CHAPTER1

CUSTOMER RELATIONSHIP
MANAGEMENTINTRODUCTION
1.1INTRODUCTION TO CRM
Customer relationship management, is a number of strategies and
technologies that are used to build stronger relationships between companies
and their customers. A company will store information that is related to their
customers, and they will spend time analyzing it so that it can be used for
this purpose. Some of the methods connected with CRM are automated, and
the purpose of this is to create marketing strategies which are targeted
towards specific customers. The strategies used will be dependent on the
information that is contained within the system. Customer relationship
management is commonly used by corporations, and they will focus on
maintaining a strong relationship with their clients.
There are a number of reasons why CRM has become so important in the
last 10 years. The competition in the global market has become highly
competitive, and it has become easier for customers to switch companies if
they are not happy with the service they receive. One of the primary goals of
CRM is to maintain clients. When it is used effectively, a company will be
able to build a relationship with their customers that can last a lifetime.
Customer relationship management tools will generally come in the form of
software. Each software program may vary in the way it approaches CRM. It
is important to realize that CRM is more than just a technology.
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Customer relationship management could be better defined as being a

methodology, an approach that a company will use to achieve their goals. It
should be directly connected to the philosophy of the company. It must guide
all of its policies, and it must be an important part of customer service and
marketing. If this is not done, the CRM system will become a failure. There
are a number of things the ideal CRM system should have. It should allow
the company to find the factors that interest their customers the most. A
company must realize that it is impossible for them to succeed if they do not
cater to the desires and needs of their customers. Customer relationship
management is a powerful system that will allow them to do this.
It is also important for the CRM system to foster a philosophy that is
oriented towards the customers. While this may sound like common sense,
there are a sizeable number of companies that have failed to do it, and their
businesses suffered as a result. With CRM, the customer is always right, and
they are the most important factor in the success of the company. It is also
important for the company to use measures that are dependent on their
customers. This will greatly tip the odds of success in their favor. While
CRM should not be viewed as a technology, it is important to realize that
there are end to end processes that must be created so that customers can be
properly served. In many cases, these processes will use computers and
software.
Customer support is directly connected to CRM. If a company fails
to provide quality customer support, they have also failed with their CRM
system. When a customer makes complaints, they must be handled quickly
and efficiently. The company should also seek to make sure those mistakes
are not repeated. When sales are made, they should be tracked so that the
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company can analyze them from various aspects. It is also important to

understand the architecture of Customer relationship management.
The architecture of CRM can be broken down into three categories, and
these are collaborative, operational, and analytical. The collaborative aspect
of CRM deals with communication between companies and their clients.
The operational aspect of the architecture deals with the concept of making
certain processes automated. The analytical aspect of CRM architecture
deals with analyzing customer information and using if for business
intelligence purposes. Each one of these elements are critical for the success
of a CRM system. A company must learn how to use all three properly, and
when they do this proficiently, they will be able to build strong customer
relationships and ensure their profits for a long period of time. As more
businesses continue to compete on a global level, it will become more
important for them to use successful Customer relationship management
techniques.
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 customercentric 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. 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
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.

1.2MEANING OF CRM
Customer Relationship Management is the establishment, development,
maintenance and optimization of long-term mutually valuable relationships
between consumers and the organizations. Successful customer relationship
management focuses on understanding the needs and desires of the
customers and is achieved by placing these needs at the heart of the business
by integrating them with the organization's strategy, people, technology and
business processes.
At the heart of a perfect CRM strategy is the creation of mutual value for all
the 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.
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
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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.

1.3 DEFINITION OF CRM

Customer Relationship Management (CRM) is a co-ordinate approach to
the selling process allowing the various operational, customer contact and
sales promotional functions of an organization to function as a whole.
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
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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.

1.3Types of CRM
Businesses must build top-line growth strategies upon the foundation of their
CRM programs by ensuring that strategic intent and cost management
measures are institutionalized. CRM is a fundamental shift in the way a
company does business with its customers, rather than just a one-time ebusiness initiative, it requires continuous leadership support over multiple
years. There are various types of CRM applicable as per sector needs:

1) Operational CRM:
Operational CRM provides support to front office business processes.
Interactions with customers are generally stored in customers contact
histories, and staff can retrieve customer information as necessary. The
contact history provides staff members with immediate access to important
information on the customer eliminating the need ti individually obtain this
information directly from the customer.
2) Analytical CRM:
Analytical CRM analyzes customer data for a variety of purposes. It i s
applicable on marketing level and aims to propose an in-debt market
analyses. Analytical CRM generally use data mining techniques searching
for common patterns within techniques searching for common patterns
within large customer databases. Some of the analytical CRM applications
include: designing and executing targeted marketing campaigns, designing
and executing campaigns, e.g. customer acquisition, cross-selling, upselling, analyzing customer behaviour in order to make decisions relating to
products and services, management information system.
3) Sales Intelligence CRM:
Sales Intelligence CRM is similar to Analytical CRM, but is intended as a
more direct sales tool. It is oriented to sales staff. Its features includes alerts
sent to sales staff regarding:

Cross-selling/up-Selling/switch-selling

opportunities, customer drift, sales performance, customer trends, customer

margins, etc.

4) Campaign Management:
Campaign management combines elements of operational and
analytical CRM. Campaign Management functions support development of
efficient marketing campaigns.
5) Collaborative CRM:
Collaborative CRM covers aspects of a companys dealings with
customers that are handled by various departments within a company, such
as sales, technical support and marketing. Staff members from different
departments can share information collected when interacting with
customers.
6) Geographic CRM:
Geographic CRM combines geographic information system and
traditional CRM, Geographic data can be analyzed to provide a snapshot of
potential customers in a region or to plan routes for customer visits.

1.4GOALS OF CRM
Implementing customer relationship management can be a costly
undertaking. Organizations spend a lot of money scrutinizing vendors,
buying the right CRM software, hiring, consultant, training employees, etc.
The only way in which a company can actually measure its success is if it
establishes CRM goals prior to the implementation as in this way it is able to
determine whether or not it has successfully implemented CRM. Despite the
fact that industries have different business aspects they share some common
CRM goals.
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Some of the Commonly Established CRM Objectives are as follows:

1) Increase in Customer Service :
Establishing customer loyalty as one of your top CRM goals is
absolutely fundamental to CRM successful implementation .For this task it
is essential that the whole organization realize that they play a part in this
goal. This objective cannot be achieved with the help of a few employees
only. Customers need to feel that they have received excellent service. This
ensures their continued patronage. This is by far one of the most essential
goals of customer relationship management. Customer retention and brand
loyalty is absolutely essential to ensure success. Undoubtedly it is far harder
to gain a new customer than to actually keep one. Customer service is the
pivotal point around which CRM revolves.

2) Increasing Efficiency:
One of the most important goals of CRM is the increase in
organization efficiency and effectiveness. This is almost always adopted by
every organization. It is necessitated by the fact that increase in efficiency is
required to boost success. CRM achieves this through cost reduction and
customer retention. Adequate CRM training achieves this goal.

3) Lowering Operating Costs:

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CRM goals also include the reduction of costs of operation. This goal
should be clearly established and conveyed to all those involved in the CRM
implementation process. CRM manages to reduce operating costs through a
workforce management system. This helps to maximize skills and thus
reduce cost. These reduced costs enable an organization to achieve greater
efficiency. If cost reduction is management's objective then the CRM
implementation should be carried out in such a way that this is achieved.
Throughout the process maximum reduction in costs should be adhered to in
order to meet this particular CRM goal.

4) Aiding the Marketing Department:

Another goal of CRM is generally aiding the marketing department
in all its efforts. This includes marketing campaigns, sales promotions etc. If
this is fixated as one of the goals of CRM, then it should be communicated
to those involved. This goal is fundamental as it boosts sales indirectly
thereby increasing the profitability.

1.5THE 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.
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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, 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
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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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CHAPTER 2
CRM IN BANKS

2.1 INTRODUCTION
Today, customers have more power in deciding their bank of choice.
Consequently, keeping existing customers, as well as attracting new ones, is
a critical concern for banks. Customer satisfaction is an important variable in
evaluation and control in a bank marketing management. Poor customer
satisfaction will lead to a decline in customer loyalty, and given the extended
offerings from the competitors, customers can easily switch banks. Banks
need to leverage effectively on their customer relationships and make better
use of customer information across the institution.
Competition in the financial services industry has intensified in recent
years, owing to events such as technology changes and financial industry
deregulation. Conventional banking distribution has been gradually
supplemented by the emerging use of electronic banking. Many bank
customers prefer using ATMs or a website rather than visiting a branch,
while technology has also reduced barriers to entry for new customers.

2.2Need for C.R.M.

CRM primarily caters to all interactions with the customers or potential
customers, across multiple touch points including the Internet, bank branch,
call center, field organization and other distribution channels.
CRM can help banks in following ways:

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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
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

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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.

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
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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 centre with the relevant internal and external business partners.

.
10. Enhanced productivity
CRM can help in enhanced productivity of customers, partners and
employees.

11. CRM 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.
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, Max Touch, ACC, National Stock Exchange and
PepsiCo. And Business Intelligence players hope many more will follow
suit.

2.3OBJECTIVES OF CRM IN BANKS

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CRM, the technology, along with human resources of the banks, enables the
banks to analyze the behavior of customers and their value. The main areas
of focus are as the name suggests: customer, relationship, and the
management of relationship and the main objectives to implement CRM in
the business strategy are:

To simplify marketing and sales process

To make call centers more efficient
To provide better customer service
To discover new customers and increase customer revenue
To cross sell products more effectively

The CRM processes should fully support the basic steps of customer life
cycle. The basic steps are:
Attracting present and new customers
Acquiring new customers
Serving the customers
Finally, retaining the customers

In today's increasingly competitive environment, maximizing organic

growth through sales momentum has become a priority for Banks and
Financial institutions. To build this momentum banks are focusing on
Customer relationship management initiatives to improve

Customer satisfaction and loyalty

Customer insight/ 360 view of customer
Speed to market for products and service
Increase products-to-customer ratio
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 Improve up sales and cross sales

Capitalizing on New market opportunities

The idea of CRM is that it helps businesses use technology and

human resources gain insight into the behavior of customers and the value of
those customers. If it works as hoped, a business can: provide better
customer service, make call centers 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. Next, the organization must look into
all of the different ways information about customers comes into a business,
where and how this data is stored and how it is currently used.
One company, for instance, may interact with customers in a myriad of
different ways including mail campaigns, Web sites, brick-and-mortar stores,
call centers, mobile sales force staff and marketing and advertising efforts.
Solid CRM systems link up each of these points. This collected data flows
between operational systems (like sales and inventory systems) and
analytical systems that can help sort through these records for patterns.
Company analysts can then comb through the data to obtain a holistic view
of each customer and pinpoint areas where better services are needed.

In CRM projects, following data should be collected to run process

engine:
1) Responses to campaigns,
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2) Shipping and fulfillment dates,

3) Sales and purchase data,
4) Account information,
5) Web registration data,
6) Service and support records,
7) Demographic data,
8) Web sales data.

2.4 CRM STRATGIES

This is a new way of thinking for many banks with thousands, even millions
of customers. Managing customer relationships successfully means learning
about the habits and needs of your customers, anticipating future buying
patterns and finding new opportunities to add value to the relationship.

Customer Behavior Patterns

For example, in the financial sector, early beneficiaries of successful
CRM strategies have been the banks. These organizations use data
warehousing and data mining technologies to learn from the millions of
transactions and interactions with their customers, and to anticipate their
needs. The patterns of customer behavior and attitude derived from this
information enable the banks to effectively segment customers on predetermined criteria.
This knowledge assists financial institutions with CRM solutions in
place to develop marketing programs that respond to each customer
segment, support cross-selling and customer retention programs and enables
the staff to understand how to maximize the value of each customers
interaction.
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CRM applications provide functionality to enhance customer

interactions. Banks known for its high level of customer service might use
this characteristic as a starting point for implementing a CRM application.
Another company may be very good at targeting profitable customers. Each
bank should seek a niche on which to develop its CRM strategy.

Customer Data
A common problem many organizations share is integrating customer
information. When information is disparate and fragmented, it is difficult to
know who the customers are, and the nature of their associations or
relationships. This also makes it difficult to capitalize on opportunities to
increase customer service, loyalty and profitability. For example, knowing
that other family members are also customers provides an opportunity to upsell or cross-sell products or services, or knowing that a customer uses
several sources of interaction with a supplier can also provide opportunities
to enhance the relationship.
The creation and execution of a successful CRM strategy depends on close
examination and rationalization of the relationship between an
organizations vision and business strategy. Building toward a CRM solution
and evaluating the use of customer data requires analysis and alignment of
the following core capabilities:
Customer value management
Prospecting
Selling
Collection and use of customer intelligence
Customer development (up-selling and cross-selling)
Customer service and retention
Protection of customer privacy
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Successful CRM implementations result from the capability of the

organization and its employees to integrate human resources, business
processes and technology, to create differentiation and excellence in service
to customers, and to perform all of these functions better than its
competitors. The current economic context and financial crisis has most
probably led many financial services institutions to refocus their CRM
strategies with the customer relationship being more than ever the key to
profitability of a retail activity. These institutions have to design a new
approach to regain and reassure customers. Even if they have only started
building a how to win back trust" strategy, there is a general movement
towards refocusing on the customer for the post-financial crisis phase.
Irrespective of whether it is a public sector bank or a private sector bank;
a regional rural bank or a foreign bank all banks commonly store details of
tens of thousands of customers and prospects - both in a corporate database
and in discrete documents on the desktops of individual bank staff.
Retrieving customer data to support targeted marketing activities in this
environment has traditionally involved sorting hard copy by hand, which is
time-consuming, inaccurate, and increasingly cost-prohibitive.
Hence the banks devise software, which would mitigate this task of
customer relationship management solution, to take full advantage of their
valuable customer data. It also provides a way to quantify a campaign's
success and aids in planning future marketing strategies, better work flow
tracking and management, considerable increase in the speed of the
marketing campaign planning process, greater cost efficiency with improved
ROI, easy monitoring of multiple marketing campaigns and improved
workflow management.

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CHAPTER 3
CRM IN INDIAN BANKS

3.1CRM in Indian bank

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. The
deepening of technology has facilitated better tracking and fulfillment of
commitments, multiple delivery channels for customers and faster resolution
of miscoordinations.
Unlike in the past, the banks today are market driven and market
responsive. The top concern in the mind of every bank's CEO is increasing
or at least maintaining the market share in every line of business against the
backdrop of heightened competition. 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. Though this offers them a unique
advantage, they face a fundamental problem. During the period of planned
23

economic development, the bank products were bought in India and not sold.
What our banks, especially those in the public sector lack are the marketing
attitude. Marketing is a customer-oriented operation. What is needed is the
effort on their part to improve their service image and exploit their large
customer information base effectively to communicate product availability.
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.
Furthermore, banks need to have very strong in-house research and market
intelligence units in order to face the future challenges of competition,
especially customer retention. Marketing is a question of demand
(customers) and supply (financial products & services, customer services
through various delivery channels). Both demand and supply have to be
understood in the context of geographic locations and competitor analysis to
undertake focused marketing (advertising) efforts. Focusing on regionspecific campaigns rather than national media campaigns would be a better
strategy for a diverse country like India.
Customer-centricity also implies increasing investment in technology.
Throughout much of the last decade, banks world-over have re-engineered
their organizations to improve efficiency and move customers to lower cost,
automated channels, such as ATMs and online banking. But this need not be
the case.
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 customercentric 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

24

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 customercentric 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 analyses
and measure customer transaction patterns and behavior. This can help a lot
in improving service levels and finding new business opportunities.
It must be noted, however, that customer-centric banking also involves
many risks. The banking industry world over is being thrust into a wild new
world of privacy controversy. The banks need to set up serious governance
systems for privacy risk management. It must be remembered that customer
privacy issues threaten to compromise the use of information technology
which is at the very center of e-commerce and customer relationship
management - two areas which are crucial for banks' future. The critical
issue for banks is that they will not be able to safeguard customer privacy
completely without undermining the most exciting innovations in banking.
These innovations promise huge benefits, both for customers and providers.
But to capture them, financial services companies and their customers will
have to make some critical tradeoffs.
3.2 IMPORTANCE OF CRM IN INDIAN BANK
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For long, Indian banks had presumed that their operations were customercentric, 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 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.
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."
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. Customer Relationship Management (CRM) in the Indian
banking system is fundamental to building a customer-centric organization.
CRM systems link customer data into a single and logical customer
repository. CRM in banking is a key element that allows a bank to develop
its customer base and sales capacity. The goal of CRM is to manage all
aspects of customer interactions in a manner that enables banks to maximize
26

profitability from every customer. Increasing competition, deregulation, and

the internet have all contributed to the increase in customer power.
Customers, faced with an increasing array of banking products and services,
are expecting more from banks in terms of customized offerings, attractive
returns, ease of access, and transparency in dealings. Retaining customers is
a major concern for banking institutions which underscores the importance
of CRM. Banks can turn customer relationship into a key competitive
advantage through strategic development across a broad spectrum. This
book examines issues related to changing banking industry in India and the
challenges in CRM.
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.

27

3.3IMPLEMENTATION OF CRM IN INDIAN BANKS

Although CRM as a concept is of recent origin its tenets have been around
for sometime. Field officers in the banks have always promoted close
relation-ship with customers, but the focus on customer orientation rather
than product orientation as a commitment has been on the Indian banking
scene for nearly a decade. But the fact remains that implementing customer
relationship management is not easy.
There are really very few organizations that are actually optimizing
customer experiences at all points of contacts. It is necessary to understand
who customers are and what they value, select customer carefully, design
products and services that deliver the desired value, design effective sales
channels and customer touch points, recruit and equip employees to deliver
and increase customer value, and constantly refine your value proposition to
ensure customer loyalty and retention.
With the advancement of banking technology and computerization and
networking of bank branches, banking customers are becoming more and
more dynamic and less loyal in their behaviour. The development of the
Internet is further adding to this trend and the whole market becomes transparent and customers are in a position to move easily from one bank to
another. In such a situation, customer satisfaction is the key to bank
marketing, which aims at retention of the old customers and their bringing in
new customers.
CRM deserves differential treatment to different class of customers at
times. Service can be given to customers either personally through
individuals such as customer service manager or the process can be
automated by using computers. These different approaches are adopted
depending on the value of relationship with the customer. Personal
management of relationship is extended to business customers and high
value personal customers and automated relationship management to lower
margin mass- market segments.

28

CRM system can open up new channels of delivery, which are most cost
effective. We can cite example of the Internet and call centers. According to
an estimate, cost per transaction through these modes can be reduced by 90
per cent when compared to cost of transaction at branch. To offer better and
extended services to customers new technology platforms are being created
through huge investment in Information Technology in banking sector. The
recent development in this field is the introduction of CBS (Core Banking
Solutions).
A CBS helps in centralizing the transactions of branches and different
banking channels and the customers start banking with the bank instead of at
different branches. This is the only way to offer seamless transactions across
different channels (branches, the Internet, the telephone and Automated
Teller Machines or ATMs). As such nowadays a customer is called a
customer of the bank rather than of a branch.
Another problem generally faced by a bank in implementing CRM is
resistance to change. The banking industry is passing through a radical
transformation, from a seller market to a customer market, a regulated
economy to a more liberalized and open economy, advancement in
technology and a lot of other developments. These complex changes are
forcing the banks to change the way they do business. A change denotes
making things in a different manner. It should be planned properly, proactive
and goal oriented. It requires two things:
Firstly, the ability of the organization to adapt changes in the business
environment is to be increased. Secondly, the mindset of the employees has
got to be changed in the development of right attitude, skills, expectations,
perceptions and behaviour. Implementation of CRM in Indian banking is
still in its initial stage and has to go a long way to develop and raise it to the
global standards. But the Indian banks including the public sector banks are
coming in a big way to address this issue to remain competitive with their
counterpartsthe foreign and private sector banks.

29

3.4CUSTOMERS RELATIONSHIP
MANTRA IN INDIAN BANKING

MANAGEMENT

NEW

Nowadays banks have to work keeping in mind the position of the financial
market and anticipate change in the market place and prepare themselves
accordingly. They have to make new resolutions to build further on their
own strengths to explore new avenues of Customers Relationship
Management. This is the only strategic weapon to be pursued for excellence
in the pursuit of performance and achievement. Both the retention of old
business as well as to search for new business, CRM is the only choice.
CRM, being the essence of modern banking, a sound understanding of the
key principles, its theories and practices should be revisited and redefined to
provide a road map to new ideas and techniques in the field. Over the years,
banking institutions have been feeling the pressing need of putting up
greater thrust on this initiative for improving their operations and
appearances.

3.5 CRM PRINCIPLES

The main principles of CRM can be grouped into seven guiding factors:
1. Customer focus
The first and foremost important guiding principle in CRM is customer
focus. Who is a customer? This question is very fundamental. A customer is
a person or group of persons who receives the product or servicethe final
output of a process or group of processes. A customer is the final arbiter of
quality, value and price of a product or service. A satisfied customer only
assigns value to a service, on the contrary, to a dissatisfied customer a
product or service has no value, even if the concerned service or product has
been designed with lot of effort, energy and cost after a thorough planning.
A satisfied customer motivates his fellow members to go in for the service or
product that he has already acquired. But a dissatisfied customer always
counsels his friends, and fellow members not to go to banks where his
experience proved to be wrong or other-wise. So customers delight or
30

customers satisfaction is the essence of any CRM program. As a part of this

focus on customers, banks should ensure that clients are identified; their
requirements are determined, understood and met enhancing customers
satisfaction.
The main thrust of CRM is to improve an organizations efficiency,
economy and effectiveness through reduction of sales cycle times and
selling costs, identification of new markets and channels for expansion,
improvement of customer value, satisfaction, retention and thereby
increasing profitability and market share of the enterprise. Successful CRM
focuses on understanding the needs and desires of the customers and is
achieved by placing these needs at the heart of the business by integrating
them with the organizations strategy, people, technology and business
processes. There must be total commitment for the enterprise towards this
end.
2. Leadership
Persuasion, judgment and decision-making abilities are the main attributes
of quality leadership. When there is a slight chance of getting a business but
the client is hesitating or in a fix, or not in a position to decide properly, it
should be followed up by the relationship manager by patient hearing, mild
counseling and to stand by the side of the prospective client to help clear his
doubts and to make him feel happy by realizing that he is going in the right
direction and he is very right in choosing his requirements.
The following points may be found helpful in this regard:
(a) It is to be communicated to all employees that all customers should be
given a proper hearing and it should be supported from all levels.
(b) Ways and means should be identified and practiced of getting and staying
closer to customers.
(c) Proper respect should be extended to the customers. All relevant
information should be collected from them with humble and polite approach.
Proper value should be given to their feedback.

31

(d) There should be proper re-action to the information and feedback

provided by the customers in designing, developing and providing desired
products at afford-able cost.
3. Process approach
A process transforms an input into desired output by the use of resources,
energies and time. In producing an output there may one single process or a
group of inter-related processes. In case of inter-related processes, often the
output from one process directly forms the input to the next. For effective
functioning of an organization, it has to identify and manage numerous
linked activities with the help of different processes for accomplishing its
goal.
Proper attention should be given to the following points:
(a) All processes should be de-signed keeping in view the requirements and
desires of the customers, within the policy, resource availability, strategy of
the company.
(b) All processes should meet the legal and statutory requirements to
perform the activity or deliver the product or service.
(c) Time involved in processing should be minimum with least waiting time
to the customers. If required delegation of authority and assignment of
account-ability at various executive levels should be addressed, revised and
fine-tuned to meet the requirements.
(d) All the processes should be properly integrated to meet the goal
congruence and should not function at cross-purpose.
(e) There should be in built control mechanism for ease of measuring,
reviewing and taking corrective action.
4. System approach
Customers requirement is one level of commitment. That level implies a
system that is reactive and provides to customers what they want but the
target should be to achieve more and to exceed the customers expectation to
32

accommodate future requirement and to build a cushion against the

competitors attributes.
CRM denotes the management of the entire system and is not confined to
only one or the other sub-systems or functional departments. CRM is based
on a system approach to management. Its primary objective is to increase
value to customers on a continuous basis by designing and improving
organizational processes and systems on a ongoing basis. Meeting Each subsystem may have its own goal but the goal and objectives of all sub-systems
are to be integrated to achieve the overall goal.
There may be one sub-system to acknowledge the customers order, a
separate one to deliver the product within the delivery schedule, another subsystem to comply with the complaints of the customers etc, but all directed
to accomplish the goalvalue to the customers. The total system as a whole
should decide what product to make or what service to offer, what should be
the quality involved, what should be the price, what markets and customers
to target upon and similar other issues.
5. Involvement of people
The fundamentals of CRM bear the genes of customer relationship
through involvement of people, i.e., the work-force at the disposal of the
organization. The whole gamut of CRM is for the people, of the people and
by the people. People involvement at all levels is essential for the success of
a CRM program. The bank managers and staff must be in a position to
exploit the concept of customer relationship completely.
Customer relation may be defined as that dimension of relationship
marketing that seeks and ensures customer loyalty by fulfilling promises and
continuing to satisfy customers wants and needs so that defection is zero. It
comprises of three levels of relationships; financial relationship, social
relationship and structural relationship.
The main focus of financial relationship is frequency marketing programs
based on financial incentives such as reduction of processing fees, lower rate
of commitment charges, organization of loan mela on special occasions etc.
33

A social relationship program revolves round a social bonding between

company and its customers and establish brand loyalty. Bankers, nowadays,
make house calls, offer different services outside their for-mal activities,
share the feelings and emotions of clients and even send clients flowers on
birthdays and anniversaries. A marketing relation with the middleman and
interested groups is developed in an in-side-out manner mainly based on
software, which would help in data warehousing, data mining and data
analysis. The optimization of structural relationship lies in the replacement
of physical resources by total service replacement.
Drawing of money through ATMs instead of physical presence in the branch
for withdrawal of cash through cheques or withdrawal forms may be sited as
example. To obtain the full benefits of people involvement, the human
resource management should focus on employee empowerment, productivity
linked reward, zero defeat service oriented train-ing and total quality
management.
6. Mutually beneficial customer relationship
The relationship with the customer should be based on a mutually beneficial
relation-ship. A bank should not concentrate its attention towards earning of
profits only, but focus should be directed to the customers wealth creation
or value enhancement with the motto of earning through service.
As an example we can talk of a savings account thats fixed up to give you
more interest. It ensures that any balance in your savings account above a
certain amount, say, Rs 3,000 automatically gets transferred to a fixed
deposit to give you higher returns, which will be swept back into your
savings account, when you need it.
Sometimes, other benefits are also extended, such as, free personal accident
insurance coverage along with fixed deposit scheme above a certain amount
and above a certain term. Banks are no more restricting their activities to
deposit and advances; rather they work with the mot-to of offering
Integrated Total Package Solutions to all needs of a customer. Banks have
gone to the extent of booking cinema tickets, paying utility bills, school fees
etc. for the ease of their clients who are very busy and do not find time for
34

such work. Many of such activities are not profitable in terms of time and
efforts spend by the bank. But banks are carrying out such services for
mutual benefits, which pays in the long run.
Wealthy individuals are in the habit of placing all sorts of demands on their
private bankers and a bank has to respond to such requests not merely for
income generation but as a gesture of goodwill and at times such activities
add a consider-able percentage to a banks fee based income. According to
an estimate, a bank can earn Rs 35,000 to Rs 100,000 per annum for a good
customer. But generally it is found that earnings start after the first twothree years of dealing with the customer. In a mature relation-ship, such feebased income is a regular feature and is very much crucial in todays
banking where interest spread is getting reduced due to competition and fee
based income can increase the bottom line. But in many instances, the
expenses in terms of time, effort, recognizing individual needs and offering a
customized investment solution are high.
Retention of customers and building a long lasting relationship is the main
criteria under this concept.
7. Continual improvement
Another objective of CRM is the efforts towards continuous improvement
in the customer relationship through the provision of value added ser-vices
at favorable cost. Business processes in the areas of finance, system
integration, human resource management etc. are to be automated and
optimized with an aim to increase the efficiency and effectiveness of
operations.
The most effective way of improvement lies in innovation and change
management. Todays successful organizations must stimulate and foster
innovation and master the art of change. Organizations that maintain their
flexibility, spontaneity and unpredictability, continually improve their
quality and, beat their competitors to the market place with a constant stream
of innovative products and services, will be the winners.

35

The major areas to be targeted are:

(i) Improving the effectiveness of marketing.
(ii) Implementing multichannel trigger driven marketing.
(iii)Implementing a strategic analysis capability to support strategic decision
making.
(iv) The ability to deliver the increasing levels service demanded by
customers.
Building a transparent communication system and employee participation to
better define the needs of the customers and deliver the right services and
products

36

CHAPTER 4
BENEFITS OF CRM

4.1 Benefits of CRM to Banks

Despite the fact that in most banks profits sometimes fail, they seldom
pay attention to or adopt any customer strategy. It has long been the
misconception that banks need not pay much attention to customer focus just
because they had customers. Some banks even if they possess good
customer relationships are unable to cross sell as they have not figured out
who to target with what product/service. What happens is that customers are
often approached for the wrong products.
However the new millennium has resulted in banks and financial
agencies rethinking their strategies and goals. They have come to understand
the importance of hanging onto the customer and keeping him happy. The
rules that once governed the banking industry have changed. They have
realized that adopting a customer centric strategy is essential and needs to be
compulsorily undertaken. The vast majority of banks now realize they need
a customer strategy and are opting for CRM - Customer Relationship
Management.
Banking CRM software serves to increase the market share and boost
growth in the banking industry. What happens in CRM banking solutions is
that they change the way the employees think and mould them into customer
conscious people. CRM induces bankers to know that they are required to
maintain good relationships with their customers and should strive to retain
them.
They are made to realize that the business process should consist of
efforts to discover and satisfy customer requirements. Since the banking
field now boasts of so much of technological innovations there has been a
wide variety of innovations in CRM banking as well. Statistics show that
bankers will spend $7 billion on CRM. The sector will also evidence an
increase in expenditure of 14 percent each year. With such phenomenal
37

statistics it is but a surety that CRM banking solutions sales will soar in the
coming years.

FOLLOWING ARE THE BENEFITS OF CRM TO BANKS:

1. CRM Banking Focuses on the Customer
CRM manages to places the customer at the focal point of the
organization in order to cater to his needs, satisfy him and thus maximize the
profits of the organization. Banking CRM understands the needs of the
customer and integrates it with people, technology, resources and business
rocesses. It focuses on the existing data available in the organization and
uses it to improve its relationship with customers. Banking CRM uses
information and analytical tools to secure customer focus. Thus it is
completely essential that banks implement CRM in order to secure this.
2. Overall Profitability
CRM enables banks to give employee's better training that
helps them face customers easily. It achieves better infrastructure and
ultimately contributes to better overall performance. The byproducts of
CRM banking solutions are customer acquisition, retention and profitability.
Banks that don't implement CRM will undoubtedly find themselves with
lesser profitability coupled with a sharp decline in the number of customers.
3. Satisfied Customers
It is important to make a customer feel as if he / she is the only one this will go a long way in satisfying and retaining them. Bankers need a
return on investment and it has been proved that increase in customer
satisfaction more than contributes a fair share to ROI. The main value of
CRM banking lies in satisfaction and increased retention of customers.

38

4. Centralized Information
CRM banking solutions manage to clearly integrate people,
processes and technology. CRM banking provides banks with a holistic view
of all bank transactions and customer information as well and stores it in a
single data warehouse where it can be studied later.
5. CRM Banking Boosts Small Banks
Banking CRM software meets the needs of banks of all sizes in terms
of attaining the required accuracy and understanding of customers. Merely
assuming that banks that are considerably smaller in size have a better
customer approach and are able to deal with their customers in a better
manner is wrong.
They are just as much in need of CRM aid as the others. Small banks
on account of a limited amount of money have had to realize that a large
contribution to profits is directly the result of good customer service. CRM
makes sure that the bank delivers exactly what the customer expects.
6. Customer Segregation
CRM enables a bank to see which customers are costing them and
which are bringing benefits. CRM provides them with the required
analytical tools that will help them focus on the importance of segregating
these two and doing what is required to avail of the maximum returns.
After this segregation is done CRM easily enables banks to increase
their communication and cross-selling to their customers effectively and
efficiently.
7. Aggressive Customer Acquisition
CRM solution supports the creation of demand generation through
multi-channel and multi-wave campaigns. The solution ensures the banks
marketing message is appropriately personalized and targeted towards the
most suitable segment of prospects. This optimizes marketing efforts and
results in greater conversion of prospects
39

8. Improved Cross-sell Framework

The solution presents a unified 360 view of the customer, allowing
single point access to all the relationships the customer has forged with the
bank. This along with robust customer analytics effectively supports true
relationship banking, providing a robust framework for cross-sell
opportunities.
CRM solution also integrates with other white labeled solutions to
facilitate contextual and personalized customer engagement, with a keen
focus on right-talk driven right-sell.
9. Increased Operational Efficiencies and Collaboration
CRM solution supports business automation for processes and
business activities, eliminating manual tasks and reducing process time.
Straight through processing abilities enhance reduction in turnaround and
processing time, increasing output and enabling speedy completion of tasks.
The multilingual Web-based single repository of information enables
remotely located bankers to collaborate and transact seamlessly.
10. Lower Total Cost of Ownership (TCO)
A Web-based solution leveraging new-generation technologies,
Finacle CRM solution is future-proof and can be seamlessly integrated with
other enterprise applications. With a robust architecture and proven
scalability, it ensures protection for the banks technology investments.
11. 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 multi40

channel marketing campaigns to reach these customers and maximize the

lifetime value of those relationships.
12. 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.
13. Marketing Encyclopedia
Central repository for products, pricing and competitive information,
as well as internal training material, sales presentations, proposal templates
and marketing collateral.
14. 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.
15. 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.
16. Lead and Opportunity Management
These enable organizations to effectively manage leads and
opportunities and track the leads through deal closure, the required followup and interaction with the prospects.

41

17. 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 center and connects
the operations center with the relevant internal and external business
partners.

18. 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 evaluated within a scoring framework. Combining the
behavior key figure and frequency to monetary acquisition analysis with a
marketing revenue quota can optimize acquisition costs and cut the number
of inefficient activities. 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, Max Touch, ACC,
National Stock Exchange and PepsiCo.

42

4.2 BENEFITS OF CRM TO CUSTOMERS

Customer relationships are becoming even more important for banks as
market conditions get harder. Competition is increasing, margins are
eroding, customers are becoming more demanding and the life-cycles of
products and services are shortening dramatically. All these forces make it
necessary for banks to intensify the relationship with their customers and
offer them the services they need via the channels they prefer.

CRM helps banks to provide lot of benefits to their customers; some

key benefits are as follow.
Service provisioning throughout the entire life cycle of the
corporate customer, from the initial stages to the establishment of a
close, long-term relationship with profitable clients,
Optimization of the use of bank resources, such as alternative
channels of distribution (internet and home banking),
Significant reduction in and limitation of operational costs through
system automation and standardization,
Low maintenance and expansion costs owing to the use of modern
administration tools which allow bank employees to make a wide
range of modifications to the system
CRM permits businesses to leverage information from their databases
to achieve customer retention and to cross-sell new products and
services to existing customers.
Companies that implement CRM make better relationships with their
customers, achieve loyal customers and a substantial payback,
increased revenue and reduced cost.
CRM when successfully deployed can have a dramatic effect on
bottom-line performance. For example, Lowes Home Improvement
Warehouse, in a span of 18 months, achieved a 265 percent return on
investment (ROI) on its $ 11m CRM investment.
According to a study conducted in the sector of banking, convenience
of location, price, recommendations from others and advertising are
43

not important selection criteria for banks. From customers point of

view, important criteria are: account and transaction accuracy and
carefulness, efficiency in correcting mistakes and friendliness and
helpfulness of personnel. Thus, CRM, high-quality attributes of the
product / service and differentiation proved to be the most important
factors for customers.
Another study conducted in a European bank shows that with CRM,
the bank was able to focus on profitable clients through efficient
segmentation according to individual behavior. Information about
who buys what and how much enabled the bank to have a
commercial approach based on the client and not solely on the
product. Thus, the bank was able to better satisfy and retain its
customers.
Eventually, CRM results both in higher revenues and lower costs,
making companies more effective and efficient: effective in targeting the
right customer base with the right services via the right channels, and
efficient in doing this at the lowest costs. For example, those banks that are
moving transactions from the more expensive channels to a less costly
channel like the call center or Internet are therefore able to save money.

44

CHAPTER 5
CRM PROCESS FRAMEWORK

Customer Relationship Management formation process

45

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.

5.2A framework for successful CRM

46

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.
1.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.
2.Customer insight
47

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.

5.3Relationship

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,
48

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 intra-company communication practically
among all concerned individuals and corporate functions that
directly pay a role in managing the relationship with specific
customer or customer group.

5.4Relational performance and Evaluation process

1. 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
49

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.

2. Evaluation process

50

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
51

firm have to perform in order to produce the results in a

cooperative relationship and hence each partys relationship
satisfaction could be measured.

5.5Customer 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.

customer retention preferred in some ways

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
52

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.
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

53

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

Stages of retention in the customer life

cycle
54

55

1. Acquisitionis a stage in which customer are acquired for an

organization business. Customers so acquired would reach a state of
either satisfaction or dissatisfaction.
2. Satisfaction leads to retention.
3. Dissatisfaction leads to stage of attrition.
4. 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.
5. 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.

5.6Building customer relationship management

56

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
satisfacto
ry service
standard

People

Organizati
on

Process

57

Product

1.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.
2.Process

58

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.
3. 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.
4.Organization
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.
59

5. 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.

60

Chapter6
E-CRM
6.1E CRM in banks
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.
61

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 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.

6.2Key features of E-CRM

Focused on process

62

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.
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 backend transactional systems and external sources.
Measurement driven
63

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.

6.3BENEFITS OF E-CRM TO Banks AND Customers

BENEFITS

TO

BENEFITS

BANK
Relationship

TO

CUSTOMER
with

Customer

the customer

interaction

and satisfaction

Using e-mail for

business

Convenience

communication

64

Personalized

Speed of processing

services or one to

the transaction through

one services

e-response

Website to market
products

and

Service quality

services
Transaction

Trust

security

CHAPTER 7
CHALLENGES FOR CRM IMPLEMENTATION

7.1CHALLENGES FACED BY
IMPLEMENTATION OF CRM

BANKS

IN

SUCCESSFUL

The most pervasive challenges to effective customer knowledge include:

The difficulty of obtaining a complete view of customers.
The need to move away from disjointed, standalone, and inconsistent
channels to provide a cohesive, multichannel offering.

65

 The burden of disconnected legacy systems and disparate databases

that store client financial data.
The cost and complexity of meeting stringent government regulatory
and client security and privacy requirements.
The pressure on margins and growth prospects from increased
competition.
The costs associated with retaining customers and developing
customer loyalty.

Although CRM can help banking institutions efficiently manage their

customers, many banks fail to meld the concept into the prevailing work
culture. But the high incidence of CRM failure has very little to do with the
CRM concept itself. Usually it's a case of the banks failing to pay attention
to customer data they already have.

A lot of banks underestimate the magnitude of CRM. They tend to

treat it just like any other application technology, without realizing that
CRM, if done properly, is a strategic initiative that touches all areas of an
organization. According to CRM software firm People soft, banks need to be
aware of three key problems:
1. Measuring CRM benefits
A key basic CRM challenge is establishing the measurement method. Banks
may find it hard to build the initial business case justification and then to
prove the worth or success of their investment What makes the latter task
even more difficult is the fact that the metrics that are best used to justify a
significant IT investment are not always the most appropriate for evaluating
ongoing success.

66

When banks seek to justify the cost of their investment in CRM-related

technology they usually focus on hard numbers, typically those related to
decreased costs and increased sales. In other words, the proponents look to
justify the top-line expenses with bottom-line benefits.
Traditionally, banks have determined the success of any project or product
mainly in terms of internal business gauges such as return on investment,
units sold asset growth, or service level agreement measures. One exception
to the typical practice of focusing solely on internal data for gauging success
is market share, or market performance. Interestingly, most CRM
practitioners quickly default to marketing and sales measures when asked
about the success of CRM implementations. The tendency to frame the
discussion of CRM measurements in terms of sales and marketing measures
is completely understandable given the phased nature of most CRM projects.
Since the majority of CRM projects are expensive multiphase and multiyear
projects that often involve multiple technologies, the funding for CRM
projects is also often phased. CRM sponsors grant funding to project leaders
at the completion of one phase and start of the next. To ensure that the
subsequent phases will get funding, project leaders typically build into each
phase of a CRM project demonstrable business benefits.
At completion of each phase of a project, business benefits are expected to
accrue rapidly to the bank. Revenue generation--whether through sales or
marketing improvements--is the preferred business benefit for CRM project
sponsors. Not surprisingly, it is far easier to continue funding large, intricate
IT projects when incremental revenue generation can be squarely identified.
2.

Customer profitability

Many banks use profitability as a key component in determining how to

treat their customers. But measuring profit in a bank is not an easy task.
Many banks allow the use of an accountant's approach to the measurement
process. This means the accounting and finance people are in charge of the
process, resulting in textbook-accurate allocations that often do not
accurately reflect the activities they are intended to measure.

67

For example, most bank costs are step-fixed. This means they are neither
purely fixed nor purely variable, with the resource able to process only a
finite number of transactions before more investment is required. The way
the step-fixed resources are allocated can dramatically affect the resulting
measurement of account level profitability.
3.

The 80-20 Rule

Most banks make critical pricing decisions based on the so-called 80-20
rule, the notion that 80 per cent of profits derive from 20 per cent of
customers. This may be true, but the use of incomplete or inaccurate cost
information and unproven hypotheses on customer buying behavior make
this rule difficult to apply. One significant problem is that banks let their
customers use the bank's products and services in an unprofitable way.
By providing a lower level of service to these customers, the bank faces the
danger of driving them away to institutions that provide better service.
Given the step-fixed nature of bank costs as discussed, banks should not
view losing unprofitable customers as the way to improved profits.
7.2METHOD OF EFFECTIVE CRM IMPLEMENTATION
Banks can take several steps to strengthen their customer relationship
management in an effective manner.
1. Acknowledge email enquiries
At the very minimum, banks should send out an automated email response
that acknowledges receipt of a customer's email and lets the sender know
when to expect a more complete response.
It is then vital to get back to the customer within the promised time frame.
Banks can earn more customer goodwill if they respond faster than the
imposed deadline. To handle significant volumes of email, banks need
adequate routing technology. Many banks regard a voice call centre as a cost
of doing business, but they don't look at it the same way with email.
2. Develop the right contact strategy
68

By knowing which offers and incentives to offer to which customers and

when, banks will not annoy customers with unwanted marketing offers,
building customer loyalty along the way. Such goals can be at least as
important as realizing cross-sell opportunities.
3. Providing online `chatting'
An alternative to telephone support, online chatting is providing a service
via emails or any other form of immediate response. This service also offers
some of the immediacy of the phone but primarily allows customers to
remain online. With online chatting, service agents can usually handle
between one and three customer inquiries at once.
Given that the average call lasts about four minutes, a customer-service
representative can handle 10 to 12 customers per hour using "chat",
compared with six to eight per hour over the telephone. One of chat's
important advantages is that it keeps customers in an online store
environment where they remain exposed to merchandise and promotions.

4. Reduce costs by improving website design and self-service

Email, telephone support, and chat all involve considerable staffing costs.
But to reduce these expenses a site should anticipate customer needs. Sites
that is difficult to navigate and don't provide needed information chase away
some customers and force those who stay to resort to more expensive
channels to satisfy their service needs.
5. Analyses the project's scope
Before recommending or embracing CRM, bank executives must analyses
the business issues, the customer relationship model and the exact nature of
customer interactions and how they tie together. Banks should not embrace
top-line growth as an objective until they can understand precisely how
CRM technology will provide those new revenues.
6. Know thy limitations
69

Many CRM implementations are severely limited because they fail to

provide a complete and meaningful view of the customer. CRM is primarily
a business program, and it requires a genuine partnership between various
departments to ensure that both business and technology issues are managed
effectively.
Furthermore, CRM not only takes existing business processes and makes
them more efficient, but it also requires these processes to be modified. For a
CRM implementation to be successful, decision makers within the bank
need to make sure that all the stakeholders understand and support the
required process changes.
7. Change accounts into customer
Traditionally banks have closely associated customers with accounts, to the
point of calling the account the customer and vice versa. Customers will
tend to feel alienated when they are treated like a number instead of a
person. A conventional account structure usually contains very little
information about customers and their needs, or their relationship with
competitors or other divisions within the bank.
The way ahead Banks have excellent reasons to adopt comprehensive
CRM strategies to cultivate a lifetime customer relationship. As banks move
from transaction-centric to a relationship-centric business approach,
effective leveraging of customer relationship becomes all the more critical.
Today, customers are expecting even more individual attention,
responsiveness and product customization, yet are unwilling to pay a
premium for these services. They are willing, however, to build a long-term
relationship with banks that offers differentiated and more personalized
services.
This is where electronic banking can offer a competitive advantage.
Successful CRM implementation in electronic banking needs to integrate
data from all customer touch points, employee feedback and even
shareholders' perceptions. If used effectively and in an innovative way, this

70

approach will enable banks to develop a strategy to deliver to the customer

the most appropriate products and services.

CHAPTER 8
CASE STUDY
North Cannera Gaur Saraswat Bank
The NKGSB Co-operative Ltd. Bank was founded by great visionary
ShethShantaramMangeshKulkarni on 26th September, 1917 as a
credit society. Later it was converted into Urban Co-operative Bank in
1993. The banks philosophy is based on four core principles- pillars
of service excellence, customer focus, product innovation and
resourceful people. They have a core banking solution, for customers
so to access their accounts and perform banking operations
71

Anywhere Anytime plus enjoying value added services. The bank is

for all the Persons.VisionA premier co-operative bank. Operating
Principles It will make our Customers, Shareholders and Community
at large very proud, It will always strive to provide Customers the best
products and services that leads to their progress and prosperity, It
shall act with high level of integrity, achieving the set goals with
active involvement, devotion and commitment of our employees.

Causes Of Incorporation:
The Bank was converted into cooperative for the following1. To satisfy credit needs of people/consumers, by working in
cooperation, equality, morally, economically, socially and legally;
2. To deliver products and services of bank to consumers that may
satisfy them (reasonable- rate of interest, credit for all levels of the
society, performing functions of a commercial bank, etc.);
3. To enjoy Benefits of a Co-operative Bank (limited liability,
exemption from tax, low cost operation, stability, etc.);
4. To increase the security of peoples accounts in a credit
cooperative;
5. To eliminate exploitation of consumers, any political influence or
any other similar problems related to commercial problems;
6. For welfare and development of society;
7. Improve the condition in which credit cooperatives work;
8. To accept deposits and raise capital through share capital
9. To expand and promote the field of Credit Co-operatives in
INDIA
72

Products offered by the Bank

1) Savings Account- Savings Account comes with a host of convenient
features and banking channels to transact through. Salient features of
the scheme: Minimum opening balance Rs.500/- without cheque
book, Free cheque book of 60 leaves, in case of minimum opening
balance Rs.1000/-, Free ATM card facility, Desk Drawing facility,
Free account statement facility, Fund transfer facility through
RTGS/NEFT anywhere in India, Any branch banking facility, Demat
facility, Safe deposit locker facility, Interest @ 4% p.a. on daily
balance products.
2) Current Deposit- Salient features of the scheme: Minimum opening
balance Rs.3000/-, Cheque book at nominal price, Free ATM card
facility for Proprietor (s), Desk Drawing facility, Free account statement
facility, Fund transfer facility through RTGS/NEFT anywhere in India,
Any branch banking facility, Demat facility, Safe deposit locker facility.
3)Term Deposit- Salient feature of the scheme- Minimum opening
balance- Rs.1000, Minimum period= 15 days and maximum = 364
days, Interest paid along with principal on maturity, Can avail loan upto
90% of the available deposit, Interest as per card rates.

4) A) Retail loans
Features & Benefits

Interest charged on daily reducing basis,

No pre-payment charges for repayment through own source,

Attractive interest rate, Simplified documentation,

Easy repayment options - ECS/ Post datedcheque / Standing

Instruction,
73

Low processing fees.

4)B)Corporate FinanceFeatures & Benefits

Interest charged on daily product basis, at monthly rest,

Simple documentation,
Low processing fee,
Speedy approval.

5) MTSS- Money Transfer Service is a boon to NRIs and their families as

well as visiting Foreign Tourists and Students in India. In a strategic tie-up,
Bank brings inbound instantaneous inward remittance to your doorsteps
under Money Transfer Services (MTSS Scheme of RBI). & Others.

Services offered by the Bank1)Any Branch Banking

2)Quick ATM
3)Ancillary Business- Bank offers various Value Added Services, Demat,
Stamp Franking, Desk Drawing, Safe Deposit Locker, Life Insurance / NonLife Insurance, Forex, I-Connect.
4)Real Time Gross Settlement System (RTGS) RTGS is a more robust
payment system enabling inter-bank fund transfers of above Rs.1 Lac.
Transfer of funds is done by simple instruction to bank to transfer funds
from your account to another bank account whereby settlement is done
continuously.
74

5)National Electronic funds transfer (NEFT) Presently all branches of

NKGSB are CBS enabled to offer NEFT facility to our customers. This
system facilitates an efficient, secure, economical, reliable and expeditious
system to transfer fund below Rs 1 Lac. and clearing throughout India.&
others.

SUGGESTIONS

The Bank should expand its operations further in more states in

INDIA. It is a research found that cooperative banks do not move
beyond Maharashtra, Karnataka, Gujarat and Tamil Nadu. This Bank
is doing the same, it should not do it.

It should reduce its working capital, making a way for more profits

Adopt Technology faster as still Internet Banking is to be launched

in its active service list.

Continue the promotional and welfare measures with reducing

expenditure.

Proper sale of unused/scrap material/furniture, bringing some

reasonable revenue/income for the bank and making less losses,
because the losses are seen.

Buy areas suitable for trespassing or area of operation of consumers

in the Bank. It is seen the area/property is small place to operate.
Improve Infrastructure.
Improve Advertising, by bringing something attractive and effective.

1. How important is CRM for banks? What benefits can banks

hope to achieve through deploying CRM solutions?

75

I think it really depends on the positioning and focus of a bank. If

operational excellence is your key-focus and not customer intimacy, the
choices you make in terms of investments in CRM will be completely
different. Knowing our client and acting on that information in every contact
is essential in achieving this.
There are two main points that describe the significant jump regarding
CRM, customer demand for sophistication and multi- channel approach and
orientation. Consequently there are four steps that banks should take to
benefit from CRM, change their commercial product vision to a customer
centric vision, effectively integrate different channels, ensure data quality
and deploy complex marketing strategies.
The benefits that banks hope to achieve through deploying CRM
solutions will be to arrive at satisfactory, measurable answers to questions
such as how profitable is the customer, which products/services does the
customer require; when, where and through which channel and what risks
does the customer present to the bank.

2. How has the understanding of CRM in banking changed

today as compared to a few years back?
Benefits of realtime are there, but the costs are high to attain these
benefits. Huge amounts of data are being gathered by banks, the intelligent
deployment in customer related processes is where a lot of banks are
struggling.
The technology solutions available to banks will continue to improve
with a noticeable shift towards integrated, broad technology solutions
designed to ease enterprise integration requirements.
Banks that have achieved positive ROI have focused on 4
fundamental tenets. First, they have focused on the creation of an
overarching, customer-centric business strategy, streamlined operations,
superior analytics and integrated collaborative channels. Second, these banks
have adopted a transformational approach to ensure that all sources of value
76

are identified and appropriately measured. Third, they have developed a

value-based CRM ROI model that is aligned with the banks strategic
objectives. And finally, based on appetite and readiness for change, these
banks evaluated numerous implementation options before making a final
decision. They ensured that each option consisted of time-phased
decompositions of an overall approach where benefits of earlier activities
funded the later ones.

3. Explain the general ways of how a CRM can be enhanced?

We are Knowing the customer, Understanding them and enhancing
keeping in touch with customer.

4.How will the CRM landscape in the banking industry

develop in the coming days?
First, as our customers use different channels to go to their bank such
as the branch, self service machines, the service center or the internet, CRM
goes multi-channel. Second, in addition to cross selling, the processes of
client retention and improvements in client loyalty are getting more
important.
As the customer is more in control, we will want to be "actively
ready" in all channels when the customer contacts us, based on what we
know and anticipate of this client. This requires different marketing skills
and new ways of managing your sales. The second trend will probably be
that CRM will contribute more to branding. Not just ROI on every contact
will be leading, but the way we want to be perceived as a brand will become
more important.
77

5.How has the technology matured in this time and what is the
impact on banks today?
The integration of different systems such as customer data and
product data has improved dramatically. It is possible now to have the 360
degree view on the client. Now we have to improve the usage of all the
systems we have designed and concentrate on standardisation.

Conclusion
Banking can be mysterious for consumers and how they interact with their
finances can be a complex matter. 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
78

implement end-to-end technologies 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 use the same to cement long-term,
mutually-beneficial relationships. For a bank to succeed in adopting a CRM
philosophy of doing business, bank management must first understand CRM
as a holistic concept that involves multiple, interlocking disciplines,
including market knowledge, strategic planning, business process
improvement, product design and pricing analysis, technology
implementation, human resources management, customer retention, and
sales management and training.
Turning the business strategy into actionable items is a difficult undertaking.
For which Customer Relationship Management works a magic wand.
With this, I end this Assignment. This assignment tells you- About NKGSB
Co-operative Bank Ltd., its authorities, working, their principles and
initiatives, their products and services. Further on which I have given my
individual suggestion as to the Bank, as what it should do for its more
progress.

BIBLIOGRAHPHY

Customer Relationship Management By Kristin Anderson & carol

kerr.
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 E-Crm: Business & System Frontiers By M.P.Jaiswal& Anjali kaushi.

Researching Customer satisfaction & Loyalty By paul Szwarc.
Essentials Of Crm By Bryan Bergeron.
Managing Customer Relationship By Don Peppers & Martha Rogers.
CRM Fundamentals By Scott Kostojohn.

Performance Driven CRM By Stanley A. Brown & Moosha Gulylz.

Connected CRM: Implementing a Data-Driven, Customer Centric
Business Strategy By David Williams.

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