E-banking an initiative for customer relationship management vis a vis SBI

Dr. Anubha Vashisht, Dr. Bharti Wadhwa

anubhavashisht@gmail.com
bahuja14@gmail.com

Symbiosis Centre for Management Studies, NOIDA

(Constituent of Symbiosis International University, Pune)

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 ABSTRACT

E-Banking as helped in establishing relations with customers and has provided convenience to the customers by
reducing time in processing and transaction. In this Internet era when the active internet user have increased over
45.3 million and when we expect India to rise to third position in Internet usage by 2013, the need to incorporate
CRM in operations and in business has increased. It has been estimated that there is about 60% cost saving in e-
banking. In India, ICICI bank has started online banking in 1996. After it, City bank, IndusInd bank, HDFC bank
introduced it. Very late it was introduced in nationalized banks like SBI, Bank of Baroda, Punjab National bank etc.

Findings: It was found that people in the age group of 20-30 prefer e- banking. People above 40 years of age prefer
branch banking as they find it easier and they have been banking this way for years. They need guidance for e-
banking.
While analyzing the benefits of modern banking system using CRM and traditional banking system we the
researchers found that the e -CRM practices have in lot many ways simplified the life of the customers. The modern
banking system has been found to be time savvy, cost effective and easy to access to the customers. However
customers do have security issues in mind. Customers have rated SBI high on Trust and Service quality.

Key words: CRM, CRM(electronic –customer relationship management), Marketing, e-

banking

INTRODUCTION

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In the present scenario when customers are more demanding, banks have realised the importance
of customer retention.For customer retention banks can look for two criteria- customer data
management and customer relationship management. Customer relationship management (CRM)
is effectively managing differentiated relationships with all customers and communicating with
them on an individual basis. The more useful way to think about CRM is as a process that will
help bring together lots of pieces of information about customers, sales, marketing effectiveness,
responsiveness and market trends. CRM solutions not only analyze customer attributes but also
determine the likelihood of visits, spending predictions and cross- sell opportunities and thereby
encourage customers to remain loyal. According to Gartner Research there are eight building
blocks of CRM. It includes vision, strategy, valued customer experience, CRM process,
information, technology and CRM Metrics. The factors that are required for customer
relationship are lower costs, higher quality, user friendly and trust worthy.

With the expansion of the businesses of a company more of fragmentation is visible. It is

becoming necessary to integrate the businesses as well as the units to satisfy the customer, may
be internal or external. A transition is necessary in this regard. CRM technology helps to
integrate the fragmented business. It uses software, networking and telephony infrastructure and
can be called as CRM. CRM helps achieve customer satisfaction and bring customer loyalty by
minimizing customer dissatisfaction, resolving customer complaints and increasing product
service quality. With the use of Web, CRM has enhanced organizations capabilities by
increasing accessibility of customers and suppliers. Thus communication through wireless web is
called CRM. The transition from mass marketing to real time marketing using CRM can be seen
in Diagram1.

Changing phase of marketing

Diagram1

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Transactional
Approach Relationship CRM CRM
Marketing

Segmente Real
Mass d time
Customer
Marketin Marketing Marketin
Marketing
g g

High market Isolated Ease of Self

share Multiple marketing Service to the
Huge transactions customer
Campaign Customer loyalty
Long term Interactive
Single relations Higher customer communication
treatment contact
High Customer Personalized
contact Customer action at all
differentiated touch Points
Tailored Offers treatment focus

Transition

CRM is a concern for almost all organizations. It is of utmost use for the banking sector.
Banking is witnessing various changes in last many years. It is due to many economic reforms
and increasing globalization. Today people require easy transfer of funds and messages. In this
internet era people expect everything to be fully computerized or atleast IT enabled. The biggest
advantage with the private or foreign banks is that they have highly sophisticated operational
system. They offer quick and easy processing to the customer.

CRM influences customer touch points and simplifies contacts with customers. It uses
telephones, letters, e-mails, fax etc. Not only this CRM helps collect data and processes it using
various IT tools. e- CRM has become a vital substitute for labor and paper intensive banking
processes. We are witnessing high use of ATMs, credit cards, debit cards, smart cards etc.
Mobile banking, i-banking, phone banking, ATMs, credit cards, Smart cards etc. are few
examples of e- banking. CRM has simplified processes between bank and bank and between
customer and bank. In case of CRM banking facilities are accessed using cell phones, internet,
wireless network etc. According to Internet and Mobile Association of India, By 2008 end India
had 10crore internet users with 16 million using internet for banking services.

CRM utilizes ERP, data warehousing and data mart. ERP i.e Enterprise Resource Planning is a
way to integrate the data and processes of an organization into one single system. Usually ERP
systems will have many components including hardware and software, in order to achieve
integration, most ERP systems use a unified database to store data for various functions found
throughout the organization. Data warehouse is a repository of an organization's electronically
stored data. Data warehouses are designed to facilitate reporting and analysis. A data mart is a

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repository of data gathered from operational data and other sources that is designed to serve a
particular community of knowledge workers.

The need to adopt CRM emerges from the following:

 To coordinate marketing initiatives across all customer channels.
 To leverage customer information for more effective marketing
 To achieve customer satisfaction through prompt service.
 To optimize value of inter-active relationship.
 To increase personalized interaction with the customers.
 To reduce cost per contact
 To decrease cost by reducing human mediated support..
 To deliver facility at the nearest point to the customer.
 To reduce processing time.

Banking Sector has been one amongst the pioneers in adopting CRM. This sector relies heavily
on building customer relationship and getting business through proving maximum customer
satisfaction. By improving the customer conversations the organization can improve the
customer relationships. Presently customers do not visit their banks for cash withdrawals,
deposits etc. They depend on ATMs or e banking for any kind of transaction. Thus customers are
becoming choosier and the success of banks depends upon the way they handle customers
through electronic mode. According to Mohini Singh(2002), faster processing the transactions by
E-CRM, the fact that e- responses to customer queries, order acknowledgement, delivery and
payment information via. E-mails or automated responses are greatly appreciated by customers.
Increased use of technology has cost on documentation and associated processes. However banks
especially small banks, regional rural banks and cooperative banks still follow the outdated
methods of accounting and service. There is still no automation of the processes. It has been
estimated that there is about 60% cost saving in e-banking. In India, ICICI bank has started
online banking in 1996. After it, City bank, Indusind bank, HDFC bank introduced it. Very late it
was introduced in nationalized banks like SBI, Bank of Baroda, Punjab National bank etc.

The State Bank of India is the country’s oldest Bank. It is the only Indian bank to feature in the
Fortune 500 list. The bank is undergoing through tremendous changes in the time when private
banks and foreign banks are moving at a very fast pace leaving back the public sector banks. It
has made great studies in adoption of technology. The bank has transformed from a single
window concept to automatic cheque transaction and IT mission to offer world class services to
customers. The State Bank of India was destined to act as the pacesetter in this respect and lead
the Indian banking system into the exciting field of national development. The bank is entering
into many new businesses with strategic tie ups – Pension Funds, General Insurance, Custodial
Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory
Services, structured products etc – each one of these initiatives having a huge potential for
growth. Thus with this these banks are trying to save the 200 year old rule of public sector banks.
SBI is bringing new technology and innovative new banking models, to expand its Rural
Banking base, looking at the vast untapped potential in the hinterland and proposes to cover
100,000 villages in the next two years. It is also focusing on whole sale banking capabilities to
serve large corporate. It is entering into structured products and derivative instruments. Today,
the Bank is the largest provider of infrastructure debt and the largest arranger of external

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commercial borrowings in the country. CBS software was 1st implemented in SBI’s branches in
2003 which offered 24x7 banking, anywhere banking and integration of other strategic sectors.
At present 90% of the banks work is through CBS.

It has also been understood by the SBI bank that customer service is a key and a crucial product
of the three critical factors of product, process and people. Thus three are to be understood
simultaneously to provide better services to the customer. So understanding this concept not only
is the bank increasing its products range but the Bank is also changing its outdated front and
back end processes to modern customer friendly processes to help improve the total customer
experience. With about 8500 ATMs of its own 10000 branches and another 5100 branches of its
Associate Banks already networked, today it offers the largest banking network to the Indian
customer. The Bank is also in the process of providing complete payment solution to its clientele
with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards,
mobile banking, etc. The facilities it provides to its customers through its ATM machines are:
1. Cash deposits and withdrawals
2. Payment of utility bills
3. mobile topups
4. SBI card bill payment
5. SBI life premium payment
6. Payment /donation to trusts
7. Funds transfer
8. Railway ticket booking

E-Services by SBI:
1. Bill payment through Billpayment@online.SBI. It enables SBI customers to pay
telephone, mobile, electricity, insurance and credit cards bills.
2. Normal bank transactions like open new account, request for Demand Draft, issue of
cheque book, balance inquiry, loan application etc.
3. Online exercise and service tax payments, income tax and corporate tax payments.

In a recently concluded mass internal communication program termed ‘Parivartan’ the Bank
rolled out over 3300 two day workshops across the country and covered over 130,000 employees
in a period of 100 days using about 400 Trainers, to drive home the message of Change and
inclusiveness. The workshops fired the imagination of the employees with some other banks in
India as well as other Public Sector Organizations seeking to emulate the program. For better
relationship with the customer the bank has offered Customers of the Bank to meet senior
executives of the Bank on 15th of every month (between 3.00 p.m. and 5.00 p.m.) without any
prior appointment and discuss issues relating to their accounts/banking transactions. In case 15th
of month is a holiday, customer can meet on the next working day. SBI has developed integrated
network across 20 countries which has enabled it to cater 100 million bank customers.

Understanding the importance of CRM in the banks the researchers have made an attempt to
analyze the effectiveness of the system and have set few objectives for the same.

OBJECTIVES:

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 1. To study the importance of CRM to the customers in banking sector and its relationship
with the age.
2. To study the impact of change brought by CRM and e-banking on the customers of SBI.
3. To study the factors responsible for customer Satisfaction.
4. To offer suggestions.

RESEARCH METHODOLOGY

This study is exploratory in nature. The researchers have used both secondary and primary data.
They have taken secondary data from internet, magazines, journals etc. Primary data has been
collected using questionnaire.

Sample size 100

Sample area NCR
Sampling Method Convenience and stratified
The sample was divided in the age group of 20-30, 30-40, 40-50 and 50 above. Each category
had 25 respondents.
For Analysis, Frequency distribution was performed and hypothesis was tested using Chi square
analysis.

ANALYSIS AND FINDINGS

The researchers in the study analyzed and found number of things. The analysis and findings are
discussed below.

It was found that people in the age group of 20-30 prefer using ATM or internet banking. We can
say that they prefer electronic channel of banking. People in the age group of 30-40 again prefer
electronic channel but few even visit bank. Although people in the age group of 40-50 people
prefer visiting banks or use ATM. However people above 50 prefer bank transactions through
personal visit in the bank. The data obtained through primary data collection on the sample is
shown in Table1 and graph 1.

Customer's preference with respect to bank services and the age group

Age Bank visits ATM Internet banking Mobile banking

20-30
1 13 7 4
30-40
2 15 5 3
40-50
15 7 2 1
50 above
17 6 1 1

Table 1

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 Customer's preference with respect to bank
service and age group

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Number of respondents

15 20-30
30-40
10
40-50
5 50 above
0
Branch ATM Internet Mobile
banking banking banking
Services

People above 40 prefer branch banking as they find it easier and they have been banking this
way for years now. They need guidance for e- banking.

The awareness level for e-services is high. People are aware about the e-services provided by the
banks. Highest level of awareness is about the use of Debit cards, smart cards credit cards etc.
The least awareness is for mobile banking which is even above 50%. This can be seen in Table 2
and graph 2.

Services
Awareness (%)
Internet banking for bill payment
90
ATMs for cash withdrawals 100
Website for general
information/queries/products 100
Online business transactions 82
Mobile banking 60
e-account statements 67
Debit, Credit, Smart cards etc. 100

Table 2

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 Awareness level of e- services

120
Awareness level (%)

100
80
60
40
20
0

statements
ATMs for cash

e-account
Mobile banking
Internet banking

Debit,Credit,Sm
information/quer

Online business
for bill payment

withdrawals

art cards etc.

transactions
Website for
general

e-Services

Graph 2

It was found during the research that most of the people utilize the services of ATM for cash
withdrawal and deposits. Around 76% utilize this service of the bank. Next after this is the
service of the banks for shopping. People use debit credit and smart cards for payment of bills,
reservations and for shopping. These respondents during an informal interaction revealed that
these services have made their life simple. As people are not aware about mobile banking hence
the usage is also low. The service can be made popular by making people know the way to use
the service. The responses obtained can be seen in Table 3 and graph 3. The reasons while
understanding the low use of various other services is lack of knowledge about the way to use
the service.

Services
Users (%)
Internet banking for bill payment
14
ATMs for cash withdrawals
76
Website for general
information/queries/products 30

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 Online business transactions
15
Mobile banking
9
e-account statements
20
Debit, Credit, Smart cards etc.
60

Table 3

Users' percentage of e-services

80
70
60
Users(% )

50
40
30
20
10
0
Internet banking for bill

inform ation/queries/prod

Debit,Credit,S m art cards

e-account statements
ATMs for cash

Online business

Mobile banking
Website for general
withdrawals

transactions
paym ent

ucts

etc.

e-Services

Graph 3
While analyzing the benefits of modern banking system using CRM and traditional banking
system we the researchers found that the e -CRM practices have in lot many ways simplified the
life. It was found by the researchers that modern banking system using electronic techniques for
maintaining relations with the customers provide e- services to them. 80% customers find
modern system to be time saving, around 85% find it easy to access because of the system.82%
customers feel that it is a simple way to bank more then 70% feel that this system gives personal
touch, it is confidential and it provides customized answers. Although for more detailed
information and security reasons they still want to rely on the old banking system. The data
obtained can be seen in Table 4.

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 Benefits Traditional banking Modern banking system(internet, mobile for
system(pass books, personal queries & transactions)
visits for queries &
transactions etc)

Time saving 20 80

Easy access 15 85

Personal touch 26 74

Confidential 28 72

Cost effective 16 84

Customized answers 30 70

Simple process 18 82

Detailed information 52 48

Security(frauds, hacking 76 24
etc)

Table 4

While studying the customer satisfaction with reference to SBI bank, we observed 7 key
parameters responsible for the satisfaction level.
H0: All the factors are not responsible for customer satisfaction at SBI.
H1: All the seven factors are responsible for customer satisfaction at SBI.
For this Chi square analysis was performed on the data obtained. The analysis is shown below
Tables 5a,5b,5c,5d,5e,5f,5g,5h.

NPar Tests
Chi-Square Test
Frequencies

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 customer interaction

Observed N Expected N Residual

very poor 16 20.0 -4.0
poor 38 20.0 18.0
ok 39 20.0 19.0
good 6 20.0 -14.0
Excellent 1 20.0 -19.0
Total 100

Table 5a
convenience

Observed N Expected N Residual

2 18 33.3 -15.3
3 48 33.3 14.7
4 34 33.3 .7
Total 100

Table 5b

Speed of processing

Observed N Expected N Residual

1 16 20.0 -4.0
2 38 20.0 18.0
3 39 20.0 19.0
4 6 20.0 -14.0
5 1 20.0 -19.0
Total 100

Table 5c

Service quality

Observed N Expected N Residual

1 15 20.0 -5.0
2 38 20.0 18.0
3 40 20.0 20.0
4 6 20.0 -14.0
5 1 20.0 -19.0
Total 100

Table5d

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 Trust

Observed N Expected N Residual

4 10 50.0 -40.0
5 90 50.0 40.0
Total 100

Table 5e

Employee cooperation

Observed N Expected N Residual

2 18 33.3 -15.3
3 48 33.3 14.7
4 34 33.3 .7
Total 100

Table 5f

Website

Observed N Expected N Residual

1 4 25.0 -21.0
2 39 25.0 14.0
3 44 25.0 19.0
4 13 25.0 -12.0
Total 100

Table 5g

Test Statistics

customer Speed of Employee

interaction convenience processing Service quality Trust cooperation Website
Chi-Square a,b,c,d 62.900 13.520 62.900 65.300 64.000 13.520 45.680
df 4 2 4 4 1 2 3
Asymp. Sig. .000 .001 .000 .000 .000 .001 .000
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 20.0.
b. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 33.3.
c. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 50.0.
d. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 25.0.

Table 5h

After analysis it is observed that at the respective degree of freedom all the seven factors have
chi square value greater then the tabulated value which is highest 10 at 4 degree of freedom.
Hence we reject null hypothesis. Thus we can say that the factors are responsible for customer
satisfaction.

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Another thing that can be analyzed with the statistics performed is that service quality and trust
have wider difference between the calculated and the tabulated value. This signifies that these
are key determining factors for customer satisfaction at SBI. Convenience and Employee
cooperation are least responsible for customer satisfaction at SBI. Thus it can also be said that
although these factors are responsible, they are not equally responsible.

In the study 26% respondents told that SBI keeps a personal touch with them. Although they also
felt that the only thing that this bank updates the customer is the status of cheques, deposits and
salary transfer. They do not provide information on latest products they have come up with or
about some thing new.

Suggestions

While interviewing the customers it was observed that people have lack of awareness of the
ways to bank with electronic mode. They want to use all the facilities of e banking but either are
not computer savey or have less faith in the system. Many new techniques have been devised to
keep the money and the transactions secure. The only thing required is making people aware
about it. Many electronic banking literacy programs can be given the customers to increase its
usage.
A literacy program at the bank location or at the customer’s choice area can be given.

Conclusion:
In spite of all; the shortcomings people are loyal with the bank. When enquired about changing
the bank, the response of the customers was negative. They want to bank with SBI as they have
full trust with the bank. The customers believe the bank will also make efforts in establishing
CRM, which would just not be established but be fully functional. SBI is doing lot in
maintaining relations with its customers but lot is required to compete with the increasing
demand for the private sector banks. e banking is a good tool for maintaining customer
relationship. The simple concept of customer relationship management has taken a step forward
and has become electronic customer relationship management.

References
1. Nagesh TR, “Mobile Banking-Gaining Momentum”,Professional Banker,The Icfai
University Press, issue 09, January 2009,p.p.47-51.
2. Sohani AK, “Technology Initiative by State Bank of India”,Professional Banker,The Icfai
University Press, issue 09, March 2009,p.p.41-45.
3. Kalyan Ram Addanki M, “Customer Retention in Banking Sector”,Professional
Banker,The Icfai University Press, issue 09, May 2009,p.p.42-47.
4. Patil R Shrinivas, “ Branchless Banking in India”,Professional Banker,The Icfai
University Press, issue 09, May 2009,p.p.48-50.
5. Upadhyay Saroj, “Developing CRMn Philosophy in Banks”,Professional Banker,The
Icfai University Press, issue 09, July 2009,p.p.27-31.
6. Singh Anchal , “Customer Retention in Banking Sector”,Professional Banker,The Icfai
University Press, issue 09, May 2009,p.p.42-47

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 7. C-H Park and Y-G Kim, “A framework for dynamic CRM: linking marketing with
information strategy.” Business Process Management Journal vol. 9 no. 5 (2003): 652-
671.
8. Camponovo et al., “Mobile customer relationship management: an explorative
investigation of the Italian consumer market,” Proceedings of 4th International
Conference on Mobile Business 11-13 july, Sydney (2005).

Websites:

1. http://en.wikipedia.org/wiki/ECRM
2. "www.crm2day.com/ecrm/
3. www.htmtinteractive.com/ecrm.html
4. epubl.luth.se/1653-0187/2007/021/LTU-PB-EX-07021-SE.pdf
5. www.oppapers.com/.../crm-in-banking-sector-page1.html

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