Published: Mon, 5 Dec Customer relationship management (CRM) is popular business strategy in today's competitive environment. Customer. Importance of Customer Relationship Management. (CRM) in the Indian banking Sector. Prof Sandeep Kaur. (Assistant Professor in Commerce Department). However, the perception of customers on CRM practices among banks .. Mysore University, Karnataka, India, “Customer Relationship Management in Banking.
A few illustrations will give a glimpse of the global scenario with respect to CRM in Banking. Royal Bank of Canada utilised CRM to develop models of assessment of customer profitability and life time value.
These were then included in determining customer decisions like — Customised Marketing campaign, establishing service levels, segmentation, targeting, product design and pricing.
Wells Fargo Bank renowned for leadership in service and convenience to varied customer segments focused on customer service through CRM.
Application of CRM enabled better integration of customer information and service applications to assist representatives of customer sales and services to easily provide a one-stop-shop for any banking service or transaction. Using CRM, Wells Fargo takes full advantage of available customer information to offer customer the choice, convenience and price benefits so that they give the Bank, all their business.
Indian scenario Although significance of Relationship Marketing practices and optimising and maintaining customer relationships across diverse customer segments has been realised and practiced by all banks in India, the technology enabled CRM is still at a developing stage. Different Banks are at different levels of CRM adoption and implementation and majority of them can be considered to be at preliminary stages.Customer Relationship Management: Optimize your Banking Business
Also SMS alerts at various significant customer service events are proliferating. Analytical CRM is being utilised but not by all banks. These enable sharing of relevant customer information to all concerned staff members to design new products, provide proactive service, and informed customer handling leading better service.
It enables collaboration among staff and customers to create higher customer value through use of CRM software. The payoffs are in terms of increased customer base, cross- selling, sales force optimisation, efficient lead management and higher productivity. Core areas of transformation were business focus, organisation structure, business matrix, marketing focus and technology. This brings the bank one step ahead in providing convenience and service through CRM. The system generates reports daily for top management and each of the branches have access to reports generated particularly for them.
Bank of Maharashtra has developed in-house software which generates and updates a variety of reports on detailed customer information and sends to branches. These reports are utilised for better customer understanding, better customer support and service by access to relevant customer information with all stakeholders to enable decision making and Business Development as well as retention activities. Issues and challenges CRM is a strategic initiative which has organisation wide implication. Many banks are still struggling to make proper use of this very useful mechanism.
However, the adoption and utilisation is dependent on a number of factors and impediments. Broadly the issues are pertaining to: People, Processes, Data and Technology.
Also a major drawback is the general perception of CRM being a Technology imperative. There is a great need to understand that technology is only the enabler to CRM. In the real sense it is an organisation wide strategy. Most officers perceive technology as a limited to record of information and transaction. The use of technology in further sophisticated information processing and dissemination is not done. There are multiple channels and multiple technologies in use simultaneously in customer interface, service and sales.
Empowerment to frontline staff: Frontline staffs have customer profile and data.
Most of them have no motivation to further process these and make full utilisation of these to provide better services and proactive selling effort. They are neither trained to use customer analytics nor to customise the Banks offering.
Customer Relationship Management in Banking Sector
Historical data collected from legacy systems tend not to have been collected in any standard form. This process has to be carried out across branches which in addition to their core tasks have this work. Employees expected to organise and systematically manage data may not dot efficiently because of the lack of understanding of the strategic perspective of this activity.
They also lack the necessary infrastructure and skill to complete this task.
CUSTOMER RELATIONSHIP MANAGEMENT MODEL FOR BANKS
People issues Lack of knowledge and skills in converting data to customer knowledge Lack of motivation for utilising the potential of CRM solution Inadequate performance management parameters Less or insufficient decision making authority: In order to use CRM concept towards customer centricity, sufficient decision making power is required to provide customised, responsive and proactive services.
Staff lacks training in IT, its applications, the complete use of software and its applications as well as marketing skills, analytical skills, uses of customer information and service skills for implementation CRM.
Process issues As CRM is an organisation wide strategy the entire processes need to be aligned appropriately. Some important process issues are: This encompasses a fundamental change in the organisational practices and employee behaviour. CRM cannot succeed in Silo structure of departments. The customers are occupying the Centre stage outshining other factors. The customers are flooded with lot of information and becoming more tech savvy.
This has increased the competition among the bankers. The competitive forces over the years are compelling the banks to concentrate more on increasing the number of customers and in providing better service quality. In other words CRM has become a major focus for the banks. The banks in the present era are facing stiff competition and they are struggling to find a place in the industry. They have realized the fact that CRM is a powerful tool to achieve success in their business.
CRM is an effective tool for the bankers to acquire new customers and to retain the existing ones.
CRM in the banking sector is of strategic importance [ 5 ]. The banks are confronting numerous problems in attracting new customers and in maintain the existing customer base.
Implementation of CRM poses a greater challenge to the banks after acquiring the customers. The various ways and means through which CRM is implemented by the banks determine the success or failure of the entire concept. The banks should concentrate highly on the valid elements of their CRM strategy for generating customer satisfaction and customer loyalty.
This will be possible only with the help of effective and efficient communication with the customers. Effective interaction between the bankers and the customers will help the banks to implement CRM in the best possible manner [ 7 ]. Any concept which is implemented would yield better results only when the same is maintained over a period of time.
CRM is not an exception to this rule. There exists a wide plays the role of boundary spanning that manages and distributes customer information. But the space between marketing and Information Technology affects the effective implementation of CIS. The CIS must be modified in order to establish a better communication system between the customers and the business [ 8 ]. The banks cannot be assured of the fact that their customers would continue to transact with them once the relationship is established.
With many financial institutions now offering multi-channel access, customer relationships are becoming more complex to handle. CRM can be used as the best tool for information tracking about the previous interaction of the customers with the business. CRM can generate a comprehensive report about the total customer interaction.
CRM can supply data to all the departments to deliver better service quality. The success of the entire concept of CRM depends on its ability to generate customer satisfaction. A highly satisfied customer will continue to find ways to strengthen the relationship with the banks.
The banks should collect information relating to the present levels of customer satisfaction and their vital determinants.
CUSTOMER RELATIONSHIP MANAGEMENT MODEL FOR BANKS | Open Access Journals
This would help them to narrow down their efforts to work more towards customer satisfaction. The location of the branch, the courteous and friendly attitude of the bank employees are the key determinants of customer satisfaction in the banking industry [ 10 ].
The pinnacle of success of CRM applications would be reached if the bank is able to generate customer loyalty. Loyalty is considered to be the ultimatum as far as CRM is concerned. TCE is portrayed in the form of physical, emotional and value chain moments [ 11 ]. In the modern competitive era, the financial institutions particularly public sector banks need to develop their service quality, to gain competitive advantage, based on the knowledge discovery from the old data bases by adopting new technologies to improve their service quality for retaining the existing customers as well as to increase the domain of new customers.
But, the adoption of new technology in such financial institutions becomes a challenging task due to different internal, external as well as technological uncertainties faced at the primary stages [ 12 ]. The present study has also made an earnest attempt to develop an empirically tested Customer Relationship Model which could be used by the banks to enhance the effectiveness of CRM.
Materials and Methods Research Design Analytical and descriptive type of research has been carried out for the purpose of the study. Secondary data has been collated from a range of print and online sources. The sample for the objective of the study is selected scientifically. Questionnaire Two different varieties of questionnaires have been utilized for achieving the objective of the study which were gathered from 1.
The following elements of CRM are identified for the purpose of study: Customer Loyalty Table 1 clearly shows that there is significant difference between the perceptions of the customers and the views of the bank employees as far as customer acquisition is concerned.
The efforts taken by the banks to acquire more number of customers are not sufficient to expand the customer base. The customers are not very much appreciative about the initiatives taken by the banks in acquiring customers.