Submission of Assignment On

Present Status & Future Potential of Relationship Banking in Bangladesh (Present Status of Relationship Banking, Service Management, Relationship Monitoring, Overcoming Customer Complaints & Future Potential of Relationship Banking in Bangladesh)

Submitted to: Q.G.M. Farooqi & Rexona Yesmin, Honorable Course Co-ordinator

Submitted by:

Md. Shahidul Islam, EXIM Bank Ltd. Md. Nazmul Islam, BASIC bank Ltd. Farid Ahamed, BASIC bank Ltd. Mohammad Anisuzzaman, ONE Bank Limited Mohammad Kamal Uddin Patwary, Islami Bank BD. Ltd.

and the tellers rarely smiled. Relationship banking involves offering customers a broad array of financial products and services that go beyond simple checking and savings accounts. Banking has become increasingly competitive financial services industry with fragmented customer groups. credit cards.Introduction: Relationship Banking is a strategy used by banks to enhance their profitability. Customers waited in long queues for hours for one small service not to mention the unimaginably rude behavior of the employees. And asking for a loan was like facing a judgment in court. To be fit against these challenges. increase in quality of service. while local public banks (NCB) are lagging behind. calculated to impress the public with the banks importance and solidity. relationshipbanking products may include certificates of deposit. insurance. it is necessary to appear close to the customers with technology driven long-term stable relationship. Reporting the attitude of the forty seven banks’ towards technology and relationship.. investments. The interior was austere. . loans and business services (e. Going to the bank was just a nightmare. Private and Foreign Commercial Banks are pioneers banking facilities with technological development maintaining better relationship with the customers.g. This was the bank’s posture before the age of relationship banking. The bank building was created in the image of a Greek temple. They may also include specialized financial products designed for specific demographics. bankers had little regard for relationship banking. such as students. They accomplish this by cross-selling financial products and services to strengthen their relationships with customers and increase customer loyalty. we emphasized on imperative importance of technology and relationship in profit maximization. Only a few decades ago. safe deposit boxes. their heterogeneous expectations and ever-changing global economic challenge. seniors or the wealthy. reduction in cost of bank operation and diversification of bank income sources. Besides. technology with sophisticated facility is making banking industry new every morning. In addition to these two basic products. credit card processing).

As competitions are growing in the banking sector. The broader context of relationship banking . acquiring latest technologies. This was further augmented as the world business environment entered an era of LPG (Liberalization. To the bank it meant carving out a niche in the customer’s mind. Banks are also spending a significant amount of money for selecting a good location for their branch. is limited to improving customer cares only. this is the basic philosophy of relationship banking where both bankers and customers would form solidarity to share joint success in business. that forced banks to practice the ‘KYC’ (Know Your Customer) concept in order to ensure stable earnings. the relationship banking system which was so far being observed in the banking system of Bangladesh. which . Privatization and Globalization) that increased competition and threats as well. Dhaka Bank. Iron etc. In fact. designing new products and services.Present Status of Relationship Banking: The concept of relationship banking received prominence in the 1970s when the world economy faced two-fold threats – the oil shock in 1973 and the maturity of old industries like Coal. Banks began to position themselves in people’s mind for example. Prime Bank. HSBC as “the world’s local bank”. customers are being well treated by the bank officials as they fear that customers now have enough opportunities to change their banks. Jamuna Bank. In Bangladesh. BRAC bank. a bunch of private banks like DBBL. However. a very special place so that the customer would return to the bank over and over again. Bankers of Bangladesh have recently learned the importance of relationship banking in management of earnings. Eastern Bank and so on is providing greater care to manage their depositors and customers. Trust bank. Steel. offering good packages for their employees and designing friendly interiors for their branch. Unlike before even the very average customer now had a choice of which bank he would want to go to. Now. As markets expanded and businesses boomed the world over the economy saw a mushrooming of banks catering to a varied segment of customers with each bank suitably tailoring its services to satisfy particular segments of customers. Bank Asia. the practice of relationship banking is still in its nursery stage.

depositors and fellow bankers by way of designing superior products. Relationship banking is a sound business strategy to identify the bank’s most profitable customers and prospects and devotes time and attention to expanding account relationships with those customers through individualized marketing. Nevertheless. personal banking officer etc. and other service providers realize the importance of customer relationship and its potential to help them acquire new customers retain existing ones and maximize their lifetime value.all delivered through the various sales channels that the bank uses.. the popularity of relationship banking would surely smile on bankers in its full phase because of its power are stable earnings. the banking system in Bangladesh is now more customers oriented and competition oriented. Today. customer relationship representative. At this point. and now customers are not treated as an outsider to the bank. Now a days relationship banking includes financial services marketing in which a bank’s customer service representative (also called account officer. As the bankers of Bangladesh are approaching towards a new era of competition and efficiency. loans. services. discretionary decision-making and customized service. both in the domestic and international market. many businesses such as banks. which was not present in early 1990s.provide emphasis on building solidarity with regulators. close relationship with customers will require a strong coordination between IT and marketing departments to provide a long-term retention of selected customers. Like other countries banks are important role players to the economy of Bangladesh. and behavior. money market investments. are yet to observe in Bangladesh. re-pricing. . etc. to survive in a competitive business environment banks need to focus on building and maintaining client relationships and to identify how their employees influence these relationships. credit cards. insurance companies. deposits. However.) attempts to meet a customer’s need with a complete package of facilities. customers. that may be summarized. The package may include most or all of services such as cash management.

in today’s competitive banking industry market. acquiring latest technologies. It is aimed at creating a long term. our banks are providing greater care to manage their depositors and customers. Now. It enables banks to provide a cost-effective. relationship monitoring process has been adopted by almost all the banks of our country in which existing and potential customers are being monitored softly. Side by side. . Therefore. offering good package for their employees and designing friendly interiors for their clients. offering good package for their employees and designing friendly interiors for their clients. Now. relationship banking focuses on building solidarity with the fellow banks and regulators. our banks are providing greater care to manage their depositors and customers. borrowers and regulatory bodies with ultimate object to earn sustainable growth in banking business. As competitions are growing in the banking system of Bangladesh. designing new products and services. Relationship Monitoring: Bankers of Bangladesh have started recognizing the importance of relationship banking in management of earnings. Relationship banking requires developing and internalizing customer care values and listening to the most critical voice in the market. Banks are also spending a significant amount of money for selecting a good location for their branch. Bankers of Bangladesh have started recognizing the importance of relationship banking in management of earnings. win-win service to the valued customers. the practice of relationship banking is viewed as a key to corporate successes. as they fear that customers now have enough opportunities to change their banks. Hence. acquiring latest technologies. designing new products and services. mutually beneficial and exclusive problem solving relations between customers & bankers with a view to holding loyalty of t he customers. customers are being well treated by the bank officials. Banks are also spending a significant amount of money for selecting a good location for their branch.Relationship banking emphasizes on managing relations among depositors.

Our main motto or slogan is Relationship Banking through “Relationship Monitoring” • In relationship monitoring the customer deserves the most courteous and attentive treatment that we can give him. Customers are being well treated by the bank officials named as Relationship Manager. buying patterns. Now a days. and an account executive is assigned to one or more major customers to fulfill their needs and maintain the relationship. • The main responsibility of Relationship Manager of a bank to improve the relationship between an organization and its clients using methods such as efficient communication means and implementing measures to improve customer services provided. and history of contacts are maintained in a sales database. which includes service over the counter. • Customer service. is a question of customer relations. We listen more than we speak. • We always believe. as they fear that customers now have enough opportunities to change their banks. • Other roles of relation managers include managing disputes raised by customers and conflict resolution between customer and company. • In relationship monitoring. customer profile. • They are also performing Marketing activities that are aimed at developing and managing trusting and long-term relationships with larger customers. over the telephone and through correspondence.• Relationship monitoring is being observed by the private commercial banks as competitions are growing in the banking system of Bangladesh. . remember and endeavour to live up to to the bank’s ideal: ‘The Bank with a Personal Touch’. smile more than we frown.

• Trust Building.Service Management: In order to promote customer loyalty and satisfaction. Many times the customer becomes impatient with the processing time taken in the service because he is more worried with the result and secondly it is difficult to set quality standards in service. In marketing differentiation plays a major role in securing businesss. Many banks are now offering savings-cum-fixed deposit combined facility. In ebusiness. If you listen two or three ideas together they .personalising the service.every opinion is a valid one.Speed is another parameter of importance in service. The bank can offer such services to valued customers in a focused and combined way.no matter what their experience or lack of it and listen without judgment. • Price/Cost of Service. if the speed of download is slow. • Speed. Total service capability also increases the customer retention rate. making the customer feel important and devoting time to understand his requirement makes the customer attached to the vendor and builds a bond of emotion and trust.Any service provider should offer total service (end-to-end service). • Personalise. he will switch to another site. Since service is a feeling. They are also taking separately portfolio management services. the more satisfied is the customer. Some major tools that can be leveraged to promote customer satisfaction: • Differentiation-Service should be extended in such a way that the customer is easily able to appreciate the difference.This is one of the greyest areas that cause widespread dissatisfaction among customers. Personalisation of the service is the biggest Satisfaction provider. • Deliver End-to End service. It must be remembered that the cost of the service is a sensitive issue for the customer and plays a major role in his satisfaction. the customer is not going to wait.Trust is very important in service. it is necessary that trust is built up right from the beginning with the customer to ensure that he has both comfort and confidence. It should be designed for distinction. Listen to another people around you. Most of the service contracts are awarded based on trust. Faster the progress of work and lesser the time taken. the ‘feeling’ has to be good.

don’t say anything. managing by exception. You need to be decisive and have the confidence and courage that inspires people. dreams and concerns. Types of Objections: 1. where you’re going and why you do what you do • Become a teacher. For example- . This type of objection may raises because of say. If you can’t say something positive. it shouldn’t be done. which you wouldn’t have arrived at if you’d heard them with a judgment • • • Use praise. Remind people what you’re doing.Instead of finding fault. there is much to be gained from being open and sharing your own hopes.can often spark a fourth. Overcoming Customers Complaints: The customer will raise an objection to buy the product when he has an unanswered question in his mind.use praise more frequently and more sincerely than you’ve ever done in the past. However. especially if you know you’ve contributed to that. It is essential that the seller can recognize objections. Always be seen to be fair and honest. Don’t ask yourself ‘what can I do for myself? Instead.Managing a customer service team is not an easy job. before accepting this. Fundamental Objection: The fundamental objection is the most difficult to deal with since the customer is rejecting the product outright. become obsessed with helping people become twice as good as they are now. and pointing out where people are going wrong. Sometime this objection will be due to a lack of information.Ask yourself that question or a version of it every single minute of the day: ‘Is what I’m doing now helping directly or indirectly to increase the number and quality of the customers our organization has? Because if it doesn’t affect the customer. Share your concerns. be certain that it is a truly fundamental objection by proving for his real problems. There is nothing more satisfying than seeing other people around you do well. ask yourself ‘how Can I help my team become a better team’? • Only do the most important things. and whenever possible anticipate them in a systematic way. or poor understanding of various aspects of the product. determine how to overcome them. lack of knowledge.

objections will be raised over features of the product. 7. In handling a price objection always prepare for the negotiations in advance. he may say: ’The decision is not mine. I have to talk my Chairman’.Statement: ‘ I have no use for a credit card’. To overcome this problem it is needed to prepare the benefit analysis in although manner and ensure that the benefits are strongly presented to the customer. To overcome this objection seeks out the reasons for postponing the decision to buy. but concentrate on the positive reasons for buying the product from you. Loyality Objection: Many prospective customers raise a loyality objection arising out of their long association with their existing bank. which is simply not being expressed openly. In overcoming the objection do not criticize the competitors. for example. 6. Such a delay often hides the true reasons for objecting. 2. Price Objection: Sometime customers compare the price you offer with the competitors. concentrate on explaining the benefits and bring out the added value compared with competitors. Hidden Objection: This objection can be an extension of the delay. 5. which represents a misunderstanding of the benefits to him. be pointing to business levels in the market and any favorable press comments. Advantages of complaints • • • • • Feedback Deficiency Identification Generic Defects Identification Market trends and behaviour Customer needs and perception . 4. General feature Objection: More generally. If he needs more information give it to him. 3. Credibility Objection: It is raised when the customer is uncertain of your standing in the market and can be overcome. Delay Objection: The customer at times will introduce reasons for postponing a decision. For example.

The complaints are like ‘early warning system’ and are to be taken like that. . • • The most redeeming feature of a complaint is that the ‘customer is still talking’ and is hopeful of some positive outcome. A complaint is a positive indication that though the customer is unsatisfied. it may lead to loss of customer himself. The relationship is still in place.Classification of Complaints: How to make every Customer a SPECIAL Customer • • • • • • • S peed P ersonalise E xceed exceptions C ompetence I nformation A ttitude – ‘Can do’ L ong-term relationship Some Features of Customer complaints • • In spite of all the best efforts made. he may continue to remain with the supplier. They indicate dissatisfaction of the customer. he is still not ready to migrate and if his grievances are addressed properly. If not handled properly or given due attention or discouraged. by not coming up to his expectations a customer being frustrated may raise complaints.

comments and compliments. convey to customers at regular intervals important information related to his complaint and status on the rectification plan and time schedule. This will help in . This helps in fast action and at the same time it sets a target for concerned people to work for and improve upon. It should work directly under a senior management cadre official reporting directly to board level. • Thus those managers. it should. must realize that it is not a bad thing in itself and it is the outcome of positive feeling. It should also keep the customer informed of any unusual thing noticed in a fully transparent way. The customer will then find it easier to share their concern. The system should be able to refer complaints to the proper division depending on its nature and have a mechanism to monitor the complaint resolving progress like identification of cause. • • It should be able to fix a time schedule for resolving the complaint. who are allergic to complaints. Characteristics of Good Complaint Management System A good complaint handling system should have the following features: • There should be a single window to receive complaint from the customer and respond to it. It should have a mechanism to acknowledge the complaint and keep the customer regularly informed of the status of his complaint redressal. The company can also provide access to customer ‘ON LINE’ complaint status system through CRM software. proposed action plan and its status. It is what a banker does after receiving the complaint that makes all the difference. if handled properly. • • • • • The system should be responsive. it should send a formal reply to the customer mentioning in brief the identified cause with related details and the remedial action taken. It should be able to segregate casual complaints from serious ones.• On the other hand. It may also add to the mutual understanding already existing and may further strengthen the relationship bond between the banker and the customer. The customers frustration increases if he is not able to get the status of his complaint redressal. As a company. they may result in enhanced customer satisfaction and loyalty. It should have the facility to sort out complaints and classify them in different categories as per classification discussed. • Once the complaint is resolved. The system should be able to maintain confidentiality. on its own. It should ensure that the status is regularly updated.

• In case the failure is attributed to the customer and the supplier would like to charge for his services. the company must revisit earlier actions that were taken and examine reasons for their failures and take corrective measures. it is necessary to identify the cause correctly and the factors contributing to it. This group should take help of others if so required so that comprehensive investigation can be done and cause can be identified.restoring confidence of the customer. it can refer problems to R & D department or constitute ‘Cross Functional Team’ (CFT) of experts or may take the help or renowned experts in the field so that a permanent solution can be established. This will provide important insight into the supplier’s product quality. • • It should be able to keep a record of complaints so as to identify generic complaints and alert the concerned departments to take appropriate measures. process and effectiveness of measures taken by the supplier for complaint management. If need be. This helps in reclaiming customer confidence and trust and in comforting the customer that the problem has been fully taken care of. this must be politely but firmly indicated to customer along with advice to avoid its recurrence in the future. the company must work out the action plan. It is also advisable to share with the customers reasons for such deficiencies and the action plan. the company should inform the charges and details thereof to the customer along with the cause of failure and should undertake future work only on acceptance of charges or finalisation of same with the customer. the company must demonstrate to the customer that the deficiency has been removed. it only indicates that either the company’s divisions are not taking the complaints redressal measures seriously or there is something fundamentally wrong somewhere. • After the remedial measures are taken. After identifying the cause. In order to address the complaint fully. In case it is of generic nature. If the type of complaint and its frequency is not showing any decline. it should be referred to the concerned group for further investigation and cause identification. • • The complaint should be analysed to ascertain whether it is generic or having a past history or is an entirely new one. . • If the problem is a new one. In case the failure was a result of negligence of the customer. It should compile and monitor statistical data on complaints to look into its orientation and rate of variation of numbers.

. .Do not interrupt . Key Listening actions: Take notes to remind you of key points to return to at a later date. . You do need to agree with his or her right to express honest feelings during the sales calls. You do not need to agree with the customer’s opinion. Ask question to: . . . the real objection is different from what the customer first expressed.Clarify the objection . Key questioning actions.The Objection handling process • Step-1:Encouraging Encouraging is the most important and difficult step because it runs counter to what most people do when they feel thay are being ‘attacked’. • Step 2: Questioning Frequently. . ask the customer to elaborate. Show empathy.Listen carefully to what he or she has to say.Factual information that he or she is sharing with you.Do not try to answer the objection at this point.Do not assume that you understand the objection. .Encourage the customer to keep him or her involved.Discover the customer’s specific concern.Actively listen.Use this step to begin thinking about the best way to resolve the objection. . Understand how the customer feels by putting yourself in his or her place.Do not belittle the questioning phase or appera to cross-examine the customer. . listen attentively for: .When in doubt.Feelings the person seems to be conveying .Acknowledge the customer’s right to object and indicate your willingness to let the customer express his or her reservations completely. Key encouraging actions: . • Step 3: Listening When the customer talks. so you really understand the objection.Encouraging the customer is not the same as agreeing with the customer. .

Before you proceed.Ask the customer directly if they are satisfied with the resolution. At the heart of a perfect strategy is the creation of mutual value for all parties involved in the . manage and personalize the needs of an organization's current and potential customers.If not.Summarise what you have heard .Check your understanding with the customer. If not. anticipate. Actions: -Clarify and explain . You might ask outright if your response has been satisfactory.Provide examples. • Step 6: Checking Check to see if the customer’s objection has been resolved. This is the business strategy that aims to understand.Show how advantages outweigh disadvantages . . you must: .• Step 4: Confirming Check your understanding of the problem before responding. references or evidence. start the process again by encouraging the customer and by asking questions to draw out the real objection.Respond with a plan to address the complaint. . Future Potential of Relationship Banking in Bangladesh: Relationship Banking is a broad approach for creating. Key checking actions: . repeat the six-step process. • Step 5: Providing You should answer the objection as specifically as possible. maintaining and expanding customer relationships.Know what the customer is thinking . Objections and their appropriate responses usually fal into one of four general categories.Demonstrate that you understand the objection. Key confirming actions: .

There is a shift from bank centric activities to customer centric activities are opted. If the base increased. The present day relationship banking includes developing customer base. pricing. Relationship banking is still in evolutionary stage. discretionary decision making. Hence the bank has to implement lot of innovative relationship banking to capture and retain the customers. and devotes time and attention to expanding account relationships with those customers through individualized marketing. Hence asking reference from the existing customers can develop their client base. Banks are aiming to increase customer profitability with any customer retention. This paper deals with the role of relationship banking in banking sector and the need for it is to increase customer value by using some analytical methods in relationship banking applications. The private sector banks in Bangladesh deployed much innovative strategies to attract new customers and to retain existing customers. It includes issuance of cheque and cards. it is the time for taking ideas from customers to enrich its service. and delivering and developing existing customer relationships in addition to creating and keeping new customers. Bank merely an organization it accepts deposits and lends money to the needy persons.business process. the existing clients can recommend others to have banking connection with the bank he is operating. timely announcement of new services. communicating. helping the customers to avail online and mobile banking etc. It is a sound business strategy to identify the bank's most profitable customers and prospects. So the concept of product life cycle is giving way to the concept of customer life cycle focusing on the development of products and services that anticipate the future need of the existing customers and creating additional services that extend existing customer relationships beyond transactions. Huge growth of customer relationship management is predicted in the banking sector over the next few years. The use of relationship banking has gained importance with the aggressive strategies for customer . It is about creating a sustainable competitive advantage by being the best at understanding. but banking is the process associated with the activities of banks. monthly statements. the profitability is also increase. The bank has to pay adequate attention to increase customer base by all means. it is possible if the performance is at satisfactory level.

Higher investment and proper use of technology can reduce cost. maintaining and enhancing customer relationship in multi service organizations. increase asset quality and will assist in setting up thirst sector. risk. Steps to follow The following steps minimize the work regarding adoption of relationship banking strategy. if any Conclusion: Relationship banking is concerned with attracting. . Technological shift in Banking sector can ensure convenient relationship with the customers.acquisition and retention being employed by the bank in today's competitive milieu. Customers are the backbone of any kind of business activities. maintaining relationship with them yield better result. asymmetric information and can increase profitability and bank’s competitive advantage.      Identification of proper relationship banking initiatives Implementing adequate technologies in order to assist relationship banking 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. Technology and relationship are vital for banking decisions. Relationship banking goes beyond the transactional exchange and enables the marketer to estimate the customer's sentiments and buying intentions so that the customer can be provided with products and services before the starts demanding. This has resulted in the adoption of various relationship banking initiatives by these banks. Respect toward relationship with customers will increase stability of profit.