CRM in Banking

Project on
Customer Relationship Management
A study on Union bank of India
In partial fulfilment of requirement for the
Award of Degree of M.Com
Subject:
Marketing Strategies& Plans
Submitted By:
Miss. SEEMA TALREJA
Roll No. 36
M.Com. Part I, Semester
Under the Guidance of:
Prof. Mr. Prakash Mulchandani

SMT. CHANDIBAI HIMATHMAL MANSUKHANI COLLEGE

ULHASNAGAR 421003
UNIVERSITY OF MUMBAI
2015 2016

CRM in Banking

Department of Commerce

Certificate
Thisistocertifythat,Ms.SEEMA.M.TALREJAofM.Com.I,Sem.I(RollNo.36),has
successfully completed the project titled

CUSTOMER RELATIONSHIP

MANAGEMENT undermyguidanceforthe AcademicYear201516. Theinformation

submittedistrueandoriginalaspermyknowledge.

Prof.PrakashN.Mulchandani
(ProjectGuide)

Prof.GopiShamnani Dr.PadmaV.Deshmukh
(Coordinator,M.ComCourse)
(I/CPrincipal)

ExternalExaminer

CRM in Banking

DECLARATION
I,

Ms. SEEMA.M.TALREJA student

of

SMT. CHANDIBAI

HIMATMAL

MANSUKHANI COLLEGE, ULHASNAGAR studying in M.Com Part I, (Semester

I); I hereby declare that I have completed this project on CUSTOMER
RELATIONSHIPMANEGEMENTforthesubjectMarketingStrategies&Plans
in the academic year2015-16.The information submitted is true and original to the best
of my knowledge

_______________
SEEMA.M TALREJA

CRM in Banking

ACKNOWLEGEMENT
To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project
I take this opportunity to thank the University of Mumbai forgiving me chance
to do this project.
I would like thank my Principal, Dr. Padma V. Deshmukh for providing the
necessary facilities required for completion of this project.
I would also like to express my sincere gratitude towards my project guide Prof.
Mr. Prakash Mulchandani whose guidance and care made the project
successful.
I would like to thank my college library, for having provided Various reference
books and magazines related to my project.
Last but not the least, I would like to thank almighty God, my parents, and
my friends who helped me gather these data and have sat with me for hours
discussing about the project.

CRM in Banking

Index
CHAPTER NO

TOPIC

Customer relationship management

introduction
1.1 what is CRM

10-12

1.2 Meaning and defining CRM

13

1.3 Emergence of CRM

14-15

1.4 CRM in Indian bank

16-18

1.5 Need of CRM in bank

19-22

1.6 Objective of CRM in banks

23-24

1.7 Benefits of CRM

25-27

PAGE
NO

CRM process framework

28

2.1 CRM formation process

29-30

2.2 A framework for successful CRM

31-32

2.3 Relationship management and governance process

33

2.4 Relational performance and evaluation process

34-35

2.5 Key principals of CRM

36-37

2.6 Customer retention

38-41

2.7 Building CRM

42-44

E- CRM

45

3.1 E-CRM in banks

46-47

3.2Key features of e-CRM

48-49

3.2 Benefits of e-CRM to BANKS and CUSTOMERS

50

Case study
Union bank of India

51
52-56

CRM in Banking

Suggestions,Findings,conclusion and Bibliography

57-60

Objectives

To study customer relationship management of Union bank of India

To find general working of bank and how staff members response to

customer.

Limitations

The project is only limited to the study of CRM of only one bank .

CRM of other banks are not disclosed.

CRM strategies of banks are not compared with each other.

Time, length, and depth of the study are limited as per the requirements of
college

Scope

The project begins with a brief mention of what CRM is and its need and
importance in banks. It further goes on to show the CRM strategy of Union
bank of India.

CRM in Banking

Methodology of study
Data for the project is obtained in two ways primary source and secondary
source.

Primary source-

The researcher collected primary data by preparing questionnaire and

interviewed manager, staff and customer of Union bank of India and Kapol cooperative bank Mulund West branch.

Secondary source-

Secondary data for the project has been gathered from various CRM books and
internet.

CRM in Banking

EXECUTIVE SUMMARY
Customer relationship management is a broad approach for creating,
maintaining and expanding customer relationships. CRM is the business
strategy that aims to understand, anticipate, manage and personalize the needs
of an organizations current and potential customers. At the heart of a perfect
strategy is the creation of mutual value for all parties involved in the business
process. It is about creating a sustainable competitive advantage by being the
best at understanding, communicating, and delivering and developing existing
customer relationships in addition to creating and keeping new customers. 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 transaction
The intense competition which banks have come to face, both as a consequence
of growth of non-banking financial institutions as well as securitization has
created the fear of high risk and has increased the attention towards Customer
Relationship Management.
Customer relationship management (CRM) is a multifaceted process, mediated
by a set of information technologies that focuses on creating two-way
exchanges with customers so that firms have an intimate knowledge of their
needs, wants, and buying patterns. In this way, CRM is intended to help
companies understand, as well as anticipate, the needs of current and potential
customers.
The project is a detail study of Process Involved in Planning of Customer
Relationship Management and Need for Customer Relationship Management.
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CRM in Banking

CRM in Banking

Chapter 1
Customer Relationship Management
Introduction

10

CRM in Banking

1.1
WHAT IS CUSTOMER RELATONSHIP MANAGEMENT?
CRM, or Customer Relationship Management, is a company-wide business
strategy designed to reduce costs and increase profitability by solidifying
customer loyalty. True CRM brings together information from all data sources
within an organization (and where appropriate, from outside the organization) to
give one, holistic view of each customer in real time. This allows customer
facing employees in such areas as sales, customer support, and marketing to
make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning
tactics.
Once thought of as a type of software, CRM has evolved into a customer-centric
philosophy that must permeate an entire organization. There are three key
elements to a successful CRM initiative: people, process, and technology. The
people throughout a company-from the CEO to each and every customer service
rep-need to buy in to and support CRM. A company's business processes must
be reengineered to bolster its CRM initiative, often from the view of, how can
this process better serve the customer? Firms must select the right technology to
drive these improved processes, provide the best data to the employees, and be
easy enough to operate that users won't balk. If one of these three foundations is
not sound, the entire CRM structure will crumble.
It's a strategy used to learn more about customers' needs and behaviors in order
to develop stronger relationships with them. After all, good customer
relationships are at the heart of business success. There are many technological
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CRM in Banking

A component to CRM, but thinking about CRM in primarily technological terms

is a mistake. The more useful way to think about CRM is as a process that will
help bring together lots of pieces of information about customers, sales,
marketing effectiveness, responsiveness and market trends. If customer
relationships are the heart of business success, then CRM is the valve the pumps
a company's life blood. As such, CRM is best suited to help businesses use
people, processes, and technology to gain insight into the behaviour and value of
customers.

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CRM in Banking

1.2
Defining CRM
Customer Relationship Marketing is a practice that encompasses all marketing
activities directed toward establishing, developing, and maintaining successful
customer relationships. The focus of relationship marketing is on developing
long-term relationships and improving corporate performance through customer
loyalty and customer retention.
Customer Relationship Management (CRM) as the name suggests, the primary
focal point is placed on the customer. The key objective is to increase customer
value over time by increasing customer loyalty. If a company develops better
customer relationships, it also improves business processes as well as its profits.
In general, CRM is a more efficient automated method used to connect and
improve all areas of business to focus on creating strong customer relationships.
All forces are coupled together to save, improve, and acquire greater business to
customer relationships. The most common areas of business that are positively
affected include marketing, sales, and customer service strategies.
CRM helps create time efficiency and savings on both sides of the business
spectrum. Through correct implementation and use of CRM solutions,
companies gain a better understanding of their strongest and weakest areas and
how they can improve upon these. Therefore, customers gain better products and
services from their businesses of choice. In order to achieve better insight on
CRM, it is essential to consider all of its components.

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CRM in Banking

CRM- Meaning
Customer relationship management (CRM) is a business strategy that spans your
entire organization from front office to back-office. It is a commitment you
make to put customers at the heart of your enterprise. The right CRM strategy
and solutions can help you securely, reliably and consistently delight your
customers every time they interact with your business by empowering them with
anytime, anywhere, and any channel access to accurate information and more
personalized service. Reach more customers more effectively, increase customer
retention and boost customer loyalty by leveraging opportunities to up-sell and
cross-sell and driving repeat business at lower cost Drive improvements in
business performance by providing your customers with the ability to access
more information through self-service and assisted-service capabilities when it
is convenient for them. Enable virtualization in your enterprise as more of your
people and resources extend beyond your offices and around the world Balance
sophisticated functionality with rapid implementation and effective support for a
faster return on your CRM investment. Todays customers face a growing range
of choices in the products and services they can buy. They base their choices on
their perception of quality, value, and service. Each Consumer has a specific
behaviour. But buying habits are sometimes difficult to understand. Therefore
companies always want to gain some insight about consumer behaviour and
habits in order to better control this behaviour. Having an impact on consumer
behaviour means being able to change consumers perception of the product or
service, to establish a relation between the company and its clients.

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CRM in Banking

1.3
THE EMERGENCE OF CRM :
The developing customer relationship management has historical antecedents
going back into the pre-industrial era. In the recent years however several
factors have contributed to the rapid development and evolution of CRM. These
include the growing de-intermediation process in many industries due to the
advent of sophisticated computer and telecommunication technologies that allow
producers to directly interact with the end customers.
The recent success of On-line banking, Charles Schwab and Merryll Lynchs
On-line investment programs, direct selling of books, automobiles, insurance
etc. on the internet all atleast to the growing consumer interest in maintaining
direct relationship with marketers. The de-intermediation process and
consequent prevalence of Customer Relationship Management is also due to the
growth of the service economy.
Another force driving the adoption of customer relationship management has
been the total quality movement. When companies embraced Total Quality
Movement philosophy to improve quality and reduce cost, it become necessary
to involve suppliers and customers in implementing the program at all levels of
the value chain. This needed close working relationships with customers,
suppliers and other members of the marketing infrastructure. Other programs
such as Just in Time and Material resource planning also made the use of
interdependent relationships between suppliers and customers.
Similarly in the current era of hype-competition, marketers are forced to be
more concerned with customer retention loyalty. As several studies indicated,

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CRM in Banking

retaining customer is less expensive and perhaps a more sustainable competitive

advantage than acquiring new ones. Marketers are realizing that it costs less to
retain customers than to compete for new ones. Today many large internationally
oriented companies are trying to become global by integrating their worldwide
operation. To achieve this they are seeking cooperative and collaborative
solutions for global operations from their vendors instead of merely engaging in
transactional activities with them. Such customers need make it imperative for
marketers interested in the business of companies who are global to adopt
Customer relationship management programs, particularly global account
management programs. Global account management is conceptually similar to
national account management programs except that they have to be global in
scope and this they are more complex. Managing customer relationship around
the world calls for external and internal partnering activities, including
partnering across firms worldwide organizations.

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CRM in Banking

1.4

Customer
Relationship
Management

in

Indian bank :
Indian

banks

had

presumed that their

operations were customer-centric, simply because they had customers. These
banks ruled the roost, protected by regulations that did not allow free entry into
the sector. And to their credit, when the banking sector was opened up, they
survived by adapting quickly for long to the new rules of the game.
Many managed to post profits. For them an unexpected bonanza came from
government bonds in which most were hugely invested.
Ironically, the Reserve Bank of India's moves to cut aggressively the interest
rates after 1999, pushed up the prices of bonds. So banks had a windfall doing
almost nothing. The bond profits, like manna from heaven, improved the
balance-sheets of all banks irrespective of their core performance.

However, the era of lazy banking is soon to end. The mesh of rules that propped
up the Indian banking industry is now being dismantled rapidly.

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CRM in Banking

According to a RBI road-map, India will have a competitive banking market

after 2009. As one of the most attractive emerging market destinations, India
will see foreign banks come in, what with more freedom to come in, grow and
acquire.
Therefore, it is imperative that Indian banks wake up to this reality and re-focus
on their core asset the customer. A greater focus on Customer Relationship
Management (CRM) is the only way the banking industry can protect its market
share and boost growth.
CRM would also make Indian bankers realize that the purpose of their business
is to "create and keep a customer" and to "view the entire business process as
consisting of a tightly integrated effort to discover, create, and satisfy customer
needs."
What is CRM, and what will it deliver to the banks? CRM is, probably, one of
the least clearly defined business acronyms, as there is no single definition for it.
It is probably easier to say what CRM is not. Unfortunately, CRM has also
become a misnomer for a range of solutions from IT vendors, each providing its
own spin on the idea.
CRM is variously misunderstood as a fancy sales strategy, an expensive
software product, or even a new method of data collection. It is none of these.

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CRM in Banking

CRM is a simple philosophy that places the customer at the heart of a business
organizations processes, activities and culture to improve his satisfaction of
service and, in turn, maximize the profits for the organization.
A successful CRM strategy aims at understanding the needs of the customer and
integrating them with the organizations strategy, people, and technology and
business process
Therefore, one of the best ways of launching a CRM initiative is to start with
what the organization is doing now and working out what should be done to
improve its interface with its customers. Then and only then, should it link to an
IT solution.
While this may sound quite straightforward, for large organizations it can be a
mammoth task unless a gradual step-by-step process is adopted.
It does not happen simply by buying the software and installing it. For CRM to
be truly effective, it requires a well-thought-out initiative involving strategy,
people, technology, and processes. Above all, it requires the realization that the
CRM philosophy of doing business should be adopted incrementally with an
iterative approach to learn at every stage of development.
Only time will tell how Indian banks embrace the CRM philosophy and take on
the competition from foreign entities.

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CRM in Banking

1.5
Need of CRM in banks

CRM primarily caters to all interactions with the customers or potential

customers, across multiple touch points including the Internet, bank branch, call
centre, field organization and other distribution channels.
CRM can help banks in following ways:
1 Campaign Management Banks need to identify customers, tailor products
and services to meet their needs and sell these products to them. CRM achieves
this through Campaign Management by analyzing data from banks internal
applications or by importing data from external applications to evaluate
customer profitability and designing comprehensive customer profiles in terms
of individual lifestyle preferences, income levels and other related criteria.
Based on these profiles, banks can identify the most lucrative customers and
customer segments, and execute targeted, personalized multi-channel marketing

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CRM in Banking

campaigns to reach these customers and maximize the lifetime value of those
relationships.
2 Customer Information Consolidation - Instead of customer information being
stored in product centric silos, (for e.g. separate databases of savings account &
credit card customers), with CRM the information is stored in a customer centric
manner covering all the products of the bank. CRM integrates various channels
to deliver a host of services to customers, while aiding the functioning of the
bank.
3 Marketing Encyclopedia - Central repository for products, pricing and
competitive information, as well as internal training material, sales
presentations, proposal templates and marketing collateral.
4 360-degree view of company This means whoever the bank speaks to,
irrespective of whether the communication is from sales, finance or support, the
bank is aware of the interaction. Removal of inconsistencies of data makes the
client interaction processes smooth and efficient, thus leading to enhanced
customer satisfaction.
5 Personalized sales home page CRM can provide a single view where Sales
Mangers and agents can get all the most up-to-date information in one place,
including opportunity, account, news, and expense report information. This
would make sales decision fast and consistent.
6 Lead and Opportunity Management - These enable organizations to
effectively manage leads and opportunities and track the leads through deal
closure, the required follow-up and interaction with the prospects.

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CRM in Banking

7 Activity Management It helps managers to assign and track the activities of

various members. Thus improved transparency leads to improved efficiency.
8 Contact Centre It enables customer service agent to provide uniform service
across multiple channels such as phone, Internet, email, Fax.
9 Operational Inefficiency Removal CRM can help in Strategy Formulation to
eliminate current operational inefficiencies. An effective CRM solution supports
all channels of customer interaction including telephone, fax, e-mail, the online
portals, wireless devices, ATMs, and face-to-face contacts with bank personnel.
It also links these customer touch points to an operations centre and connects the
operations centre with the relevant internal and external business partners.
10Enhanced productivity CRM can help in enhanced productivity of customers,
partners and employees.
11CRM with Business Intelligence - Banks need to analyze the performance of
customer relationships, uncover trends in customer behaviour, and understand
the true business value of their customers. CRM with business intelligence
allows banks to assess customer segments, which help them calculate the net
present value (NPV) of a customer segment over a given period to derive
customer lifetime value. Customers can be evaluated within a scoring
framework. Combining the behaviour key figure and frequency to monetary
acquisition analysis with a marketing revenue quota can optimize acquisition
costs and cut the number of inefficient activities.

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CRM in Banking

With such knowledge, banks can efficiently allocate resources to the most
profitable customers and reengineer the unprofitable ones. Data warehousing
solutions have been implemented in Citibank, Reserve Bank of India, State Bank of
India, IDBI, ICICI, MaxTouch, ACC, National Stock Exchange and PepsiCo. And
Business Intelligence players hope many more will follow suit.

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CRM in Banking

1.6
Objective of Customer Relationship Management in Banks

Objective of
customer
relationship
management

Sales

Customer
service

Marketing

Support

The push towards better CRM technologies is natural result of the search by
business of greater productivity and efficiency in customer facing operations
like sales, marketing, customer service and support. E.g. in sales, companies
need IT system that provides greater control and efficiency. This means
improved forecasting and to capability, greater visibility into sales performance
across a variety of channels increased productivity by external sales forces and
reduced sales costs, meanwhile, companies must meet customer demands for
better quality timeless and customization in the service they deliver.

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CRM in Banking

Companies also need technologies that help them approach customers in a

rational way. E.g. remember a customer address from one transaction to another
and carefully choreograph contact between its, sales force and customers. In
addition to being wasteful and inefficient
pitching a new product to a customer who has just bought the same item makes
the company look incompetent to the customer.
The internet dramatically accelerate the focus on CRM by making customer
interactions more cost-efficiency. In addition, the web has established a more
direct sales channel that supports rapid customers interaction and short sales
cycles. Using internet technologies, customer can interact with information
from a wide variety of sources without special training.
The idea of CRM is that it helps businesses use technology and human resources
gain insight into the behaviour of customers and the value of those customers. If
it works as hoped, a business can: provide better customer service, make call
centres more efficient, cross sell products more effectively, help sales staff close
deals faster, simplify marketing and sales processes, discover new customers,
and increase
Customer revenues. It doesn't happen by simply buying software and installing
it. For CRM to be truly effective an organization must first decide what kind of
customer information it is looking for and it must decide what it intends to do
with that information. For example, many financial institutions keep track of
customers' life Stages in order to market appropriate banking products like
mortgages or IRAs to them at the right time to fit their needs.

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CRM in Banking

1.7
Benefits of a Customer Relationship Management
A properly implemented CRM system can bring significant benefits to
organizations. But when I talk about a system, I mean the 3 P's, the complete
consortium of people (employees, culture), procedures (way of doing business)
and programs (supporting applications), not just an application running on a
computer.
CRM is more than just the next wave of computer-aided marketing; it's a way of
doing business. Lets take a look at the advantages that a CRM or Customer
Relationship Management system can bring.
1.Shared or distributed data
As companies realize that customer relationships are happening on many levels
(not just through customer service or a web presence), they start to understand
the need for sharing all available data throughout the organization. A CRM
system is an enabler for making informed decisions and follow-up, on all the
different levels.

2.Cost reduction
A strong point in Customer Relationship Management is that it is making the
customer a partner in your business, not just a subject. As customers are doing
their own order entry, and are empowered to find the info they need to come to a
buy decision, less order entry and customer support staff is needed.

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CRM in Banking

3.Better Customer Service

All data concerning interactions with customers is centralized. The customer
service department can greatly benefit from this, because they have all the
information they need at their fingertips. No need to guess, no need to ask the
customer for the n-th time. And through the use of push-technology, customer
service reps can lead the customer towards the information they need. And, most
of the time, the customer can do this on their own, as the CRM system
(remember, the 3 P's) is more and more able to anticipate the need of the
customer. The customer experience is greatly enhanced.

4.Increased Customer Satisfaction

The customer feels that he is more "part of the team" instead of just a subject for
sales and marketing (the proverbial number), customer service is better, his
needs are anticipated. There is no doubt that customer satisfaction will go up. If
the products sold exceed the customers expectation, of course, no CRM system
can help you with shoddy products. In my opinion, the term satisfaction is a
contaminated. Many companies think that if customers are satisfied that this is a
good predictor for repeat business. However, this is not the case. Only
delighted customers have a great level of loyalty.

5.Better Customer Retention

If a CRM system can help to enchant customers, this will increase customer
loyalty, and they will keep coming back to buy again and again, hence customer
retention.

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CRM in Banking

6.More repeat business

The repeat business is coming from the delighted customers, who are turned
from doubting clients into loyal advocates.

7.More new business

If you are delivering the ultimate customer experience, this will seed the wordof-mouth buzz, which will spawn more new business.

8.More Profit!
More business at lower cost equals more profit.

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CRM in Banking

Chapter 2

Customer Relationship Management

Process Framework

29

CRM in Banking

2.1
Customer Relationship Management formation process

Correlate

Connect

Formation
process

Cognize

30

Combine

CRM in Banking

The appropriate approach for the CRM process involve :

1. Correlate
A series of transaction that make up a dialogue between customer, customer, end
user and an organization. This is the data that is collected from all contact points
and communication. With outside points of contact.

2. Combine
The mapping and management of interactions points between a customer,
channel, end user and an organization.

3. Cognize
The insight gained through capture and analysis of detailed information is to
create continuous learning from the data warehouse and knowledge base that is
created, interrogated and analysed.

4. Connect
The application of insight to create relevant interaction or communication with
the consumers, customers, channels suppliers and partners that build value
relationships.

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CRM in Banking

2.2
A framework for successful CRM
Customer Relationship Management involves much more than installing any
one application, embracing a new technology, or even committing to one
vendors CRM suite. It provides better insight into customer behaviour and
enables new ways of doing business. Good implementations give employees a
complete view of the organizations relationship with its customers and open up
internal system to customers so they can have access to sales and services
themselves.
CRM requires a cultural change that aligns a company, its employees and its
system towards customers and away from traditional product or process centric
models. Companies that are unresponsive to the shift will soon find themselves
scrambling for scraps left behind by those that are.
Adopt a suitable framework
A simple framework will help you to understand the full scope of a CRM
solution and also help to focus on areas that need your attention. A useful
framework will encompass the following elements.

Customer strategy
This will ensure that you are focused on achieving specific customer goals, and
will provide direction to the selection and deployment of CRM applications.

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CRM in Banking

Customer insight

This encapsulates customer data acquisition and storage capabilities, insight

generation capabilities and insight generation capabilities and insight
exploitation capabilities and is used both to support customer strategy
development and to drive intelligent customer interaction in marketing, selling
and service activities.

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CRM in Banking

2.3
Relationship management and governance process
Once CRM program is developed and rolled out, the program as well as the
individual relationship must be managed and governed. For mass market
customers, the degree to which there is symmetry or asymmetry in the primary
responsibility of whether the customer or the program sponsoring company will
be managing the relationship varies with the size of market. However, for
program directed at distributor and business customers the management of the
relationship would require the involvement of both parties. The degree to which
these governance responsibilities are shared or managed independently will
depend on the perception of norms of governance processes among relational
partners given the nature of their CRM program and the purpose of engaging in
the relationship.
Whether management and governance responsibilities are independently or
jointly undertaken by relational partners, several issues must be addressed.
These include decisions regarding role specification, communication, common
bonds, planning process, process alignment, employee motivation and
monitoring procedures.
Communication with customer partners is a necessary process of relationship
marketing. It helps in relationship development, fosters trust, and provides the
information and knowledge needed to undertake cooperative and collaborative
activities of relationship marketing. In many ways it is the lifeblood of
relationship marketing. By establishing proper communication channels for
sharing information with a company can enhance their relationship with them. In
addition to communicating with customers, it is also essential to establish intracompany communication practically among all concerned individuals and
corporate functions that directly pay a role in managing the relationship with
specific customer or customer group.
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CRM in Banking

2.4
Relational performance and Evaluation process
Relational parties
Customer partner selection is another important decision in the relationship
formation stage. Even though a company may serve all customer types, few
have the necessary resources and commitment to establish CRM programs for
all. Therefore I the initial phase, a company has to decide which customer type
and specific customers or customer groups will be the focus of their CRM
efforts. Subsequently when the company gains experience and achieve
successful results, the scope of CRM activities could be expanded to include
other customers into the program or engage in additional programs
Although partner selection is an important decision in achieving CRM goals, not
all companies have a formalized process of selecting customers. Some follow
intuitive judgmental approach of senior managers in selecting customers
partners and other partners with those customers who demand so. Yet other
companies have formalized processes of selecting relational partners through
extensive research and evaluation along chosen criteria. The criteria for partner
selection vary according to company goals and policies. These range from a
single criterion such as revenue potential of the customer to multiple criteria
including several variables such as customer commitment, resourcefulness, and
management values.

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CRM in Banking

Evaluation process
Periodic assessment if results in CRM to evaluate if programs are meeting
expectations and if they are sustainable in the long run. Performance evaluation
also helps in making corrective action in terms of relationship governance or in
modifying relationship marketing objectives and program features. Without a
proper performance metrics to evaluate CRM efforts, it would be hard to make
objective decisions regarding continuation, modification or termination of CRM
programs. Developing a performance metrics is always a challenging activity as
most firms are inclined to use existing marketing measures to evaluate CRM.
however many existing marketing measures, such as market share and total
volume of sales may not be appropriate in the context of CRM. Even when a
more CRM oriented measures are selected it cannot be applied uniformly across
all CRM programs particularly when the purpose of each program is different
from one another.
Another global measure used by firms to monitor CRM performance is the
measurement of relationship satisfaction. Similar to the measurement of
customer satisfaction measurement would help in knowing to what extent
relational partners are satisfied with their current cooperative and collaborative
relationships. Unlike customer satisfaction measures that are applied to measure
satisfaction on one side of the dyad, relationship satisfaction measures could be
applied on both sides of the dyad. Both the customer and the marketing firm
have to perform in order to produce the results in a cooperative relationship and
hence each partys relationship satisfaction could be measured.

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CRM in Banking

2.5
Key principals of customer relationship management
Differentiate Customers:
All customers are not equal; recognize and reward best customers
disproportionately.

Understanding

each

customer

becomes

particularly

important. And the same customers reaction to a cellular company operator may
be quite different as compared to a car dealer. Besides for the same product or
the service not all customers can be treated alike and CRM needs to differentiate
between a high value customer and a low value customer.
What CRM needs to understand while differentiating customers is?
-

Sensitivities,

Tastes,

Preferences

and

Personalities
-

Lifestyle and age

Culture Background and education

Physical and psychological characteristics

Differentiating Offerings
Low value customer requiring high value customer offerings
Low value customer with potential to become high value in near future
High value customer requiring high value service
High value customer requiring low value service
Keeping Existing Customers
Grading customers from very satisfied to very disappoint should help the
organization in improving its customer satisfaction levels and scores.

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CRM in Banking

As the satisfaction level for each customer improves so shall the customer
retention with the organization.

Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life
event trigger points by customer, marketers can maximize share of purchase
potential. Thus the single adults shall require a new car stereo and as he grows
into a married couple his needs grow into appliances.

Increase Loyalty

Loyal customers are more profitable. Any company will like its mind share
status to improve from being a suspect to being an advocate. Company has to
invest in terms of its product and service offerings to its customers. It has to
innovate and meet the very needs of its clients/ customers so that they remain as
advocates on the loyalty curve. Referral sales invariably are low cost high
margin sales.
Business intelligence and analytical capabilities
CRM applications contain a vast amount of information pertaining to an
organization customers and prospects. This information needs to be leveraged an
analyzed by decision. This is possible only if CRM solutions have robust
business intelligence and analytical capabilities. This is a major requirement
primarily for marketing application.

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CRM in Banking

2.6
Customer retention
Under the present context of competitive environment, the focus of the
organizations is more on customer retention than simply on customer
acquisition. Customer retention is the process of keeping customer in the
customer inventory for an unending period by meeting the needs and exceeding
the expectations of those customers. It is approach of converting a casual
customer not a committed loyal customer.

Why is customer retention preferred?

Some of the major benefits of customer retention are presented below. customer
come within the fold of an organization in the following ways:

Customer by chance.

Customer by occasion

Customer by choice

Customer by reception

Customer by loyalty
In the customer retention approach the organization makes every effort to
convert a customer by chance into a customer by loyalty. A retained customer
who turns out to be loyal will shift his focus of relationship with the
organization from a mere transactional relationship to a relationship tied up with
emotion and commitment, which will benefit the organization a long way.

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CRM in Banking

Customer retention would enable the organization to minimize expenses in

terms of acquisition of new customers. Customer retention cost for an
organization is expected to be far less than that of the acquisition concerned.
Customer retention enables a long tem relationship of mutual benefit, both to the
organization and to the customer concerned.
There appears to be close interaction between customer retention and customer
loyalty. Loyalty is usually measured in terms of longevity of the patronage of
customers. Loyalty that arises out of retention is a preferred state, as compared
to loyalty of reluctant customers.
Retained customers would help to spread a positive image of the organization by
word of mouth, which in turns helps to acquire new customers to the customer
inventory.

Approach to retention process

The approach of the organization at the retention process is expected to be
different from the approach adopted at the acquisition process. The difference is
indicated in the following lines.
At the acquisition the focus is on acquiring relationship whereas at the retention,
it is on nurturing the relationship.
At the acquisition the focus is on demographic, psychographic profile of the
customer, whereas the retention process the focus is more on past and present
transactional profiles in addition to demographic, psychographic profiles.

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CRM in Banking

Stages of retention in the customer life cycle

Acquisition

Reacquisition

Retention
Stages of
retention in
customer life
cycle...

Defection

Attrition

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CRM in Banking

Acquisition is a stage in which customer are acquired for an organization

business. Customers so acquired would reach a state of either satisfaction or
dissatisfaction.

Satisfaction leads to retention.

Dissatisfaction leads to stage of attrition.

A satisfied customer who joins the retention stage might either proceed towards
loyalty stage or in the event of being dissatisfied will join the attrition stage.
The customer who joins the attrition stage will proceed to the stage if defection,
unless he is satisfied. T hose customers in the defection stage may be reacquired,
by means of appropriate marketing programmes designed and implemented for
the purpose Reacquisition.

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CRM in Banking

2.7
Building customer relationship management
Organization strategies towards developing and maintaining sustainable
relationship differ from one organization to another depending on certain
factors. These include nature of business, its size, its market share, nature of
product type, volume of sales, geographic concentration, socio economic status
and life style of the customer concerned, competitors strength, and so on. The
strategies that are practiced by customer driven organization with national and
global perspective. The reader may concentrate on those strategies or
combination of several strategies that suit the business context.

Setting
satisfactory
service standard

People

Process

Organization

Product

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CRM in Banking

People
People within the organization have the basic role in developing and maintaining
relationship with customer. Everyone in the organization must realize the fact
that their work is towards satisfying customers. Everyone from the lowest to the
highest level irrespective if their functional specialization and responsibilities
must integrate their activities towards one of the main objectives of the
organization customer satisfaction. The marketing departments can coordinate
integrated activity towards customer satisfaction.
Process
Process involves a logical sequence of activities right from the need
identification of potential customers to need fulfilment. Need fulfilment requires
manufacture of product with desired attributes. The process has to be derived
from the customers viewpoint which paves way for total customer satisfaction.
The performance of each link must be objectively analyzed and corrected in tune
with the internal and external customers expectation.
Product
The product offered must constantly provide value addition. The expectations of
the customers may always be on the increase due to various reasons. A customer
satisfied with a given product may soon become a dissatisfied customer in view
of the changes that takes place in his expectations. Customers expectations go
much beyond physical tangible things.
Organization

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CRM in Banking

In order to build customer relationship, an organization should be aware of the

technology advancements and provide quality service in tune with the
customers expectations. It should
concentrate on total customer satisfaction and respond to the requirement of the
customers faster than its competitors. The responsive and learning nature of the
organization must build Confidence in the mind of the customers and that will
go a long way in building the customer relationship.

Setting satisfactory service standard

A customer not only expects quality products but also quality services. The
organization must ensure quality and availability of the product. The
understanding couple with the skills would help more significantly the process
of achieving the ultimate objective of Customer Interaction Management. At this
point, it is worthy to note that effective CIM goes much beyond the skills
developed, knowledge gained, technology enabled and infrastructure build up.
Ultimately it is love, trust and respect that an organization earns from customers
that is supported by organization help-desks, customer support, software,
integrated customer information system etc that would help to gain maximum
benefits out of Customer Interaction Management.

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CRM in Banking

Chapter 3

E-CRM

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CRM in Banking

3.1
E CRM in banks
What is E-CRM?
As the internet is becoming more and more important in business life, many
companies consider it as an opportunity to reduce customer-service costs,
tighten customer relationships and most important, further personalize
marketing messages and enable mass customization Together with the creation
of Sales force automation (SFA), where electronic methods were used to gather
data and analyze customer information, the trend of the upcoming Internet can
be seen as the foundation of what we know as eCRM today.
We can define eCRM as activities to manage customer relationships by using
the Internet, web browsers or other electronic touch points.
The challenge hereby is to offer communication and information on the right
topic, in the right amount, and at the right time that fits the customers specific
needs.
Channels, through which companies can communicate with its customers, are
growing by the day, and as a result, getting their time and attention has turned
into a major challenge. One of the reasons eCRM is so popular nowadays is that
digital channels can create unique and positive experiences not just
transactions for customers. An extreme, but ever growing in popularity,
example of the creation of experiences in order to establish customer service is
the use of Virtual Worlds, such as second life. Through this so-called eCRM,
companies are able to create synergies between virtual and physical channels
and reaching a very wide consumer base. However, given the newness of the
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CRM in Banking

technology, most companies are still struggling to identify effective entries in

Virtual Worlds. Its highly interactive character, which allows companies to
respond directly to any customers requests or problems, is another feature of
eCRM that helps companies establish and sustain long-term customer
relationships.

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CRM in Banking

3.2
Key features of E-CRM

Focused on process
A CRM process brings you the appropriate technology and it will reduce the
technology gap as well as refining your business process.
Data warehouse driven
In a e-CRM solution, the data warehouse or customer data mart contains a
consolidated and comprehensive view of the customer. The warehouse provides
the broadest possible profile of the customer. This is needed to determine an
appropriate course of action, the most effective offer to make, and the best
channel to deliver your pertinent message.

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CRM in Banking

A multi channel view

Organizations today have different methods of interacting with customers.
E.g. A bank might use one application to support its website , another to support
sales and another to support ATMs and yet another to support direct mail and
telemarketing.
An e-CRM solution must have applications that coordinate or synchronies
customer communication across channels and do so in real time. These
applications must be able to capture customer transaction across disparate touch
points and
Store that information in a temporary data store for immediate assessment and
response. In addition, this application must feed information captured from those
touch points into the data warehouse to broaden the customer profiles obtained
from back-end transactional systems and external sources.
Measurement driven
Today many companies spend millions of dollars communicating with
customers, but spend little time and effort determining the effectiveness of those
campaigns CRM provides the means to measure communication efforts. E-CRM
is a continuous process.

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CRM in Banking

3.3
BENEFITS OF E-CRM TO Banks AND Customers

BENEFITS TO

BENEFITS TO

BANK

CUSTOMER

Relationship with the

Customer interaction and

customer

satisfaction

Using e-mail for

business

Convenience

communication
Personalized services

Speed of processing the

or one to one services

transaction

through

response
Website

to

market

products and services

Service quality

Transaction security

Trust

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e-

CRM in Banking

Chapter 4.1

Union bank of India case study

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CRM in Banking

4.1
Union bank of India
The Union Bank of India was built up in twentieth century and declared open by
the Father of the Nation, Mahatma Gandhi. The bank with its efficient valueadded services, sustained growth, consistent profitability and development of
new technologies bank has ensured complete customer delight, living up to its
image of, GOOD PEOPLE TO BANK WITH. Bank is offering credit cards,
home loan, union demat, Kisan ATM, International debit card, online tax
payment facility, Railway e-ticketing kiosk, etc., services to its customers
through core banking solution.
The Union Bank of India has 2261 branches out which 1031 branches are under
CBS. Presently 939 ATMs spread out across India both Onsite and Offsite. All
the ATMs are inter-connected through the Banks ATM Switch, thus facilitating
on-line operations in case of CBS customers. The Bank is a member of Cash
Tree consortium and also has bilateral arrangement with State Bank of India,
enabling the Banks ATM cardholder access to over 20000 ATMs across the
country. UBI Net connects 65 Offices and 984 branches located in 323 centres,
facilitating speedier transmission of MIS data (Network Map). The network also
facilitates the implementation of Core Banking Solution, apart from DEMAT
services, Cash Management services, fund transfers, messaging system, etc.The
Bank is using VSAT network for connecting branches and ATMs wherever
leased line connectivity is not feasible. We have 590 VSATs operational,
connecting 194 branches/extension counters and 316 ATMs.

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CRM in Banking

4.2
Customer satisfaction survey
Responsiveness of employee in dealing with customer?

Quality service provided by bank?

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CRM in Banking

Customer care service of the bank?

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CRM in Banking

4.3
Steps followed by the bank for customer retention
Quality service is provided for building good relationship with customer.
The following services are provided by bank for customer retention
o

SMS banking

Internet banking

ATM facility

Telebanking

Debit cards

Credit card

Lockers etc..

Bank doesnt focus on certain group of customer, it caters all groups.

The call centres of bank are also available.

All customers are given equal services.

Bank track individual problem of customer.

According to bank customers are satisfied with the bank, and it can
be seen by number of accounts opened regularly and increase in business of
bank in all departments.

It is very important for the bank to have good customer relationship management
debt of the bank.
Customer satisfaction ultimately results in increase in profit of the bank.

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CRM in Banking

To help customer at our best.

To keep a track of every complaint and problems of customer to solve it and see
to it that it doesnt get repeated.
Customer retention is important.
Increase in number of customer
Various services are provided (e.g. Debit card, credit card, internet banking etc..)

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CRM in Banking

Chapter 5
Suggestion findings and conclusion

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CRM in Banking

Suggestions
Bank should increase staff.
Bank transaction should be fully computerised.
Customer care service of the bank should be improved for convenience
of the customers.
Customer care service of the bank should be fast and responsive.
ATMs should be increase.
Findings
CRM is not a technology initiative; many have confused as a technology
initiative, and assigned the CRM implementation project to their information
system or IT group.
Technology is needed in order to implement CRM particularly the customization
part but technology is not the driver of CRM or the solution to successful CRM
implementation.
CRM is not exclusively a sales initiative similar to marketing; CRM is often
lodged with the sales department. The sales force after all its extremely close to
their customers, understanding their needs and wants, and trying to fulfil them.
Sales however is just one functional area that can benefit from customer
relationship management and that is necessary for effective customer
relationship management.

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CRM in Banking

CONCLUSION:
Providing excellent customer service is no easy task. This aspect of business is a
major force that can make or break profits. However, customer service is rarely
mentioned in an organization's mission statement nor is it the top of the
discussion list for staff meetings or training sessions. Providing the type of
customer service that is expected by customers take a lot of thought and
flexibility on the part of management as well as staff members. The challenges
faced by banks and their customers are many but the trick lies in de-mystifying
complex financial relationships. Technical solutions deployed by banks today
are flexible, user friendly and meant to facilitate specific workflow and
requirements in implementation processes. In order to simplify lives, banks have
begun to implement end-to-end technology through all departments with the
intention of removing human error from processes previously existing manual
environments could not have been adequate for future visions, growth plans and
strategies. In this day and age, customers enjoy complete luxury in terms of
customized technical solutions and banks us the same for long term, mutually
beneficial relationships.

BIBLIOGRAPHY
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CRM in Banking

Book

Author

Customer relationship

Mohammed, H.Peeru

management

Customer

Sheth, jagdish. N

relationship

and others ed.

management
strategies

WEBLIOGRAPHY
www.wikipedia.com
www.ebooks.com
www.google.com

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