005.
Finally, the study found that while CRM investments typically have been focused among large retail financial institutions, more small and mid-sized institutions are expected to pursue CRM business strategies in the next few years.
“Until recently, CRM has been the province of very large banks. In the minds of many retail executives, CRM was equated with a major technology expenditure,” said Kathleen Khirallah, a senior analyst in the Needham, MA, firm's retail banking practice. “We're now seeing the beginnings of a change in perspective. Across North America, retail financial services executives are realizing that CRM is far more than technology — it also encompasses business processes and people.”