Customer Relationship Management in Banks

CHAPTER – 1

CUSTOMER RELATIONSHIP MANAGEMENT
INTRODUCTION TO CRM

1.1 1.2 1.3 1.4

Introduction Meaning and Definition Objective of CRM CRM Architecture

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Customer Relationship Management in Banks

1.1 INTRODUCTION

CRM, or Customer relationship management, is a number of strategies and technologies that are used to build stronger relationships between companies and their customers. A company will store information that is related to their customers, and they will spend time analyzing it so that it can be used for this purpose. Some of the methods connected with CRM are automated, and the purpose of this is to create marketing strategies which are targeted towards specific customers. The strategies used will be dependent on the information that is contained within the system. Customer relationship management is commonly used by corporations, and they will focus on maintaining a strong relationship with their clients.

There are a number of reasons why CRM has become so important in the last 10 years. The competition in the global market has become highly competitive, and it has become easier for customers to switch companies if they are not happy with the service they receive. One of the primary goals of CRM is to maintain clients. When it is used effectively, a company will be able to build a relationship with their customers that can last a lifetime. Customer relationship management tools will generally come in the form

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Customer Relationship Management in Banks of software. Each software program may vary in the way it approaches CRM. It is important to realize that CRM is more than just a technology. Customer relationship management could be better defined as being a methodology, an approach that a company will use to achieve their goals. It should be directly connected to the philosophy of the company. It must guide all of its policies, and it must be an important part of customer service and marketing. If this is not done, the CRM system will become a failure. There are a number of things the ideal CRM system should have. It should allow the company to find the factors that interest their customers the most. A company must realize that it is impossible for them to succeed if they do not cater to the desires and needs of their customers. Customer relationship management is a powerful system that will allow them to do this. It is also important for the CRM system to foster a philosophy that is oriented towards the customers. While this may sound like common sense, there are a sizeable number of companies that have failed to do it, and their businesses suffered as a result. With CRM, the customer is always right, and they are the most important factor in the success of the company. It is also important for the company to use measures that are dependent on their customers. This will greatly tip the odds of success in their favor. While CRM should not be viewed as a technology, it is important to realize that there are end to end processes that must be created so that customers can be properly served. In many cases, these processes will use computers and software. Customer support is directly connected to CRM. If a company fails to provide quality customer support, they have also failed with their CRM system. When a customer makes complaints, they must be handled quickly and efficiently. The company should also seek to make sure those mistakes are not repeated. When sales are made, they should

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Each one of these elements are critical for the success of a CRM system. 4 . As more businesses continue to compete on a global level. The operational aspect of the architecture deals with the concept of making certain processes automated. The analytical aspect of CRM architecture deals with analyzing customer information and using if for business intelligence purposes. The architecture of CRM can be broken down into three categories. The collaborative aspect of CRM deals with communication between companies and their clients. it will become more important for them to use successful Customer relationship management techniques. and these are collaborative. operational. It is also important to understand the architecture of Customer relationship management. and analytical.Customer Relationship Management in Banks be tracked so that the company can analyze them from various aspects. and when they do this proficiently. they will be able to build strong customer relationships and ensure their profits for a long period of time. A company must learn how to use all three properly.

Customer Relationship Management in Banks CRM OVERVIEW 5 .

development. maintenance and optimization of long-term mutually valuable relationships between consumers and the organizations.Customer Relationship Management in Banks 1. people. and developing existing customer relationships in addition to creating and keeping new customers. communicating.” 6 . technology and business processes. and delivering. DEFINITION OF CRM “Customer Relationship Management (CRM) is a co-ordinate approach to the selling process allowing the various operational.2 MEANING OF CRM Customer Relationship Management is the establishment. Successful customer relationship management focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization's strategy. customer contact and sales promotional functions of an organization to function as a whole. It is about creating a sustainable competitive advantage by being the best at understanding. At the heart of a perfect CRM strategy is the creation of mutual value for all the parties involved in the business process.

etc.3 GOALS OF CRM can be a costly undertaking. hiring. Customer retention and brand loyalty is absolutely essential to ensure success. Customer service is the pivotal point around which CRM revolves. Despite the fact that industries have different business aspects they share some common CRM goals. Implementing customer relationship management Organizations spend a lot of money scrutinizing vendors. consultant. training employees. Undoubtedly it is far harder to gain a new customer than to actually keep one.Customer Relationship Management in Banks 1. buying the right CRM software. This is by far one of the most essential goals of customer relationship management. This objective cannot be achieved with the help of a few employees only. Customers need to feel that they have received excellent service. This ensures their continued patronage.For this task it is essential that the whole organization realize that they play a part in this goal. Some of the Commonly Established CRM Objectives are as follows: 1) Increase in Customer Service : Establishing customer loyalty as one of your top CRM goals is absolutely fundamental to CRM successful implementation . 7 . The only way in which a company can actually measure its success is if it establishes CRM goals prior to the implementation as in this way it is able to determine whether or not it has successfully implemented CRM.

If this is fixated as one of the goals of CRM. This is almost always adopted by every organization. This goal should be clearly established and conveyed to all those involved in the CRM implementation process. It is necessitated by the fact that increase in efficiency is required to boost success. If cost reduction is management's objective then the CRM implementation should be carried out in such a way that this is achieved. 4) Aiding the Marketing Department: Another goal of CRM is generally aiding the marketing department in all its efforts. CRM achieves this through cost reduction and customer retention. CRM manages to reduce operating costs through a workforce management system. Throughout the process maximum reduction in costs should be adhered to in order to meet this particular CRM goal. Adequate CRM training achieves this goal. sales promotions etc. This goal is fundamental as it boosts sales indirectly thereby increasing the profitability. This includes marketing campaigns.Customer Relationship Management in Banks 2) Increasing Efficiency: One of the most important goals of CRM is the increase in organization efficiency and effectiveness. This helps to maximize skills and thus reduce cost. 8 . 3) Lowering Operating Costs: CRM goals also include the reduction of costs of operation. These reduced costs enable an organization to achieve greater efficiency. then it should be communicated to those involved.

Each plays an important role in Customer relationship management and a company that wants to success must understand the importance of using these three components successfully. and these are operational.4 CRM ARCHITECTURE Customer Relationship Management (CRM) is an information industry term for methodologies. and customer service reps can access information. know what other products a customer had purchased. When a connection is made to a customer. and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner. This database describes relationships in sufficient detail so that management. Examples of business processes that are connected to operational CRM are marketing and sales. and Sale force automation.Customer Relationship Management in Banks 1. salespeople. software. The Enterprise marketing automation will give the company 9 . remind customers of service requirements. an enterprise builds a database about its customers. and analytical. match customer needs with product plans and offerings. etc The Customer relationship management architecture can be broken down into three categories. the information related to this interaction will be automatically stored in a database. collaborative.  OPERATIONAL CRM Operational CRM deals with the automation of certain business processes. Customer service automation. These components are Enterprise marketing automation. Operational CRM can further be broken down into three components. In many cases. and the company can pull up specific information on that customer when it is needed.

In addition to building stronger relationships with customers. By enhancing its customer service capability. Analytical CRM can also be used to provide important information to customers within a short period of time. Customer service and support will automate specific processes that are connected to service. There are a number of common ways that Analytical CRM is used to achieve this. 10 . As the name suggests. As the name implies. a company will build a stronger relationship with its customers.  ANALYTICAL CRM The next important part of CRM architecture is Analytical CRM. Analytical CRM can be an important tool for fraud prevention and detection. This data will be analyzed so that the company can enhance its customer service capabilities. An example of this could be item returns or customer complaints. the customer service representative can provide them with relevant information. Once the customer makes a call. Many companies will also automate processes such as allowing customers to access their accounts. and it will also provide them with crucial data on their competitors. Enterprise marketing automation deals with strategies a company can use to strengthen their marketing tactics. A number of corporations will use call centers to store data on their customers. customer needs.Customer Relationship Management in Banks information about the business climate. Analytical CRM deals with analyzing data that is collected by the company. as will as trends within the industry and other important variables. and accounting management. Sales force automation will be responsible for automating some of the company's sales task An example of tasks that SFA would automate is demographics. A number of companies will use the data they've collected and analyzed to cross-sell products to their customers. as well as retaining customers that may normally switch to another company.

The goal of CRM is to find out what customers need. a company can become highly successful.  COLLABORATIVE CRM The third important aspect of CRM architecture is Collaborative CRM. The company may need to alter its strategies or methods based on the information that is analyzed through this process. Once a company is making interactions with their customers. It will also be responsible for providing services over the Internet so that the costs of the service can be reduced. or they could come through mediums such as the telephone or the Internet. When interactions are made with customers. It is important to realize that Analytical CRM is an ongoing process. inventory. This information can be used to strengthen interactions. 11 . and to make sure those needs are filled. and profits in order to find any patterns that are not consistent. Collaborative CRM will allow the company to provide them with useful information. Collaborative CRM is important because it places an emphasis on the interactions that a company will make with its customers.Customer Relationship Management in Banks It can analyze the patterns of sales. When this done. Analytical CRM is also important when it comes to both product development and risk management. At the highest level. These interactions could be personal. CRM should be an important part of all interactions that a company makes with its customers. they can collect and analyze information. Collaborative CRM will give companies a powerful form of communication that will utilize multiple technologies.

Customer Relationship Management in Banks CRM ARCHITECTURE 12 .

3 Need of CRM in banks 2.Customer Relationship Management in Banks CHAPTER .2 Objective of CRM in banks 2.2 CUSTOMER RELATIONSHIP MANAGEMENT IN BANKS 2.4 CRM Strategies 13 .1 Introduction 2.

and given the extended offerings from the competitors.Customer Relationship Management in Banks 2. while technology has also reduced barriers to entry for new customers. customers can easily switch banks. marketing. CRM--A POWERFUL TOOL CRM is a powerful management tool that can be used to exploit sales potential and maximize the value of the customer to the bank. keeping existing customers. This strategy may not increase a business's profit today or tomorrow. Banks need to leverage effectively on their customer relationships and make better use of customer information across the institution. as well as attracting new ones. Poor customer satisfaction will lead to a decline in customer loyalty. customers have more power in deciding their bank of choice.1 INTRODUCTION Today. Customer satisfaction is an important variable in evaluation and control in a bank marketing management. is a critical concern for banks. owing to events such as technology changes and financial industry deregulation. IT and accounting. CRM integrates various components of a business such as sales. Generally. Competition in the financial services industry has intensified in recent years. Many bank customers prefer using ATMs or a website rather than visiting a branch. Consequently. 14 . but it will add customer loyalty to the business. Conventional banking distribution has been gradually supplemented by the emerging use of electronic banking.

identify new customers and increase customer revenues. For instance. Although CRM is known to be a relatively new method in managing customer loyalty. With this. The next stage is to look into the different methods customers' information are gathered. Banks can use this asset and turn it into key competitive advantage by retaining those customers who represent the highest lifetime value and profitability. CRM produces continuous scrutiny of the bank's business relationship with the customer. Banks can develop customer 15 . make call centres more efficient. banks may keep track of a customer's life stages in order to market appropriate banking products. emails. banks may interact with customers in a countless ways via mails. where and how this data is stored and how it is currently being used. CRM AND BANKS One of the banks' greatest assets is their knowledge of their customers. it has been used previously by retail businesses for many years. a business can hope to achieve better customer service. As an example. marketing and advertising. thereby increasing the value of the Customer’s business. such as mortgages or credit cards to their customers at the appropriate time. cross-sell products more effectively. Business analysts can then browse through the data to obtain an indepth view of each customer and identify areas where better services are required.Customer Relationship Management in Banks In the long term. simplify marketing and sales processes. The core objective of modern CRM methodology is to help businesses to use technology and human resources to gain a better view of customer behavior. The collected data may flow between operational systems (such as sales and stock systems) and analytical systems that can help sort through these records to identify patterns. call centres.

call centres will evolve to encompass more than just cost reduction and improved efficiency.But to be successful. banks have invested heavily in CRM. which. electronic banking and call centres. internet. Over the years.Customer Relationship Management in Banks relationships across a broad spectrum of touch points such as at bank branches. It needs a comprehensive CRM strategy in which all departments within the bank are integrated. a bank needs more than the ability to handle customer service calls. especially in developing call centres. kiosks. According to Gartner Group. In future. were designed to improve the process of inbound calls. more than 80 per cent of all US banks will develop their call centres as alternative delivery channels and revenue centres. to be used for the delivery of existing products and services. 16 . ATMs. CRM is not a new phenomenon in the industry. in the past.

enables the banks to analyze the behavior of customers and their value. relationship. The basic steps are: • • • • Attracting present and new customers Acquiring new customers Serving the customers Finally. the technology. retaining the customers In today's increasingly competitive environment. and the management of relationship and the main objectives to implement CRM in the business strategy are: • • • • To simplify marketing and sales process To make call centers more efficient To provide better customer service To discover new customers and increase customer revenue To cross sell products more effectively • • The CRM processes should fully support the basic steps of customer life cycle. To build this momentum banks are focusing on Customer relationship management initiatives to improve • Customer satisfaction and loyalty 17 .Customer Relationship Management in Banks 2.2 OBJECTIVES OF CRM IN BANKS CRM. along with human resources of the banks. maximizing organic growth through sales momentum has become a priority for Banks and Financial institutions. The main areas of focus are as the name suggests: customer.

the organization must look into all of the different ways information about customers comes into a business. For example. and increase customer revenues . for instance. discover new customers. simplify marketing and sales processes. If it works as hoped. where and how this data is stored and how it is currently used.It doesn't happen by simply buying software and installing it. This collected data flows between operational systems (like sales and inventory systems) and analytical systems that can help sort through these records for 18 . Next. For CRM to be truly effective. an organization must first decide what kind of customer information it is looking for and it must decide what it intends to do with that information. help sales staff close deals faster. brick-and-mortar stores. a business can: provide better customer service. mobile sales force staff and marketing and advertising efforts. make call centers more efficient . cross sell products more effectively. call centers. One company. many financial institutions keep track of customers' life stages in order to market appropriate banking products like mortgages or IRAs to them at the right time to fit their needs. Solid CRM systems link up each of these points.Customer Relationship Management in Banks • • • • • Customer insight/ 360º view of customer Speed to market for products and service Increase products-to-customer ratio Improve up sales and cross sales Capitalizing on New market opportunities The idea of CRM is that it helps businesses use technology and human resources gain insight into the behavior of customers and the value of those customers. may interact with customers in a myriad of different ways including mail campaigns. Web sites.

7) Demographic data. In CRM projects.Customer Relationship Management in Banks patterns. following data should be collected to run process engine: 1) Responses to campaigns. 6) Service and support records. Company analysts can then comb through the data to obtain a holistic view of each customer and pinpoint areas where better services are needed. 4) Account information. 2) Shipping and fulfillment dates. 3) Sales and purchase data. 8) Web sales data. 19 . 5) Web registration data.

helping the customers to avail online and mobile banking etc. ensure that the customer gets what he wishes from service provider and understand when they are not satisfied and might leave the service provider and act accordingly.3 NEED OF CRM IN BANKS Bank merely an organization it accepts deposits and lends money to the needy persons. Banks are aiming to increase customer profitability with any customer retention. In banking sector. but banking is the process associated with the activities of banks. timely announcement of new services. ensure that the customer such as how to fund the customer. Huge growth of customer relationship management is predicted in the banking sector over the next few years. It includes issuance of cheque and cards. get to know the customer. 20 . relationship management could be defined as having and acting upon deeper knowledge about the customer.Customer Relationship Management in Banks 2. 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. It is a sound business strategy to identify the bank’s most profitable customers and prospects. discretionary decision making. monthly statements. pricing. and devotes time and attention to expanding account relationships with those customers through individualized marketing. keep in tough with the customer.

creating awareness regarding online and e-banking. STEP TO FOLLOW 21 . issuing credit and debit cum ATM card. The use of CRM in banking has gained importance with the aggressive strategies for customer acquisition and retention being employed by the bank in today’s competitive milieu. making timely information about interest payments. maturity of time deposit. This has resulted in the adoption of various CRM initiatives by these banks.Customer Relationship Management in Banks CRM in banking industry entirely different from other sectors. The present day CRM includes developing customer base. The bank has to pay adequate attention to increase customer base by all means. the existing clients can recommend others to have banking connection with the bank he is operating. If the base increased. it is possible if the performance is at satisfactory level. because banking industry purely related to financial services. Hence the bank has to implement lot of innovative CRM to capture and retain the customers. Establishing customer care support during on and off official hours. which needs to create the trust among the people. the profitability is also increase. it is the time for taking ideas from customers to enrich its service. Hence asking reference from the existing customers can develop theirclient base. CRM in banking sector is still in evolutionary stage. The private sector banks in India deployed much innovative strategies to attract new customers and to retain existing customers. There is a shift from bank centric activities to customer centric activities are opted. adopting mobile request etc are required to keep regular relationship with customers.

maintaining and enhancing customer relationship in multi service organizations. 2. CRM goes beyond the transactional exchange and enables the marketer to estimate the customer’s sentiments and buying intentions so that the customer can be provided with products and services before the starts demanding.4 CRM STRATEGIES 22 . Customers are the backbone of any kind of business activities. These are:  Identification of proper CRM initiatives  Implementing adequate technologies in order to assist CRM initiative  Setting standards (targets) for each initiative and each person involved in that circle  Evaluating actual performance with the standard or benchmark  Taking corrective actions to improve deviations. maintaining relationship with them yield better result.Customer Relationship Management in Banks The following steps minimize the work regarding adoption of CRM strategy. if any Customer Relationship Management is concerned with attracting.

Customer Relationship Management in Banks This is a new way of thinking for many banks with thousands. anticipating future buying patterns and finding new opportunities to add value to the relationship. Customer Behavior Patterns For example. and to anticipate their needs. The patterns of customer behavior and attitude derived from this information enable the banks to effectively segment customers on predetermined criteria. even millions of customers. These organizations use data warehousing and data mining technologies to learn from the millions of transactions and interactions with their customers. Detailed customer data can provide answers to the following questions: • Which communication channel do they prefer? 23 . early beneficiaries of successful CRM strategies have been the banks. Managing customer relationships successfully means learning about the habits and needs of your customers. in the financial sector.

When information is disparate and fragmented.Customer Relationship Management in Banks • • What would be the risk of leaving the bank to go to the competition? What is the probability the customer will buy a service or product? This knowledge assists financial institutions with CRM solutions in place to develop marketing programs that respond to each customer segment. and the nature of their associations or relationships. The creation and execution of a successful CRM strategy depends on close examination and rationalization of the relationship between an organization’s vision and 24 . Another company may be very good at targeting profitable customers. CRM applications provide functionality to enhance customer interactions. support crossselling and customer retention programs and enables the staff to understand how to maximize the value of each customer’s interaction. This also makes it difficult to capitalize on opportunities to increase customer service. loyalty and profitability. or knowing that a customer uses several sources of interaction with a supplier can also provide opportunities to enhance the relationship. Banks known for its high level of customer service might use this characteristic as a starting point for implementing a CRM application. For example. Each bank should seek a niche on which to develop its CRM strategy. knowing that other family members are also customers provides an opportunity to up-sell or cross-sell products or services. it is difficult to know who the customers are. Customer Data A common problem many organizations share is integrating customer information.

25 . Even if they have only started building a “how to win back trust" strategy. and to perform all of these functions better than its competitors. These institutions have to design a new approach to regain and reassure customers. to create differentiation and excellence in service to customers. their CRM strategy and their goals. The current economic context and financial crisis has most probably led many financial services institutions to refocus their CRM strategies with the customer relationship being more than ever the key to profitability of a retail activity. there is a general movement towards “refocusing on he customer” for the “post-financial” crisis phase.Building toward a CRM solution and evaluating the use of customer data requires analysis and alignment of the following core capabilities: • • • • • • • Customer value management Prospecting Selling Collection and use of customer intelligence Customer development (up-selling and cross-selling) Customer service and retention Protection of customer privacy Successful CRM implementations result from the capability of the organization and its employees to integrate human resources. Here are some global banking institutions that have deployed CRM Customer Relationship Management systems. business processes and technology.Customer Relationship Management in Banks business strategy.

link 80 banking applications to support unified view of customers Goal Improve customer experience. integrating with central office. which is time-consuming.Customer Relationship Management in Banks Global Banks Bank of America CRM Strategy Provide service representatives with 360-degree view of customer relationship for corporate and retail banking Segment customer base into six different groups based on demographics and banking behavior Deploy CRM system across branch network. link multiple customer databases Integrate call center. branch. and central office. a regional rural bank or a foreign bank all banks commonly store details of tens of thousands of customers and prospects . cross-sell BNP Paribas Societe Generale Improve customer experience. and increasingly cost-prohibitive. inaccurate. maximum lifetime value Improve customer experience. support consistent message Irrespective of whether it is a public sector bank or a private sector bank. retention FleetBoston Attain cross-sell revenues. Retrieving customer data to support targeted marketing activities in this environment has traditionally involved sorting hard copy by hand.both in a corporate database and in discrete documents on the desktops of individual bank staff. 26 .

to take full advantage of their valuable customer data.Customer Relationship Management in Banks Hence the banks devise software. considerable increase in the speed of the marketing campaign planning process.A new mantra in Indian banking 3.3 Implementation of CRM in Indian Banks 27 3. better work flow tracking and management. It also provides a way to quantify a campaign's success and aids in planning future marketing strategies.4 CRM. CHAPTER – 3 CRM IN INDIAN BANKS 3. greater cost efficiency with improved ROI.5 CRM Principles .1 Introduction 3.2 Importance of CRM in Indian Banks 3. which would mitigate this task of customer relationship management solution. easy monitoring of multiple marketing campaigns and improved workflow management.

the banking industry around the world has been undergoing a rapid transformation.Customer Relationship Management in Banks 3. 28 . The deepening of technology has facilitated better tracking and fulfillment of commitments. the wave of deregulation of early 1990s has created heightened competition and greater risk for banks and other financial intermediaries. The cross-border flows and entry of new players and products have forced banks to adjust the product-mix and undertake rapid changes in their processes and operations to remain competitive.1 CRM IN INDIAN BANKS In recent years. multiple delivery channels for customers and faster resolution of miscoordinations. In India also.

banks need to have very strong in-house research and market intelligence units in order to face the future challenges of competition. location. The top concern in the mind of every bank's CEO is increasing or at least maintaining the market share in every line of business against the backdrop of heightened competition.Customer Relationship Management in Banks Unlike in the past.their profiles. To address the challenge of retention of customers. The success of such a model depends upon the approach adopted by banks with respect to customer data management and customer relationship management. customers (both corporate and retail) have become more discerning and less "loyal" to banks. They have been managing a world of information about customers . they face a fundamental problem. especially customer retention. With the entry of new players and multiple channels. During the period of planned economic development. and improving customer service-related processes so that the services are quick. Marketing is a customer-oriented operation. Over the years. the banks today are market driven and market responsive. Indian banks have expanded to cover a large geographic & functional area to meet the developmental needs. Achieving customer focus requires leveraging existing customer information to gain a deeper insight into the relationship a customer has with the institution. Furthermore. Marketing is a question of demand (customers) and supply (financial 29 . This makes it imperative that banks provide best possible products and services to ensure customer satisfaction. there have been active efforts in the banking circles to switch over to customer-centric business model. especially those in the public sector lack are the marketing attitude. What our banks. error free and convenient for the customers. Though this offers them a unique advantage. etc. What is needed is the effort on their part to improve their service image and exploit their large customer information base effectively to communicate product availability. requirements and cash positions. They have a close relationship with their customers and a good knowledge of their needs. the bank products were bought in India and not sold.

Customer Relationship Management in Banks products & services. This transformation would help them achieve bottom line business benefits by retaining the most profitable customers. insurance products. The banks need to ensure through 30 . to maximize the value of this resource. automated channels. banks are now realizing that one of their best assets for building profitable customer relationships especially in a developing country like India is the branch-branches are in fact a key channel for customer retention and profit growth in rural and semi-urban set up. mutual fund products. The biggest challenge our banks face today is to establish customer intimacy without which all other efforts towards operational excellence are meaningless. our banks need to transform their branches from transaction processing centers into customer-centric service centers. more efficient channels. Focusing on region-specific campaigns rather than national media campaigns would be a better strategy for a diverse country like India. There are active efforts to develop a relationshiporiented model of operations focusing on customer-centric services. etc. banks world-over have re-engineered their organizations to improve efficiency and move customers to lower cost. Both demand and supply have to be understood in the context of geographic locations and competitor analysis to undertake focused marketing (advertising) efforts. Branches could also be used to inform and educate customers about other. Throughout much of the last decade. However. Customer-centricity also implies increasing investment in technology. such as ATMs and online banking. But this need not be the case. There is a growing realization among Indian banks that it no longer pays to have a "transaction-based" operating model. As is proved by the experience. customer services through various delivery channels). to advise on and sell new financial instruments like consumer loans.

It must be noted. These innovations promise huge benefits. This is because data warehousing helps bring all the transactions coming from different channels under the same roof. The banks need to set up serious governance systems for privacy risk management. The critical issue for banks is that they will not be able to safeguard customer privacy completely without undermining the most exciting innovations in banking. Customer relationship management (CRM) solutions. Data warehousing can help in providing better transaction experiences for customers over different transaction channels.two areas which are crucial for banks' future. financial services companies and their customers will have to make some critical tradeoffs. Data mining helps banks analyses and measure customer transaction patterns and behavior. however. The banking industry world over is being thrust into a wild new world of privacy controversy. It must be remembered that customer privacy issues threaten to compromise the use of information technology which is at the very center of e-commerce and customer relationship management .Customer Relationship Management in Banks their services that the customers come back to them. 31 . rather than from new customers. that customer-centric banking also involves many risks. can help significantly in improving customer satisfaction levels. This is because a major chunk of income for most of the banks comes from existing customers. both for customers and providers. This can help a lot in improving service levels and finding new business opportunities. if implemented and integrated correctly. But to capture them.

pushed up the prices of bonds. The bond profits.Customer Relationship Management in Banks 3. improved the balance-sheets of all banks irrespective of their core performance.2 IMPORTANCE OF CRM IN INDIAN BANK For long. the Reserve Bank of India's moves to cut aggressively the interest rates after 1999. Indian banks had presumed that their operations were customer-centric. the era of lazy banking is soon to end. However. And to their credit. For them an unexpected bonanza came from government bonds in which most were hugely invested. 32 . they survived by adapting quickly to the new rules of the game. protected by regulations that did not allow free entry into the sector. These banks ruled the roost. Many managed to post profits. Ironically. like manna from heaven. So banks had a windfall doing almost nothing. The mesh of rules that propped up the Indian banking industry is now being dismantled rapidly. when the banking sector was opened up. simply because they had customers.

CRM in banking is a key element that allows a bank to develop its customer base and sales capacity. Customer Relationship Management (CRM) in the Indian banking system is fundamental to building a customer-centric organization. faced with an increasing array 33 . CRM has also become a misnomer for a range of solutions from IT vendors. Increasing competition. or even a new method of data collection. each providing its own spin on the idea. Therefore. It is none of these." What is CRM. what with more freedom to come in. deregulation. probably. India will see foreign banks come in. CRM would also make Indian bankers realize that the purpose of their business is to "create and keep a customer" and to "view the entire business process as consisting of a tightly integrated effort to discover. as there is no single definition for it. an expensive software product. create. it is imperative that Indian banks wake up to this reality and re-focus on their core asset — the customer. one of the least clearly defined business acronyms. CRM is variously misunderstood as a fancy sales strategy. grow and acquire. India will have a competitive banking market after 2009. A greater focus on Customer Relationship Management (CRM) is the only way the banking industry can protect its market share and boost growth. CRM systems link customer data into a single and logical customer repository. and the internet have all contributed to the increase in customer power. It is probably easier to say what CRM is not. The goal of CRM is to manage all aspects of customer interactions in a manner that enables banks to maximize profitability from every customer.Customer Relationship Management in Banks According to a RBI road-map. and what will it deliver to the banks? CRM is. Customers. and satisfy customer needs. Unfortunately. As one of the most attractive emerging market destinations.

It does not happen simply by buying the software and installing it. should it link to an IT solution. Banks can turn customer relationship into a key competitive advantage through strategic development across a broad spectrum. activities and culture to improve his satisfaction of service and. ease of access. technology. one of the best ways of launching a CRM initiative is to start with what the organization is doing now and working out what should be done to improve its interface with its customers. Above all. maximize the profits for the organization. For CRM to be truly effective. Therefore. CRM is a simple philosophy that places the customer at the heart of a business organization’s processes. A successful CRM strategy aims at understanding the needs of the customer and integrating them with the organization’s strategy. people. This book examines issues related to changing banking industry in India and the challenges in CRM. and technology and business process. and transparency in dealings. are expecting more from banks in terms of customized offerings. 34 . in turn. for large organizations it can be a mammoth task unless a gradual step-by-step process is adopted. it requires a well-thought-out initiative involving strategy. people. and processes. it requires the realization that the CRM philosophy of doing business should be adopted incrementally with an iterative approach to learn at every stage of development.Customer Relationship Management in Banks of banking products and services. Retaining customers is a major concern for banking institutions which underscores the importance of CRM. attractive returns. While this may sound quite straightforward. Then and only then.

design products and services that deliver the desired value. But the fact remains that implementing customer relationship management is not easy. recruit and equip employees to deliver and increase customer value. select customer carefully.3 IMPLEMENTATION OF CRM IN INDIAN BANKS Although CRM as a concept is of recent origin its tenets have been around for sometime. With the advancement of banking technology and computerization and networking of bank branches. design effective sales channels and customer touch points. It is necessary to understand who customers are and what they value. and constantly refine your value proposition to ensure customer loyalty and retention (Forsytyh 1997 and Goldenberg 1998).Customer Relationship Management in Banks 3. but the focus on customer orientation rather than product orientation as a commitment has been on the Indian banking scene for nearly a decade. banking customers are becoming more and more dynamic 35 . There are really very few organizations that are actually optimizing customer experiences at all points of contacts. Field officers in the banks have always promoted close relation-ship with customers.

A CBS helps in centralizing the transactions of branches and different banking channels and the customers start banking with the bank instead of at different branches. The development of the Internet is further adding to this trend and the whole market becomes trans-parent and customers are in a position to move easily from one bank to another. Personal management of relationship is extended to business customers and high value personal customers and automated relationship management to lower margin massmarket segments. As such nowadays a customer is called a customer of the bank rather than of a branch. CRM system can open up new channels of delivery. We can cite example of the Internet and call centers. CRM deserves differential treatment to different class of customers at times. customer satisfaction is the key to bank marketing. which are most cost effective. The recent development in this field is the introduction of CBS (Core Banking Solutions). from a 36 . This is the only way to offer seamless transactions across different channels (branches. The banking industry is passing through a radical transformation.Customer Relationship Management in Banks and less loyal in their behaviour. which aims at retention of the old customers and their bringing in new customers. To offer better and extended services to custom-ers new technology platforms are being created through huge investment in Information Technology in banking sector. cost per transac-tion through these modes can be reduced by 90 per cent when compared to cost of transaction at branch. Another problem generally faced by a bank in implementing CRM is resistance to change. the Internet. In such a situation. the telephone and Automated Teller Machines or ATMs). According to an estimate. These different approaches are adopted depending on the value of relationship with the customer. Service can be given to customers either personally through individuals such as customer service manager or the process can be automated by using computers.

These complex changes are forcing the banks to change the way they do business. the ability of the organization to adapt changes in the business environment is to be increased. It requires two things: Firstly. Implementation of CRM in Indian banking is still in its initial stage and has to go a long way to develop and raise it to the global standards. a regulated economy to a more liberalized and open economy. But the Indian banks including the public sector banks are coming in a big way to address this issue to remain competitive with their counterparts—the foreign and private sector banks. the mindset of the employees has got to be changed in the development of right attitude. proactive and goal oriented. perceptions and behaviour.Customer Relationship Management in Banks sellers market to a customers market. 37 . expectations. Secondly. It should be planned properly. skills. advancement in technology and a lot of other developments. A change denotes making things in a different manner.

Customer Relationship Management in Banks 3. its theories and practices should be revisited and redefined to provide a road map to new ideas and techniques in the field. CRM is the only choice. Over the years. This is the only strategic weapon to be pursued for excellence in the pursuit of performance and achievement. They have to make new resolutions to build further on their own strengths to explore new avenues of Customers Relationship Management. CRM.4 Customers Relationship Management– A new mantra in Indian banking Nowadays banks have to work keeping in mind the position of the financial market and anticipate change in the market place and prepare themselves accordingly. being the essence of modern banking. 38 . a sound understanding of the key principles. Both the retention of old business as well as to search for new business. banking institutions have been feeling the pressing need of putting up greater thrust on this initiative for improving their operations and appearances.

Further. interest spread is touching the low ebb every day.Customer Relationship Management in Banks The FOCUS ON CRM The profitability of a bank depends to a large extent on its ability to deploy its fund in high yielding loan portfolios of their customers. the working capital cycle of manufacturing companies fell to 21 days compared to 60 days a year ago. availability of cheaper funds from other routes etc. After a lot of exercise and considerable thought. In the year 2001. they identify the retail sector and commit for considerable retail lending as a means to serve their ends. Taking as a percentage on sales. working capital ratio had dropped to three per cent from a level of 13 per cent over the last five years in case of 4. there is lack of investment demand in the market. during 200001. 39 . According to the Centre for Monitoring Indian Economy (CMIE). The demand for working capital will be in the declining stage in the years to come. These developments have led the banks to go in search of new business opportunities where they can put their resources and earn a reasonable margin to add to their bottom lines.02.000 selected manufacturing industries. the cycle further reduced to 14 days and became negative during 2002-03. The demand for credit from the corporate sector is diminishing due to more efficient management of working capital. But with the increasing competition of lowering interest rates by different banks.

The establishment of ARC 40 .Thirdly. the Indian retail market was largely untapped. With this increased knowledge base and better information they are demanding more and more satisfaction and choosing to optimize the value of their money for goods and services. India. Customer leadership is a concept to project the product or service of the firm the benchmark for the market (customers). Then. cell phone calls. Banking is no exception to this reality. in an attempt to market tailor-made innovative products. for years together. the CDR mechanism. being a poor country. consumers are being supplied with abundant information through paper advertisement. it is a matter of realization that the bottom 75 per cent of the consumer pyramid basically relates to the retail sector customers. Firstly. This endeavor on the part of the banks is leading the customers in their process of information abundance and thereby acting as customer leader. it must focus its attention with tailor made products and services to meet their needs. personal counseling to make them aware of the facilities and opportunities available in the market.Customer Relationship Management in Banks Driving forces for retail lending There are several driving forces to support this move. and if one is looking at a growth opportunity. of late. there has been a tremendous improvement in Non-Performing Assets (NPAs) due to introduction of certain new methodologies such as new foreclosure law. the opportunities for exploring the possibility of lending in this segment continues to be immense and all banks. more or less tried to capture this huge market. TV advertisement. Secondly. But there is another side to the coin. which visualize all competitive stimuli in term of benchmark product or service. particularly foreign banks and private sector banks. With the entry of several players in the field. This had added momentum to the competition. With retail lending at levels far below those prevailing in other Asian countries. the Debt Recovery Tribunals and the provision of one time settlement. the customers today has a wide array of choices which is increasing day by day with the rapid and exponential development of communication technology.

Under the changed scenario of NPA management. Besides. Also. CBS (Centralised Banking Solution) etc. another major force behind this retail revolution is technology involved in today’s banking.Further more.000 crore in 1997 to 60. Bank managers are not hesitating in disbursing new loans. Indian mortgage market grew from around 15. in the case of small and medium enterprises (SME) and farmers in many cases such loans have been roped in big companies to back them in default 41 . (Any time. Any where and Any how) banking through ATM.000 crore at the end of 2002 or at a compound annual growth rate (CAGR) of 32 per cent. retail loans are considered to be safe and according to the managers of some eminent banks there is less risk involved in managing a fat retail portfolio. According to a study. In addition. there is enough scope in the case of mortgage loan. Now a clear message has been ventilated in the community that bank loans are not for charity.Customer Relationship Management in Banks (Assets Reconstruction Committee) and enactment of Securitization Act have helped in a big way to liquidate a huge amount of unmoved loan being carried forward for years together. It will not be out of place to mention here that at the same time China’s mortgage grew by a CAGR of 113 per cent. but are to be repaid and the bank management is there to recover it. Technology has developed to such an extent that the customers are in a position to take advantage of “AAA” banking. the Internet.

energy and cost after a thorough planning. Who is a customer? This question is very fundamental. Customer focus The first and foremost important guiding principle in CRM is customer focus. economy and effectiveness through reduction of sales cycle times and selling costs. improvement of customer 42 . So customer’s delight or customer’s satisfaction is the essence of any CRM program. The main thrust of CRM is to improve an organization’s efficiency. But a dissatisfied customer always counsels his friends. As a part of this focus on customers. A satisfied customer only assigns value to a service.Customer Relationship Management in Banks 3. A customer is the final arbiter of quality. banks should ensure that clients are identified. value and price of a product or service. understood and met enhancing customers’ satisfaction. A customer is a person or group of persons who receives the product or service—the final output of a process or group of processes. identification of new markets and channels for expansion. and fellow members not to go to banks where his experience proved to be wrong or other-wise.5 CRM PRINCIPLES The main principles of CRM can be grouped into seven guiding factors: 1. their requirements are determined. to a dissatisfied customer a product or service has no value. on the contrary. even if the concerned service or product has been designed with lot of effort. A satisfied customer motivates his fellow members to go in for the service or product that he has already acquired.

Leadership Persuasion. When there is a slight chance of getting a business but the client is hesitating or in a fix. satisfaction. people. Successful CRM focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization’s strategy. (Heygate. 43 . developing and providing desired products at afford-able cost. it should be followed up by the relationship manager by patient hearing. The following points may be found helpful in this regard: (a) It is to be communicated to all employees that all customers should be given a proper hearing and it should be supported from all levels. technology and business processes. or not in a position to decide properly. There must be total commitment for the enterprise towards this end. 1999).Customer Relationship Management in Banks value. (c) Proper respect should be extended to the customers. retention and thereby increasing profitability and market share of the enterprise. mild counseling and to stand by the side of the prospective client to help clear his doubts and to make him feel happy by realizing that he is going in the right direction and he is very right in choosing his requirements. All relevant information should be collected from them with humble and polite approach. (b) Ways and means should be identified and practiced of getting and staying closer to customers. (d) There should be proper re-action to the information and feedback provided by the customers in designing. Proper value should be given to their feedback. judgment and decision-making abilities are the main attributes of quality leadership. 2.

it has to identify and manage numerous linked activities with the help of different processes for accomplishing its goal. (e) There should be in built control mechanism for ease of measuring. For effective functioning of an organization. revised and fine-tuned to meet the requirements. 4. often the output from one process directly forms the input to the next. In producing an output there may one single process or a group of inter-related processes. (b) All processes should meet the legal and statutory requirements to perform the activity or deliver the product or service. strategy of the company. System approach Customer’s requirement is one level of commitment. (c) Time involved in processing should be minimum with least waiting time to the customers. resource availability. reviewing and taking corrective action.Customer Relationship Management in Banks 3. (d) All the processes should be properly integrated to meet the goal congruence and should not function at cross-purpose. within the policy. energies and time. That level implies a system that is reactive and provides to customers what they want but the target should 44 . Proper attention should be given to the following points: (a) All processes should be de-signed keeping in view the requirements and desires of the customers. Process approach A process transforms an input into desired output by the use of resources. In case of inter-related processes. If required delegation of authority and assignment of account-ability at various executive levels should be addressed.

It comprises of three levels of relationships. of the people and by the people. People involvement at all levels is essential for the success of a CRM program.Customer Relationship Management in Banks be to achieve more and to exceed the customer’s expectation to accommodate future requirement and to build a cushion against the competitors’ attributes. social relationship and structural relationship.e. 45 . but all directed to accomplish the goal— value to the customers. The bank managers and staff must be in a position to exploit the concept of customer relationship completely. the work-force at the disposal of the organization. i. what should be the quality involved. The total system as a whole should decide what product to make or what service to offer. a separate one to deliver the product within the delivery schedule.. Involvement of people The fundamentals of CRM bear the genes of customer relationship through involvement of people. another sub-system to comply with the complaints of the customers etc. CRM is based on a system approach to management. Its primary objective is to increase value to customers on a continuous basis by designing and improving organizational processes and systems on a ongoing basis. what should be the price. financial relationship. 5. Meeting Each sub-system may have its own goal but the goal and objectives of all sub-systems are to be integrated to achieve the overall goal. what markets and customers to target upon and similar other issues. CRM denotes the management of the entire system and is not confined to only one or the other sub-systems or functional departments. There may be one sub-system to acknowledge the customer’s order. Customer relation may be defined as that dimension of relationship marketing that seeks and ensures customer loyalty by fulfilling promises and continuing to satisfy customer’s wants and needs so that defection is zero. The whole gamut of CRM is for the people.

offer different services outside their for-mal activities. Mutually beneficial customer relationship The relationship with the customer should be based on a mutually beneficial relation-ship. share the feelings and emotions of clients and even send clients flowers on birthdays and anniversaries. To obtain the full benefits of people involvement. Bankers. 46 . data mining and data analysis.Customer Relationship Management in Banks The main focus of financial relationship is frequency marketing programs based on financial incentives such as reduction of processing fees. which will be swept back into your savings account. A marketing relation with the middleman and interested groups is developed in an in-side-out manner mainly based on software. but focus should be directed to the customers’ wealth creation or value enhancement with the motto of earning through service. Drawing of money through ATMs instead of physical presence in the branch for withdrawal of cash through cheques or withdrawal forms may be sited as example. It ensures that any balance in your savings account above a certain amount. which would help in data warehousing. say. A social relationship program revolves round a social bonding between company and its customers and establish brand loyalty. lower rate of commitment charges.000 automatically gets transferred to a fixed deposit to give you higher returns. zero defeat service oriented train-ing and total quality management. when you need it. A bank should not concentrate its attention towards earning of profits only. nowadays. 6. make house calls. As an example we can talk of a savings account that’s ‘fixed up’ to give you more interest. Rs 3. organization of loan mela on special occasions etc. productivity linked reward. the human resource management should focus on employee empowerment. The optimization of structural relationship lies in the replacement of physical resources by total service replacement.

such fee-based income is a regular feature and is very much crucial in today’s banking where interest spread is getting reduced due to competition and fee based income can increase the bottom line. effort.three years of dealing with the customer. Continual improvement Another objective of CRM is the efforts towards continuous improvement in the customer relationship through the provision of value added ser-vices at favorable 47 . free personal accident insurance coverage along with fixed deposit scheme above a certain amount and above a certain term. school fees etc. But in many instances. a bank can earn Rs 35.000 per an-num for a good customer. other benefits are also extended.Customer Relationship Management in Banks Sometimes. Banks are no more restricting their activities to deposit and advances. paying utility bills. But generally it is found that earnings start after the first two. rather they work with the mot-to of offering ‘Integrated Total Package Solutions to all needs of a customer. recognizing individual needs and offering a customized investment solution are high. the expenses in terms of time. such as.000 to Rs 100. Many of such activities are not profitable in terms of time and efforts spend by the bank. But banks are carrying out such services for mutual benefits. Retention of customers and building a long lasting relationship is the main criteria under this concept. for the ease of their clients who are very busy and do not find time for such work. In a mature relation-ship. Banks have gone to the extent of booking cinema tickets. Wealthy individuals are in the habit of placing all sorts of demands on their private bankers and a bank has to respond to such requests not merely for income generation but as a gesture of goodwill and at times such activities add a consider-able percentage to a bank’s fee based income. According to an estimate. 7. which pays in the long run.

system integration. (v) Building a transparent communication system and employee participation to better define the needs of the customers and deliver the right services and products CHAPTER – 4 WORKING OF CRM 4. The most effective way of improvement lies in innovation and change management. are to be automated and optimized with an aim to increase the efficiency and effectiveness of operations. will be the winners.1 CRM Implementation 4. human resource management etc. Implementing multichannel trigger driven marketing. Organizations that maintain their flexibility. spontaneity and unpredictability. beat their competitors to the market place with a constant stream of innovative products and services.Customer Relationship Management in Banks cost. Today’s successful organizations must stimulate and foster innovation and master the art of change. The major areas to be targeted are: (i) (ii) Improving the effectiveness of marketing. (iii) Implementing a strategic analysis capability to support strategic decision making. continually improve their quality and. (iv) The ability to deliver the increasing levels service demanded by customers.2 CRM Optimization 4.3 Rules and Regulations 48 . Business processes in the areas of finance.

1 CRM IMPLEMENTATION .Customer Relationship Management in Banks 4.The Right Way! 49 .

Customer Relationship Management in Banks CRM implementation differs from organization to organization but there are a few common steps one needs to follow to ensure a successful implementation. There are many factors that could influence the success of CRM implementation. Some of them are;

● Organization Objectives
Clear cut objectives are essential and they need to be communicated effectively to the entire organization. Business goals are absolutely essential and need to be clearly defined. Similarly goals of the CRM implementation and how it supports organization goals should also be intimated to employees. Let employees know how important CRM success is to the organization.

● Solution to Suit Business Objectives
A business needs to look for a CRM solution that fits its needs, not the other way around. This step is vitally important and spells success. When choosing a CRM solution every business organization has to ensure that it chooses a CRM solution that fits into the organizations requirements. It is wrong to try and adjust organization requirements to the chosen CRM solution. If this is done organization goals will not be achieved and the CRM process will have disastrous results.

● Focus on All Business Aspects
In most cases the technology will have less to do with the CRM success. Therefore it is important to focus as much importance on communication training and other aspects as much as the technology involved. It is important to involve management at several levels, focus on communication need and indulge in adequate training of the concerned employees throughout the

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Customer Relationship Management in Banks organization. If these items receive a level of focus comparable to the technical system, CRM implementation stands a better chance of succeeding.

● Define the Business Problem
A business needs to clearly define the business problem see what benefits it wants to achieve and adopt the required measures. It is imminently important to clearly identify the business problem that the company needs to resolve. An organization needs to absolutely identify the desired benefits and make sure that the expected returns are generated at every stage. It is important to break down the entire process into smaller pieces that can be individually handled effectively.

● Establishing Proper Metrics
Since companies normally wait for a five year period to see a return on investment. Every organization has to compulsorily define performance metrics to ensure that it measures the return on investment adequately.

● Business Processes not Technology
In order to succeed at CRM all companies need to understand that it is not about technology alone but about business processes as well. While CRM changes a company's business processes technology supports the processes. Most businesses make the mistake of actually assuming that the CRM is only about technology alone. This hampers business process development.

● Implement Change
Most employees tend to stick with their old ways and are reluctant to adapt to changes, It needs to be understood that the implementation of CRM involves immense changes and employees need to adapt themselves to it.

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Customer Relationship Management in Banks From the very beginning of the implementation employees will have to adopt new attitudes to help deliver the customer experience properly to customers. Organizations need to make sure that their employees are provided with sufficient training to ensure that they handle this aspect of the customer experience adequately and efficiently.

● Choose the Right Methodology
Decide whether to use the classical or modern methodology bearing in mind that ease of usage, cost effectiveness and efficiency need to be gained. This is an important step in the CRM implementation as it has a bearing on the entire process.

● Using Skilled Managers
Organizations need to make sure that they use the most highly skilled and experienced group of professionals possible. CRM aspects are complex and what is needed most is a team that has CRM expertise and business knowledge. The team should be adequately trained and sufficiently equipped both intellectually and technologically to carry out the CRM implementation successfully.

● Choose the Right Vendors
Companies need to know the vendors through looking at them from this perspective alone. This involves the process of scrutinizing the vendor and seeing whether or not the vendor can fulfill the requirements of the business. Only if this is possible can the vendor be selected. You may not find a vendor that basically fulfills every single objective but at least an organization will be aware of it.

● Ease of Usage
The entire objectives of the CRM process are hampered if the CRM choice is difficult to use. It is highly essential to ensure that the system speaks of ease of usage and the ability to be easily customizable. Employees implementing CRM and forming a part
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Customer Relationship Management in Banks of the CRM process range from the mediocre level right to management and to the employee at the very forefront. This is a step that needs to be taken at the time of choosing the CRM technology. CRM IMPLEMENTATION 53 . It is imperative that the business ensure that the CRM software chosen is easy to use and implement not only by a few employees but by everyone using the system.

Customer Relationship Management in Banks

4.2 CRM OPTIMIZATION

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Customer Relationship Management in Banks Simply implementing a solution intended to achieve organizational goals is not enough to achieve CRM success. The process should ensure that these goals are achieved. More importantly CRM optimization should be encouraged through the right practices, optimization of resources and the ability to adapt to change.

TO

ACHIEVE

CRM

OPTIMIZATION  Identifying CRM goals
Objectives need to be identified and CRM goals need to be fixed before embarking on a CRM project. Business processes need to be integrated with the CRM solution before actual implementation. The chosen solution should fit organizational objectives to the hilt.

 Phased Implementation
Start a pilot project and set goals for the organization. Then go ahead with CRM implementation in phases to ensure CRM success. Phased implementation is always easier to implement and the rewards are higher.

 Objective Focus
The net result or the ultimate objective of the business process needs to be taken into consideration while implementing .The ability of the CRM solution to contribute to

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Customer Relationship Management in Banks this has to be considered. If the objective is increasing overall profit or simply contributing to customer retention than this should be achieved by the CRM choice.

Customer Focus
The CRM process sometimes gains department coordination and success but fails

to focus on the customer. Hence although companies may succeed internally they fail to achieve customer retention on account of unsatisfied customers.

 Data Consolidation
What happens here is that information needs to be corrected before putting it into the CRM system so that bulk data is assessed, corrected and placed together so as to be easily assessable.

 Change Incorporation
Since change is unavoidable and CRM is a continuous process, information becomes outdated very quickly. Changes required need to be implemented periodically.

 Customer Flexibility
CRM processes need to be suited to the customer needs. Adopting stringent rules that affect the customer due to its inflexibility will hamper the ability of the organization to find appropriate solutions for its customers.

 Date Assessing
Assessing data quality issues is essential. Companies need to measure data quality before embarking on a CRM implementation.

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 IT's Involvement Dynamic changes are possible only when sufficient technology is in place. An integrated view of the customer with entire company access is absolutely essential.  Cost Restraints It is imperative to understand the existing problems customers are facing and not endeavor to find solutions that suit the companies budget alone. 57 . cleansing. and consolidation. IT enables this as it facilitates change within the organization and enables it to adapt. The need for outside resources has to be carefully studied and adopted if essential. Hence the IT department needs to be incorporated in all respects  Data Cleansing Since all information needs to be cleansed before it enters the system a data quality solution must be used from initial analysis to identification.Customer Relationship Management in Banks  Holistic Approach It is important to create a single holistic view about a customer with the collation of all the information available about him.  CRM Consultants Outside resources need to be brought in if required. This information should be available to every one in the organization.

3 GUIDELINES FOR CRM 58 .The chosen solution should fit organizational objectives to the hilt. It is they who should initiate this and be involved in all aspects of its implementation. CRM success is a sure result if this is implemented. Business processes need to be integrated with the CRM solution before actual implementation . Their combined efforts are essential for CRM success.Customer Relationship Management in Banks  Identifying CRM goals Objectives need to be identified and CRM goals need to be fixed before embarking on a CRM project.  Integration It is essential to actually collaborate the IT departments and the other departments. 4.  Employee involvement It is important to get the customer facing employees personally involved in the activities of the business you can get many online jobs from CRM consultants.

Customer Relationship Management in Banks Customer Relationship Management (CRM) doesn't have to be difficult.  Outline a CRM strategy Many people mistake implementing CRM to simply mean installing/using ‘software’. people and IT 59 . they are the people who help engrain CRM usage into company culture. set CRM strategy. surveys. involve key stakeholders Many CRM projects fail because key people are not involved in the project. In fact CRM strategy is more about identifying critical relationships between business goals and CRM implementation strategy: business processes. questionnaires and feedback meetings are useful ways of gathering information on customer expectations. Basically. Here are some guidelines that you can follow before you embark on CRM implementation in your company. Potential users and if possible. make corporate policies and issue directives. Communicate CRM initiatives to people in your company via directives. policies and training. If your teams know what is expected at the executive level then they can better understand and respond to customers.  Develop a corporate ‘CRM culture’. They need to be involved in order to assess business objectives. Key sponsors need to be able to make financial and time commitments to ensure success. customers should be involved to some extent to assess their expectations.

increasing repeat business. cultural differences within your organization. Combine this with regular business problems and you can quickly lose focus of the main objective if you do not prioritize your CRM requirements. Also. Marketing and Customer Support. reduce incoming phone support requests. It is about using appropriate methods and business processes to help improve your business relationships with your customers. increasing numbers of customer referrals. while Customer Support may want to implement a self-service knowledgebase for customers to reduce the number of support calls. cost and missed opportunities for your business. politics. make comparisons with previous metrics and with competitors if possible. Set goals in key metrics areas like Sales. and so on. as CRM is based around people. roles / hierarchy and authority. For example. reducing sales admin time. you should consider social and organizational factors such as company structure. Sales Managers may want to get better pipeline and forecasting capabilities. For example. 60 . sales metrics might be lowering lead to sales time. You should prioritize those areas which are key process areas (kpas) or which are causing the most problems. understanding all of these more subtle points will also play a part in a more successful CRM implementation. resistance to change. First.Customer Relationship Management in Banks tools. Customer Support may want to reduce issue resolution time.  Define your CRM objectives and prioritize CRM requirements Every department within any organization has its own needs and sense of priority. Marketing may want to increase leads per campaign. you should measure key performance metrics in your company. increase efficiency of lead capture and segmentation.

 Integrate your current systems Look at the ‘big picture’. and if other systems require integration. or maybe your website e-commerce section or ERP/accounting system. complexity of each area.for example. which help build momentum and enthusiasm from users. Other factors to consider are weaknesses compared with competitors.Customer Relationship Management in Banks Start in areas which will be easiest and which will result in the highest reward for your business and highest level of buy-in from your users. determine how.g. A CRM Consultant will be able to assist in analyzing your business processes and making recommendations on where the CRM can integrate or even replace your current systems. A CRM will eliminate the need for traditional means of reporting Sales status and activities with Word/Excel . assign people within your company who can liaise with a CRM Consultant and to identify key metrics and timelines for low risk/high reward areas. a master plan. 61 .  Develop a CRM roadmap Once you have a high-level vision from the previous steps and after you have identified and prioritized the areas which will give the most rewards most quickly. and you will likely want to integrate/consolidate your calendaring/contacts system (e. you should then develop a CRM ‘roadmap’. It is useful to identify key people responsible for each project task. where and when implementing a CRM tool will integrate/replace other tools/applications/processes. Outlook). consisting of several mini projects that will move you toward the corporate CRM goals.

customizing it as you go to suit your business. Don’t get a CRM which is a strong call centre oriented CRM if your main issue is in Sales.Customer Relationship Management in Banks  Research CRM vendors Learn about potential CRM vendors from their websites. Don't get sidetracked by the mind boggling number of features in CRM software.they have the experience of implementing CRM’s across multiple businesses and will know the sorts of problems you will face and how to overcome them. customer references and publications. Get an independent perspective from a CRM Consultant . ‘Software as a Service’ or on-demand CRM is increasingly popular as it gives a short time to value and is less expensive to set up. especially with independent advice from a CRM Consultant. you will be more able to decide upon worthy CRM software.  Communication is critical 62 .  Focus on your needs CRM software is complex. It needs to be. You simply pay a monthly fee and start using it. With a roadmap in place and your requirements defined. use that list and determine which vendor can best meet those needs. After determining your main business needs and priorities. A CRM Consultant can also assist in this area as they will be able to advise you which software on the market matches your business needs. Many CRM vendors offer 30-day free trials or limited function/limited user licenses for free.

get feedback and implement solutions to make sure the CRM evolves with your business and customer needs. Report on the status on a regular basis. get him/her to create regular newsletters or chair weekly/monthly status meetings depending on the scale of your implementation. Provide flexible training programs to accommodate different schedules. ongoing training and can make appropriate recommendations to make sure changing needs are addressed over time. be flexible. Analyse CRM usage. A CRM Consultant can help you by overseeing feedback. the users of the software and the ones who will benefit.  Learn. no matter what size your organization.Customer Relationship Management in Banks Once CRM implementation begins. Invite key people to keep them all involved – they are. 63 . process improvements and feature requests (there will be plenty) as well as project-related issues. after all. This will also speed adoption and produce benefits more quickly. IT skills and learning preferences. If you use a CRM Consultant. use the tool and evolve your business Use the CRM to log tasks. communicate plans and developments to your staff. customization requests.

2 Benefits of CRM to customers 5.1 BENEFITS OF CRM TO BANKS 64 .1 Benefits of CRM to Banks 5.Customer Relationship Management in Banks CHAPTER – 5 BENEFITS OF CRM 5.

What happens is that customers are often approached for the wrong products. What happens in CRM banking solutions is that they change the way the employees think and mould them into customer conscious people. Some banks even if they possess good customer relationships are unable to cross sell as they have not figured out who to target with what product/service. They have realized that adopting a customer centric strategy is essential and needs to be compulsorily undertaken. The vast majority of banks now realize they need a customer strategy and are opting for CRM . Since the banking field now boasts of so 65 .Customer Relationship Management in Banks Despite the fact that in most banks profits sometimes fail. CRM induces bankers to know that they are required to maintain good relationships with their customers and should strive to retain them. Banking CRM software serves to increase the market share and boost growth in the banking industry. They have come to understand the importance of hanging onto the customer and keeping him happy. They are made to realize that the business process should consist of efforts to discover and satisfy customer requirements. The rules that once governed the banking industry have changed. It has long been the misconception that banks need not pay much attention to customer focus just because they had customers. they seldom pay attention to or adopt any customer strategy.Customer Relationship Management. However the new millennium has resulted in banks and financial agencies rethinking their strategies and goals.

Thus it is completely essential that banks implement CRM in order to secure this. resources and business rocesses. Banking CRM understands the needs of the customer and integrates it with people. Overall Profitability CRM enables banks to give employee's better training that helps them face customers easily. 66 . The sector will also evidence an increase in expenditure of 14 percent each year. It achieves better infrastructure and ultimately contributes to better overall performance. 2. Banks that don't implement CRM will undoubtedly find themselves with lesser profitability coupled with a sharp decline in the number of customers. CRM Banking Focuses on the Customer CRM manages to places the customer at the focal point of the organization in order to cater to his needs. satisfy him and thus maximize the profits of the organization. It focuses on the existing data available in the organization and uses it to improve its relationship with customers. technology. Statistics show that bankers will spend $7 billion on CRM. The byproducts of CRM banking solutions are customer acquisition. FOLLOWING ARE THE BENEFITS OF CRM TO BANKS: 1. retention and profitability. Banking CRM uses information and analytical tools to secure customer focus. With such phenomenal statistics it is but a surety that CRM banking solutions sales will soar in the coming years.Customer Relationship Management in Banks much of technological innovations there has been a wide variety of innovations in CRM banking as well.

Centralized Information CRM banking solutions manage to clearly integrate people. They are just as much in need of CRM aid as the others. CRM provides them with the required analytical tools that will help 67 . Bankers need a return on investment and it has been proved that increase in customer satisfaction more than contributes a fair share to ROI. Satisfied Customers It is important to make a customer feel as if he / she is the only one . CRM banking provides banks with a holistic view of all bank transactions and customer information as well and stores it in a single data warehouse where it can be studied later.Customer Relationship Management in Banks 3. Customer Segregation CRM enables a bank to see which customers are costing them and which are bringing benefits. 4.this will go a long way in satisfying and retaining them. The main value of CRM banking lies in satisfaction and increased retention of customers. CRM Banking Boosts Small Banks Banking CRM software meets the needs of banks of all sizes in terms of attaining the required accuracy and understanding of customers. CRM makes sure that the bank delivers exactly what the customer expects. processes and technology. Small banks on account of a limited amount of money have had to realize that a large contribution to profits is directly the result of good customer service. 5. Merely assuming that banks that are considerably smaller in size have a better customer approach and are able to deal with their customers in a better manner is wrong.

Straight through processing abilities enhance reduction in turnaround and processing time. Improved Cross-sell Framework The solution presents a unified 360° view of the customer. Increased Operational Efficiencies and Collaboration CRM solution supports business automation for processes and business activities. The multilingual Web-based single repository of information enables remotely located bankers to collaborate and transact seamlessly. eliminating manual tasks and reducing process time. Lower Total Cost of Ownership (TCO) 68 . After this segregation is done CRM easily enables banks to increase their communication and cross-selling to their customers effectively and efficiently.Customer Relationship Management in Banks them focus on the importance of segregating these two and doing what is required to avail of the maximum returns. with a keen focus on right-talk driven right-sell. Aggressive Customer Acquisition CRM solution supports the creation of demand generation through multi-channel and multi-wave campaigns. 8. providing a robust framework for cross-sell opportunities. This along with robust customer analytics effectively supports true relationship banking. CRM solution also integrates with other white labeled solutions to facilitate contextual and personalized customer engagement. allowing single point access to all the relationships the customer has forged with the bank. 6. 9. This optimizes marketing efforts and results in greater conversion of prospects 7. increasing output and enabling speedy completion of tasks. The solution ensures the bank’s marketing message is appropriately personalized and targeted towards the most suitable segment of prospects.

Customer Information Consolidation Instead of customer information being stored in product centric silos. (for e. income levels and other related criteria. Finacle CRM solution is future-proof and can be seamlessly integrated with other enterprise applications. 11. separate databases of savings account & credit card customers). Campaign Management Banks need to identify customers. banks can identify the most lucrative customers and customer segments. it ensures protection for the bank’s technology investments. and execute targeted. personalized multi-channel marketing campaigns to reach these customers and maximize the lifetime value of those relationships. CRM integrates various channels to deliver a host of services to customers. Marketing Encyclopedia 69 . 12. With a robust architecture and proven scalability. with CRM the information is stored in a customer centric manner covering all the products of the bank. Based on these profiles.g. while aiding the functioning of the bank.Customer Relationship Management in Banks A Web-based solution leveraging new-generation technologies. 10. tailor products and services to meet their needs and sell these products to them. CRM achieves this through Campaign Management by analyzing data from banks internal applications or by importing data from external applications to evaluate customer profitability and designing comprehensive customer profiles in terms of individual lifestyle preferences.

15. including opportunity. account. pricing and competitive information. as well as internal training material. finance or support.Personalized sales home page CRM can provide a single view where Sales Mangers and agents can get all the most up-to-date information in one place. 13. 14. and expense report information. the required follow-up and interaction with the prospects. Removal of inconsistencies of data makes the client interaction processes smooth and efficient. irrespective of whether the communication is from sales. 360-degree view of company This means whoever the bank speaks to. the bank is aware of the interaction. news. 16.Customer Relationship Management in Banks Central repository for products. An effective CRM solution supports all channels of customer interaction 70 . Lead and Opportunity Management These enable organizations to effectively manage leads and opportunities and track the leads through deal closure. proposal templates and marketing collateral. thus leading to enhanced customer satisfaction. Operational Inefficiency Removal CRM can help in Strategy Formulation to eliminate current operational inefficiencies. This would make sales decision fast and consistent. sales presentations.

CRM with Business Intelligence Banks need to analyze the performance of customer relationships. With such knowledge. wireless devices. uncover trends in customer behavior. It also links these customer touch points to an operations center and connects the operations center with the relevant internal and external business partners. Customers can be evaluated within a scoring framework. And Business Intelligence players hope many more will follow su 5. margins are eroding. State Bank of India. Competition is increasing.2 BENEFITS OF CRM TO CUSTOMERS Customer relationships are becoming even more important for banks as market conditions get harder. National Stock Exchange and PepsiCo. All these forces make it 71 . which help them calculate the net present value (NPV) of a customer segment over a given period to derive customer lifetime value. 17. Data warehousing solutions have been implemented in Citibank. fax. Combining the behavior key figure and frequency to monetary acquisition analysis with a marketing revenue quota can optimize acquisition costs and cut the number of inefficient activities. Max Touch. customers are becoming more demanding and the life-cycles of products and services are shortening dramatically. ACC. e-mail. and face-toface contacts with bank personnel. banks can efficiently allocate resources to the most profitable customers and reengineer the unprofitable ones. and understand the true business value of their customers.Customer Relationship Management in Banks including telephone. the online portals. IDBI. ICICI. CRM with business intelligence allows banks to assess customer segments. ATMs. Reserve Bank of India.

From customers’ point of view. ► Companies that implement CRM make better relationships with their customers. Lowe’s Home Improvement Warehouse. recommendations from others and advertising are not important selection criteria for banks. achieve loyal customers and a substantial payback. important criteria are: account and transaction accuracy and carefulness. ► Service provisioning throughout the entire life cycle of the corporate customer. achieved a 265 percent return on investment (ROI) on its $ 11m CRM investment.Customer Relationship Management in Banks necessary for banks to intensify the relationship with their customers and offer them the services they need via the channels they prefer. ► According to a study conducted in the sector of banking. in a span of 18 months. increased revenue and reduced cost. For example. such as alternative channels of distribution (internet and home banking). ► Significant reduction in and limitation of operational costs through system automation and standardization. ► CRM when successfully deployed can have a dramatic effect on bottom-line performance. convenience of location. CRM helps banks to provide lot of benefits to their customers. some key benefits are as follow. long-term relationship with profitable clients. price. efficiency in correcting mistakes and friendliness and 72 . ► Optimization of the use of bank resources. ► Low maintenance and expansion costs owing to the use of modern administration tools which allow bank employees to make a wide range of modifications to the system ► CRM permits businesses to leverage information from their databases to achieve customer retention and to cross-sell new products and services to existing customers. from the initial stages to the establishment of a close.

and efficient in doing this at the lowest costs.1 Challenges faced by banks in successful Implementation of CRM73 6. CRM results both in higher revenues and lower costs. the bank was able to focus on profitable clients through efficient segmentation according to individual behavior. Thus. CHAPTER -6 CHALLENGES FOR CRM IMPLMENTATION 6. Information about ‘who buys what and how much’ enabled the bank to have a commercial approach based on the client and not solely on the product. ► Another study conducted in a European bank shows that with CRM. making companies more effective and efficient: effective in targeting the right customer base with the right services via the right channels. high-quality attributes of the product / service and differentiation proved to be the most important factors for customers.2 Methods of effective CRM implementation . Eventually. those banks that are moving transactions from the more expensive channels to a less costly channel – like the call centre or Internet– are therefore able to save money. the bank was able to better satisfy and retain its customers. CRM.Customer Relationship Management in Banks helpfulness of personnel. Thus. For example.

Customer Relationship Management in Banks 6.1 CHALLENGES FACED BY BANKS IN SUCCESSFUL IMPLEMENTATION OF CRM 74 .

► The costs associated with retaining customers and developing customer loyalty. ► The need to move away from disjointed. standalone. ► The cost and complexity of meeting stringent government regulatory and client security and privacy requirements. ► The pressure on margins and growth prospects from increased competition.Customer Relationship Management in Banks The most pervasive challenges to effective customer knowledge include: ► The difficulty of obtaining a complete view of customers. and inconsistent provide a cohesive. ► The burden of disconnected legacy systems and disparate databases that store client financial data. channels to 75 . multichannel offering.

Measuring CRM benefits A key basic CRM challenge is establishing the measurement method. without realizing that CRM. Traditionally.Customer Relationship Management in Banks Although CRM can help banking institutions efficiently manage their customers. According to CRM software firm People soft. One exception to the typical practice of focusing solely on internal data for gauging success is market share. They tend to treat it just like any other application technology. But the high incidence of CRM failure has very little to do with the CRM concept itself. if done properly. or service level agreement measures. banks have determined the success of any project or product mainly in terms of internal business gauges such as return on investment. is a strategic initiative that touches all areas of an organization. units sold asset growth. banks need to be aware of three key problems: 1. Banks may find it hard to build the initial business case justification and then to prove the worth or success of their investment What makes the latter task even more difficult is the fact that the metrics that are best used to justify a significant IT investment are not always the most appropriate for evaluating ongoing success. the proponents look to justify the top-line expenses with bottom-line benefits. 76 . or market performance. typically those related to decreased costs and increased sales. When banks seek to justify the cost of their investment in CRM-related technology they usually focus on hard numbers. Usually it's a case of the banks failing to pay attention to customer data they already have. many banks fail to meld the concept into the prevailing work culture. In other words. A lot of banks underestimate the magnitude of CRM.

most bank costs are step-fixed. business benefits are expected to accrue rapidly to the bank. At completion of each phase of a project. To ensure that the subsequent phases will get funding. with the resource able to process only a finite number of 77 . resulting in textbook-accurate allocations that often do not accurately reflect the activities they are intended to measure. Revenue generation--whether through sales or marketing improvements--is the preferred business benefit for CRM project sponsors. CRM sponsors grant funding to project leaders at the completion of one phase and start of the next. But measuring profit in a bank is not an easy task. the funding for CRM projects is also often phased. Not surprisingly. intricate IT projects when incremental revenue generation can be squarely identified. it is far easier to continue funding large. 2 Customer profitability Many banks use profitability as a key component in determining how to treat their customers. For example. Since the majority of CRM projects are expensive multiphase and multiyear projects that often involve multiple technologies. most CRM practitioners quickly default to marketing and sales measures when asked about the success of CRM implementations. project leaders typically build into each phase of a CRM project demonstrable business benefits. This means the accounting and finance people are in charge of the process. This means they are neither purely fixed nor purely variable. The tendency to frame the discussion of CRM measurements in terms of sales and marketing measures is completely understandable given the phased nature of most CRM projects. Many banks allow the use of an accountant's approach to the measurement process.Customer Relationship Management in Banks Interestingly.

but the use of incomplete or inaccurate cost information and unproven hypotheses on customer buying behavior make this rule difficult to apply. 78 . By providing a lower level of service to these customers. the bank faces the danger of driving them away to institutions that provide better service. The way the step-fixed resources are allocated can dramatically affect the resulting measurement of account level profitability. One significant problem is that banks let their customers use the bank's products and services in an unprofitable way. 3 The 80-20 Rule Most banks make critical pricing decisions based on the so-called 80-20 rule. banks should not view losing unprofitable customers as the way to improved profits. the notion that 80 per cent of profits derive from 20 per cent of customers.Customer Relationship Management in Banks transactions before more investment is required. This may be true. Given the stepfixed nature of bank costs as discussed.

Customer Relationship Management in Banks 6. Many banks regard a voice call centre as a cost of doing business.2 METHOD OF EFFECTIVE CRM IMPLEMENTATION Banks can take several steps to strengthen their customer relationship management in an effective manner. 1. Develop the right contact strategy By knowing which offers and incentives to offer to which customers and when. Acknowledge email enquiries At the very minimum. To handle significant volumes of email. building customer loyalty along the way. Such goals can be at least as important as realizing cross-sell opportunities. 2. banks will not annoy customers with unwanted marketing offers. Banks can earn more customer goodwill if they respond faster than the imposed deadline. banks need adequate routing technology. It is then vital to get back to the customer within the promised time frame. banks should send out an automated email response that acknowledges receipt of a customer's email and lets the sender know when to expect a more complete response. but they don't look at it the same way with email. 79 .

Providing online `chatting' An alternative to telephone support. online chatting is providing a service via emails or any other form of immediate response. With online chatting. a customer-service representative can handle 10 to 12 customers per hour using "chat". This service also offers some of the immediacy of the phone but primarily allows customers to remain online. 5. the customer relationship model and the exact nature of customer interactions and how they tie together. telephone support.Customer Relationship Management in Banks 3. Reduce costs by improving website design and self-service Email. compared with six to eight per hour over the telephone. Analyses the project's scope Before recommending or embracing CRM. One of chat's important advantages is that it keeps customers in an online store environment where they remain exposed to merchandise and promotions. Sites that is difficult to navigate and don't provide needed information chase away some customers and force those who stay to resort to more expensive channels to satisfy their service needs. Given that the average call lasts about four minutes. bank executives must analyses the business issues. 4. But to reduce these expenses a site should anticipate customer needs. service agents can usually handle between one and three customer inquiries at once. and chat all involve considerable staffing costs. Banks should not embrace top-line growth as an 80 .

but it also requires these processes to be modified. effective leveraging of customer relationship becomes all the more critical. or their relationship with competitors or other divisions within the bank. 6. to the point of calling the account the customer and vice versa. A conventional account structure usually contains very little information about customers and their needs. As banks move from transactioncentric to a relationship-centric business approach. Change accounts into customer Traditionally banks have closely associated customers with accounts. CRM not only takes existing business processes and makes them more efficient. CRM is primarily a business program. For a CRM implementation to be successful. Furthermore. decision makers within the bank need to make sure that all the stakeholders understand and support the required process changes. and it requires a genuine partnership between various departments to ensure that both business and technology issues are managed effectively. 7. Customers will tend to feel alienated when they are treated like a number instead of a person. 81 .Customer Relationship Management in Banks objective until they can understand precisely how CRM technology will provide those new revenues. The way ahead Banks have excellent reasons to adopt comprehensive CRM strategies to cultivate a lifetime customer relationship. Know thy limitations Many CRM implementations are severely limited because they fail to provide a complete and meaningful view of the customer.

to build a long-term relationship with banks that offers differentiated and more personalized services.Customer Relationship Management in Banks Today. They are willing. If used effectively and in an innovative way. Successful CRM implementation in electronic banking needs to integrate data from all customer touch points. responsiveness and product customization. This is where electronic banking can offer a competitive advantage. yet are unwilling to pay a premium for these services. customers are expecting even more individual attention. this approach will enable banks to develop a strategy to deliver to the customer the most appropriate products and services. however. employee feedback and even shareholders' perceptions. RECOMMENDATION 82 .

is today fast emerging s one of the most important cooperates strategies. One competence does not customer relationship management make. All aspects of customer relationship management. 83 .Customer Relationship Management in Banks Customer Relationship Management (CRM). must be fully explored effectively deliver the competencies required to realize the business benefits. 1. Take pragmatic steps with a clear view on delivery of all the components in the medium term. Tackling any one competence alone will lead to a dysfunctional business. Customer Relationship Management is do-able. the most exciting strategies that emerged from networking technology revolution of the nineties. Successful mass customization is crucial to reducing customer acquisition cost and improving the cross selling capacity. A well-executed Customer Relationship Strategies can result in number of quantitative benefits. However the following must take into consideration before embarking upon its implementation. including greater ability to sell and cross sell. including technology solution. 2. improved retention besides cost of services. 3. rather than piecemeal in the short term.

75% of all Customer Relationship Management projects have failed due to lapses in implementation. Channels are a delivery mechanism. The effectiveness of the mechanism is achieved when it is faultless! 5. You cannot foresee the future. Technology is not enough. which will put you in a position tomorrow to deal with future risks and opportunities to your advantage. Customer Relationship Management implementation is effective when companies are able to identify the internal and external customer and integrate them with its core business process. “No-one can guarantee success. you can develop the possibilities and capabilities today. implementation is the key and this is where the people aspect comes into the forefront. 6. And that is a whole lot better than waiting to see what "fate" has in store.Customer Relationship Management in Banks 4. However.” CONCLUSION 84 .

Technical solutions deployed by banks today are flexible. For a bank to succeed in adopting a CRM philosophy of doing business. banks have begun to implement end-to-end technologies through all departments with the intention of removing human error from processes. user-friendly and meant to facilitate specific workflow and requirements in implementation processes. The challenges faced by banks and their customers are many but the trick lies in de-mystifying complex financial relationships. including market knowledge. customers enjoy complete luxury in terms of customized technical solutions and banks use the same to cement long-term. interlocking disciplines. 85 . mutually-beneficial relationships. bank management must first understand CRM as a holistic concept that involves multiple.Customer Relationship Management in Banks Banking can be mysterious for consumers and how they interact with their finances can be a complex matter. growth plans and strategies. In order to simplify lives. Previously existing manual environments could not have been adequate for future visions. In this day and age. strategic planning.

For which Customer Relationship Management works a magic wand. and sales management and training. product design and pricing analysis.Customer Relationship Management in Banks business process improvement. human resources management. 86 . customer retention. Turning the business strategy into actionable items is a difficult undertaking. technology implementation.

com 87 .businessline.com www.Customer Relationship Management in Banks BIBLIOGRAHPHY • Customer Relationship Management-Mohamed HP • Marketing Management-Philip Kotler NEWSPAPERS • Times of India • Hindustan Times WEBLOGRAPHY • • • • www.crm.marketing.customerrelation.com www.com www.

Customer Relationship Management in Banks ANNEXURE QUESTIONNAIRE 88 .

How do you develop these program? 3. Is there any development after implementing CRM program? 6.Customer Relationship Management in Banks 1. What are the various CRM initiatives undertaken by your bank? 2. How successful are these program in retaining your customers and acquiring new customers? 5. How do you decide the technology that is to be implemented for CRM? 89 . How do you measure the effectiveness of these program? 4.

What numbers of employees are involved in solving customer’s complaints? 10.Customer Relationship Management in Banks 7. Do you have a separate department to take care of customer’s complaints? 8. What technique is followed to solve customer’s complaints? 9. What strategy do you follow to acquire more knowledge about the customers? 90 .

Customer Relationship Management in Banks 91 .

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