This action might not be possible to undo. Are you sure you want to continue?
Customer Relationship Management (CRM) as the name suggests, the primary focal point is placed on the customer. The key objective is to increase customer value over time by increasing customer loyalty. If a company develops better customer relationships, it also improves business processes as well as its profits. In general, CRM is a more efficient automated method used to connect and improve all areas of business to focus on creating strong customer relationships. All forces are coupled together to save, improve, and acquire greater business to customer relationships. The most common areas of business that are positively affected include marketing, sales, and customer service strategies. CRM helps create time efficiency and savings on both sides of the business spectrum. Through correct implementation and use of CRM solutions, companies gain a better understanding of their strongest and weakest areas and how they can improve upon these. Therefore, customers gain better products and services from their businesses of choice. In order to achieve better insight on CRM, it is essential to consider all of its components. Customer relationship management (CRM) is a business strategy that spans your entire organization from front office to back-office. It is a commitment you make to put customers at the heart of your enterprise. The right CRM strategy and solutions can help you securely, reliably and consistently:
Delight your customers every time they interact with your business by empowering them with anytime, anywhere, and any channel access to accurate information and more personalized service. Reach more customers more effectively, increase customer retention and boost customer loyalty by leveraging opportunities to up-sell and cross-sell and driving repeat business at lower cost. Drive improvements in business performance by providing your customers with the ability to access more information through selfservice and assisted-service capabilities when it is convenient for them. Enable virtualization in your enterprise as more of your people and resources extend beyond your offices and around the world. Balance sophisticated functionality with rapid implementation and effective support for a faster return on your CRM investment.
Today’s customers face a growing range of choices in the products and services they can buy. They base their choices on their perception of quality, value, and service. Each consumer has a specific behavior. But buying habits are sometimes difficult to understand. Therefore companies always want to gain some insight about consumer behavior and habits in order to better control this behavior. Having an impact on consumer behavior means being able to change consumer’s perception of the product or service, to establish a relation between the company and its clients. Another concept which is closely related to CRM is the Customer Relationship Marketing, which is a practice that encompasses all marketing
activities directed toward establishing, developing, and maintaining successful customer relationships. The focus of relationship marketing is on developing long-term relationships and improving corporate performance through customer loyalty and customer retention.
1.2 What Constitutes of CRM Data mining The way in which companies interact with their customers has changed dramatically over the past few years. A customer's continuing business is no longer guaranteed. As a result, companies have found that they need to understand their customers better, and to quickly respond to their wants and needs. In addition, the time frame in which these responses need to be made has been shrinking. It is no longer possible to wait until the signs of customer dissatisfaction are obvious before action must be taken. To succeed, companies must be proactive and anticipate what a customer desires. It is now a cliché that in the days of the corner market, bankers had no trouble understanding their customers and responding quickly to their needs. The bakers would simply keep track of all of their customers in their heads, and would know what to do when a customer walked into the banks. But today's bankers face a much more complex situation. More customers, more products, more competitors, and less time to react means that understanding your customers is now much harder to do. A number of forces are working together to increase the complexity of customer relationships:
Compressed marketing cycle times. The attention span of a customer has decreased dramatically and loyalty is a thing of the past.
A successful bank needs to reinforce the value it provides to its customers on a continuous basis. In addition, the time between a new desire and when you must meet that desire is also shrinking. If you don't react quickly enough, the customer will find someone who will.
Increased marketing costs. Everything costs more. Printing, postage, special offers (and if you don't provide the special offer, your competitors will). Streams of new product offerings. Customers want things that meet their exact needs, not things that sort-of fit. This means that the number of products and the number of ways they are offered have risen significantly. Niche competitors. Your best customers also look good to your competitors. They will focus on small, profitable segments of your market and try to keep the best for themselves.
Successful banks need to react to each and every one of these demands in a timely fashion. The market will not wait for your response, and customers that you have today could vanish tomorrow. Interacting with your customers is also not as simple as it has been in the past. Customers and prospective customers want to interact on their terms, meaning that you need to look at multiple criteria when evaluating how to proceed. You will need to automate:
• • •
The Right Offer To the Right Person At the Right Time
It is important to realize. assembled in a consistent. prioritizing what the offers will be while making sure that irrelevant offers are minimized. Once a firm begins to use customer information to make decisions. Finally. reliable and usable format. as well as with established business practices.). we hope that you will appreciate that data mining needs to work as part of a larger business process (and not the other way around!). etc. Your interactions with them need to move toward highly segmented marketing campaigns that target individual wants and needs. This is significantly different from the past. email. telemarketing. the right channel means that you can interact with your customers in a variety of ways (direct mail. The right time is a result of the fact that interactions with customers now happen on a continuous basis. You need to make sure that you are choosing the most effective medium for a particular interaction. If you take nothing else from this book. they may begin to develop -6- . data warehousing and marketing automation). Data mining needs to work with other technologies (for example.• Through the Right Channel The right offer means managing multiple interactions with your customers. when quarterly mailings were cutting-edge marketing. though. The right person means that not all customers are cut from the same cloth. Information about customers is gathered from a variety of sources across the enterprise. that data mining is just a part of the overall process. and provided at an appropriate level throughout the firm.
data exploration and knowledge discovery are all terms that create an image of the demanding and sometimes tedious search to uncover insights that are neither obvious to competitors nor easy for competitors to duplicate. Data analyses can range from simple. You understand that the cost of keeping customers around is significantly less than the cost of bringing them back after they leave. Customer relationship management depends on data analysis activities to uncover directions and opportunities and highlight warning indicators for CRM initiatives.more sophisticated means of using customer data. -7- . Let's review two broad categories of data analysis and see how they might be used to prioritize CRM initiatives. so you need to figure out a cost-effective way of doing this. intuitive determination of who to contact. when and where to applying complex algorithms in real-time to deliver customized responses to customer-initiated interaction. An Example: Imagine that you are a marketing manager for a regional telephone company. Data mining. One of your current concerns is customer attention (sometimes known as "churn"). which has been eating severely into your margins. CRM uses data mining to understand how to reach out to and communicate with customers. You are responsible for managing the relationships with the company's cellular telephone customers.
There are differences between your customers. Don't worry about the ones who will stay. This persuasion might involve some sort of gift (possibly a new phone) or maybe a discount calling plan. One big spending customer might value the relationship because of your high reliability. Instead of providing the customer with something that is proportional to their value to your company. -8- . you should instead be providing the customer with something proportional to your value to them. This solution is probably very wasteful. Give your customers what they need.The traditional approach to solving this problem is to pick out your good customers (that is. On the other hand. and you need to understand those differences in order to optimize your relationships. The key is determining which type of customer you're dealing with. and thus wouldn't need a gift in order to continue with it. The value of the gift might be based on the amount that a customer spends. with big spenders receiving the best offers. The customers to concentrate on are the ones that will be leaving. the ones who spend a lot of money with your company) and try to persuade them to sign up for another year of service. This solution to the churn problem has been turned around from the way in which it should be perceived. Or they might simply want a better rate for evening calls because their employer provides the phone and they have to pay for calls outside of business hours. There are undoubtedly many "good" customers who would be willing to stick around without receiving an expensive gift. a customer who takes advantage of all of the latest features and special services might require a new phone or other gift in order to stick around for another year.
The key is finding the correct middle ground. You can't wait until a week before a customer's contract and then pitch them an offer in order to prevent them from churning. which could very well come from your understanding of your market and the customers in that market. you might be using data mining to automatically find the optimal point. It might be months before they have an understanding of your company's value to them. they have likely decided what they are going to do and you are unlikely to affect their decision at such a late date. By then. -9- . On the other hand. as we will discuss later. you don't to start the process immediately upon signing a customer up.It is also important to consider timing in this process. Or. so any efforts now would also be wasted.
So why is this? Raising customer satisfaction levels requires a comprehensive systems approach. since 1994. Setting a Clear Customer Experience Strategy . customer satisfaction has dropped in nearly every sector of the economy according to the American Customer Satisfaction Index compiled by the University of Michigan.3 CRM .1. So many banks "jump on the bandwagon" of improving customer service in order to impact customer retention levels. Yet.10 - .Strategy Steps from Customer Service One of the ongoing challenges successful banks face is in optimizing customer satisfaction and developing Customer Relationship Management.
thereby disillusioning employees and creating a "flavor of the month?" To establish a good strategy certain key practices are required: • • • Understand the overall banks vision and mission Define the bank’s customer service direction. technical competence and knowledge rather than interpersonal skills. lack of the right attitude can drastically impact client satisfaction levels. it is amazing how often we hear banks say. "Improving Customer Service is a priority. and we are also introducing stringent cost-cutting measures.11 - . How many banks create a slogan without any supporting initiatives. As consultants. slogan and values Ensure customer service is defined as a key responsibility for the banks(business/department) Share the customer experience strategy via a comprehensive communications program Ensure that this strategy does not conflict with other business strategies. • • Selecting the Correct People It's really hard to teach an elephant to dance! When recruiting employees to provide customer service.Often banks or any organization confuse defining a customer experience strategy with creating a "slogan". the process often tends to concentrate more on functional expertise. However. Research has in fact ." This can present a tough dichotomy.
4 Steps to follow The following steps minimize the work regarding adoption of CRM strategy. not the subjective "Be Like Me" criteria • • 1. 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.12 - . Therefore in selecting the right people: • • Define the critical job requirements Develop scenario-based interviews/assessment centers to screen and select candidates Involve multiple team members in the hiring process Ensure evaluation is based on objective.shown that attitude is the most important requirement: skills and functional expertise can be taught. if any .
Need of a Bank The banks now need to find out what to sell. when to sell. Banks also need to identify customers and products that would be most profitable and target customers with products that are . offerings and building long-term relationships with their customers through more customized products.2.13 - . how to sell and how to be different to increase profitability. whom to sell. enhanced value offerings. Banks need to differentiate themselves by adding value-added service. personalized services and increased accessibility.
which best suits their needs and satisfies them the most. however. Studies have now shown. This may be explained better from two initiatives bank took in the past: • Earlier what drove many bankers to invest in ATMs was the promise of reduced branch cost. that the primary value of offering Internet banking services lies in the increased retention of highly valued customer segments.most appropriate to their needs and serve the customers with greater cost efficiency. Bankers invested in Internet banking. was a significant increase in that intangible called customer satisfaction. banks need to retain existing customers with enhanced personalized services and products. But what was discovered is that the financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. which leads to increased customer loyalty. however. The increase in customer satisfaction has translated to loyalty that resulted in higher customer retention and growing franchise value. since customers would use them instead of a branch to transact business. • Thus.14 - . Again customer satisfaction drives the value proposition. . believing that the Internet was a lower-cost delivery channel and a way to increase sales. The value proposition. Banks also need to find out the avenues for increased customer satisfaction.
15 - . . banks should focus strongly on relationship management with customers.2. To retain High Net Worth individuals.1 Customer Relationship Management in the Banking Sector Competition and globalization of banking services are forcing banks to be productive and profitable.
in achieving the desired results. The challenge is for the banks to work towards ensuring that customers prefer . Banks are increasingly focusing on the premise that customers choose on the service provider who differentiates through quick and efficient service. to a great extent. The entire service industry is now metamorphosed to become customerspecific. banks are opening Personalized Boutiques which provide all the required financial needs of a customer”. Banks are well aware that their success is predominantly dependent on the CRM strategies adopted by them. Service providers have recognized that good CRM bonds customers with the organization for a longer term. Today.16 - . resulting in increased revenues. In today’s Internet era. With customers’ expectations becoming even more competitive. Gone are the days when customers at a bank did not mind the long serpentine queues and waited patiently for their turn with a token in their hand. unlike the yester when it was transaction-centric. online banking is assuming a great significance. banks are coming up with a wide array of novel products and services every day. there is more to Customer Relationship Management (CRM) than just managing customers and analyzing their behaviors. In this context. To provide customized services. However.Innovative Customer Relationship Management (CRM) strategies and cutting edge software can help. no one has the leisure to wait. banking is more customer-centric. the management of customer relationship in financial services industry demands special focus. In this context.
Knowledge dissemination has been propelled by electronic and mass media campaigns. In order to bolster their top lines.their products and services over that of competing brands. Leveraging on IT. there is hardly any option but to learn from and actively respond to consumers’ needs. succeed and make profit. In the current falling interest rate scenario. and exploring the possibility of cross-selling products to gain a competitive advantage are the other issues drawing attention and interest.17 - . The battle of the banks. banks are in pursuit of newer ways and means of achieving organic growth through strategies that enable acquisition of new customers and retaining the loyalty of the existing . a number of private sector banks have joined the fray and are offering a plethora of products and servicesrechristening themselves as ‘Financial Boutiques’. Thus in this current competitive scenario. to ensure customer satisfaction. Today’s knowledgeable consumer is challenging the Indian retail banking industry to redefine itself. Banks offering retail products need to reorient their strategy from a product-centric to a customer-centric approach to attract and retain High Net worth Individuals (HNI) and profitable customers as well. With the opening up of the economy. banks are finding it increasingly difficult to meet the high growth expectations. for gaining a greater slice of the market share. is taking on a new dimension. for a bank to survive competition. The key to develop and nurture a close relationship with customers is by appreciating their needs and preferences and catering to their requirements. to appropriately analyze and understand the needs of existing customers better.
Emphasis on CRM arises on account of the challenges confronting retail managers managing to sustain and achieve growth and profits. Incidentally. with the result that “customer churn” is the call of the day. the challenge for the banks is to retain and deepen the profitability of the existing customer relationships.18 - . which translates into increased profits. which is borne out by Nat West’s success.customers. A good customer experience will drive customer acquisition and promote customer retention. leveraging CRM has become sine qua non (indispensable and essential action). Ensuring a good customer experience at every customer touch point is the cornerstone of a successful growth strategy. process and products more effectively to embark on the true relationship banking— with the end result of accelerating the business momentum. in other words. Moreover. is the hallmark of a successful CRM strategy. rather that customer cultivation and creation. Success of a bank’s strategy towards customer acquisition will depend on its ability to develop customer insights and translate these into effective operating models. bankers are fully aware that losing the existing customer and acquiring new customers is an expensive affair. Towards this end. Banks are adopting CRM to converge people. With the shift from a transaction-centric to a relationship-centric business approach. most bankers resort to customer grabbing. As top management emphasizes on “delivering results”. it acts as a drain on the existing resources of the bank. which can be better employed for growth initiatives. . Bankers are conscious of the relative costs of acquiring new customers. This. Therefore.
bankers are bound to attract customers by providing a spectrum of services. it is prudent to plan for CRM in retail banks. Having understood the significance. the success of a CRM plan is dependent on the choice of the software. Towards this end. cost implementation and relationship with the vendor as factors on which vendor selection is based. multiply product database and tracking require specific CRM focus. ATM banking and Tele-banking are just a few of them. To a large extent. To meet the challenging preferences of the customers and to stay ahead of competitors.experts propose various ideas and approaches to understand the fundamental marketing motivations driving the CRM trend in banks. On their part. At the end of the day. bankers should display a flair for cultivating a good relationship with customers through the mechanism of better customer service. The domains of software systems. the setting up of a CRM cell and conducting surveys at a periodic intervals to track their effectiveness. employees need to demonstrate certain service traits such as. maintenance of efficient service delivery standards and business process reengineering. credibility in the market. . Besides understanding the requirements for CRM implementations such as. banks need to understand how CRM assists them n customer identification. Online banking. bankers should identify domain enterprise. Banks can enhance customer service by leveraging on technology. putting on pleasing attire.19 - . acquisition and retention.
introducing CRM audit by independent teams to identify the existing lacunae (small space. The rationale behind losing their best clients to other service providers such as non-brokerage houses and mutual fund houses needs to be analyzed by banks. cavity). Another dimension of the relationship building exercise is to obtain an electronic feedback from customers to understand the level of acceptance of existing products. Initiatives. The remedies suggested by them are that banks should adopt customer relationship building approaches such as responding to complaints instantaneously. In this context.20 - . percolating and permeating to all levels of the CRM is a necessity in the present business scenario. It is observed that banks lose their best clients to competitors due to a variety of reasons. and the creation of a suggestion box to elicit the views and suggestion of their employees. and rating of services across the network of branches. infrastructure. as well as the product environment. the management initiatives for CRM assume importance. which will facilitates in developing better products. are required to be adopted by the banks for reaping benefits.As a part of the planning process. Experts opine that inefficient and improper service is one major reason. A top-down CRM focused approach that starts with the top management. analyzing the attrition of the clients in a particular product. and plugging the loopholes in the CRM strategy as per the recommendations of the audit report. . frontline executives in banks should thoroughly understand their organizational structure. such as.
Banks can gain a competitive advantage from CRM by becoming low-cost players in the market.21 - . Several CRM issues such as. which is still at an embryonic stage as far as the CRM domain is considered. Having witnessed the manner in which several global banks have benefited through CRM. and streamlining of business processes are some of the benefits retail banks obtain by taking to successful management of their customer relationships. The Indian banking scenario. . The ability to predict the products that customers are likely to purchase over a period of time. needs to strive towards CRM implementation to meet the emerging demands of “universal banking”. the Indian retail banks too need to focus on and continuously invest in the customer relationship activities. its effectiveness. sales and customer service staff. application and challenges draw attention of the banking industry. achieving operational efficiency and maintaining customer loyalty. Implementing the right CRM tools can enhance customer satisfaction leading to business growth. increased productivity of managerial executives. CRM enables organizations to motivate customers to initiate revenue-generating contacts.
for new with existing clients. responding to clients.2. with existing clients. Reduced to cost of Improved response client requests. Matching software of client profile to client profile. Web based call center Personalized workspaces . Data Building history. to those IT to Increasing Client profiles. Personalized interfaces. Client retention through better service. Mailing services. Contact center. Building enquiry profiles. Reduced marketing. client cost of Internet Client profiles e-mail distribution or mailing services.2 Objectives and benefits of CRM Business Objectives Type of Benefit Knowledge requirements Potential technology Acquiring new clients Direct Marketing using technologies. client mining. business Strategies providing services. Standard responses queries. Cross selling by using identify products similar to purchased earlier Service customization Increasing business Quicker ways to match services to client needs.22 - .
Current status of Improving field service Reduced cost of travel client better service. Increase Event identification with meet relationship client new by client Identifying unusual events. Thus the customer base of banks has increased. new given Client retention through Potential directions Personalized interfaces. loans (e. Message analyses service. client the client profile. such as Internet banking and ATMs. With the advent of new technologies in the business of bank. 3. auto. investment advisory services (for high net worth individuals) etc. and so has the choices of customers for selecting the banks. . credit cards. personal. now customers can freely chose any bank for their transactions. debit cards.23 - . and educational). consumers largely selected their banks based on how convenient the location of bank’s branches was to their homes or offices. depository services.g. Need of Customer Relationship Management (CRM) in Banks: Retail banking refers to mass-market banking where individual customers typically use banks for services such as savings and current accounts. suggesting services to circumstances. housing. Before Internet era. mortgages. fixed deposits.
This is just the beginning of the story. small business. Internet and kiosk) • Multiple customer groups (consumer.24 - . and the proliferation of the Internet are changing the competitive landscape of the retail banking industry. new technology. the customers have many expectations from bank such as (i) Service at reduced cost (ii) Service “Anytime Anywhere” (iii) Personalized Service . public sector banks are also becoming more technology savvy and customer oriented. Thus. Non-traditional competition. and corporate) Today. insurance. investments and securities) • Multiple channels of distribution (call center. Due to globalization new generations of private sector banks and many foreign banks have also entered the market and they have brought with them several useful and innovative products. branch. Today’ retail banking sector is characterized by following: • Multiple products (deposits. market consolidation. Due to forced competition. credit cards.
Why is Customer Service Important? • Changing customer expectations: Today the customer is more demanding and more sophisticated than he or she was thirty years ago.25 - . The need for a relationship strategy: To ensure that a customer service strategy that will create a value preposition for customers should be formulated implemented and controlled. products and services and practically nil switching costs. customers are easily switching banks whenever they find better services and products. Therefore banks are now stressing on retaining customers and increasing market share. 5% increase in customer retention can increase profitability by 35% in banking business. and 125% in the consumer credit card market. competitors are seeing customer service as a competitive weapon with which they differentiate their products and services. 50% in insurance and brokerage. According to a research by Reichheld and Sasser in the Harvard Business Review. Banks are finding it tough to get new customers and more importantly retain existing customers. • • . 4. It is necessary to give it a central role and not one that is subsumed in the various elements of the marketing mix. The increased importance of customer service: With changing customer expectations.With increased number of banks.
Consistency and Durability at low price are the final expectations of a customer. of world class quality. .26 - . Only those institutions which work according to his dictates will flourish. The ten key areas of customer’s services to be attended timely and regularly are: • Submission of statement of A/Cs to customers • Updating of savings pass books. Quality cannot be of minimum acceptable standards. Speed. • Handling of complaint register. Quality will have to be unambiguous. • Advance intimation to customers for rewards of Term Deposits Receipts on maturity. • Advance for Debit/credit to accounts.The customer is the king pin in growth organizations like commercial banks. • Intermediate Credit for institution cheques/land bills. • Cleanliness and Upkeep of premises. Quality. • Teller system efficiency. Customer responsiveness must be quick and also competent. • Punctuality of staff. performance and cost will be the new values “mantra” for success.
update of passbooks supply of statements of accounts. • E-mail service made freely available at all banking centers. • Rapid customer services should be provided through automation of work and simplification of procedures. 1 service with smile should be the motto of every bank employee. • Credit Cards Services. . This shall facilitate non-stop banking. which should be provided to the customers. etc. Debit Card Services. Customer’s dissatisfaction in the banking industry is neither recent nor unknown. must a link service with all the banks and branches if possible to facilitate the customer and the business organizations.• Maintain a complaint register. To event such situation the following improvements in the customer services may be carried out: • Personal relations of the bank employee with customers will improve customer satisfaction. • ATM’s may be introduced in all the branches of the banks. Failure to provide prompt and efficient customer service is likely to lead to reduction in the number of customers and they may have to face closure. based upon the volume of transactions.27 - . This is mainly due to delays in handling transactions across the counter in collections.
28 - . • Totally deregulated interest rate structure should be there. Hence need based schemes may be introduced. call center.1 Utility of CRM in Banks Customer Relationship Management (CRM) primarily caters to all interactions with the customers or potential customers. • All the customers are not homogenous in their needs. field organization and other distribution channels. across multiple touch points including the Internet. • The banking staff must be trained to understand the customer’s psychology. • Educating the customers will increases better utilisation of banking services 4. Customer Relationship Management (CRM) can help banks in following ways: . so they may provide customer service in a qualified manner. bank branch.• Foreign Exchange transactions are to be extended to all the branches to facilitate trade and industries.
personalized multi-channel marketing campaigns to reach these customers and maximize the lifetime value of those relationships. banks can identify the most lucrative customers and customer segments. CRM integrates various channels to deliver a host of services to customers. finance . tailor products and services to meet their needs and sell these products to them.g.29 - . and execute targeted. 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. • 360-degree view of company – This means whoever the bank speaks to. irrespective of whether the communication is from sales.• Campaign Management – Banks need to identify customers. (for e. with CRM the information is stored in a customer centric manner covering all the products of the bank. while aiding the functioning of the bank. • Customer Information Consolidation – Instead of customer information being stored in product centric silos. income levels and other related criteria. separate databases of savings account & credit card customers). • Marketing Encyclopedia – Central repository for products. as well as internal training material. sales presentations. pricing and competitive information. Based on these profiles. proposal templates and marketing collateral.
Thus improved transparency leads to improved efficiency. Removal of inconsistencies of data makes the client interaction processes smooth and efficient. • 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. An effective CRM solution supports all channels of customer interaction including telephone. • Operational Inefficiency Removal – CRM can help in Strategy Formulation to eliminate current operational inefficiencies. wireless devices. and expense report information. the online portals. Fax. Internet. This would make sales decision fast and consistent. news. email. account. • Lead and Opportunity Management – These enable organizations to effectively manage leads and opportunities and track the leads through deal closure. including opportunity.30 - .or support. • Contact Center – It enables customer service agent to provide uniform service across multiple channels such as phone. • Activity Management – It helps managers to assign and track the activities of various members. the required follow-up and interaction with the prospects. thus leading to enhanced customer satisfaction. . the bank is aware of the interaction. fax. e-mail.
• CRM with Business Intelligence . State Bank of India. 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. and face-to-face contacts with bank personnel. It also links these customer touch points to an operations center and connects the operations center with the relevant internal and external business partners. Reserve Bank of India.ATMs. ACC.Banks need to analyze the performance of customer relationships. With such knowledge. Data warehousing solutions have been implemented in Citibank. MaxTouch. Customers can be evaluated within a scoring framework. . uncover trends in customer behavior.31 - . ICICI. CRM with business intelligence allows banks to assess customer segments. A word of caution…. IDBI. which help them calculate the net present value (NPV) of a customer segment over a given period to derive customer lifetime value. National Stock Exchange and PepsiCo. partners and employees. and understand the true business value of their customers. And Business Intelligence players hope many more will follow suit. • Enhanced productivity – CRM can help in enhanced productivity of customers. banks can efficiently allocate resources to the most profitable customers and reengineer the unprofitable ones.
issue instructions for drafts or even transact through these. 4.2 Customer Services in Commercial Banks .32 - . information on credit balance. At the same time there may be a few customers who still prefer the traditional methods of banking. Customers can get account information. finding it easier to buy CRM technology than to make the major internal changes necessary to really make CRM work for them. Internet and ATM. Banks need to be flexible enough to continue to extend the “personal touch” that such customers prefer. These are serviced by channels like IVR. Unfortunately for these banks. Make changes internally before going for CRM: Many banks have spent a lot of money on CRM. the software has often failed to deliver.Customers may not want what they get: A CRM system apart from improving front office operations and customer servicing also helps in coping with many services that do not need manual intervention.
a lot depends on efficient and prompt customer service. Banking being a service industry.Customer service is the service provided in support of a bank’s core products. . Prompt and efficient service with smile will develop good public relations reduce complaints and increase business.33 - . handling complaints. Quality customer service is essential to building cordial customer relationship. Customer service can occur on site (as when an onstage employee helps a customer or answers a question) or it can occur over the phone or the Internet. Customer service is the most important duty of the banking operations. Customer service often includes answering questions.
the buzzword. This article focuses on the kind of services provided by developed countries and level of innovative services provided by Indian banks. Globalization.34 - .5. The continuing evolution of the banking and financial market has created opportunities both for providers and for users of financial products and this evolution have proven beneficial to the economy. Customers will be satisfied only when the banks provide the customized and innovative products and services at responsible cost. The opening of the world trade has brought out several changes in the global banking map.. The changes that are taken place in the last decade demonstrate again the technical weakness and weak corporate governance at a few firms can dramatically change the cost of capital and impose additional regulatory burden on even well managed organizations. but there is a wast6 scope of improvement. Many banks have conveniently used control and security . However. Innovations in Customer Services in Indian Banking Sector Satisfied customers are the best guarantee for the stability and growth. ATMs. Many innovative services are currently available from Indian banks like E-Banking. innovations in financial products also have given rise to some new challenges for market participants and their supervisors in the areas of corporate governance and compliance. did not leave the banking industry untouched. which engulfed all the nations of the world since the beginning of the last decade of the past millennium. A conventional bank may treat its customer as coldly as they cash they deposits or borrow. Anywhere Banking etc.
2005 where it was given that “Banks are putting their best face forward for improving service quality.” The major brakes in the internal controls of big corporate and institutions such as share market in the past few years. costs. and profits. And the role of bankers has led bank regulators to change their view of bankers’ relationships with there corporate clients. and are now branch marking with non-bank institution to learn about their best practice. In recent. Technological innovation has helped in overcoming any such problems. India is picking well. Let’s see the currently booming plastic card market.35 - . Some banks have finally adopted these new services Paradigms. Now with demat -accounts this risk is taken off. . In India the growth is not that phenomenal but among the emerging economies. The growing concern about the improvement in service quality can be gauged by recent news in the business standard dated June 1. There was a time when we used to hear that duplicate share certificates were flooding the market and large amount of money was being embezzled. other service industries.as reasons for their remarkable slow and impersonal services. not ably fast food and airlines have proven that customer service can be a swift and enjoyable experience for both the clients and employees without sacrificing control. others have gone a step forward and are recruiting people from the airline and hospitality industries to improve the quality of front line sales staff. While some like the Oriental Bank of Commerce have prepared a detailed dress code of their employees.
Employers in the developed countries are turning increasingly to electronic payroll cards as a cost-effective way to reduce the burden of writing and processing checks. Still we are far behind in terms of Internet security and E-money security. people still prefer to pay by cash. Reliance on credit cards held steady during that time. A major result of this functional benchmarking was the establishment of a 24-hour customer service center that can not only respond to queries and complaints but also promote and . for the first time. the American Bankers Association reported last December that in 2003. The reason behind this mindset is safety for money. Monitoring this trend. “driven by the increasing popularity of debit cards. dropped to about 47% last year.an “evolution of payment behavior.” In a country like America. up from 21% only seven years ago. In India. which accounted for 57% of in-store purchases in 1999. Consumers are using their payroll cards and other versions of prepaid debit card. if we see then. electronic payments surpassed cash and cheques as consumers preferred payment method for in store purchases.as a substitute for cash and checking accounts. at about 21%.Technology is rapidly transforming the banking industry.36 - .also know as stored value cards. Cash and checks. Debit cards accounted for nearly one-third (31%) of in-store purchases in 2003.and expanding its ability to reach the un-banked. Coming across through the performance of Banking Institutions of the west and seeing their performance in the use of innovative methods to make them-selves more customer-friendly we would have no doubts about their strong banking mail-order company.” the ABA noted.
To reinforce this service philosophy. Insider by these models. if the customer complains of any other inconvenience.sell the bank’s products and services. Banks published a 50-page catalogue to help customers appreciate and select from its more than 160 financial services. branch managers are rated not only on sales but on service goals. “wait any longer than 5 minutes in line and the bank guarantees $5 to your account. Seafirst Bank in Seattle redefined itself from a “retail bank” to a “retailer” and has benchmarked with retailers know for world-class customer service such as fast-food restaurant chains. The center even allows customers to open a checking account anytime or negotiate an overdraft at 2 am. Achieving or even exceeding sales targets without achieving customer satisfaction goals will not qualify a branch manager to receive the bank’s prestigious “Gold Club” award. When Seafirst decide to redesign and re-layout its offices to improve services. The ATM was also reconfigured from mere cash dispenser to a versatile and tireless account executive. Executives from the CEO down are encouraged and expected to visit branches regularly to monitor service and get a first-hand fell of the action. It is now more open . it acquired the services of an expert from the Godfather’s Pizza chain. One result making the teller counter waist-high.37 - . one other bank instituted a 5-mintue guarantee that says. The greeter mans a kiosk (booth) at the entrance of the bank. much like the Guest Relation Officers (GRO) or receptionists of 5-star hotels. The machine can even buy and sell mutual funds. he or she gets a $5 “I’m sorry coupon”.” Moreover. Its branch offices have official “greeters” to greet and guide customers to the right tellers or desks.
and standardization of tasks. The facility is designed to represent the company’s commitment to services and also serve as the customer’s last resort in case everything else fails. Similarly. The bank also benchmarked with Chrysler in getting its functional departments work effectively as teams. streamlining. modern day banks have established phone centers to accept. By applying the concept of “mass production”. Citicorp aims to remove this critical bottleneck. Any customer can pick up this phone and relay his or her complains. have likewise adopted innovative service strategies and practices. and resolve customer complaints.and personal than the traditional counter that is intimidating and creates a barrier between the client and the teller. sledded their conversation “finance and control” images. Other banks in the west have. Phone lines dedicated to customer service have been installed. Back offices of banks are knows for snail-pace bureaucracy that hampers front line operations and ultimate customer service. process.38 - . questions. or difficulties. Many Indian banks have also adopted some of these systems. They also have a customer feedback program whereby whoever the customer complaints to. will be responsible for giving the client feedback on the status and progress of . Information about the busiest day or days in the branch is displayed so that the customers who want to avoid these periods may do so. Here customers can browse through various bits and pieces of important service information like the average time to finish a transaction and the company’s products and services. say a staff employee or manager. Many Banks have established an information center or “encyclopedia” in the waiting lounge.
banks have also reconfigured their Automated Teller Machines to dispense not only cash. The Korean Technology Banking Corporation (KTB) is setting up a Technology Financing Information Center to serve the various needs of its clients. To facilitate processing.his or her complaint. local information.39 - . development financial institutions like the Industrial Development Bank on India requires borrowers to submit loan application forms in electronic floppy disks. The banks have customer service centers where they have created two customer flows or lines to deliver services more effectively. clients will get information about specific technologies. but also commodity prices and information about its products and services. One was for loans and similar products that require customized and personalized services. The centers will contain a huge database of information analyzed from various data from internal and external sources. and other data relevant to the ventures they are setting up. By accessing this database. The other was for the standard and repetitive service like deposits and withdrawals. Modern day banks have extended the concept of “Mobile Banking.” Some banks in the European and American continents have launched floating branches on boats that provide full branch bank services. to the convenience and delight of customers living in longhouses along the river banks. To further enhance service. By creating two service environments that cater to two different types of needs. . most of which are setting up joint-venture overseas. service is enhanced and speeded up.
Before sweeping changes were made. the Singapore clearing House Association has cut the clearing of US $ checks deposited in Singapore from two weeks .40 - . The Industrial and Commercial Bank. visit the bank’s branches to learn a few lessons on satisfying and delighting customers. the benchmark for customer service and customer courtesy is surprisingly a bank. Even clearinghouses have adopted the new service paradigms to support the banks’ initiatives. the Industrial and Commercial Bank was also known for bad service and discourteous front line employees who even swore at clients. used the Amex model in enhancing its billing system. For instance.Some banks and financial institutions have done such a remarkable job in improving and reinventing customer service that they themselves have become the benchmarks of other companies outside the banking sector. For instance. “when will you sleep complaining?” was included in the banned list. While other banks may refuse to change or accept soiled or old currency notes. the benchmark for many quality practices. Xerox. American Express. many of which are known for rude service. For instance. One radical and highly effective policy it instituted was coming about with a list of words and phrases their employees were forbidden to use when dealing with customers. In China. Hundreds of retail shops and department stores. the credit card company. the popular expression. the bank will replace these without question. Amex’s billing is reportedly the fastest and most accurate in the world in any industry. is the recognized benchmark to emulate when it comes to improving a company’s billing process.
in contrast to customer processing. passbooks. Innovation banking in customer service is indeed a welcome and longwaited development. banks have rarely treated customers as people. We hope that other left out banks and financial institutions will follow suit soon. Customer service. is a concept whose time has come for the banking industry worldwide. Our Article focused on the kind of services provided by the banks in the developed countries but this is not to deny the fact that the banking sector in India and other developing countries has also started doing up well in terms of providing innovative and modern day banking facilities along with good customer service. As in other service sectors. In the past. Satisfied customers are the best guarantee of stability and growth. and loan applications. . preferring to treat them as account numbers. The new system requires participating banks to open US dollar accounts with Citibank to service their respective clients.to 3 days.41 - . bank customers deserve the very best.
tremendous changes have taken place in the banking industry. regional rural banks and co-operative banks with the Reserve Bank of India as the fountain Head of the system. agricultural and other preferred areas like export sector etc. private sector banks – both old and new generation. foreign banks.42 - . In the banking field. Massive branch expansion in the rural and underdeveloped areas. The banks have shed their traditional functions and have been innovating.6. improving and coming out with new types of the services to cater to the emerging needs of their customers. have resulted in the widening and deepening of the financial infrastructure and transferred the fundamental character of class banking into mass banking. we are having a fairly well developed banking system with different classes of banks – public sector banks. there has been an unprecedented growth and diversification of banking industry has been so stupendous that it has no parallel in the annals of banking anywhere in the world. Recent Trends in Indian Banking Sector Today. . During the last 52 years since 1969. mobilization of savings and diversification of credit facilities to the either to neglected areas like small scale industrial sector.
greater disclosure in the case of defaults. leasing. but lent for a purpose and with a purpose ought to be the slogan for salvation. The banking industry cannot afford to sustain itself with such high levels of NPA’s thus. Some banks have commenced factoring business.43 - . banks are groaning with burden of NPA’s (Non Performing Assets). Today. The major challenges faced by banks today are as to how to cope with competitive forces and strengthen their balance sheet. credit cards. if not recovered. mutual funds etc.There has been considerable innovation and diversification in the business of major commercial banks. “lend. It is rightly felt that these contaminated debts. Some of them have engaged in the areas of consumer credit. The resolution of the NPA problem requires greater accountability on the part of the corporate.” The Indian banks are subject to tremendous pressures to perform as otherwise their very survival would be at stake. will eat into the very vitals of the banks. Information technology (IT) plays an important role in the banking sector as it would not only ensure smooth passage of interrelated transactions over the electric medium . an efficient credit information sharing system and an appropriate legal framework pertaining to the banking system so that court procedures can be streamlined and actual recoveries made within an acceptable time frame. A few banks have already set up subsidiaries for merchant banking. merchant banking. Another major anxiety before the banking industry is the high transaction cost of carrying Non Performing Assets in their books. leasing and mutual funds and many more are in the process of doing so.
In the days to come. Human Resources Management is assuming to be of greater importance. The Reserve Bank in its bid to move towards the best international banking practices will further sharpen the prudential norms and strengthen its supervisor mechanism.but will also facilitate complex financial product innovation and product development. There is no need of person-to-person physical interaction or dealings. extension counters. This would be the case of banking reaching the customers. does not exist. human capital will emerge as the finest . The application of IT and e-banking is becoming the order of the day with the banking system heading towards virtual banking. As an extreme case of E-banking World Wide Banking (WWB) on the pattern of World Wide Web (WWW) can be visualized. banks are expected to play a very useful role in the economic development and the emerging market will provide ample business opportunities to harness. There is no need to have large number of physical bank branches. That means all banks would be interlinked and individual bank identity. Customers would be able to do all their banking operations sitting in their offices or homes and operating through internet. as far as the customer is concerned.44 - . Many new players with different muscle powers will enter the market. As banking in India will become more and more knowledge supported. There will be more transparency and disclosures. Banking landscape is changing very fast.
assets of the banking system.45 - . 7. and • . etc. Setting measurable targets for each initiative in terms of growth in profits. A Case Study of ICICI Bank Focus on ICICI Bank’s Initiatives The use of Customer Relationship Management (CRM) in banking has gained importance with the aggressive strategies for customer acquisition and retention being employed by banks in today’s competitive milieu. Ultimately banking is people and not just figures. The steps that banks follow in implementing Customer Relationship Management (CRM) are: • Identifying CRM initiatives with reference to the objectives to be attained (such as increased number of customers. number of customers. etc. enhanced percustomer profitability. This has resulted in the adoption of various CRM initiatives by these banks to enable them achieve their objectives.).
Aggressive marketing and promotions on the part of the banks have resulted in most customers happily switching loyalties to enjoy better privileges. The use of Customer Relationship Management (CRM) in banking has been essentially done for the following purposes: • Targeting customers: It is necessary for banks to identify potential customers for approaching them with suitable offers. Customer expectation from banks can be summed up as: “Any time anywhere service.) needs to be collated into one database to facilitate its proper analysis. The transactional data that is generated through customer interactions and also by taking into account the profile of the customer (such as the lifecycle stage. a customer interacts with the banks for savings . etc. family commitments. The challenges in managing customer relations in retail banking are due to the multiple products being offered and the diverse channels being used for the distribution of the products.46 - . personalized offers. and lower payouts”. Customer Relationship Management (CRM) has been deployed in retail banking. economic background.• Evaluating and choosing the appropriate Customer Relationship Management (CRM) package that will help the company achieve its CRM goals (a comparison of pay-offs against investments could be carried out during the evaluation exercise). For example. thereby making the task of retaining them more difficult for the banks.
Removal of inconsistencies is necessary to ensure that customers are not harassed and frustrated owing to poor internal co-ordination. irrespective of the medium used for the interaction such as telephone. Internet. finance. competitor information. Therefore. fax. • . e-mail. the data generated through all these services needs to be integrated to enable effective targeting.accounts. car loans. pricing. This is bound to enhance customer satisfaction.) Consistent interface with customers: The communication to customers from various departments like sales. demat accounts. etc. should be consistent and not contradictory. home loans. The contact centers used to interface with customers should ensure consistency in customer interaction. all departments should be privy to a unified view of the customer to enable a consistent approach. etc.47 - . These prove to be very helpful in Sales Force Automation (SFA) wherein the salesperson gets instantaneous access to all relevant material as and when it is required (especially when he/she is in a meeting with a client. etc. sales presentations. • Sales reference material: A consolidated information database on all products. After the integration is done. a profitability analysis of the customer needs to be undertaken to acquire an understanding of the profit-worthiness of the customer before targeting him with new offers. credit cards. customer support. proposal templates and marketing collateral should be accessible to all the people concerned.
Proper analysis of all available data will enable banks to understand the needs of various customer segments and the issues that determine “value” for that segment. ICICI Bank’s CRM Initiatives ICICI Bank has to manage more than 13 million customers. it helps in generating opportunities for cross-selling and up-selling. Its customers often use multiple channels. and they are increasingly turning to electronic banking options. ATMs and other electronic channels now comprises more than 50 per cent of all transactions. multiple call centres. The Teradata solution focuses on a Customer Relationship Management (CRM) platform. a network of 2025 ATMs. Accordingly. Business from the Internet. When data analysis is done in the right manner. Information from various legacy and transaction systems is fed into a single enterprise called wide data warehouse. The Behaviour Explorer enables profiling of customers and querying on various parameters. Internet banking and mobile banking. suitable campaigns can be designed to address the issues relevant for that segment and to ensure higher loyalty from these customers. The bank has over 550 branches. The warehouse has the capability to integrate data from multiple sources comprising Oracle and flat files. In the process of making its business grow to this level. ICICI Bank has distinguished itself from other banks through its relationship with customers.48 - . These enable the bank staff create suitable . This allows the bank to generate a single view of its customers.Banks can use the data on customers to effectively segment the customers before targeting them.
49 - . bonds. enabling the bank to satisfy customers through better personalization and customization of services. credit cards. The products thus created take into account the customer’s needs and desires.campaigns for targeting individual customers on the basis of their requirements. which includes information from eight separate operations systems including retail banking. The warehouse also gives indications regarding the customer’s channel usage. Central data management: The initial implementation of CRM allowed ICICI to analyse its customer database. The data access was facilitated through the use of Cognos Power Cubes. whereby customer profiling can be undertaken by using ad hoc queries. fixed deposits. unearthing cross-selling opportunities as well as finding out about the channel usage undertaken by a segment. etc. fixed deposits. The Benefits of CRM • Customers’ usage pattern: ICICI’s CRM data warehouse integrates data from multiple sources and enables users to find out about the customer’s various transactions pertaining to savings accounts. credit cards. custodial services. New product development: Analysis at ICICI guide product development and marketing campaigns through Behaviour Explorer. The logistics in the system have also led to other benefits like interactive reports. retail consumer loans. • • . online share trading and ATM.
which guide a visually challenged person to access ATMs without any help. After the deposit slip is filled. ICICI Bank also has cash pick-up service for business customers under the business banking segment. The Bulk Deposit ATM is available in Mumbai’s Vashi sector branch office of ICICI. The transaction slip is then generated by the ATM as an acknowledgement of the deposit. ICICI Bank issues a special card called the `Deposit Only Card’ to facilitate this service.Some Noteworthy CRM Initiatives of ICICI Bank Mobile ATMs: Customers of ICICI Bank can access their bank accounts through mobile ATMs. ATMs for the visually challenged: ICICI Bank has launched ATMs with special voice-guided systems. This facility has been tried at Mumbai. The bulk deposit facility can be availed of by select customers who need to deposit huge amounts of cash.50 - . Unlike conventional ATMs. Bulk Deposits: The ICICI Bank’s Bulk Deposit ATMs enable customers to deposit large amounts at one time. the bag can be inserted in the ATM. The service is further facilitated by the provision of special bags at ATMs in which a customer can put his money. Chandigarh and various places in Kerala during specified timings. these ATMs allow the deposit of huge amounts. This card allows for deposit transactions only. which are able to accept only 30 notes at a time. These ATMs are kept in vans and parked at locations that have a high traffic of bank customers such as the commercial areas in a city or upmarket residential areas ICICI Bank now provides standard ATM facilities through ATM vans. The jack on the terminal enables .
2005. Other Services through ATMs: Apart from the usual transactions involving the bank. the customer is guided to ensure that the ATM card is inserted in the right slot and thereafter. some other services can also be availed of by ICICI Bank customers. Making donations for Tirupati Tirumala Devasthanams. On September 19.51 - . ICICI Bank and VISA announced the launch of mchq – a revolutionary new service – which is a credit card using the mobile phone. and Bill payments • • • Mobile phone as a Virtual Wallet: The mobile phone has been transformed into a virtual wallet – a new innovation in mobile commerce. After the language selection is done. These include: • • Prepaid mobile recharge Buying and renewing Internet packs (such as those of TATA I Indicom Internet service provider and Sify). The slot for cash collection has such raised `pips’ that enable easy identification through touch. Nathdwara temple and Shri Mata Vaishnodevi shrine. Mutual fund transactions. Customers may choose a suitable language to get voice commands. This is the first mobile-to-mobile payment option which . guidance is provided for entering the PIN by using the keypad. Airtel. A raised button is provided on number 5 to enable users to identify the numbers easily through touch.headphones to be connected to it and voice commands enable the customer to transact business.
account debit/credit. This nation-wide golf tournament had over one lakh high-net-worth clients of ICICI Bank’s private banking division participating in the event.. Social Events: ICICI Bank organized the largest domestic invitational amateur golf event for HN1 (high-net-worth individuals) customers.enables Airtel customers and ICICI Bank Visa cardholders to pay for their purchases with their Airtel Mobile phones. Mobile Banking Benefits: Mobile banking enables the customer to avail of many facilities by just sending an SMS. The service has eliminated the need for carrying physical cash for making a purchase and also the problems associated with the point of sale (POS) terminal since the mobile phone services as a secure POS and a payment mechanism. cards and demat account • . which are currently offered free of cost. and Queries on banking. cheque bounce.52 - . are as follows: • • • • Locating ATM Locating branch Locating drop box Alert facilities like salary credit. These facilities. etc.
the following actions are now being deployed: .53 - .8. Conclusions Results obtained by extensive usage of customer data to develop and apply Relational Marketing have convinced the ICICI Bank to proceed along the line undertaken. as above described. As lists of customers eligible for four very important banking product/services are available.
. Extension of promotions to a larger customer population by having sales people in the branches contacting progressively 15. Moreover the analytical and strategic CRM cycle is being completed by developing an application analyzing customers' attrition and deploying strategies to reduce it. 3.54 - . Explain the initiatives take by ICICI Bank to promote Customer Relationship Management (CRM). Targeted campaigns through Internet and the call center for customers actively using one or both of these innovative channels for their banking operations. The same approach is now being extended to small and medium businesses and to commercial customers.1. 9. Questionnaire: 1.000 customers 2.
55 - . Discuss the benefits of the initiatives taken by ICICI Bank to promote Customer Relationship Management (CRM). 10. Bibliography . Give your views keeping in mind the cost involved in implementing CRM and enhancing business also. Outsourcing CRM is one activity that most organizations follow. Is it a viable option.2. What should be the core elements of CRM that ICICI bank in your opinion should follow. 3. besides what they are already following to make themselves a distinct bank from their competitors 4.
com • • .banknetindia.56 - .icicibank.In completion of this project the following websites were referred to • www.wikipedia.wikipedia.rbi.in www.com • • • www.google.com • www.allahabadbank.org www.com www.com www.gov.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.