Customer Relationship Management in Banking Sector

ABSTRACT OF THE STUDY
Competition and globalisation of banking services are forcing banks to be productive and profitable. To retain High Net Worth individuals, banks should focus strongly on relationship management with customers. Innovative Customer Relationship Management (CRM) strategies and cutting edge software can help, to a great extent, in achieving the desired results. To provide customised services, banks are opening Personalised Boutiques which provide all the required financial needs of a customer.
The entire service industry is now metamorphosed to become customer- specific. In this context, the management of customer relationship in financial services industry demands special focus. Gone are the days when customers at a bank did not mind the long serpentine queues and waited patiently for their turn with a token in their hand. In todays Internet era, no one has the leisure to wait. In this context, online banking is assuming a great significance. Today, banking is more customer-centric, unlike the yester when it was transaction-centric. Banks are increasingly focusing on the premise that customers choose on the service provider who differentiates through quick and efficient service.
SCOPE OF THE STUDY
The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions. The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Ever since nationalization of banks took place in 1969, the public sector banks or the nationalized banks have acquired a prominent place and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis. Indian banks are now quoting at higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore,
Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the high revenue niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the new Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be futuristic and proactive players, capable of meeting the multifarious requirements of the large customer base. Private Banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.
CRM in banking
Retail banking refers to mass-market banking where individual customers typically use banks for services such as savings and current accounts, mortgages, loans (e.g. personal, housing, auto, and educational), debit cards, credit cards, depository services, fixed deposits, investment advisory services (for high net worth individuals) etc.
Before Internet era, consumers largely selected their banks based on how convenient the location of banks branches was to their homes or offices. With the Advent of new technologies in the business of bank, such as Internet banking and ATMs, now customers can freely chose any bank for their transactions. Thus the customer base of banks has increased, and so has the choices of customers for selecting the banks.
This is just the beginning of the story. Due to globalization new generations of private sector banks and many foreign banks have also entered the market and they have brought with them several useful and innovative products. Due to forced competition, public sector banks are also becoming more technology savvy and customer oriented.
Thus, Non-traditional competition, market consolidation, new technology, and the proliferation of the Internet are changing the competitive landscape of the retail banking industry. Today retail banking sector is characterized by following:
Multiple products (deposits, credit cards, insurance, investments and securities)
Multiple channels of distribution (call center, branch, Internet and kiosk)
Multiple customer groups (consumer, small business, and corporate)
Today, the customers have many expectations from bank such as
(i) Service at reduced cost (ii) Service Anytime Anywhere
(iii) Personalized Service
With increased number of banks, products and services and practically nil switching costs, customers are easily switching banks whenever they find better services and products. Banks are finding it tough to get new customers and more importantly retain existing customers.
Needs of a Bank
The banks now need to find out what to sell, whom to sell, when to sell, how to sell and how to be different to increase profitability. Banks need to differentiate themselves by adding value-added service, offerings and building long-term relationships with their customers through more customized products, enhanced value offerings, personalized services and increased accessibility. Banks also need to identify customers and products that would be most profitable and target customers with products that are most appropriate to their needs and serve the customers with greater cost efficiency.
Banks also need to find out the avenues for increased customer satisfaction, which leads to increased customer loyalty. This may be explained better from two initiatives bank took in the past:
1. Earlier what drove many bankers to invest in ATMs was the promise of reduced branch cost, since customers would use them instead of a branch to transact business. But what was discovered is that the financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. The value proposition, however, was a significant increase in that intangible called customer satisfaction. The increase in customer satisfaction has translated to loyalty that resulted in higher customer retention and growing franchise value.
2. Bankers invested in Internet banking, believing that the Internet was a lower-cost delivery channel and a way to increase sales. Studies have now shown, however, that the primary value of offering Internet banking services lies in the increased retention of highly valued customer segments. Again customer satisfaction drives the value proposition.
Thus, banks need to retain existing customers with enhanced personalized services and products, which best suits their needs and satisfies them the most.

Customer Relationship Management in Banking Sector

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Customer Relationship Management in Banking Sector

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ABSTRACT OF THE STUDY

SCOPE OF THE STUDY

Multiple products (deposits, credit cards, insurance, investments and securities)

Multiple channels of distribution (call center, branch, Internet and kiosk)

Multiple customer groups (consumer, small business, and corporate)

Today, the customers have many expectations from bank such as

(i) Service at reduced cost (ii) Service Anytime Anywhere

(iii) Personalized Service

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