CRM : Making it simple for

banking industry.

Submitted To: Submitted by:

Prof. K. Siva Reddy Sachin Bansal 09BSHYD0711
Tanmay Garg 09BSHYD0912
Prerak Dhawan 09BSHYD0586
Preetish Kr. Singh 09BSHYD0585
Sarita Sethi 09BSHYD0742
Priyanka Gunturu 09BSHYD0600
Index
1. Introduction to banking 3
Importance of banking 3
Need for CRM
4

2. Introduction to CRM 5
Phases of CRM 5
Benefits of CRM 6
Types/variations of CRM 7
Implementations of CRM 10
Importance of CRM in banking 12
Challenges in CRM implementation 14

3. CRM initiatives at SBI 16

CRM and SBI Life 16

4. CRM initiatives at HDFC Bank 19

About HDFC bank 19
Challenges 20
CRM solutions 20
Results 21
VbV facility for HDFC customers 21
Offers 21
RAP computer telephony integration 22

5. Research Methodology 23
Objective 23
Methodology 23
Demographics of sample 23
Data Analysis 24
Qualitative Analysis 25
Quantitative Analysis 27
Data Interpretation 29

6. Conclusion 30

7. References 31

pg. 2
Introduction to Banking
Sec 5 (b) of the Banking Regulation Act, 1949 defines banking as “accepting for the purpose of
lending or investment, of deposits of money from the public, repayable on demand or otherwise,
and withdrawal by cheque, draft, order or otherwise”.

Prior to initiation of reforms in 1991, Indian banking industry suffered from lack of competition,
low capital base, inefficiency and high intermediation costs. Ever since the bank nationalization
of 1969, the banking sector had been dominated by the public sector along with a high degree of
financial repression characterized by administered interest rates and allocated credit. Banking
sector reforms of the last two decades have placed greater emphasis on structural measures and
improvement in standards of disclosure and levels of transparency in order to align the Indian
standards with international best practices. Reforms have brought about considerable
improvements as reflected in various parameters relating to capital adequacy, asset quality,
profitability and operational efficiency.

The key objective of reforms in the banking sector in India has been to enhance the stability and
efficiency of banks. An outstanding feature of banking sector reforms in India has been the
emergence of micro credit as the most suitable and practical alternative to the conventional
banking in reaching the hitherto unreached poor population. The Self-help Group (SHG)-Bank
Linkage Programme was formally launched in the year 1992 as a flagship programme by
National Bank for Agriculture and Rural Development (NABARD) and aptly supported by the
Reserve Bank of India (RBI) through its policy support.

Importance of Banking

Banks play very important role in the economic life of the nation. The health of the economy is
closely related to the soundness of its banking system. Although banks create no new wealth but
their borrowing, lending and related activities facilitate the process of production, distribution,
exchange and consumption of wealth. In this way they become very effective partners in the
process of economic development. Today, modern banks are very useful for the utilization of the
resources of the country. The banks are mobilizing the savings of the people for the investment
purposes.
In recent years, the banking industry around the world has been undergoing a rapid
transformation. In India also, the wave of deregulation of early 1990s has created heightened
competition and greater risk for banks and other financial intermediaries. The cross-border flows
and entry of new players and products have forced banks to adjust the product-mix and
undertake rapid changes in their processes and operations to remain competitive.

pg. 3
 Need for C.R.M.

Unlike in the past, the banks today are market driven and market responsive. With the entry of
new players and multiple channels, customers (both corporate and retail) have become more
discerning and less "loyal" to banks. This makes it imperative that banks provide best possible
products and services to ensure customer satisfaction. To address the challenge of retention of
customers, there have been active efforts in the banking circles to switch over to customer-
centric business model. The success of such a model depends upon the approach adopted by
banks with respect to customer data management and customer relationship management.

Over the years, Indian banks have expanded to cover a large geographic & functional area to
meet the developmental needs. They have been managing a world of information about
customers - their profiles, location, etc. They have a close relationship with their customers and a
good knowledge of their needs, requirements and cash positions. Achieving customer focus
requires leveraging existing customer information to gain a deeper insight into the relationship a
customer has with the institution, and improving customer service-related processes so that the
services are quick, error free and convenient for the customers.

As is proved by the experience, banks are now realizing that one of their best assets for building
profitable customer relationships especially in a developing country like India is the branch-
branches are in fact a key channel for customer retention and profit growth in rural and semi-
urban set up. However, to maximize the value of this resource, our banks need to transform their
branches from transaction processing centers into customer-centric service centers. This
transformation would help them achieve bottom line business benefits by retaining the most
profitable customers. Branches could also be used to inform and educate customers about other,
more efficient channels, to advise on and sell new financial instruments like consumer loans,
insurance products, mutual fund products, etc.

There is a growing realization among Indian banks that it no longer pays to have a "transaction-
based" operating model. There are active efforts to develop a relationship-oriented model of
operations focusing on customer-centric services. The biggest challenge our banks face today is
to establish customer intimacy without which all other efforts towards operational excellence are
meaningless. The banks need to ensure through their services that the customers come back to
them. This is because a major chunk of income for most of the banks comes from existing
customers, rather than from new customers.

Customer relationship management (CRM) solutions, if implemented and integrated correctly,

can help significantly in improving customer satisfaction levels. Data warehousing can help in
providing better transaction experiences for customers over different transaction channels. This
is because data warehousing helps bring all the transactions coming from different channels
under the same roof. Data mining helps banks analyze and measure customer transaction patterns
and behavior. This can help a lot in improving service levels and finding new business
opportunities.

pg. 4
Introduction to C.R.M.

The term “CRM” stands for Customer Relationship Management. Customer relationship
management (CRM) is a broadly recognized, widely-implemented strategy for managing and
nurturing a company’s interactions with customers, clients and sales prospects. It is a process or
a methodology used to learn more about customers' needs and behaviors in order to develop
stronger relationships with them. CRM is as a process that will help bring together lots of pieces
of information about customers, sales, marketing effectiveness, responsiveness and market
trends. This process helps businesses use technology and human resources to gain insight into
the behavior of customers and the value of those customers. It involves using technology to
organize, automate, and synchronize business processes—principally sales activities, but also
those for marketing, customer service, and technical support. The overall goals are to find,
attract, and win new clients, nurture and retain those the company already has, entice former
clients back into the fold, and reduce the costs of marketing and client service. When an
implementation is effective, people, processes, and technology work in synergy to increase
profitability, and reduce operational costs.

Phases of CRM

The three phases in which CRM can help to support the relationship between a business and its
customers is explained below:

ACQUIRE ENHANCE RETAIN

 Acquire: A CRM initiative can help a business in acquiring new customers through
excellent contact management, direct marketing, selling and fulfillment.

 Enhance: A web-enabled CRM combined with customer service tools offers customers
excellent service from a team of trained and skilled sales and service specialists, which
offers customers the convenience of one-stop shopping.

pg. 5
  Retain: CRM software and databases enable a business to identify and reward its loyal
customers and further develop its targeted marketing and relationship marketing
initiatives.

Benefits of C.R.M.

These CRM initiatives have been shown to help companies attain the following objectives:

 To provide better customer service.

 To increase customer revenues.
 To discover new customers.
 To cross sell/up sell products more effectively.
 To help sales staff close deals faster.
 To make call centers more efficient.
 To simplify marketing and sales processes.

The advantages can also be summarized according to the domain it contributes to:

Marketing

 To make intelligent business decisions with enhanced customer insights.

 To increase marketing velocity and speed to market.
 To maximize visibility into and control of your entire marketing process.
 To drive customer demand up.
 To increase returns on the marketing investments.

Sales

 To grow profitable relationships.

 To maintain focus on productive activity.
 To eliminate barriers to productivity.
 To improve sales efficiency service.
 To transform service into a profitable line of business.
 To increase customer loyalty.
 To increase the sales revenue.
 T reduce costs of customer service and field service
 To decrease service giveaways/ Poka yokes.

pg. 6
Web channel enablement

 To drive revenue and extend market reach.

 To increase customer convenience and satisfaction.
 To reduce the cost of sales and support.
 To build lasting customer loyalty.
 To improve sales and service profitability.

Running and customer interaction center

 To increase customer satisfaction.

 To improve credibility with your customers.
 To increase revenue and productivity.
 To manage the customer interaction life cycle.

Types/variations of CRM in terms of the desired

benefits

Sales force automation

Sales force automation (SFA) involves using software to streamline all phases of the sales
process, minimizing the time that sales representatives need to spend on each phase. This allows
sales representatives to pursue more clients in a shorter amount of time than would otherwise be
possible. At the heart of SFA is a Contact management system for tracking and recording every
stage in the sales process for each prospective client, from initial contact to final disposition.
Many SFA applications also include insights into opportunities, territories, sales forecasts and
workflow automation, quote generation, and product knowledge.

Marketing

Systems for marketing (also known as marketing automation) help the enterprise identify and
target its best clients and generate qualified leads for the sales team. A key marketing capability
is tracking and measuring multichannel campaigns, including email, search, social media, and
direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue.

Customer Service and Support

pg. 7
Recognizing that service is an important differentiator, organizations are increasingly turning to
technology platforms to help them improve their clients’ experience while aiming to increase
efficiency and minimize costs. The core for these applications has been and still is
comprehensive call center solutions, including such features as intelligent call routing, computer
telephone integration (CTI), and escalation capabilities.

Analytics

Relevant analytics capabilities are often interwoven into applications for sales, marketing, and
service. These features can be complemented and augmented with links to separate, purpose-
built applications for analytics and business intelligence. Sales analytics let companies monitor
and understand client actions and preferences, through sales forecasting, data quality, and
dashboards that graphically display
Marketing applications generally come with predictive analytics to improve segmentation and
targeting, and features for measuring the effectiveness of online, offline, and search marketing
campaign. Web analytics have evolved significantly from their starting point of merely tracking
mouse clicks on Web sites. By evaluating “buy signals,” marketers can see which prospects are
most likely to transact and also identify those who are bogged down in a sales process and need
assistance. Marketing and finance personnel also use analytics to assess the value of multi-
faceted programs as a whole.

Integrated/Collaborative

Departments within enterprises—especially large enterprises—tend to function in their own little

worlds. Traditionally, inter-departmental interaction and collaboration have been infrequent and
rivalries not uncommon. More recently, the development and adoption of the tools and services
has fostered greater fluidity and cooperation among sales, service, and marketing. This finds
expression in the concept of collaborative systems which uses technology to build bridges
between departments.

Social Media

Social media sites like Twitter and Facebook are greatly amplifying the voice of people in the
marketplace and are predicted to have profound and far-reaching effects on the ways companies
manage their clients. This is because people are using these social media sites to share opinions
and experiences on companies, products and services. As social media isn’t moderated or
censored, individuals can say anything they want about a company or brand, whether pro or con.
Increasingly, companies are looking to gain access to these conversations and take part in the
dialogue. More than a few systems are now integrating to social networking sites. Social media
promoters cite a number of business advantages, such as using online communities as a source of
high-quality leads and a vehicle for crowd sourcing solutions to client-support problems.
Companies can also leverage client stated habits and preferences to personalize and even “hyper-
target” their sales and marketing communications.

pg. 8
Non-profit and Membership-based

Systems for non-profit and membership-based organizations help track constituents and their
involvement in the organization. Capabilities typically include tracking the following: fund-
raising, demographics, membership levels, membership directories, volunteering and
communications with individuals.

Strategy

Choosing and implementing a system is a major undertaking. For enterprises of any appreciable
size, a complete and detailed plan is required to obtain the funding, resources, and company-
wide support that can make the initiative successful. Benefits must be defined, risks assessed,
and cost quantified in three general areas:

 Processes: Though these systems have many technological components, business

processes lie at its core. It can be seen as a more client-centric way of doing business,
enabled by technology that consolidates and intelligently distributes pertinent information
about clients, sales, marketing effectiveness, responsiveness, and market trends.
Therefore, before choosing a technology platform, a company needs to analyze its
business workflows and processes; some will likely need re-engineering to better serve
the overall goal of winning and satisfying clients. Moreover, planners need to determine
the types of client information that are most relevant, and how best to employ them.

 People: For an initiative to be effective, an organization must convince its staff that
change is good and that the new technology and workflows will benefit employees as
well as clients. Senior executives need to be strong and visible advocates who can clearly
state and support the case for change. Collaboration, teamwork, and two-way
communication should be encouraged across hierarchical boundaries, especially with
respect to process improvement.

 Technology: In evaluating technology, key factors include alignment with the company’s
business process strategy and goals; the ability to deliver the right data to the right
employees; and sufficient ease of use that users won’t balk. Platform selection is best
undertaken by a carefully chosen group of executives who understand the business
processes to be automated as well as the various software issues. Depending upon the
size of the company and the breadth of data, choosing an application can take anywhere
from a few weeks to a year or more.

pg. 9
 Implementation of CRM in Banking Sector

Implementing a customer relationship management (CRM) system at a bank takes careful

planning. Banks need to involve key employees in the vendor decision so that they choose a
system which will give them the most for their investment. Ease of use and ability to view
information quickly are equally important to employees and managers. As Destinationcrm.com
points out, CRMs helps firms manage customer relationships better, and customer relationships
are vital to any company's success.

Implementing a CRM system at a bank is a first step toward improved customer relationships.

1. Step 1

Gain employees' opinions. Ask bankers which data is important to them when tracking
customers and prospects. Most bank CRM systems include contact information, account
information and potential sale amounts. They also include an estimate of how likely it is
that the banker will convert a prospect into a new customer. When employees provide
input into the new system decision, they will be more willing to use the CRM when it is
rolled out.

pg. 10
2. Step 2

Research vendors: Ask similar sized banks for vendor recommendations. Find out if the
vendor provided appropriate CRM features for the bank's specific needs. Ask if the
company delivered the system on time and if the firm provided sufficient support and
training to employees after the sale. Create a spreadsheet comparing vendor features and
pricing.

3. Step 3

Narrow the choices to three or four vendors. Meet with department managers that will
use the CRM system. Review the vendor choices and make a vendor decision as a group.
Arrange training by combining vendor resources and internal training resources. Allow
ample time for employees to learn the CRM system before holding them accountable for
using it.

pg. 11
 Importance of CRM in Banking Sector

Customer Relationship Management deals with the interactions with the customers (current or
potential) across multiple touch points including the Internet, bank branch, call center, field
organization and other distribution channels. It helps banks in the following ways:
IMPORTANCE OF CRM IN BANKING SECTOR

CAMPAIGN MANAGEMENT

CUSTOMER INFORMATION
CONSOLIDATION

360-DEGREE VIEW OF COMPANY

PERSONALIZED SALES HOME PAGE

ACTIVITY MANAGEMENT

OPERATIONAL INEFFICIENCY REMOVAL

ENHANCED PRODUCTIVITY

CRM WITH BUSINESS INTELLIGENCE

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

pg. 12
 lucrative customers and customer segments, and execute targeted, personalized multi-
channel marketing campaigns to reach these customers and maximize the lifetime value
of those relationships.

2. Customer Information Consolidation - Instead of storing customer information in

product centric manner (for e.g. separate databases of savings account & credit card
customers), CRM stores the information in a customer centric manner covering all the
products of the bank, thereby integrating various channels to deliver a host of services to
customers.

3. 360-degree view of company – Means that who so ever the bank speaks to, irrespective
of whether the communication is from sales, finance or support, the bank is aware of the
interaction. CRM removes inconsistencies in data, thereby making the client interaction
processes smooth and efficient, thus leading to enhanced customer satisfaction.

4. Personalized Sales Home Page – CRM provides 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.

5. Activity Management – CRM helps managers to assign and track the activities of various
members. This improves transparency and leads to improved efficiency.

6. Operational Inefficiency Removal – CRM helps 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 center and connects the operations center with the relevant
internal and external business partners.

7. Enhanced Productivity – CRM helps banks in enhanced productivity of customers,

partners and employees. It enables customer service agents to provide uniform service
across multiple channels such as phone, Internet, email, Fax.

8. CRM with Business Intelligence - Banks need to analyze the performance of customer
relationships, uncover trends in customer behavior, 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

pg. 13
 evaluated within a scoring framework. With such knowledge, banks can efficiently
allocate resources to the most profitable customers and reengineer the unprofitable ones.

Challenges in CRM implementation

Despite the benefits, many companies are still not fully leveraging these tools and services to
align marketing, sales, and service to best serve the enterprise. Tools and workflows can be
complex to implement, especially for large enterprises.

Implementation Issues
Dramatic increases in revenue, higher rates of client satisfaction, and significant savings in
operating costs are some of the benefits to an enterprise. Proponents emphasize that technology
should be implemented only in the context of careful strategic and operational planning.
Implementations almost invariably fall short when one or more facets of this prescription are
ignored:

 Poor planning: Initiatives can easily fail when efforts are limited to choosing and
deploying software, without an accompanying rationale, context, and support for the
workforce. In other instances, enterprises simply automate flawed client-facing processes
rather than redesign them according to best practices.

 Poor integration: For many companies, integrations are piecemeal initiatives that address
a glaring need: improving a particular client-facing process or two or automating a
favored sales or client support channel. Such “point solutions” offer little or no
integration or alignment with a company’s overall strategy. They offer a less than
complete client view and often lead to unsatisfactory user experiences.

 Siloed thinking: Experts advise organizations to recognize the immense value of

integrating their client-facing operations. In this view, internally-focused, department-
centric views should be discarded in favor of reorienting processes toward information-
sharing across marketing, sales, and service. For example, sales representatives need to
know about current issues and relevant marketing promotions before attempting to cross-
sell to a specific client. Marketing staff should be able to leverage client information from
sales and service to better target campaigns and offers. And support agents require quick
and complete access to a client’s sales and service history.

Specialists offer these recommendations for boosting adoptions rates and coaxing users to blend
these tools into their daily workflow:

pg. 14
  Choose a system that’s easy to use: All solutions are not created equal. Some vendors
offer more user-friendly applications than others, and simplicity should be as important a
decision factor as functionality.
 Choose the right capabilities: Employees need to know that time invested in learning and
usage will yield personal advantages. If not, they will work around or ignore the system.
 Provide training: Changing the way people work is no small task, and help is usually a
requirement. Even with today’s more usable systems, many staffers still need assistance
with learning and adoption
 Lead by example: Showing employees that upper management fully supports the use of a
new application by using the application themselves may increase the likelihood that
employees will adopt the application.

Privacy and data security system

One of the primary functions of these tools is to collect information about clients, thus a
company must consider the desire for privacy and data security, as well as the legislative and
cultural norms. Some clients prefer assurances that their data will not be shared with third parties
without their prior consent and that safeguards are in place to prevent illegal access by third
parties.

pg. 15
Customer Relationship Management
initiatives at State Bank of India
State Bank of India offers its products and services in domains like:

 Personal Banking

 NRI Services

 Agriculture

 International

 Corporate

 SME

 Domestic Treasurer

Customer Relationship Management and SBI Life

Need for CRM

The need for system automation became critical at SBI Life Insurance. The challenge was to
meet the demanding service and fulfillment levels of the growing insurance sector. SBI Life was
on the lookout for a technology solution that was easy to implement, cost-effective and robust to
expand its presence in the insurance sector and achieve a higher degree of service differentiation.
Although the organization had a centralized system, most of the work was done manually. They
needed client/server architecture in place. But it was not integrated with the legacy systems.
Early on, the top management realized that technology was a crucial driver for product and
service delivery. Although using the extensive SBI group platform for cross-selling products and
services was a viable option, reaching and engaging the customer cost effectively required a
technology backbone. The portal initiative started sometime in 2003. Earlier, the insurance major
had little enterprise software to support its business and the processes were carried out in an ad
hoc manner. The system went live in 2004, taking just four to five months to go online.

pg. 16
It was clear as far back as 2002 that a durable and scalable system was going to be essential, and
it was felt that a Web portal would be the best solution as a part of SBI’s CRM initiative. Various
options were taken into consideration-recreating their entire operations in-house, allowing a
vendor to provide the basic platform and then build applications on it, etc. SBI also spoke to
some leading providers in the industry, did some spadework, and finally decided to go for BEA
WebLogic.

Benefits of CRM in SBI Life

 Reduction in TAT (Turn Around Time)

 SBI Life can now integrate and manage content, campaigns and merchandising to patrons
via the Web
 Streamlined product delivery and support processes with a single contact point on the
Web
 Site offers a one-stop-shop for customers' insurance needs

The insurer was looking at a system that would be up and ready in the shortest span of time, in a
stable manner, and roll out business-critical applications. The other concern for SBI Life was
connectivity; it decided to use the Internet to tackle the problem of linkage across locations in
India. (SBI has a network of over 9,000 branches.) Since laying out the network, application and
infrastructure is time consuming and not very cost-effective, using the Internet fits perfectly into
their scheme of things.

BEA faced tough competition from industry biggies who were also bidding for the project.
Sanjay Dhingra, BEA’s Director of Sales believes that the most challenging part of the project
was to put a technology backbone in place that could handle SBI’s transactions and also scale up
as and when required-the insurer was looking at a system that could be upgraded every six
months.

When looking for vendors SBI sought cutting-edge technology that did not cost the earth.
Another important issue was support. Typically, Indian service providers do not have the
capability to deliver the required services. They believe that the product by itself should be
mature enough to manage both its own complexity as well as that of the business, and also offer
ease of use for those who work on it. Most importantly, the vendor had to have a roadmap
extending well into the future.

In India, many implementations are not up to the mark due to cultural aspects of business.
Acceptance among staff and familiarity of employees with the system were two of the things we
considered before they decided to go in for a full-fledged implementation.

There were hiccups as various centers had problems connecting to the CRM portal, which have
been solved. They are using multiple types of connectivity, leased lines that terminate at the
central data centre in Mumbai, broadband connections, dial-up connections, telephone lines, etc.

pg. 17
The type of connectivity depends on the number of users in that particular branch and the kind of
work being done there.

Outcome: Saving time and money

Process improvements are evident. All of this happened with minimal system changes without
adding to the existing infrastructure. As a result, SBI has been able to decentralize 36 branches.
The solution has also brought down by 50 percent the time taken for specific processes like cash
management, insurance claims, and accounting. The insurer has managed to save about 30
percent of costs on infrastructure, with better utilization of manpower. Unlike separate
frameworks for integration and custom application development, the BEA solution was a model
that enabled faster customization and development of applications.
With almost 30 functions already running on the site, they feel that in future the portal has the
capability to scale up to handle a much bigger transaction load. The company is to add
applications in a phased manner, and is looking at service oriented architecture (SOA) in the
future. They are still adding new functionalities, and with an SOA (using WebLogic Integration
8.1) they can maintain the value provided to our customers while minimizing investments in
maintenance and development.

pg. 18
Customer Relationship Management
initiatives at HDFC Bank

About HDFC bank

Promoted in 1995 by Housing Development Finance Corporation (HDFC), India's leading

housing finance company, HDFC Bank is one of India's premier banks providing a wide range of
financial products and services to its over 11 million customers across over three hundred cities
using multiple distribution channels including a pan-India network of branches, ATMs, phone
banking, net banking and mobile banking. Within a relatively short span of time, the bank has
emerged as a leading player in retail banking, wholesale banking, and treasury operations, its
three principal business segments. The bank's competitive strength lies in the use of technology
and the propensity to deliver world-class service with rapid response time. Over the last 13 years,
the bank has been successfully able to gain market share in its target customer franchises while
maintaining healthy profitability and asset quality. As on December 31, 2007, the Bank had a
network of 754 branches and 1,906 ATMs in 327 cities. For the quarter ended December 31,
2007, the bank reported a net profit of Rs. 4.3 billion, up 45.2%, over the corresponding quarter
of previous year. Total deposits were Rs. 993.9 billion, up 48.9% over the corresponding quarter
of previous year. Total balance sheet size too grew by 46.7% to Rs.1.3144 billion.

pg. 19
 The challenges

 With HDFC Bank’s success and rapid growth, it needed an effective way to increase
customer profitability through deeper, stronger customer relationships.
 It also needed a way to detect important events in a customer’s life so that targeted
communications could be sent at the right time to build relationships and increase profit.
 A central, automated process was required to access data across systems as well as plan,
design, test, optimize and execute marketing efforts across channels including direct mail,
email, SMS and call centers.

CRM solution

 After evaluating several vendors, HDFC Bank selected Unica’s Affinium solution for
enterprise marketing management.
 Affinium was chosen for its ease of use, quick implementation as well as its robust
modeling, customer analysis, and right-time interaction management capabilities.
 For instance, Credit card activation
 In order to boost credit card activation by a goal of seven to 16 percent, a targeted multi-
channel, multi-wave campaign has been designed. As ten days after a new cardholder is
approved, inactive members are identified.
 These members are then segmented into distinct groups and are sent targeted offers via
email, SMS or direct mail which vary from product
 For cardholders who don’t respond to the offer in the first wave, a second communication
with a different offer is sent.
 This campaign automatically runs every ten days, in order to make sure new inactive card
members are identified and communicated with on a timely basis.

Results

pg. 20
 With Affinium , HDFC Bank has boosted customer retention by four percent, and
executed acquisition campaigns, which resulted in reduction of acquisition cost by 60
percent due to effective targeting and channel optimization.
 Following the implementation of Affinium, the campaign volume increased by over 200
percent
 Lastly, the credit card activation campaign has achieved an incremental activation rate of
30 percent compared to activation efforts without predictive modeling. Debit card
early activation program resulted in incremental response of
five percent over the normal activation rates.

VbV facility for HDFC customers

 HDFC Bank has introduced Verified by Visa (VbV) facility for all its credit and debit
cardholders.
 VbV is a global program by Visa, based on 3-D secure technology, for identifying and
authenticating cardholders when they purchase on the Internet.
 It allows cardholders to create a secret password, which they require to authenticate the
payment and complete the transaction when shopping online.
 The bank also offers its cardholders NetSafe, a virtual card through which they can shop
online without revealing their card number.
 HDFC uses the data bases in its varied ways. They get the data from the various
companies and formulate the offers keeping in mind the needs and the usage of the
customers. For eg. HDFC Bank Gold Credit Card.

Offers

 Exclusive travel benefits only on HDFC Bank Gold Credit Card.

 5% Cash back on domestic air ticket bookings through domestic airline websites.
 5% Cash back on rail ticket bookings through www.irctc.co.in.
Free Airmiles across leading airlines on redemption of reward points.
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Value Plus Credit Cards

RAP computer telephony integration

pg. 21
 The bank is currently working on a customer data model that covers over 6,000 fields,
which should allow it to have one comprehensive and intelligent view of its customers.
 With regard to operational CRM, HDFC Bank has brought online its RAP Computer
Telephony Integration (CTI) initiative for the bank's 14 contact centers, which service as
many as 650,000 actual calls per month.
 The system gives the bank's contact center agents a view of data most often needed in
standard customer interactions.
 The RAP CTI system pulls the select data from various screens in the host and makes it
available as the agent picks up the call.
 With the new system, the agent does not need to toggle between data sources any longer.
If the agent were to toggle, it would affect the customer experience and adds to the call
time.
 The agent is also able to see outstanding offers. The bank has populated the host system
with offers available for qualified customers.

pg. 22
Research Methodology

Objective

To find the consumer perception about the CRM services offered by public and private sector
banks in India and to conduct a comparative analysis between the CRM practices of public
and private sector banks.

Methodology

The survey research was carried out in the following four steps:

Step1. Questionnaire Preparation and Validity – A questionnaire was prepared for conducting
the survey research among IBS, Hyderabad students. The validity of the questionnaire was
done by carrying out a pilot study for selecting the right CRM services offered by banks.

Step2. Selection of the Sample – A sample of 120 students of IBS, Hyderabad was selected
and was asked to fill the questionnaire.

Step3. Data Collection – The data was collected through online questionnaire filled by
students of IBS, Hyderabad.

Step4. Data Analysis and Interpretation – This was done both qualitatively and
quantitatively. For quantitative analysis, factor analysis technique was used to determine the
consumer perception about the most important CRM services provided by the banks.

Demographics of the sample

The age of the selected sample was between 20-30 years and the male to female ratio was
60:40.

pg. 23
 Data Analysis

The study is more descriptive in nature as CRM is a widely used concept in banking sectors
today. Both qualitative and quantitative research approaches are used for this study to get a
better understanding of the research area. Based on our research question we have
specifically chosen two banks:
Private Sector Bank: HDFC
Public Sector Bank: SBI

Two major banks (HDFC and SBI) were selected because they had wide network of branches
in the city i.e. over 20 branches of HDFC and 80 branches of SBI. Also the presence of
HDFC, SBI ATM machines in the campus was a selection criterion. Furthermore, these three
banks proven business success also are very famous banks of India and are working in the
capacity to represent the banking sector of India.
Selection criteria were:
• Banks having nationwide representation
• Banks having different target customer; individuals, and groups
• Banks having national and/or international representation
• Banks with proven business success

While framing the online survey questionnaire, we had coded the options for our questions
as:

‘1’ as Very Satisfied

‘2’ as Satisfied
‘3’ as Neutral
‘4’ as Dissatisfied
‘5’ as Very Dissatisfied

Thus, the factor with the lowest average score is given the highest preference by the
consumers.

pg. 24
 Qualitative Analysis

The basic knowledge of customer relationship management in these banks was augmented by
the use of Questionnaire, which was the main instrument for data collection. The instrument
aimed to explore the implementation of CRM in banking sector.

The following table gives the average scores of the respondents to the 10 parameters of CRM
initiatives of the two banks. The results are arranged in the firm of a comparative analysis
model:

Parameter HDFC SBI

1) Variety of Products Offered by the Bank 1.96 2.1
2) Time Taken to Process your Transactions 1.85 2.55
3) Personalized Attention Provided by the Bank 2 2.85
4) Safety of your Transactions 1.85 1.81
5) Professional Behavior of the Employees of the 2.14 2.78
Bank
6) Value Added Services Provided by the Bank 2.1 2.52
7) Technologically Advanced Services Provided 1.78 2.1
by the Bank (Internet Banking, Mobile Banking
etc.)
8) Promptness in Handling 2.1 2.91
Complaints/Grievances
9) Ease of Acquiring Loans/Other Financial 2.17 2.78
Products
10) Promotional/Discount Offers Provided by the 2.25 2.79
Bank

The results are shown in horizontal and vertical form. The horizontal showing the parameters
and the vertical showing the average scores of the respondents of each of the banks.

The result for Variety of Products Offered by the Bank shows HDFC with 1.96 and SBI with
2.1. This shows that HDFC customers are more satisfied by the products offered by the
respective bank. Overall score is high for the two banks and therefore should give importance
to the products offered.

In today’s scenario speed of transactions is an important criterion for customers to evaluate

bank’s performance. HDFC has better performance than SBI. Both banks should give
importance to this parameter as it can be a differentiating feature.

Personalized attention is another parameter that customers value while choosing a bank.
HDFC with mean score of 2 has better customer relations than SBI with 2.85 points.
Therefore SBI should focus more on the personal attention given to the customers.

pg. 25
Safety of transactions is the most important parameter for banks. As there is money being
transferred and customers give more importance to the safety of transactions. HDFC with
1.85 and SBI with 1.81 are equally good in providing safety to customers.

Professional behavior of employees is similar to the personalized attention parameter and

both banks should focus on this parameter as both have high mean scores. HDFC however
has a better Professional behavior of employees than SBI.

VAS: These are the differentiating services that banks look to offer to customers to create
competitive advantage. HDFC with 2.1 provides more value added services than SBI with
2.52. Some of these services are: Real time Gross Settlement, Corporate Salary Accounts,
and Reimbursement Account.

Now day’s customers lay more emphasis on convenience in banking services. That is why
use of features like Internet banking and Mobile banking has increased rapidly in the last 2-3
years. HDFC with 1.78 was a far better Technological advanced services than SBI with 2.1.

Complaint handling is also important as the customers face many difficulties in the banking
services and the bank which addresses to their problems in a more efficient way increases the
customer loyalty towards the respective bank. HDFC with 2.1 handles complaints better than
SBI with a score of 2.91, which is far too high.

Loan acquiring is a parameter that most customers need. The ease of availing the loans is
therefore an important parameter that the banks should consider. HDFC again has a lower
mean score than SBI in the ease of acquiring loans.

The last parameter is the Promotional offers/Discount offers given by the banks. It is an
important parameter as most customers use Credit/Debit cards in transactions. The
promotional/discounts that these cards offer to the customers gives them an added advantage
of using the banking services. Here again HDFC with 2.25 has a better score than SBI with
2.79.

 FINAL RESULT: HDFC SBI

Average Score 2.02 2.52

From the table it is inferred that SBI should focus more on the CRM activities adopted as it
has a higher mean score of all the parameters than HDFC.

pg. 26
 Quantitative Analysis

Factor Analysis technique was used to carry out quantitative analysis of the collected
data. Factor analysis is a technique used to get a small set of variables (usually
homogeneous) from a large number of unrelated variables. It is conducted in a
mathematical tool called SPSS. The output of SPSS is analyzed and interpreted to get the
best set of variables as perceived by the consumers.

Factor Analysis Output:

1. Kaiser Meyer Olkin Test and Bartlett’s Test of Sphericity:

The KMO test value of 0.781 (greater than 0.6) and the significance value of Bartlett’s
test of Sphericity (less than 0.05) indicates that this is a good model and we can proceed
with the factor analysis.

2. Number of Factors to be considered:

The Scree Plot (a graphical relation between the no. of factors and their corresponding
Eigen values) gives us the number of factors to be considered for conducting the factor
pg. 27
analysis. The number of factors having Eigen values greater than ‘1’ is considered. Here,
in our output we have three factors with Eigen values greater than ‘1’; hence we have a
three factor solution.

3. Factor Descriptions: The Rotated Component Matrix gives a brief description about
each factor, telling which variable is included in which factor. This matrix for our
output is as shown below:

From the above matrix, it is clear that:

Factor ‘1’ consists of the following variables:

1. Variety of Products Offered by the Bank

2. Time Taken to Process your Transactions
3. Personalized Attention Provided by the Bank
4. Professional Behavior of the Employees of the Bank
5. Value Added Services Provided by the Bank
6. Promptness in Handling Complaints/Grievances

Thus we have named this factor as ‘Core Services’

Factor ‘2’ consists of the following variables:

1. Promptness in Handling Complaints/Grievances

2. Ease of Acquiring Loans/Other Financial Products
3. Promotional/Discount Offers Provided by the Bank

pg. 28
 Thus we have named this factor as ‘Utility Services’.

Factor ‘3’ consists of the following variables:

1. Safety of your Transactions

2. Technologically Advanced Services Provided by the Bank (Internet Banking,
Mobile Banking etc.)

Thus we have named this factor as ‘Tech Services’

Data Interpretation

For the purpose of interpretation, the data collected for both the banks (SBI and HDFC) was
separated and analyzed. The average values of the three factors for both the banks are:

HDFC Bank
Factor 1 Factor 2 Factor 3
8.10 4.78 3.05
State Bank of India
Factor 1 Factor 2 Factor 3
10.50 6.17 3.22

In both the type of banks (Public and Private) factor ‘3’ has the lowest average score. Hence
the segment of the people covered in our research study give most preference to the
following CRM services provided by the banks:

1. Safety of Transactions
2. Technologically Advanced Services Provided by the Bank (Internet Banking,
Mobile Banking etc.)

Also, between the two banks considered, people like the above mentioned CRM services
of HDFC Bank more than that of SBI (as is visible from the average factor scores).

This is followed by factor ‘2’. Factor ‘3’ is least liked by the target population.

Conclusion

pg. 29
With the advent of privatization, deregulation, globalization there has been a significant increase
in competition. in order to survive this competition, banks need to understand the needs of their
customers better, and formulate strategies and technology accordingly so that the customer is
served efficiently and effectively and is thus retained. CRM comes as successful answers to this
scenario given the following critical issues are taken care of:

 Banks should recognize the diversity of experience and needs of different customers.
 Banks need to develop the propositions both relevant and practical, but not too complex
 Customer education programmes should be launched to improve understanding of bank’s
procedures and decision making and increase comfort levels.
 Measurement is a key to the understanding, learning and improvement customer
experience. Banking sector management needs actively to articulate the need for an
improved and consistent customer experience and branch mangers should localize this
approach and coach their staff to deliver it.
 Banks should use customer friendly technology – which their customer can use and
brings value in their life.

pg. 30
References
 http://www.ehow.com/how_6808577_implement-crm-banks.html

 http://www.g-cem.org/eng/content_details.jsp?contentid=1804&subjectid=101

 http://www.thehindubusinessline.com/2005/11/04/stories/2005110401230900.html

 http://www.expresscomputeronline.com/20050704/management02.shtml

 http://en.wikipedia.org/wiki/Bank

 www.statebankofindia.com

 www.hdfcbank.com

pg. 31