In the beginning, there was STP. All in banking technology saw that STP was good and the desire for STP was great. So, STP begat ERP and then BPM. Meanwhile, unnoticed by the banktech crowd, CRM only slowly developed BPM so it too could deliver STP.

Whoa! Wait a minute. What are all these three letter words? And what do they have to do with trust company management?

The answer is that these are acronyms that have been rolling around banking technology circles for the past twenty-five years and understanding what they mean is the foundation for improving the scalability and operating efficiency of your trust company.

STP – Straight Through Processing

Let’s start with STP, which stands for Straight Through Processing. The basic idea underlying STP is that data should not be input twice and that paper and manual processes should be replaced with electronic communication and decisioning wherever possible. STP began to roll in the early 1990s, primarily in capital markets (especially trade settlement) and payments, and quickly spread to loan origination and processing. The benefits of straight through processing are clear-cut: less errors and reduced processing times produce greater operating efficiency and better customer service.

ERP – Enterprise Resource Planning

One manifestation of the idea underlying STP is ERP, or Enterprise Resource Management systems. Full-blown ERP systems are ambitious (overly ambitious?) attempts to share information completely across organizations, linking sales, production, purchasing, HR, accounting and other departments in one big electronic kumbaya hug. The 1990s also saw the first big push into ERP systems by firms like SAP, Oracle, and Baan. Massively expensive, difficult to implement, and often constricting in actual operation, they nonetheless conferred enough offsetting benefits that they gained traction, although less notably in financial services than in other industries.

BPM – Business Process Management

A less ambitious approach to improving financial processing efficiency comes through Business Process Management, or BPM. In general, BPM involves breaking a business process into its constituent parts and then re-engineering it to be more efficient. BPM is technically a business methodology, and we are more concerned with BPMS, or BPM Systems, the software developed to implement BPM. Business process management software can be stand-alone BPM tools that can be used across industries or processes or BPM tools can be included as part of a specific software solution. This latter aspect of BPMS is of more interest for financial technology and was introduced in the early/mid 2000s, especially in loan origination systems and trading middleware, both of which had various offerings incorporating drag-and-drop process design modules. Again, the intent with BPM is to improve efficiency by eliminating redundant steps and maximizing electronic sharing of information and handoffs from one group or system to the next.

CRM – Customer Relationship Management

Which brings us to CRM, or Customer Relationship Management, systems. For the elders amongst us, your circular rolodex, with stapled business cards to look up names and phone numbers, was your pre-computer CRM. With the advent of the business PC in the late 1980s, contact information migrated to Lotus 1-2-3 spreadsheets and to ACT!, the first widely used PC CRM system. In the 1990s, Siebel became the industry leader, followed by Salesforce, with its cloud-based approach in the late 2000s.

But something funny happened with CRM in banking and wealth management. Contact information was already stored in banking and broker core processing systems, so CRM did not see the same initial demand as in other industries. “We already have this information on file; we don’t need to duplicate it!”
Wealth management platform vendors like Thompson Reuters or Sungard did not really focus on delivering CRM functionality as part of their workstations and CRM is not really a priority even on modern advisor platforms like Folio Dynamix or Envestnet. For wealth management stations, the focus was on integrating trading and financial reporting along with return analytics; the technology stack addressing the customer life cycle began with the financial plan and initial presentation.

…a great CRM system should be more important in financial services than any other industry!

This is a more than a little odd; in financial services, as in any services industry, the relationship is part of the product. There is no handoff from sales to distribution as with a product company, the delivery of the “product” and its perceived value is intrinsically tied with the ongoing maintenance of the relationship. If anything, a great CRM system should be more important in financial services than any other industry!

It is not surprising, then, that a number of specialty CRM systems ultimately were developed and are available for wealth management. However, wealth management CRM systems are built with the retail financial advisor in mind—not for trust and fiduciary management.

This is a key difference and ties back to our discussion of STP and BPM, because the newest breed of CRM systems are built to deliver efficiency benefits via straight through processing and intelligent management of business processes—designed and built for specific industries. A CRM system today should not only be a sales and marketing tracking tool, it should serve as the central information and operating platform for an organization—and this is especially critical for financial services firm like trust companies or family offices.

The lowly CRM system has evolved into the mission-critical tool for effective trust company management by combining a single integrated information interface with BPM tools like automated workflows, approval processes, reviews, and task scheduling and management. To be done effectively requires deep domain expertise on the part of the CRM developer or consultant.

About the Author
Jim Marks, CEO, WealthHub Solutions

Jim has spent nearly 30 years working in financial technology, as an entrepreneur, equity analyst and investment banker. He started the first Wall Street practice covering fin tech in 1996 with Credit Suisse and his extensive writings on the intersection of financial services and technology have been cited in a wide variety of publications in the US and abroad. WealthHub Solutions is the leading provider of enterprise software for fiduciary management. WealthHub’s cloud-based platform for trust company administration helps trust companies and family offices improve efficiency and enhance compliance and reporting through intelligent automation.

Visit www.wealthhubsolutions.com for more information on CRM for fiduciary administration.

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