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docid=277594 Nowadays, many businesses such as banks, insurance companies, and other service providers realize the importance of Customer Relationship Management (CRM) and its potential to help them acquire new customers retain existing ones and maximize their lifetime value. At this point, close relationship with customers will require a strong coordination between IT and marketing departments to provide a long-term retention of selected customers. This paper deals with the role of Customer Relationship Management in banking sector and the need for Customer Relationship Management to increase customer value by using some analytical methods in CRM applications. http://www.isbs.com/partnumber.asp?pnid=297152 Customer Relationship Management (CRM) in the Indian banking system is fundamental to building a customer-centric organization. CRM systems link customer data into a single and logical customer repository. CRM in banking is a key element that allows a bank to develop its customer base and sales capacity. The goal of CRM is to manage all aspects of customer interactions in a manner that enables banks to maximize profitability from every customer. Increasing competition, deregulation, and the internet have all contributed to the increase in customer power. Customers, faced with an increasing array of banking products and services, are expecting more from banks in terms of customized offerings, attractive returns, ease of access, and transparency in dealings. Retaining customers is a major concern for banking institutions which underscores the importance of CRM. Banks can turn customer relationship into a key competitive advantage through strategic development across a broad spectrum. This book examines issues related to changing banking industry in India and the challenges in CRM. http://www.networkmagazineindia.com/200302/case1.shtml
Case Study: Standard Chartered’s CRM
Banking on customer relations
Standard Chartered Bank was looking for a tool that would help it analyze the huge volumes of data captured by its OLTP systems. The objective was to analyze new business opportunities, provide better customer service, and boost profitability. by Soutiman Das Gupta Standard Chartered Bank (SCB) previously used OnLine Transaction Processing (OLTP) system, which facilitated and managed transaction-oriented applications. "The system was reliable but provided little scope for in-depth customer analysis, which is the key to survive in the fiercely competitive financial marketplace. It answered the financial queries and generated reports at a broad portfolio level, which included total earnings, debt situation, interest income, cost, fee income, and profits," said Sedjwick John Joseph, Head-Business Intelligence Unit, SCB.
After evaluating a number of vendor offerings.2 million retail customers and over 1.3 million credit card customers nationwide.In a nutshell The bank realized that it needed to go a step further and deploy a solution which it can use to analyze the huge volumes of data captured by its OLTP systems. • The company Standard Chartered Bank has over 2. wealth management services to individuals and medium-sized businesses. and figure out new ways to minimize costs. The ability to implement a customer-centric approach focused on optimizing the lifetime value of the customer. The solution SCB decided to go for SAS Customizable CRM Solutions to address its business needs. cost control. foreign exchange. The objective was to enhance the organization's competitive advantage and boost profits. lending. concentrate on financial budgeting. deposit taking activity. The bank was looking forward to the following broad benefits: • • • • The ability to exploit changing and widening markets.3 million credit card customers nationwide. and mutual funds to retail customers. This information can help a bank take critical business decisions in the dog-eat-dog financial world. implement a customer-centric approach. to the right executive and at the right time. To look for new ways to minimize costs. • • • SCB has over 2. The idea was to search for crucial nuggets of information from the vast amounts of transactional data at its disposal to get the right information. It claims to be the first to launch initiatives like a Global Credit Card and a Photocard in India. Defining benefits The bank's vision was to champion fact-based strategic business decisions using best-inclass analytics. and debt capital markets. lending. The benefits The bank can now exploit changing and widening markets. Such a fervent pace needed to be supported by efficient management of the huge volumes of data generated and captured at each touch-point. Its products and services include cash management. And credit cards. foreign exchange. Varied services A better way to understand the bank's need would be to understand its customer base and the varied services it provides. "Our customer base has grown three-fold in the last three years. It went for the SAS Customizable CRM Solutions (See box: The solution up close). . The ability to concentrate on financial budgeting. custody. while increasing profitability and shareholder value by effectively managing consumer relationships. to the right people. It had to get the right information. interest rate management. Its products and services include cash management. at the right time.2 million retail customers and over 1." said Sedjwick. custody. personal loans. The need The bank needed to manage and analyze the huge volumes of data captured by its OLTP systems. in order to carry out a number of critical business activities and provide excellent customer service. interest rate management. and risk management. and risk management. After all it is absolutely essential to keep up the bank's unchallenged reputation of efficiency. cost control. and debt capital markets for corporates. SCB decided to use a suite of products from SAS. while increasing profitability and shareholder value. mortgages. The bank's IT team looked at the business requirement in detail and deduced that the organization needed a data warehousing and analytical solution that would help analyze customer data to enable fact-based decision making in areas ranging from acquisition and risk management to crossselling and portfolio management.
finance resources. This also enables micro-segmentation. "We wanted a solution that can perform analytics on the valuable customer data to answer queries across divisions. Cognos. This has resulted in more focused marketing campaigns and reduced costs with improved customer satisfaction. Sedjwick said." said Sedjwick. and the head of consumer banking via the SCB Intranet. It is easier for us to run targeted campaigns and elicit substantially higher returns since we perform profit modeling for each account." The organization's marketing team is now empowered with information to increase cross holding." He continues. We wanted the solution to leverage information on customer profiles and segments and enable us to spread our risks based on empirical data analysis. and SAS. "Any bank today cannot ignore the risk:reward equation." "We also wanted the solution to be scalable. Business Objects." Evaluation The bank created a team of 25 people in Bangalore and called it a Business Intelligence Unit. Examples of products are credit cards. Calculating it is a complex and challenging task that all bankers have to accomplish. Using analytics. SAS was chosen as the preferred solution partner and SCB today relies on SAS solutions across Asia for its customer analytics. This unit was responsible for deriving and implementing strategies to analyze and exploit customer data. product heads and managers. Sedjwick said. "The company evaluated a number of solutions from Brio. This was crucial as the solutions would be very critical to our business. The SAS software accesses and integrates data from multiple sources and disparate systems across the enterprise. This data is then used for a variety of analyses by the Business Intelligence Unit and is disseminated to all information consumers across the bank. credit resources. . The information consumers include sales managers. auto loans. Analytics' benefit The solution has helped the bank effectively manage and optimize profitability of all the products that constitute its retail portfolio.Solution needs It was clear that in order to achieve the desired benefits. and can target its most valuable customers (not accounts within a product line) and also help in the next best product strategy for a customer. "As a result. It's the process of applying a variety of scoring techniques across product lines to arrive at the probable risk associated with each product sale and the possible rewards. the bank had to implement a data warehouse and analytical solution. and personal loans. and a test and learn culture we know the likelihood of customers to take a new product. The answers would then enable us to proactively service customers and thereby ensure customer loyalty and retention. "SAS's solutions forms a central part of the bank's CRM strategy. and the volumes of data kept increasing exponentially. This exercise is a must for survival in a fiercely competitive environment. The SAS solutions reside on an IBM RS/6000 server running the AIX operating system. We now know which card member is more likely to take an auto loan. analytics provide a key competitive edge and are used seamlessly for empowering business manager in their goals." said Sedjwick.
SCB was able to successfully launch DIVA. "Now that we know our customer well enough to provide effective customer service and maximize shareholder value. Besides. Future plans In future SCB plans to embark on SAS' data mining technologies for various predictive modeling and advanced scoring initiatives to strengthen its risk management framework in the area of retail lending. We realized that by using this technique we could provide more value to our savings account customers and help increase customer loyalty. It includes discounts and zero interest rates on categories like jewellery. leather products. DIVA is a specially designed women's international credit card targeted at the Indian woman and bundled with several features. The bank can carry out stress tests on its portfolios and learn about the best case and worst case scenarios. SAS solutions are also used to carry out simulations that help the bank assess its overall profitability and balance its exposures across portfolios. and mobile phones." said Sedjwick." said Sedjwick. The working of the SAS library of advanced statistical techniques helps in achieving the results and arriving at an optimized risk-adjusted capital. we will keep using information strategically so that it contributes in providing a cutting edge to our organization. "Information on customer profiles and segments forms the backbone of product strategy for us. "This was possible due to an in-depth analysis of our customer data provided by the BI solutions. Customers who have this account can access cash at over 1800 ATMs worldwide through the Visa network.New products With the help of the Business Intelligence (BI) solutions. It allows us to tailor our products across a diversified consumer base." said Sedjwick. SAS feels that a company has to adopt a truly customer-centric approach to manage its business. enabling us to spread the risk across a much wider spectrum. cosmetics. consumer durables. The solution up close Standard Chartered Bank uses SAS Customizable CRM Solution. they can use this account to shop for goods and services at over 25. We realized that a significant proportion of our business came from the upwardly mobile Indian woman and was likely to grow substantially from this section in the coming months. Other benefits "We are successfully able to calculate our risk:reward equation. apparel." explained Sedjwick. This gave us an impetus to launch a product which catered to the needs of this segment and consolidate our position in the mind of the customer. .000 outlets in India and at 10 million outlets worldwide." declared Sedjwick. "This strategy was validated and facilitated by the information provided to us by the BI unit. SCB uses SAS for scoring virtually all its products in the asset portfolio ranging from its 1.3 million credit card holders to its loan portfolio in excess of $ 860 million. The bank also launched the aXcess plus savings account. "The solution can scale to handle different sizes of data and takes much less time to analyze SAS data sets than it takes to analyze a standard relational database." said Sedjwick.
Anticipate customer expectations and predict customer behavior like. This approach is made possible by advances in information technology. The customer.It means that fundamental decisions on strategy and resource allocation must be based on a detailed and accurate understanding of customers and the overall market. previous purchases. This idyllic customer relationship disappeared as the nation grew. needs. remained loyal to the store and made repeated purchases. Allow to cross-sell and up-sell.g. customers became fickle. Management is a broader concept than marketing because it covers marketing management. moving to the supplier who provided the desired object at lowest cost or with the most features. propensity to purchase. The concept itself is relatively simple. the consumer became mobile. Combine business rules and analytic models to accurately segment and profile customers. Although prices were lower and goods more uniform in quality.sas. and credit risk. and focus the marketing efforts on a more receptive audience. Source: www. human resource management. sales . It can help identify the best candidates for purchasing particular combinations of products and services. eliminate data errors and redundancies. In this one-to-one approach. the population moved from the farm communities to large urban areas. As a result. Combine behavioral insights derived from analytics with attitudinal data obtained from online and offline customer surveys. people went to their neighborhood general store to purchase goods. before the advent of the supermarket. lifetime profitability. and wants) is used to frame offers that are more likely to be accepted. and reduce the complexity of data management. manufacturing management. and supermarkets and department stores were established to achieve economies of scale through mass marketing. and construct a personalized strategy for each group. information about a customer (e. The customizable CRM solution can: • • • • • • Integrate information from multiple sources. 3 The last several years saw the rise of Customer Relationship Management (abbreviated CRM) as an important business approach. Deliver customer intelligence into front office systems to enable smarter customer interactions through various channels. the relationship between the customer and the merchant became nameless and faceless. and the automobile. Remember that CRM is an abbreviation for Customer Relationship Management. The personal relationship between merchant and customer became a thing of the past. in small-town America. Rather than market to a mass of people or firms. in turn.com Over a century ago. the mall. not Customer Relationship Marketing. Its objective is to return to the world of personal marketing. The proprietor and the small staff recognized the customer by name and knew the customer's preferences and wants. service management. market to each customer individually. tailor data for efficient access and analysis. It feels that customized CRM solutions can provide access to the information you need to come out on top..
It is now one of: ◗ increased competition. Research shows that it costs far less to retain existing customers than win new ones. obtain.business2000. field sales. customer services. consumers can now demand better quality services and more customised products from their banks. and information technology associated with marketing. and field service) required to contact customers directly or indirectly. Within AIB. CRM helps businesses manage customer relationships in a more organised way. Banking customers have also changed in recent years. this has led to a shift in business focus from transactional to relationship marketing. ◗ ◗ growing product commoditisation.is to build strong customer relationships through . sophisticated. and assertive. processes.5m active customers. Customer Relationship Management (CRM) is the term for a company-wide system used by businesses to seek. Customer defection rates are higher than ever because of increased market competition. At AIB the customer is at the centre of all business activities and the bank has organised to position staff to meet the needs of customers in a highly customised and responsive manner. http://www. customisation. The term “touch points” is used in CRM to refer to the many ways in which customers and firms interact. Competition to attract new customers is fierce.pdf THE CHANGING ENVIRONMENT The environment within which financial institutions operate has changed in recent years. who have already chosen a particular business over its competitors. CRM requires organizational and business level approaches – which are customer centric – to doing business rather than a simple marketing strategy. Analysing this data can help the bank identify the customers’ present and future financial needs. CRM implies that everyone in the enterprise is focused on the customer.Customers are more knowledgeable. According to CRM consultants. as well as demographic information. sales. are less loyal. and control.5 MILLION CUSTOMERS AIB Group is Ireland's leading banking and financial services organisation.ie/pdf/pdf_8/aib_8th_ed. WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? Simply put. CRM involves all of the corporate functions (marketing. and diminishing margins. transparency.and ultimately its profitability . "The idea is to have the same information available to everyone in the company so that every product or service need of the customer is met. and more inclined to switch to a competitor. This information is updated regularly. is an invaluable asset and an investment in the future of the business. It employs approximately 25. AIB has approximately 1.management. Every customer is important. and customer service. greater convenience. MANAGING 1. and maintain customers. attracting and crucially keeping customers for the long term is a key challenge for all businesses. In this consumer economy. and research and development management. Thus. This deeper understanding of customers helps the bank provide solutions to meet individual customer needs. AIB has access to information about its customers’ financial history and their dealings with the bank. Modern customers require flexibility in hours of operation.000 people worldwide in more than 800 offices." AIB’S CRM STRATEGY AIB recognises that customers are the lifeblood of the business and that the way to protect and grow its customer base . With so many different financial institutions to choose from. accessibility. manufacturing. They demand higher levels of customer service. Maintaining an existing customer base. A successful CRM system involves all people.
Research has shown that the key drivers of customer loyalty are: ◗ positive staff attitude.delivery of superior quality service and to meet customer needs better than the competition. integrity. ◗ simplicity and ease of doing business. AIB Requires Quality customer information Product knowledge Consultative selling/relationship management skills Proactive approach AIB Requires Strategic thinking Understanding the business knowledge Quality customer information Partnership skills a fair and efficient complaints resolution CRM NEEDS & REQUIREMENTS Personal Customer Needs Personal contact A knowledgeable reliable banker Relevant information Customised & timely solutions Value for Money Business Customer Needs A professional partnership approach High levels of information Customised and highly Industry responsive service . ◗ ◗ ◗ ◗ ◗ honesty. proactive advice and delivery of promise. good after-sales service. consistent delivery of superior quality service. and reliability.The CRM approach adopted by AIB focuses on maximising value for the customer and the bank. and policy.
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