VSRD International Journal of Business and Management Research, Vol. 3 No.

6 June 2013 / 253

e-ISSN : 2231-248X, p-ISSN : 2319-2194 VSRD International Journals : www.vsrdjournals.com
RESEARCH COMMUNICATION
CUSTOMER RELATIONSHIP MANAGEMENT IN BANKS
1
Yatish Joshi* and
2
Ehtesham Ahmad
1
Assistant Professor, Department of Management Studies, SRMSWCET, Bareilly, Uttar Pradesh, INDIA.
2
Associate Professor, Department of Commerce, VRAL PG Govt. Girls College, Bareilly, Uttar Pradesh, INDIA.
*Corresponding Author : yatish.joshi24@gmail.com
ABSTRACT
In Todays era, many businesses such as banks, insurance companies, NBFCS and other service providers realize the importance of
Customer Relationship Management (CRM) and its potential to help them acquire new customers, retaining existing ones and maximize
the customer lifetime value. It is a business strategy that enables delineation of an increase in customer value and correct means by which
to increase customer value and motivate valuable customers to remain loyal indeed and buy again.. In todays business environment
banking industry is facing intense competition from existing as well as from new players.CRM enables Banking professionals to identify
high net worth customers who bring more benefits. This paper defines basic concepts, strategies used in managing customer relationship by
using the branch service, ATMs, electronic banking, call centers. Phone banking and other customer touch points.
Keywords : Customer Relationship Management, Customer-centric, Competition, Deregulation.

1. INTRODUCTION
The CRM is an overall business strategy. CRM is an
integrated business approach that connects back office and
front office, uniting them into a single entity for the benefit
of the customer. Different and unrelated functions like sales
force automation, inventory Management, customer
services, sales and after-sales support come together for a
common Cause customer satisfaction.
CRM is a philosophy that places the customer at the center
of an organization's processes, activities and culture to
improve his satisfaction levels and, in turn, maximize
profits for the organization.CRM stands for customer
relationship management and helps the management to deal
with customer concerns and issues. Different Banking
Services and products like "Anywhere Banking" "Phone-
Banking" "Electronic banking" etc. are most commonly
used by the customers now a days and the banks are trying
to offer innovative and convenient technology-based
services to their customers. Simultaneously, CRM helps in
maintaining customer database and providing better
services. The use of CRM in banking has gained
importance with the aggressive approaches used for
customer acquisition and retention by the bank in todays
competitive era. It has resulted in the adoption of various
CRM initiatives by these banks. There is a shift from bank
centric activities to customer centric activities. The private
sector banks in India deployed much innovative strategies
to attract new customers and to retain existing customers.
Banking is the process associated with the activities of
banks; it includes various activities like issuance of cheque
and cards, monthly statements, online and mobile banking
etc. CRM involves gathering of customer data, and then
using it to facilitate customer service transactions by
making the needed information available to resolve the
specific issue and concern of the customers. This results in
more satisfied customers, a more profitable business and
more resources available to the support staff. Some recent
CRM packages integrate the speech-enabled specific
application functions which embrace customer support,
order management and sales force automation or modules
within individual applications. These products are provided
by companies such as Siebel system, Oracle, and SAP.
CRM in banking industry entirely different from other
sectors, because banking industry purely related to financial
services, which needs to create the trust among the people.
Establishing customer care support during on and off
official hours, making timely information about interest
payments, maturity of time deposit, issuing credit and debit
cum ATM card, creating awareness regarding online and e-
banking, adopting mobile request etc are required to keep
regular relationship with customers. This paper deals with
the role of CRM in banking sector and the need for it is to
increase customer value by using some analytical methods
in CRM applications.
2. TYPES OF CRM
Generally , three types of CRM are adopted by banks:
(1) Operation CRM In this, CRM software packages are
used to track and efficiently organise inbound and outbound
interactions with customers including the management of
marketing campaigns and call centres. Operational CRM
supports frontline processes in sales, marketing and
customer service, automating communications and
interactions with the customers.
(2) Analytical CRM It is about analyzing customer
information to better address marketing and customer
service objectives and deliver the right message to the right
customer at the right time through the right channel. It
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involves the use of data analysis to extract knowledge for
optimizing customer relationships.
(3) Collaborative CRM - These involve systems
facilitating customers to perform services on their own
through a variety of communication and interactive
channels.
3. NEED FOR CUSTOMER RELATIONSHIP
MANAGEMENT
The important factors that establish the need for CRM in
the Banking Industry are detailed below:
Intense Competition : There is intense competition among
the Private Sector Banks, Public Sector Banks and Foreign
Banks and they are all taking steps to attract and retain the
customers. New technologies, research facilities,
globalization of services, the flood of new products and the
concept of all the facilities under one roof to provide better
customer service leading to customer delight.
Well Informed Customers : The Customers in Banking
Industry today are well informed. With the introduction of
new technology, the world has become like a small village.
Thus, if a Bank wants to have more customers, it should
develop a good relationship with its present customers and
try to maintain the same in the future also.
Declining Brand Loyalty : In the present scenario, brand
loyalty is on decline. The customers are switching over
frequently to avail the better facilities from other banks.
Newer and superior products and services are being
introduced continuously in the market. Thus, the banks
have to upgrade their products, improve customer service
and create bonds of trusts through proper care of customer
needs and regular communications. With the help of CRM,
strong customer loyalty and a good image for the
organization can be developed.
Improved Customer Retention : In the intensely
competitive banking industry, retention of existing
customers is vital, which can be achieved through the
process of CRM.
The Generic Constitutes of CRM are :





1. Customer Acquisition : It can be considered the
connectivity between advertising and customer relationship
management. This critical connectivity facilitates the
acquisition of targeted customers in an effective fashion
2. Customer Retention : Customer retention is more than
giving the customer what they expect; its about exceeding
their expectations so that they become loyal advocates for
your brand.
3. Customer Value : A customer value proposition is a
business or marketing statement that describes why a
customer should buy a product or use a service. It is
specifically targeted towards potential customers rather than
other constituent groups such as employees, partners or
suppliers.
4. CRMS BENEFITS TO THE BANKING
INDUSTRY
Benefits of CRM can be categorized into three groups
namely: Benefits for customers, benefits for employees and
benefits for banks.
Benefits for Customers
Coordinated and professional approach to customer
contact.
Up-to-date customer information, Banks can offer
more personalized services.
Customers feel empowered if they have greater access
to products and services. For example 24 hours
banking.
Targeted product and service offerings can be timed to
coincide with customer events and requirements e.g.,
Education Loans and Tourism Loans.
Develop better communication channels.
Collect vital data, like customer details and order
histories
Create detailed profiles such as customer preferences
Deliver instant, company-wide access to customer
histories
Identify new selling opportunities
Benefits for Employees
Employees are empowered with the information to
deliver high quality service and meet customer
expectations.
CUSTOMER
ACQUISTION
CUSTOMER
VALUE
CUSTOMER
RETENTION
Yatish Joshi and Ehtesham Ahmad VSRDIJBMR, Vol. III (VI), June 2013 / 255


Employees have more time to serve customers.
Employees have higher satisfaction ratings.
Benefits for Banks
Managers are empowered with information that can
help them manage customer relationships and make
better decisions.
Optimum use of bank resources.
Customer satisfaction and increased loyalty.
CRM permits businesses to leverage information from
their databases to achieve customer retention and to
cross-sell new products and services to existing
customers
It helps in capitalizing on short windows of
opportunities in the market.
Significant reduction in and limitation of operational
costs through system automation and standardization.
5. SUCCESS FACTORS FOR CRM
It is quite necessary to consider the following factors for
successful implementation of CRM in banking industry
To motivate customers to initiate revenue generating
contacts. To understand customers needs even before
themselves. To decrease customer churn by increasing
customers satisfaction.
To use technology to improve customers service
enables a greater degree of customer differentiation in
order to deliver unique customer interaction.
To make customer and employee friendly through
CRM.
To ensure that employees at all levels are accurately
collecting the information of the CRM system.
6. IMPLEMENTING AND INTEGRATING
CRM SOLUTIONS
Several CRM software packages exist that can help tourism
companies in deploying CRM activities. Besides choosing a
package according to their sustainability, Tourism
Company can choose to design and build their own
solutions. To implement CRM in an effective way, one
needs to consider the principle of CADRT.
Creating a customer- based culture in the organization.
Adopting customer based managers assess
satisfactory.
Developing an end to end process to serve customers.
Recommend to solve the answers of question.
Tracking all forms of selling the services to the
customers.
Issues Related To Changing Banking Industry :
Technology was the nucleus of CRM strategies few years
ago. The technology was new, sophisticated and very
difficult to manage. Now it is evolving to a commodity
piece within CRM strategies. Some issues related to
changing banking industry are:
Integration of different systems- The integration of
different systems such as customer data and product
data has improved dramatically. Due to lack of channel
data and the dispersion of channel responsibilities
throughout the organization, most financial institutions
develop channel strategies and manage their channels
poorly and in an uncoordinated fashion. This leads to
sub-optimal resource allocation and poor customer
management. Leading banks have realized this problem
and are addressing this aggressively. The whole area of
integrated channel management which is tightly
coupled with CRM will rapidly evolve to higher levels
of sophistication.
Usage of multi-channel by customers- Multi-channel
customers having real-time interface is a buzzword.
The First, customers use different channels to go to
their bank such as the branch, self service machines,
the service center or the internet, CRM goes multi-
channel. Second, in addition to cross selling, the
processes of client retention and improvements in
client loyalty are getting more important. Firms have
been slow to adopt due to the greater complexity of the
relationships and number of touch-points.
Branding- CRM will contribute more to branding. Not
just ROI on every contact will be leading, but the way
customers want to be perceived as a brand will become
more important. Lot of effort is put on being there at
customers' moments-of-truth.
7. CONCLUSION
With intensifying competition threatening banks revenues
and putting downward Pressure on operating margins and
profits, retail banks are facing increasing pressure to
Increase their growth rate. They are using CRM as a Main
tool for this purpose.
The domain of CRM helps into many areas of banking.
Including strategic decision making, marketing and selling
financial products, helping banking industry to enable its
marketing to identify and target their best customers,
managing market campaigns and generating quality leads.
Technology-enabled improvements and a desire to improve
earnings stability have led many banks to enter new
markets (global and national) driving increased competition
in local markets by the adoption of new technology. Local
competition includes remote banks and nonbank
competitors. This, combined with a growing appetite for
customization and personalization, is driving the need to
constantly transform applications and offerings to meet new
competition and changing customer preferences,
expectations, and needs. However, technology is always
changing and improving, and banks typically and
desperately adapt in order to keep their customer base.
When there is a change in the solution within a bank policy,
it affects the interaction of other solutions being used within
the same bank. Therefore, to take full advantage of these
ever changing solutions, the bank must act to make sure it
has full access to information between each solution.
Yatish Joshi and Ehtesham Ahmad VSRDIJBMR, Vol. III (VI), June 2013 / 256


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