A PROJECT REPORT

ON
CUSTOMER RELATIONSHIP MANAGEMENT IN BANKING SECTOR

SUBMITTED BY
VARSHA SINGH
M.COM
(2016-17)

UNDER THE GUIDANCE OF

PROF. POONAM MIRWANI

VIDYALANKAR SCHOOL OF INFORMATION

TECHNOLOGY
AFFILIATED TO UNIVERSITY OF MUMBAI

WADALA (E)
MUMBAI 400037.
NOVEMBER 2015

VIDYALANKAR SCHOOL OF INFORMATION

TECHNOLOGY

CERTIFICATE

This is to certify that VARSHA SINGH of Vidyalankar School of

Information Technology studying in M.Com{Banking & Finance}
bearing Roll No. 15310A1007 and Examination Seat No. _____ has
successfully completed the project entitled CUSTOMER
RELATIONSHIP MANAGEMENT IN BANKING SECTOR
part of internal assignments under my supervision during the academic
year 2012 2013.

----------------------------

-----------------------------

Prof. SANDEEP KALEKAR

Dr. ROHINI

(Co-ordinator)

Principal

---------------------------------

----------------------------

External Examiner

Prof.

College Seal

DECLARATION
I MISS. VARSHA SINGH student of M.COM BANKING AND
FINANCE(2015-16) of Vidyalankar School of Information Technology
Mumbai 400037 do hereby declare that I have completed project
work titled CUSTOMER RELATIONSHIP MANAGEMENT IN
BANKING SECTOR as a part of my academic fulfillment.
The information contained in this project work is true and
original to the best of my knowledge and belief.

--------------------------------DATE:

SIGNATURE OF STUDENT
(VARSHA SINGH)

ACKNOWLEDGEMENT
I have a great pleasure in presenting my project on CUSTOMER
RELATIONSHIP MANAGEMENT IN BANKING SECTOR I
sincerely thank with deep sense of gratitude to PROF. POONAM
MIRWANI, my guide for him kind co-ordination for the fulfillment
of this project.
I would also like to thank our seniors, librarians who sincerely helped
me getting this information and, last but not the least my college for
the big reason that I am here in front of you in presenting this project.

SIGNATURE OF STUDENT
..
(VARSHA SINGH)

Sl.
No
1

CHAPTERS

Page
no

INTRODUCTION

1.1- BANKING ON CRM

1.2- DEFINE CRM

1.3- STUDY OF BANKING SECTOR
2

BANKING

2.2- KNOW YOUR CUSTOMER (KYC)

RELATIONSHIP MARKETING IN BANKS
3.1- CRM IN BANKING
3.2- WHAT DOES BANK NEED
3.3- HOW CRM HELP BANKS
3.5- CRM IMPLEMENTATION IN INDIAN BANKS
4

SOCIAL CONCERNS
4.1-CONSUMER EXCLUSION & SOCIAL RES IN
MARKETING DECISIONS.
4.2- FIELD RESEARCH OBJECTIVES
4.3- METHODOLOGY

10
11
12
12
13
13
13
14
14
15
15

4.4- DATA ANALYSIS

15

4.5- FINDINGS
5

9
10

2.1- WHAT IS BANKING

3

CRITICAL ISSUES AND TERMS

16

SWOT ANALYSIS OF RETAIL BANKS

18

RELATIONSHIP BANKING IN TROUBLEDTIMES

20

CRM IN FINANCIAL SERVICES SECTOR

21

8.1 DEFINING CRM

21

8.2 EVOLUTION OF CRM & CHALLENGES

22

OF PERSONALIZED E-SUPPORT
9

8.3 CUSTOMER SUPPORT

23

WHAT CUSTOMERS WANT

25

TEN MYTHS ABOUT THE CUSTOMERS

WHAT CUSTOMERS WANT
10

CUSTOMERS DIRECTIVES
BENEFITS OF IMPLEMENTING CRM
WARNING & PITFALLS
PRINCIPLES OF SERVICES IN BANKING

28
30
35
36
36

11

SUGGESTIONS
CONCLUSION

12

REFERENCES

40

37

Chapter 1
INTRODUCTION
1.1 Banking on CRM

Competition and globalisation of banking services are forcing banks to be productive and
profitable. To retain High Net Worth individuals, banks should focus strongly on relationship
management with customers. Innovative Customer Relationship Management (CRM)
strategies and cutting edge software can help, to a great extent, in achieving the desired
results. To provide customised services, banks are opening Personalised Boutiques which
provide all the required financial needs of a customer.
The entire service industry is now metamorphosed to become customer- specific. In this
context, the management of customer relationship in financial services industry demands
special focus. Gone are the days when customers at a bank did not mind the long serpentine
queues and waited patiently for their turn with a token in their hand. In todays Internet era, no
one has the leisure to wait. In this context, online banking is assuming a great significance.
Today, banking is more customer-centric, unlike the yester when it was transaction-centric.
Banks are increasingly focusing on the premise that customers choose on the service provider
who differentiates through quick and efficient service.

1.2 Defining CRM

Customer Relationship Marketing is a practice that encompasses all marketing activities
directed toward establishing, developing, and maintaining successful customer relationships.
The focus of relationship marketing is on developing long-term relationships and improving
corporate performance through customer loyalty and customer retention.
Customer Relationship Management (CRM) as the name suggests, the primary focal point is
placed on the customer. The key objective is to increase customer value over time by
increasing customer loyalty. If a company develops better customer relationships, it also
improves business processes as well as its profits. In general, CRM is a more efficient
automated method used to connect and improve all areas of business to focus on creating
strong customer relationships. All forces are coupled together to save, improve, and acquire

greater business to customer relationships. The most common areas of business that are
positively affected include marketing, sales, and customer service strategies.
CRM- meaning
Customer relationship management (CRM) is a business strategy that spans your entire
organization from front office to back-office. It is a commitment you make to put customers at
the heart of your enterprise. The right CRM strategy and solutions can help you securely,
reliably and consistently:

Delight your customers every time they interact with your business by empowering
them with anytime, anywhere, and any channel access to accurate information and
more personalized service.

Reach more customers more effectively, increase customer retention and boost
customer loyalty by leveraging opportunities to up-sell and cross-sell and driving
repeat business at lower cost.

Drive improvements in business performance by providing your customers with the

ability to access more information through self-service and assisted-service
capabilities when it is convenient for them.

Enable virtualization in your enterprise as more of your people and resources extend
beyond your offices and around the world.

Balance sophisticated functionality with rapid implementation and effective support

for a faster return on your CRM investment.

1.3 Study of Banking Sector

The Indian banking can be broadly categorized into nationalized (government owned), private
banks and specialized banking institutions. The Reserve Bank of India acts a centralized body
monitoring any discrepancies and shortcoming in the system. Ever since nationalization of
banks took place in 1969, the public sector banks or the nationalized banks have acquired a
prominent place and has since then seen tremendous progress.
The need to become highly customer focused has forced the slow-moving public sector banks
to adopt a fast track approach. The unleashing of products and services through the net has
galvanized players at all levels of the banking and financial institutions market grid to look
anew at their existing portfolio offering. Conservative banking practices allowed Indian banks
to be insulated partially from the Asian currency crisis. Indian banks are now quoting at
higher valuation when compared to banks in other Asian countries (viz. Hong Kong,
Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets
(NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed
with efficient branch networks focus primarily on the high revenue niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the new Indian
market and is addressing the relevant issues to take on the multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be futuristic and proactive
players, capable of meeting the multifarious requirements of the large customer base. Private
Banks have been fast on the uptake and are reorienting their strategies using the internet as a
medium The Internet has emerged as the new and challenging frontier of marketing with the
conventional physical world tenets being just as applicable like in any other marketing
medium.

Chapter 2
9

BANKING
2.1 Definition of banking
The accepting for the purpose of lending or investment, of deposits from the public, repayable
on demand or otherwise and withdrawal by cheques, draft or otherwise. (Banking Regulation
Act)
Dr. Paget in Law of Banking states, No one and no body, corporate or otherwise, can be a
banker who does not:
i.

Conduct Current Accounts

ii.

Pays cheques drawn on himself

iii.

Collects cheques for his customers

A bank is therefore Any company that transacts the business of banking in India. Negotiable
Instrument Act.
Banker:Banker is Any person acting as a banker Negotiable Instrument Act.
Customer:
There must be some recognizable course or habit of dealing in the nature of regular banking
business. A single transaction can constitute a customer; must have an account; dealing must
be of a banking nature; some frequency in transactions is expected but is not essential.

Bank Custome

Minor

Married women

Pardanashin Woman

10

Illiterate people

Lunatics

Trustees

Executors and Administrators

Power of Attorney Holders

Joint Account

Hindu undivided Family

Partnership firm

Limited companies

Clubs, Societies and Charitable Institutions

Non resident and Persons of India origin

Foreigners

Before getting into the details of how CRM actually works in the financial sector, it is
very important to know your customer.
2.2 Know Your Customer (KYC)
It is very important to know the customer before having any kind of relationship with
him (especially in the banking sector).
This is important because of drugs smuggling/ trafficking, money laundering and
terrorism coming up. If one has to build a relationship with the customer one should
follow all the KYC norms laid down by RBI.
Under the KYC a customer is:

A person or entity that maintains an account and/ or has a business relationship

with the bank.

Chapter 3
11

RELATIONSHIP MARKETING IN BANKS

3.1 CRM in banking
Retail banking refers to mass-market banking where individual customers typically use banks
for services such as savings and current accounts, mortgages, loans (e.g. personal, housing,
auto, and educational), debit cards, credit cards, depository services, fixed deposits,
investment advisory services (for high net worth individuals) etc.
Thus, Non-traditional competition, market consolidation, new technology, and the
proliferation of the Internet are changing the competitive landscape of the retail banking
industry. Today retail banking sector is characterized by following:

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

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

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

Today, the customers have many expectations from bank such as

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

3.2 Needs of a Bank

12

The banks now need to find out what to sell, whom to sell, when to sell, how to sell and how
to be different to increase profitability. Banks need to differentiate themselves by adding
value-added service, offerings and building long-term relationships with their customers
through more customized products, enhanced value offerings, personalized services and
increased accessibility. Banks also need to identify customers and products that would be
most profitable and target customers with products that are most appropriate to their needs
and serve the customers with greater cost efficiency.
3.3 CRM Implementation in Banks in India
According to Nasscom report Strategic Review 2004, Indian CRM market was estimated at
US $ 14 million and is forecast to grow to US $ 26 million in 2005. Banking and financial
services segment has a high growth potential and accounts for 22 percent of CRM license
revenue. There are many banks such as ICICI Bank, HDFC Bank and Citibank, which are
using CRM products.
Disciplined work along four dimensions can significantly improve results from CRM
initiatives:
Customer Segmentation- Do intensive data analysis and value-based segmentation to
highlight the value of different customer segments and the underlying drivers of that value.
Design programs- Design innovative programs focusing on customer acquisition, cross-sell,
retention, loyalty, and customer service, based on customer insights, experience and industry
best practices.

Chapter 4
13

SOCIAL CONCERNS
4.1 Consumer Exclusion and Social Responsibility in Marketing Decisions
The radical changes occurring in the micro and macro environment, which dynamically affect
the marketplace and its participants, are widely known. Both the industrial and the academic
communities have to realize the need of a re-determination and re-evaluation of many basic
and traditional concepts of the strategic marketing plan. The defenders of the concept of
globalization argue that it ideally leads to a multi/cross cultural and without boundaries world.
In this context, there is a need of a worldwide community to capitalize effectively and
efficiently the opportunities based on the principles of the "system".
4.2 FIELD RESEARCH OBJECTIVES
Financial exclusion is often largely attributed to structural changes in the financial services
sector, including increased competition from new entrants in the markets, mergers and
information technology. All these characteristics, resulted in the development of a
combination of tactics related to the adoption of cost cutting activities and increased emphasis
on market segmentation and appropriate targeting, are present in the banking sector in India.
The inhabitants of isolated areas cannot satisfy their banking needs although they have a
healthy income profile and financial strength. Only few financial services were traditionally
offered in these areas. Nowadays, due to the increased competition in the market, these
neglected customer segments can be of interest to the banking industry.

4.3 METHODOLOGY

14

Two of the most isolated suburbs, Sitapur and Biswan, were chosen as collecting data from all
the remote Uttar Pradesh cities is almost impossible, due to resource limitations. Sitapur is a
suburb and attracts mostly business class. In 1991 it had a population of 267, living in two
villages. The area of Biswan is somewhat bigger, has a long tradition in sugarcane farming
and attracts manufactures of sugar and allied products.In both places there is a post office,
offering a limited range of financial products.
4.4 Data Analysis
Research on the inhabitants' views in these areas is relatively limited. Because of the
exploratory nature of all the issues examined, descriptive statistics are displayed. As a next
step in our analysis, we performed a series of extensive statistical analysis, using T-Tests, chisquare statistics, in order to identify the exact relationships. More precisely, in order to
examine the hypotheses that the opinion of people in the two samples and the fact that the one
group has experienced living away from the island was not related, independent samples t-test
was used. To assess the ranking of different variables, by examining the mean rank
differences, Friedman two-way ANOVA test was conducted. Pearson 2 was also used in
order to examine comparisons of categorical data.
4.6 FINDINGS
A primary objective of this study was to investigate the banking services currently used by
customers, in order to reveal the provision of those services in the particular areas. In
addition, the study highlights their perceptions about the provided services. In this section, we
discuss the key findings of this study, in order to provide also a new perspective on
companies' social responsibility issues combining those with "exclusion", particularly social
and financial one.

Chapter5
Chapter 5
15

CRITICAL ISSUES AND TERMS

5.1 Setting socially responsible Marketing Objectives and Strategy
In the free market economies, business organizations are free to choose what goods and
services they produce, the processes by which they produce as well as the markets they aim to
serve. So, a social service does not necessarily mean the offer of specific additional services
to particular customers. It means the company's orientation in offering its products/services in
a more "social way".
In market economies where companies do have a high degree of autonomy, the manner in
which organizations make strategic decisions, taking into consideration the Social
Responsibility notion, becomes in itself a matter of discretion. As Frederick et al, (1992)
suggests there are 3 broad views of the social contribution of the company.
5.2 Customer Dialogue Builds Loyalty & Profit
Customers and potential customers are getting more sophisticated. The very marketing
techniques used to separate the customer from their hard earned money are, helping, by
training both the old and newer generations of customers to be more wary and smarter.
Customers want to trust the companies they buy from and in some case may even value a
relationship of a sort.
Managing Customer experience is the biggest challenge faced by businesses today. The ability
to acquire, retain and grow customer relationships is determined by an organization's ability to
quickly adapt to changing customer needs. This demands an integrated approach to managing
customer interactions.

5.3 Customer 360

16

It is in line with these needs that a concept called Customer 360 has been generated - an
integrated framework that addresses every point of the customer lifecycle of a business - from
customer support to back office to customer analytics.
What is Customer 360?
Customer 360 is a proprietary framework for integrated Customer Lifecycle Management
(CLM) services that touch every point in the customer lifecycle of your business. Customer
360 integrates both direct and indirect interactions of a customer along the entire lifecycle
from prospecting to acquisition to service to retention while also delivering insights through
customer analytics. From a business point of view, this translates into reduced service costs,
increased business and enhanced profitability. From a customer centric viewpoint, it translates
into customer delight and enhanced customer satisfaction by catering to their current and
future needs.
Customer 360 comprises of:

Customer Interaction services

Back-Office services

Customer Intelligence service

5.4 Inbound Customer Marketing Research Report

The world of targeted marketing is moving on apace. Organizations no longer rely just on
direct mail to get their message across. The norm is fast becoming: multi-channel with the call
centre, website, e-mail and SMS all joining the fray; multi-stage where a number of contact
events are tracked prior to making the sale; and insight driven, where consumers are targeted
based on their predicted behaviors or the occurrence of specific events in their lives.

Chapter 6
17

SWOT ANALYSIS OF RETAIL BANKS

6.1 Banking on an Online Future
These are the following opportunities and threats posed to retail banks by online banking.
The development of online banking has proved a mixed blessing for retail banks. By allowing
customers to service their accounts online, online banking represents a clear opportunity to
reduce the costs of face-to-face banking.
However, the study suggests that over a quarter of Internet users are now using online
banking, the majority of customers are proving slow to take it up, and even those who do still
demand the reassurance of one-to-one personal support, whether provided online or over the
telephone.
6.2 Cost Trap
It seems that banks are caught in a classic cost trap: Customers want detailed, one-to-one,
personalized advice, yet neither they nor their financial providers are prepared to pay for it. In
the past this circle was squared through the medium of an independent financial adviser (IFA),
offering free advice in return for the opportunity to sell financial products on commission.
Banks motivation to move into the provision of advice will be as much about, customer
retention as selling products the challenge is to be able to do it cost-effectively. He believes
that the answer is for banks to invest in online, self-service products which use knowledge
management techniques to automate the provision of advice which is nevertheless
personalised to the user.
A financial adviser probably has knowledge of no more than 100 products. Its also more
personal that one can say he does not want any IT investments, or that he only wants
environment friendly funds. And the software will spot contradictions in his responses.
6.3 The Rewards

18

The payback for the bank is in the amount of information about customers the online check
delivers - up to 300 items of information on employment, home ownership and so on. This
approach is most applicable to the mass affluent customer with over 10,000 in liquid
assets.
Once implemented, online advice systems can be made available at no extra charge to less
valuable customers, and also be used to underpin the personal advice given to customers with
more complex affairs.
6.4 Understanding Your Customer Base
However, the ability at any time to drop out of the website and contact a human being is seen,
as equally important.
The problem for direct operators is that they are heavily dependent on branding, and therefore
cannot switch advertisement spendings into customer acquisition through intermediaries. And,
like all players in e-commerce, they are discovering that the opening of new channels to the
customer does not necessarily mean that old ones can be phased out.
6.5 Cautious Future Expected
Banks have indicated that while online advice is something that they are looking at in the
medium term, in the absence of any strongly expressed customer demand, it is unlikely to be a
priority. Either way the tradition of getting financial advice funded by the backdoor looks set
to continue for some time.

Chapter 7

19

RELATIONSHIP BANKING IN TROUBLED TIMES

In the present uncertain economic climate, can banks and customers benefit from an actively
managed relationship?
Relationship banking and its effectiveness in todays challenging economic circumstances. It
is observed that despite serving the economy well, banks are generally focused on distribution
at the expense of understanding the needs of their customers. The growing fears of recession
may be reflected in how banks deal with their customers. It can be argued that a banks
relationship with a customer is driven both by the current macroeconomic outlook and by the
banks assessment of the impact of recession on the customers business.

7.1 Strong Power Base

The big banks in India provide about 75% of domestic lending, and as such enjoy even
greater power than their counterparts.

7.2 A Key Element

In conclusion, relationship banking is the key to successful banking. The bank gains a better
knowledge of the customer, the business and their needs. The customer enjoys a partnership
with their bank, allowing both sides to manage issues in good times and bad. Despite
technological advances and change, banking remains a people business, and the successful
committed interaction of people is the foundation of true relationship banking.

Chapter 8
20

CRM IN FINANCIAL SERVICES SECTOR

CRM is one of the primary initiatives in any industry and more so in financial industry
sector, where competitive pressures from both financial and non-financial services are
fueling the movement toward CRM as the companies are systematically raiding a banks
territory to pick-off the most profitable customers. Thus, one has to begin with a
financial institutions strategic goals, develop a consistent technology platform that is
scalable and support across delivery channels, train people at all levels and incorporate
a customer-centric approach to every customer interaction. This article gives an overall
picture of CRM with reference to financial service industry.

8.1 Defining CRM

One of the greatest problems with CRM is what it means. The whole CRM concept means
different people, depending on what they want to do, says Jimmy Sawyers, consultant,
Reynolds, Bone & Griesbeck, Memphis, TN.

Financial services that are transaction based, such as credit card companies or bill
payment providers, want to manage the customer relationship to drive up transaction
volumes and squeeze out expenses from individual transactions. One customer
generally has one account and it doesnt matter if others within the same household
have accounts.

Consultative financial services, such as investment advisors and financial planners,

use CRM to deepen the trust the customer has in the service provider in order to
increase the fees for services. These companies earn fees regardless of the number of
transactions the customer makes.

Retail oriented financial institution defines CRM as a combination of the two

extremes- managing the entire customer relationship in order to reduce costs and
increase the depth of the relationship with the customer.

21

8.2 The Evolution of CRM & The Challenges of Personalized E-Support

Historically, customer relationship management has been the specialty of community
banks. Bank management came from the community. Bankers knew their customers, their
families, and their businesses. Lending decisions were based as much on good payment
histories as on good standing in the community. Customers gave all their business to one
bank, appreciating the good services they receive as a reward for their loyalty.
8.3 Customer Support A historical perspective
The Customer is King. This mantra, although used for a long time, has not been put into
practice until recently. Forget the ideology of royal treatment; customers were not even treated
with dignity by most organizations. As recently as the 1970s and 80s, the concept of customer
support meant that organizations were doing a favor by answering a few questions for the
customer on the phone after putting them on hold for an hour! Standing in line to buy something
was common and expected
8.4 Evolution of Customer Relationship Management
The genesis of CRM (Customer Relationship Management) lies in Sales Force
Automation (SFA) tools. Companies like Siebel and Vantive (now part of PeopleSoft) took the
early lead by introducing tools to help the sales personnel become more efficient in tracking their
customers. There were also a few problem-tracking tools for help desk such as Remedy. As
companies focused more on customer relationships, additional applications emerged in areas of
customer support, field support, and marketing automation.

8.5 Current CRM and E-support Environment

There are currently over 200 CRM software vendors and the number continues to grow.

22

Although, there are various types of applications included in CRM suites, as described earlier, the
core application within the CRM landscape that truly builds customer relationships is the
customer service application. Other pieces, though useful, are focused on helping the vendor
rather than the customer.
8.6 The challenges of personalized Enterprise E-Support
While certain aspects of personalization are relatively easy such as allowing customers
to create their own preferences on the Web site the process of providing only customer-specific
information, especially to enterprise customers is challenging. These challenges include:
Relevant information: One major issue that most organizations face is finding information
pertaining to each customer. Most often, this information is buried in disparate databases and
extraction of relevant information at a customer level is a Herculean task.
Information Updates: As the information is constantly evolving, continuous updating for
customers reference is required. In most cases, information is updated on an ad-hoc or periodic
basis resulting in delayed and inaccurate information and high overhead costs of updating the
information.
Publishing of information: Since the information resides in various diversified
functions within an enterprise, publishing of information is a major problem. Traditionally,
publishing was restricted to certain IT professionals and business users who typically forward
their documents to these IT groups for publishing on the Web. This approach is not only
bureaucratic, and expensive but also excludes a wealth of tacit and explicit knowledge that never
gets published due to lack of tools.
Personalized Applications: Some vendors offer personalized portals based on custom profiles
created by users. Although these models work for the consumer level user, they do
not provide value for enterprise customers. It puts the burden on users to define in what
information is more relevant versus not. Business customers need an autonomous environment
can all their users interface with the vendor enterprise and get the relevant information quickly

23

Communication: A relationship is based on two-way communication. Most esupport

and relationship portal solutions are designed for enterprises to communicate to the user.
A critical challenge is to enable a process where business customers are able to truly interact with
the vendors, beyond the usual e-mail and phone options.
Security: Security continues to be a major issue for organizations especially for -based support.
User authentication and management can be a nightmare for vendors trying to
manage thousands of users coming from diverse locations.
8.7 Overview More than just E-Support
As competition intensifies, organizations need to increase their focus on enterprise customer
relationships. An urgent need exists for solutions that enable enterprises to manage
relationships with their key customers on a personalized basis. Most of the current solutions fall
short in providing a truly scalable model, where customers receive an autonomous and
personalized environment for their support needs over the Web.
Each customer gets their own personalized Weblet, with real-time information that pertains only
to them. Customers are able to get specific and relevant information -quickly and easily - to
resolve any problems or issues without going through numerous steps or phoning the call-center.
Enterprises cut their costs by drastically reducing the number of calls into the call-center. Since
these Weblets allow bi-directional communication, customers can give instant feedback to the
enterprise. The solution is not just about providing support on the Web. Its about managing
relationships with key customers.

Chapter 9
24

CUSTOMERS WANT- BIG FACTOR

9.1 Ten Myths About the Customers
To become customer centered and customer preferred, a firm must change its orientation and
design its business capabilities, infrastructure, and measures of success from the outside-in by
using the customers' perspective. There are several real issues to overcome to do that. The
first is that a firm's current beliefs about its customers tend to drive its policies, decision
making, and not only what its employees do with customers, but also what they don't do. This
becomes so embedded that firms practice this without realizing it, and thus resulting in a great
resistance to new ideas about customers when the old ideas are so heavily ingrained.
9.2 Retail Bank: Let's Ask the Customers
At one of the largest, most successful banks in India, in a survey,there were in a quandary
because tens of millions of rupees had been expended on telephone contact centers, yet the
volume of calls was growing at such a rate that the capacity of that relatively new equipment
would be exceeded in a year or so.
"Who's going to tell him?" asked one executive, referring to their CEO. No one made eye
contact. Some examined the ceiling tiles, while other execs scrutinized their feet, apparently
concerned that some shoelaces might be loose and in need of tying.
The silence grew heavy. Ultimately, as an outsider, I felt it was okay to fill the void and speak.
Ten common myths about your customers.
Myth 1: Customers want the lowest priceperiod.
A powerful concept to remember is that a product or service offering is rarely a commodity
that can only be differentiated by price. The fact is that the savvy business can differentiate
even a roll of steel, arguably one of the most rock-solid examples of a commodity.
Myth 2: We know what our customers want (or don't want).
25

Perhaps the greatest inhibitor to go beyond "Have a nice day" service platitudes is the belief
within a firm that its prior history and years of experience result in perfect knowledge of what
customers want and do not want.
Myth 3: Customers cannot envision what does not exist; focus groups are a waste of
money and, besides, no Sony customer ever envisioned the Walkman.
This wonderful myth is born from many firms expending great sums on research, and sitting
for hours behind one-way mirrors watching ineffective focus groups that yield little of value.
Anything, done the wrong way, can be disappointing and ineffective, including focus groups.
Myth 4: Customers do not want to be telephoned at homealways.
As the banking client learned, it is unwise to project ones own personal prejudices, likes, and
dislikes onto the customers. In fact, customers in visioning workshops for many different
industries have stated that the primary problem with being contacted at home is that it is
almost always by a blanket marketing program and not targeted to their specific interests.
Myth 5: Customers do not want to be sold to, when they telephone for service.
This is a common misconception resulting in missed opportunities in all industries to provide
great customer value during touch-point interactions.
As with all these items, there is both opportunity and risk involved. The risk with this one is
twofold:

Myth 6: Customers do not want to give us information about themselves.

In today's world there are well-publicized and growing public concerns regarding the use of
personal information. These include, but are certainly not limited to, real issues of invasion of
privacy, breach of confidentiality, identity theft, and plain old irritation at being contacted by
someone who has obtained one's phone number, postal address, or Internet address.

26

Myth 7: Customers who call hate to be transferred.

While this statement appears to be intuitively correct, the reality is actually counter-intuitive
and it depends on why they are calling. If a customer contacts for general information
regarding your business, products, prices, and so on, they may well expect to get an answer
from their first point of contact.
Myth 8: An apology is never enough (so we don't do it).
A common myth that drives the behavior of customer-facing employees is: Our customers
don't want an apology; they only want some form of personal compensation or concession for
mistakes. In many businesses that myth is not only accepted, culturally, but it is an actual
business practice to never admit or take responsibility.
Myth 9: Our customers and their needs are unique.
Another common misconception is that customer needs for a given firm, industry, or
geography are unique and quite different from those of other firms, industries, or geographies.
Virtually everyone needs responsive service, and easy, timely access to their vendors,
irrespective of industry.
Myth 10: We know what our customers need (not want . . . need).
This myth or misunderstanding is tightly linked to discussions that firms founded on their
own internal expertise and product knowledge often continue to believe that, due to their
product expertise, they are the experts on what customers need. This is quite different from
the issue of what customers want. It assumes that product expertise equates to also knowing
what is best for the customer.

What Customers Want

9.3 Five "Doing-Areas"

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We can categorize what customers want to do on the Web under five "doing areas," as
follows:
1. Evaluate competing businesses and products.
2. Select products and transact with e-service providers.
3. Get help.
4. Provide feedback.
5. Stay tuned in as e-customers.
These five areas are all important. Customers will operate in one area more than another at a
given point in time, depending on where they are at with what they're trying to do. We can
think of the five areas as a rough progression, from evaluating businesses and products to
becoming customers to receiving after-sales support and information
1. EVALUATE COMPETING BUSINESS AND PRODUCTS
Customers have to decide between businesses and products. Web sites are a part of that
decision-making process.
When deciding among businesses, customers will either actively or passively get information
from a company's Web site. Customers want to make sure they like a company enough to do
business with them. Customers are more likely to actively search for, and evaluate,
information on a company when they are new to the market for a product.
2. SELECT PRODUCTS AND TRANSACT WITH E-SERVICE PROVIDERS
Customers are faced with a lot of choices when they go to a Web site. They will make
selections to personalize their experience and the services and products they receive. That
selection will comprise the choices they make to get around your site and identification of the
things that they want or that particularly interest them. This may involve choosing a particular
product there and then or setting themselves up to receive information and services later.
3.GET HELP

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Customers may seek help at different times, as part of their evaluation process or after they
have made a selection and transacted. Customers will also seek out help on different levels:
getting around the site, evaluating what is best for them, and getting the best out of something,
and solving a particular problem.
Customers will interact with your site to:

Work out how to use your site. Customers want to learn how to get around and
optimize the use of your site as quickly and easily as possible.

Find out how something works once they have it.

Resolve a problem online.

Find out where to go, or whom to talk to, if they have a problem that can't be easily
resolved online.

4. PROVIDE FEEDBACK
Customers will provide feedback. This may be voluntarily provided by e-customers
(unprompted) or solicited (prompted).
Customers sometimes want to provide feedback on an experience they've had with you, either
on your Web site, or in general. A Web site provides a medium where people can have a good
moan without having to talk to someone in person.
5. STAY TUNED IN AS E-CUSTOMERS
The level of day-to-day involvement e-customers have with businesses as e-service providers
will determine how much they want to "tune in" to their Web site. For example, a bank's
customer is more likely to want to use a Web site for frequent transactions than a computer
supplier's customer who may only purchase once a year.
9.4 Seventeen Customer Directives- evolution of E- CRM

29

When we get in the way of what customers want to do on the Web, they get frustrated. What
they want to do will comprise getting around a site and making use of the content and
functionality it offers.
There are some complaints, or requests, in relation to a whole range of Web sites and
industries. Customers don't know all the marketing and business reasons behind the way a
business has done things, they just know what they want it to do, and they'll state it in simple
terms they understand.
1. It should Be Worth the Wait
Everything we offer on the Web is subject to higher expectations because customers have to
wait for it.
On the Internet we have to wait for things to download; that's a given. Slow download speed
is still rated by customers as the biggest negative in their experience of the Web, but they live
with it.
2. What Customers Get If They Do This
Web sites can't show everything all on one level. It's just physically impossible. We have to
put different information on different levels and give customers paths to navigate their way
through it.
Customers need to make an informed decision of whether or not it is worth their while to head
down a particular path or partake in a particular process. The more we can tell customers
about the consequences of their actions, the better. And "telling" a customer what's going to
happen, or is happening, will involve written and visual cues.
3. Blind Registration
Sometimes customers want to be anonymous and sometimes they want you to know exactly
who they are. Customers use their anonymity as a basis for getting impartial advice and

30

information without any sales pressure. This tends to be early in the process when a customer
is evaluating alternatives.
4. Customers have to use what is generally given
If you ask customers for information, they expect you to use it in some way. This applies to
information that returns a response then and there, as well as later on.
If customers are using functionality, such as a calculator, or a drop-down menu, to create
outcomes from different scenarios or selections, they expect the information they enter to
directly affect the outcome. Customers get frustrated when they enter information and it
doesn't change the outcome.
5. Customers expect to be given more
Because Web sites are not the only medium that customers have to find out about companies
and their products, they expect Web sites to "make sense" in relation to all of the dealings and
exposure they have with a company.
Customers expect businesses to tell them more than what they already know, not repeat
everything they've already been told without offering anything new. It also sticks out like a
sore thumb when known parts of the business or product offerings are obviously excluded
from the Web site.
6. Customers make Comparison
Customers evaluate products and services against each other; those products may be offered
by one company or across companies. Customers also want to compare the value of the
different information offerings on your Web site.
7. Customers make Decision by analyzing the Facts
Customers are likely to feel like they're being subjected to a hard sell if they do not have
sufficient information before being faced with a decision or an invitation to purchase. There

31

will be some fundamental information that a customer wants before deciding whether to
purchase. The nature of these fundamentals will depend on the service being offered.
8. Customers want business to know their Needs
Customers make brilliant and smart use of the Web, only to find them ambivalent toward it
(or, when too much liberty is seen to be taken; disdainful. Everyone is limited in their
knowledge of the customers, one way or another. The better we know our customers, the more
we can directly address their needs.
9. Doing Area For Customers
Some Web sites just don't allow customers to do the things they need to do as customers. The
things they want to do are likely to fall into one of the five "doing areas" identified earlier.
One of the most common areas of customer frustration is not being given access to people
within a company.
10. Customers Frustration
Customers get frustrated when a Web site leads them down a path to a product and then they
can't get it. Either the Web site does not give them the option to select or purchase, or they
have to go through some convoluted process to end up doing something other than purchasing
it.

11. Help Customers Navigate

Given that we have to create layers of information, and paths through them, we need to
provide signposts that show customers where they're going. We need to help customers

32

navigate. When a Web designer designs a navigation system, they are designing a system of
visual cues that helps customers find their way around a Web site.
12. Privacy
Some Web sites offer different access to different users. In other words, some customers can
get at some information while others can't. The users who can get at this privileged
information will have to identify, or authenticate, themselves to gain access. Customers don't
always react positively to this, wondering what lies behind those magic doors and why they
can't get at it too.
13. Should Not Limit Customers Choices
Poor navigation will, of course, restrict the choices customers have because they won't be able
to make the appropriate selections to get to where they need to go. The broader issue of
navigation aside, we will look at some specific instances where customers are directly offered
choices and where those tend to be problematic.
14. Relevant Details
Many customers seem to hate scrolling, and scrolling, and scrolling, to get at a company's
information. Customers get angry, in fact, when they feel like they're drowning in your
information. They expect to receive information in chunks they can digest, and quite often,
they'll even suggest what those chunks might be. For example, in the case of product pages,
customers prefer to see links to product information within the page so they can go straight to
the part of the page they are most interested in without having to scroll through all of the other
information available.
15. Give what is genuine to a customer
Customers often feel that a site over-promises and under-delivers. In some ways this is almost
unavoidable given that we can't always do everything customers want online. However, we

33

would manage customer expectations, and stave off disappointment, much better if we called
a spade "a spade"; i.e., called things exactly what they are.
"Too clever" is what many customers would call fancy, and often misleading, labeling on a
Web site. "Just tell me what it is," they would say, "straight up." In addition, there are a lot of
labels that have taken on a certain meaning in the Web world.
16. Should Be innovative
Customers get very frustrated when they're transacting with you and you don't tell them the
information you need them to provide, or the format that you need it provided in. They can
waste a lot of time going backward and forward, "correcting things," to get a transaction
accepted.
17. Do not Ignore Important Relationships
Web sites are only one part of customers' relationships with a business. Some customers have
very important personal relationships with the people inside. Customers often expect these
relationships to carry over to the Web, particularly in a business-to-business environment,
where customers will expect to have access to someone like their account manager.

Chapter 10
BENEFITS OF IMPLEMENTING CRM

34

Customer relationship management is meant to shore up less than adequate efforts in the past
at understanding who your most profitable customers are. This means creating a profile of
desirable customers, developing marketing and sales campaigns to reach those prospects, and
maintaining your best customers to increase the lifetime value of the relationship.
In short, CRM should provide the benefits of:

Selling to your best prospects, and

Retaining your best customers for

Improving the profitability of your institution.

Warnings and Pitfalls

In todays CRM environment, there is a danger we see with multiple vendors offering systems
built on relational database technology and touting theirs as the one customer relationship
management tool you need. Because most new banking applications are being developed with
a database that aggregates customer data, a data mart, these vendors are jumping on the
CRM bandwagon. The problem will come when you have implemented multiple CRM data
marts to handle various applications, and then find you cannot reconcile the data in each
database. It will be better to implement a single CRM system first and then hang multiple
applications off the core database.

PRINCIPLES OF SERVICE IN BANKING

1. By satisfying the clients business objectives a bank can satisfy their own professional
and personal objectives.

35

2. Every bank wants their client to regard the organization as their partner of choice time
after time.
3. Satisfied customers/clients become engaged clients when they trust the bank the are
linked with and feel a sense of pride through an association with it.
4. Engaged clients form a significant source of continued and improved growth.
5. An engaged client will actively sell the banks product and services to others.
6. Engaged client forms a sound commercial foundation for the existing bank.
7. Dont keep good news to yourself-inform the client of every success.
8. Give every customer a reason to trust the bank.
9. Do what you said; you could do it, when you said you would do it.
10. Take personal ownership& responsibility for keeping the client informed of progress
in any matter they have raised.

Chapter 11
FINDINGS & CONCLUSION
36

The main objective of the report has been to assess the current state of the CRM development
within Indian credit institutions and to evaluate its organizational impacts.
The study has identified issues that need to be assessed if CRM is to be used more
productively to take advantage of new opportunities.
STEPS THAT BANKERS CAN FOLLOW TO BULID UP

LONG TERM

RELATIONSHIP WITH THEIR CUSTOMERS:

WELCOME CALL

PROFILE SHEET

BANK CUSTOMER INTERACTION DETAIL FILE

APPOINTMENT DIARY

IMPORTANT DATES TRACK ALARM

CRM should be viewed neither as a new competitive tool nor as a cluster of technologies, but
rather as a set of business processes that help manage client credit institutions relationships
and improve internal credit institutions workflow. CRM in fact, is a process that helps to
maximize medium to long term profits as a result of a better customer knowledge, customized
treatment of customers or a perception of it, and improved fulfillment of customer needs.
These goals can be better reached by adoption of enabling ICTs. Ideally, an effective CRM
project needs to be very well integrated in the credit institution organization.
Implementing a CRM process means gathering flows of information concerning actual and
potential customers. Information flows coming from delivery channels should ideally be
consolidated into a customer database in order to develop customer profiles that enable banks
to improve customer services CRM based on ICT can strengthen the marketing strategy of the
financial organization by making more effective the management of all the information
concerning customers.

37

The exploitation of CRM appears to have a positive impact on the quality and quantity of
information conveyed to customers. This is particularly relevant for the most sophisticated
customers, i.e. those who are used to dealing with new technological tools and are not afraid
of interacting with the bank through the telematics channels. Nevertheless, distant interaction
is not as effective as personal interaction between customers and their bank. Therefore,
according to almost all of the bank representatives, e-business supports low value information
needs, while more sophisticated requests for information can be addressed only through
personal interaction between the bank and the customer that usually takes place at the branch.
Almost all the credit institutions have adopted the strategy of launching their e-business
services as an additional service rather than as an alternative to offline services. The impact of
e-business in banks is being limited by their strategic decision not to cannibalize their
branches. This research highlights how some of the credit institutions which had originally
invested only in the development of a virtual channel had to drastically re-define their
customers or by opening a call centre. The credit institutions representatives argued that their
customers want a choice of channels and they are adopting a multi-channel strategy. Most of
the banks consider that since Internet and telephone are most useful for managing operational
and low value added tasks, the traditional delivery structure still has a fundamental role and
can be developed to specialize in high added value tasks and consultancy services.
Most financial suppliers believe that customer support services are a core business in the
financial industry. Most of the financial organizations choose to internalize the customer
support contact center, whereas others choose to outsource front-office customer care tasks to
contact centre companies. But the final elaboration of data on customers and their exploitation
for CRM strategy is maintained in house and involves the bank management personnel.
The customer retention is the result of an increasing degree of product personalization and
differentiation. Credit institutions apparently prefer to compete on quality (product
information, broader range of product and services) rather than on price (meant as product
acquisition cost to the customer: price, mode of payment, delivery). Therefore product

38

innovation (cross-selling, product differentiation and personalization) seems to be the crucial

issue of the CRM strategy.
Financial institutions have to realize the importance of the technology scalability as well as
the reengineering of the business processes.
A medium to long term CRM strategy requires significant innovation in the organization of
the banks flow of information.
Ideally, CRM technologies and processes could make the slogan the right customer with the
right product at right place and in the right moment possible.
But many banks face the problem of having multiple database with customer information, so
that multiple entries refer to the same customer if he/she holds more than one product with the
company. This makes it difficult for sales people or relationship managers to have a full view
of their customers. A number of CRM deployments have failed because of inconsistent
customer data. This problem results in companies sending, for example, the same offer twice
to the same customer.
Hence CRM is a vital tool for financial institution to prosper.

Chapter 12
References
39

Gandy A.,2001, Customer first- A study of customer relationship management

strategies in Indian financial services Financial World Publishing: London

Boston Consulting Group, 2001, Active and integrate: optimizing the value of on-line
banking

Assessing the impact of e-business on Indian financial services, by Vikram T.Lund JP

Morgan Equity Research (2001)

Assessing the impact of e-business on Indian retail financial services.WEBM Global

Services

Sato S.J. Hawkins and A. Berenstein (2001) E-finance: recent developments and
policy implications

www.databank.it/star

www.google.com/CRM in Indian Financial Industry

www.vivisimo.com/CRM in Indian Financial Industry

Changing paradigms in Commerce, Management and Technology

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41