Customer Relationship Management in Banking Sector

Customer Relationship Management has become inevitable for growth and profitability of Banks in present scenario marked by rising competition, technological advancement and empowered customers. The CRM practices are adopted to generate better understanding of the customer for product development, segmentation, appropriate targeting, campaign management and maintenance of long term profitable and mutually beneficial relationships with customers. In Indian banking Customer Relationship Management is still at a nascent stage. A very small proportion of its potential has been utilized. The concept has been implemented on a limited scale. The paper investigates the impediments to successful implementation of CRM. An attempt is made to chart out a strategic framework to realize the benefits of Customer Relationship Management.

In the present Indian Banking Scenario, two prominent phenomena are the focal point to emerging practices and policies. These are ‘Technology’ and ‘Relationship Marketing’. The power of technology that has revolutionized banking services and practices. ‘Relationship Marketing’ is seen as the only differentiating factor given the almost commoditization of banking services. On observation of the recent restructuring, rebranding and reengineering efforts of many banks, we find that the key motive towards these is to utilize customer centricity as a strategy. Further, catalyzing the importance of Technology and Relationship marketing is the Core Banking Solution (CBS). All the banks have overcome the teething troubles of CBS and it has become the axis of   banks’ growth and performance.  Going further, most of the Banks have invested in technology enabled Customer Relationship Management Software to utilize CBS generated customer information for enhancing business opportunities, access to customers and support. Thus, CRM is a logical progression of CBS for Indian banks. Although, at a nascent stage it is developing swiftly.

Customer Relationship Management is the integration of these two cornerstones of Indian banking viz. technology and relationship marketing. It has a potential to bring about dynamic changes in marketing practices of banks in near future, with the objective of business growth through managing customers as assets, Systematically collecting, analyzing and disseminating customer information and use of this customer information for acquiring, retaining and better servicing customers. An understanding of the current status of the CRM initiative in majority of banks suggests that only a minuscule of the potential of CRM has been realized. The key impediment is the lack of understanding and acceptance of CRM as an organization wide strategy and need for reorientation of organization structure to adopt this. The paper attempts to investigate these issues and suggests a framework for reaping the benefits of this investment in CRM by various banks.

CRM in Banking: Indian scenario

Although significance of Relationship Marketing practices and optimizing and maintaining customer relationships across diverse customer segments has been realized 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. Operational CRM is the most wide spread, but collaborative CRM is most evident in internet banking, mobile banking, ATM functions, POS devices and initiatives like availability of pass  book  printing  machines  to  enable  customers  to update their passbooks themselves. Also SMS alerts at various significant customer service events are proliferating. Analytical CRM is being utilized but not by all banks. Here also a few illustrations of Indian banks using CRM will define a clearer picture of CRM in Indian banking.

Yes Bank has developed YCCRM(Yes Bank Collaborative CRM), the prominent features of which are ‘discussion boards’ and ‘templates’. 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.

Punjab National Bank deployed CRM software with modules of Prospect Management, Lead Management, Activity Management, Product Management, Complaint Management and Business Intelligence Reporting. The payoffs are in terms of increased customer base, cross- selling, sales force optimization, efficient lead management and higher productivity.

ICICI identifiedfive functional areas which when integrated will give Bank its CRM Business Transformation Map. Core areas of transformation were business focus, organization structure, business matrix, marketing focus and technology.  The  pay  offs  were  : lower total cost of  ownership, efficient management of volume growth, greater responsiveness to market needs, improved operations, decrease in operational costs, reduction in turnaround time, and integrated platform for all applications of bank. The recent CRM application is enabling ICICI customers to perform transactions via the platform of face book, a social networking site.  This brings the bank one step ahead in providing convenience and service through CRM. SBI’s Business Intelligence system integrates data from nearly 70 databases to form a single enterprise data warehouse model. The system generates 248 reports daily for top management and each of the branches have access to reports generated particularly for them.  This has empowered decision makers to have actionable data lending to faster decision making based on latter’s information.

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 utilized 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.

A bank’s ability to identify customer needs, segment customers and  build  accurate  customer  profiles,  all depend on how effectively it collects, manages and uses customer data. Banks need to realize which type of information they need, harvest it carefully, store it safely, keep it updated and use it proactively to cross- sell, improve customer experience and deepen relationships. Today data access is no longer a challenge, rather banks have access to loads of customer information, but the challenge still lies in converting this into business advantage. This implies that CRM needs to address the gap of converting data into customer insights which proliferates profitable customer relationships across multiple touch points. The strategic framework suggested for effective implementation of CRM emphasizes the importance of understanding CRM as an organization wide strategy and need for alignment of bank’s culture and processes to bring customer centricity at the core of operations. The framework recommends leadership and motivation driven by top management to optimize customer relationships on the basis of customer information. It points out the need for training at all levels along with coordination and communication amongst various departments. Thus, a strategic approach towards CRM implementation will enable attainment of the desired benefits of the CRM investments made by banks.