CRM: Past, Present and Future

The last six years of the customer relationship management (CRM) market have been a near perfect expression of the Gartner Hype Cycle. This model charts the explosive popularity of any new technology, followed by a precipitous decline as companies adopt it and realize its limitations and ultimately a gradual rise in popularity again as mainstream companies begin to understand its true value. Fundamental technologies like Java and XML can experience the complete roller coaster ride in less than a year. Applications of enterprise scope, like ERP and CRM, often take a ride that lasts several years. In the case of enterprise CRM software, there are a number of potential dates for the official beginning of the Hype Cycle. Siebel Systems initial public offering in June 1996 is a logical date.

Enterprise CRM: Remember dot-coms? In the late 1990s they were going to demolish brick and mortar business. For each traditional business model there was a category killer that would redefine the economics of the market and drive every existing company out of business. Such was the gestalt of the last decade. The Internet land rush had a number of important impacts on the CRM market: It added an additional customer channel to traditional businesses It made the call center a key point of coordination among these channels It provided a new set of technologies to supplant client/server It shifted the balance of power from corporate IT organizations to software

vendors and systems integrators.The challenge was that very few corporate IT departments had staff trained in Internet technology.Those that were competent were difficult to retain as dot-coms, systems integrators and technology Enterprise CRM: This year, the CRM market has shifted again. Success rates are up dramatically as more companies take a multi-generation and best practice approach to their initiatives. Success or failure is now being determined much more quickly, and adjustments made before large expenditures are committed. Many CRM initiatives are integrated with Web sites and operational systems. For companies that have successfully passed through the first two stages, however, challenges remain. Be careful what you wish for, you may get it: this has certainly become true with customer information. The amount of data residing in marketing, sales and service repositories has proliferated wildly. This operational and often real-time data is a treasure trove of information not just about customer aspirations, but their actual behavior. Understanding this data and having it inform live interaction with customers, and longer-term business planning is still a mostly unmet promise of CRM. Customer analytics, broadly defined, have become the new focal point of customer initiatives worldwide. This new generation of software is not your fathers analytics. The batch process of analyzing static data in a warehouse or data mart, is being replaced by immediate analysis at the customer point of contact. As a result, analytical software is being pushed out into the channel and developing a higher degree of immediacy. The creation of one-to-one customer relationships that span multiple channels has become

a new design center of CRM initiatives at least in theory. As always, reality lags aspiration One area that is already a reality is the adoption of CRM software packages pre-customized for vertical markets. As companies move away from highly customized implementation projects, vertical packages offer an excellent alternative. The top CRM companies now offer products customized for manufacturing, banking, insurance, communications and a host of others. The amount of added value in these vertical products is increasing rapidly, and they have already become the direction of choice for most companies in the covered market segments. The migration from the horizontal to vertical has been rapid since the introduction of Web-based architectures. In the client/server days, there was often a significant time lag between introduction of the software providers base product and vertical versions of the software. Companies that wanted the latest technology and minimal customization had a serious trade off to make. With server-based architectures the time lag has declined so that horizontal and vertical products are released in tandem. As the year ends, there is a new Big Three in enterprise CRM with potentially the most important competitor standing in the doorway. Siebel, SAP and Oracle have established leadership positions in the market. Siebel remains the undisputed leader, but the other two companies are doing well in their large installed bases. This fact creates an interesting choice for many companies. Is it better to standardize on one enterprise software vendor like Oracle or SAP across the company to automate the complete value chain, or select a best-of-breed product in each major area? Unless,

or until Siebel and the other CRM specialists acquire a back-office product line, this decision will be a difficult one. Each functional group within the company wants the best application to do its job, but there are potentially financial and technical benefits in standardizing of a single vendor. Today, specialist CRM packages are more functionally rich, vertically oriented and better integrated than products that are modules in a broader enterprise software solution. On a standalone basis, they set the current competitive standard. Whether this remains true is certainly debatable. Outside this decision process for the moment, lies Microsofts recent foray into application software with its acquisition of Great Plains Software and the first rollout of a new MS CRM suite. The Microsoft strategy is clearly to target the small (your local florist) and medium (your local factory) size businesses with a set of software easily integrated with existing Windows, email, Web services and development tools. This year at least, Microsoft, is not a player in the CRM market. CRM in private banking sector : 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. However, there is more to Customer Relationship Management (CRM) than just managing customers and analysing their behaviours. Banks are well aware that their success is predominantly dependent on the CRM strategies adopted by them. Service providers have recognised that good CRM bonds customers with the organisation for a longer term, resulting in increased revenues. With customers expectations becoming even more competitive, banks are coming up with a wide array of novel products and services every day. The challenge is for the banks to work towards ensuring that customers prefer their products and services over that of competing brands. The key to develop and nurture a close relationship with customers is by appreciating their needs and preferences and catering to their requirements. Leveraging on IT, to appropriately analyse and understand the needs of existing customers better, to ensure customer satisfaction, and exploring the possibility of cross-selling products to gain a competitive advantage are the other issues drawing attention and interest. With the opening up of the economy, a number of private sector banks have joined the fray and are offering a plethora of products and services- rechristening themselves as Financial Boutiques. Knowledge dissemination has been propelled by electronic and mass media campaigns. Todays knowledgeable consumer is challenging the Indian retail banking industry to redefine itself. Thus in this current competitive scenario, for a bank to survive competition, succeed and make profit, there is hardly any option but to learn from and actively respond to consumers needs. Banks offering retail products need to reorient their strategy from a productcentric to a customer-centric approach to attract and retain High Net Worth Individuals (HNI) and profitable customers as well. The battle of the banks, for gaining a greater slice of the market share, is taking on a new dimension. In the current falling interest rate scenario, banks are finding it increasingly difficult to meet the high growth expectations. In order to bolster their top lines, banks are in pursuit of newer ways and means of achieving organic growth through strategies that enable acquisition of new customers and retaining the loyalty of the existing customers. Success of a banks strategy towards customer acquisition will depend on its ability to develop customer insights and translate these into effective operating models. Ensuring a good customer experience at every customer touch point is the cornerstone of a successful growth strategy. A good customer experience will drive customer acquisition and promote customer retention, which translates into increased profits. This, in other words, is the hallmark of a successful CRM strategy. Emphasis on CRM arises on account of

the challenges confronting retail managers managing to sustain and achieve growth and profits. Bankers are conscious of the relative costs of acquiring new customers. As top management emphasizes on delivering results, most bankers resort to customer grabbing, rather that customer cultivation and creation, with the result that customer churn is the call of the day. Incidentally, bankers are fully aware that losing the existing customer and acquiring new customers is an expensive affair. Moreover, it acts as a drain on the existing resources of the bank, which can be better employed for growth initiatives. Therefore, the challenge for the banks is to retain and deepen the profitability of the existing customer relationships, which is borne out by Nat Wests success. With the shift from a transaction-centric to a relationship-centric business approach, leveraging CRM has become sine qua non. Banks are adopting CRM to converge people, process and products more effectively to embark on the true relationship banking with the end result of accelerating the business momentum. Towards this end, experts propose various ideas and approaches to understand the fundamental marketing motivations driving the CRM trend in banks. To meet the challenging preferences of the customers and to stay ahead of competitors, bankers are bound to attract customers by providing a spectrum of services. Online banking, ATM banking and telebanking are just a few of them. Banks can enhance customer service by leveraging on technology, maintenance of efficient service delivery standards and business process reengineering. On their part, employees need to demonstrate certain service traits such as, putting on pleasing attire. At the end of the day, bankers should display a flair for cultivating a good relationship with customers through the mechanism of better customer service. Having understood the significance, it is prudent to plan for CRM in retail banks. To a large extent, the success of a CRM plan is dependent on the choice of the software. Towards this end, bankers should identify domain enterprise, credibility in the market, cost implementation and relationship with the vendor as factors on which vendor selection is based. The domains of software systems, multiply product database and tracking require specific CRM focus. Besides understanding the requirements for CRM implementations such as, the setting up of a CRM cell and conducting surveys at a periodic intervals to track their effectiveness, banks need to understand how CRM assists them n customer identification, acquisition and retention. As a part of the planning process, frontline executives in banks should thoroughly understand their organisational structure, infrastructure, as well as the product environment. In this context, the management initiatives for CRM assume importance. A top-down CRM focused approach that starts with the top

management, percolating and permeating to all levels of the CRM is a necessity in the present business scenario. Initiatives, such as, introducing CRM audit by independent teams to identify the existing lacunae, and plugging the loopholes in the CRM strategy as per the recommendations of the audit report, are required to be adopted by the banks for reaping benefits. It is observed that banks lose their best clients to competitors due to a variety of reasons. The rationale behind losing their best clients to other service providers such as non-brokerage houses and mutual fund houses needs to be analysed by banks. Experts opine that inefficient and improper service is one major reason. The remedies suggested by them are that banks should adopt customer relationship building approaches such as responding to complaints instantaneously, analyzing the attrition of the clients in a particular product, and rating of services across the network of branches, and the creation of a suggestion box to elicit the views and suggestion of their employees. Another dimension of the relationship building exercise is to obtain an electronic feedback from customers to understand the level of acceptance of existing products, which will facilitates in developing better products. Banks can gain a competitive advantage from CRM by becoming low-cost players in the market, achieving operational efficiency and maintaining customer loyalty. The ability to predict the products that customers are likely to purchase over a period of time, increased productivity of managerial executives, sales and customer service staff, and streamlining of business processes are some of the benefits retail banks obtain by taking to successful management of their customer relationships. Implementing the right CRM tools can enhance customer satisfaction leading to business growth. CRM enables organisations to motivate customers to initiate revenue-generating contacts. Several CRM issues such as, its effectiveness, application and challenges draw attention of the banking industry. Having witnessed the manner in which several global banks have benefited through CRM, the Indian retail banks too need to focus on and continuously invest in the customer relationship activities. The Indian banking scenario, which is still at an embryonic stage as far as the CRM domain is considered, needs to strive towards CRM implementation to meet the emerging demands of universal banking.

Innovations in Customer Services in Indian Banking Sector SharSatisfied customers are the best guarantee for the stability and growth. Customers will be satisfied only when the banks provide the customized and innovative products and services at responsible cost. This article focuses on the

kind of services provided by developed countries and level of innovative services provided by Indian banks. Many innovative services are currently available from Indian banks like E-Banking, ATMs, Anywhere Banking etc., but there is a wast6 scope of improvement. Globalization, the buzzword, which engulfed all the nations of the world since the beginning of the last decade of the past millennium, did not leave the banking industry untouched. The opening of the world trade has brought out several changes in the global banking map. The continuing evolution of the banking and financial market has created opportunities both for providers and for users of financial products and this evolution have proven beneficial to the economy. However, innovations in financial products also have given rise to some new challenges for market participants and their supervisors in the areas of corporate governance and compliance. The changes that are taken place in the last decade demonstrate again the technical weakness and weak corporate governance at a few firms can dramatically change the cost of capital and impose additional regulatory burden on even well managed organizations. Technological innovation has helped in overcoming any such problems. There was a time when we used to hear that duplicate share certificates were flooding the market and large amount of money was being embezzled. Now with demat accounts this risk is taken off. Lets see the currently booming plastic card market. In India the growth is not that phenomenal but among the emerging economies, India is picking well. Technology is rapidly transforming the banking industry- and expanding its ability to reach the unbanked. Employers in the developed countries are turning increasingly to electronic payroll cards as a cost-effective way to reduce the burden of writing and processing checks. Consumers are using their payroll cards and other versions of prepaid debit card- also know as stored value cards- as a substitute for cash and checking accounts. Monitoring this trend, the American Bankers Association reported last December that in 2003, for the first time, electronic payments surpassed cash and chques as consumers preferred payment method for in store purchases- an evolution of payment behavior, the ABA noted, driven by the increasing popularity of debit cards. In a country like America, Debit cards accounted for nearly one-third (31%) of instore purchases in 2003, up from 21% only four years ago. Reliance on credit cards held steady during that time, at about 21%. Cash and checks, which accounted for

57% of in-store purchases in 1999, dropped to about 47% last year. In India, if we see then, people still prefer to pay by cash. The reason behind this mindset is safety for money. Still we are far behind in terms of Internet security and E-money security. Coming across through the performance of Banking Institutions of the west and seeing their performance in the use of innovative methods to make themselves more customer-friendly we would have no doubts about their strong banking mailorder company L.L. Bean, know for its superb order-taking and service delivery systems, as its model for change. A major result of this functional benchmarking was the establishment of a 24-hour customer service center that can not only respond to queries and complaints but also promote and sell the banks products and services. The center even allows customers to open a checking account anytime or negotiate an overdraft at 2 am. The ATM was also reconfigured from mere cash dispenser to a versatile and tireless account executive. The machine can even buy and sell mutual funds. Inspired by LL Bean, Banks published a 50-page catalogue to help customers appreciate and select from its more than 160 financial services. Seafirst Bank in Seattle redefined itself from a retail bank to a retailer and has benchmarked with retailers know for world-class customer service such as fastfood restaurant chains. Insider by these models, one other bank instituted a 5mintue guarantee that says, wait any longer than 5 minutes in line and the bank guarantees $5 to your account. Moreover, if the customer complains of any other inconvenience, he or she gets a $5 Im sorry coupon. Its branch offices have official greeters to greet and guide customers to the right tellers or desks, much like the Guest Relation Officers (GRO) or receptionists of 5-star hotels. The greeter mans a kiosk at the entrance of the bank. To reinforce this service philosophy, branch managers are rated not only on sales but on service goals. Achieving or even exceeding sales targets without achieving customer satisfaction goals will not qualify a branch manager to receive the banks prestigious Gold Club award. Executives from the CEO down are encouraged and expected to visit branches regularly to monitor service and get a first-hand fell of the action. When Seafirst decide to redesign and re-layout its offices to improve services, it acquired the services of an expert from the Godfathers Pizza chain. One result making the teller counter waist-high. It is now more open and personal than the traditional counter that is intimidating and creates a barrier between the client and the teller. Back offices of banks are knows for snail-pace bureaucracy that hampers front line operations and ultimate customer service. By applying the concept of mass production, streamlining, and standardization of tasks, Citicorp aims to remove

this critical bottleneck. The bank also benchmarked with Chrysler in getting its functional departments work effectively as teams. Other banks in the west have, sledded their conversation finance and control images, have likewise adopted innovative service strategies and practices. Many Banks have established an information center or encyclopedia in the waiting lounge. Here customers can browse through various bits and pieces of important service information like the average time to finish a transaction and the companys products and services. Information about the busiest day or days in the branch is displayed so that the customers who want to avoid these periods may do so. Phone lines dedicated to customer service have been installed. Many Indian banks have also adopted some of these systems. Any customer can pick up this phone and relay his or her complains, questions, or difficulties. The facility is designed to represent the companys commitment to services and also serve as the customers last resort in case everything else fails. Similarly, modern day banks have established phone centers to accept, process, and resolve customer complaints. They also have a customer feedback program whereby whoever the customer complaints to, say a staff employee or manager, will be responsible for giving the client feedback on the status and progress of his or her complaint. The banks have customer service centers where they have created two customer flows or lines to deliver services more effectively. One was for loans and similar products that require customized and personalized services. The other was for the standard and repetitive service like deposits and withdrawals. By creating two service environments that cater to two different types of needs, service is enhanced and speeded up. Modern day banks have extended the concept of Mobile Banking. Some banks in the European and American continents have launched floating branches on boats that provide full branch bank services, to the convenience and delight of customers living in longhouses along the river banks. To further enhance service, banks have also reconfigured their Automated Teller Machines to dispense not only cash, but also commodity prices and information about its products and services. The Korean Technology Banking Corporation (KTB) is setting up a Technology Financing Information Center to serve the various needs of its clients, most of which are setting up joint-venture overseas. The centers will contain a huge database of information analyzed from various data from internal and external sources. By accessing this database, clients will get information about specific technologies, local information, and other data relevant to the ventures they are setting up. To facilitate processing, development financial institutions like the

Industrial Development Bank on India requires borrowers to submit loan application forms in electronic floppy disks. Some banks and financial institutions have done such a remarkable job in improving and reinventing customer service that they themselves have become the benchmarks of other companies outside the banking sector. For instance, American Express, the credit card company, is the recognized benchmark to emulate when it comes to improving a companys billing process. Amexs billing is reportedly the fastest and most accurate in the world in any industry. Xerox, the benchmark for many quality practices, used the Amex model in enhancing its billing system. In China, the benchmark for customer service and customer courtesy is surprisingly a bank; The Industrial and Commercial Bank. Hundreds of retail shops and department stores, many of which are known for rude service, visit the banks branches to learn a few lessons on satisfying and delighting customers. Before sweeping changes were made, the Industrial and Commercial Bank was also known for bad service and discourteous front line employees who even swore at clients. One radical and highly effective policy it instituted was coming about with a list of words and phrases their employees were forbidden to use when dealing with customers. For instance, the popular expression, when will you sleep complaining? was included in the banned list. While other banks may refuse to change or accept soiled or old currency notes, the bank will replace these without question. Even clearinghouses have adopted the new service paradigms to support the banks initiatives. For instance, the Singapore clearing House Association has cut the clearing of US $ checks deposited in Singapore from two weeks to 3 days. The new system requires participating banks to open US dollar accounts with Citibank to service their respective clients. Innovation banking in customer service is indeed a welcome and long-waited development. Our Article focused on the kind of services provided by the banks in the developed countries but this is not to deny the fact that the banking sector in India and other developing countries has also started doing up well in terms of providing innovative and modern day banking facilities along with good customer service. We hope that other left out banks and financial institutions will follow suit soon. Satisfied customers are the best guarantee of stability and growth. As in other service sectors, bank customers deserve the very best. In the past, banks have rarely treated customers as people, preferring to treat them as account numbers, passbooks, and loan applications. Customer service, in contrast to customer processing, is a concept whose time has come for the banking industry worldwide.

Therefore, to conclude, the banking sector should start emphasizing on its service part and to implement the concept of CRM in their institutions. Need of Customer Relationship Management (CRM) in Banks Share Retail banking refers to mass-market banking where individual customers typically use banks for services such as savings and current accounts, mortgages, loans (e.g. personal, housing, auto, and educational), debit cards, credit cards, depository services, fixed deposits, investment advisory services (for high net worth individuals) etc. Before Internet era, consumers largely selected their banks based on how convenient the location of banks branches was to their homes or offices. With the advent of new technologies in the business of bank, such as Internet banking and ATMs, now customers can freely chose any bank for their transactions. Thus the customer base of banks has increased, and so has the choices of customers for selecting the banks. This is just the beginning of the story. Due to globalization new generations of private sector banks and many foreign banks have also entered the market and they have brought with them several useful and innovative products. Due to forced competition, public sector banks are also becoming more technology savvy and customer oriented. Thus, Non-traditional competition, market consolidation, new technology, and the proliferation of the Internet are changing the competitive landscape of the retail banking industry. Today retail banking sector is characterized by following: Multiple products (deposits, credit cards, insurance, investments and securities) Multiple channels of distribution (call center, branch, Internet and kiosk) Multiple customer groups (consumer, small business, and corporate) Today, the customers have many expectations from bank such as (i) Service at reduced cost (ii) Service Anytime Anywhere (iii) Personalized Service With increased number of banks, products and services and practically nil switching costs, customers are easily switching banks whenever they find better

services and products. Banks are finding it tough to get new customers and more importantly retain existing customers. According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore banks are now stressing on retaining customers and increasing market share. Needs of a Bank: The banks now need to find out what to sell, whom to sell, when to sell, how to sell and how to be different to increase profitability. Banks need to differentiate themselves by adding value-added service, offerings and building long-term relationships with their customers through more customized products, enhanced value offerings, personalized services and increased accessibility. Banks also need to identify customers and products that would be most profitable and target customers with products that are most appropriate to their needs and serve the customers with greater cost efficiency. Banks also need to find out the avenues for increased customer satisfaction, which leads to increased customer loyalty. This may be explained better from two initiatives bank took in the past: Earlier what drove many bankers to invest in ATMs was the promise of reduced branch cost, since customers would use them instead of a branch to transact business. But what was discovered is that the financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. The value proposition, however, was a significant increase in that intangible called customer satisfaction. The increase in customer satisfaction has translated to loyalty that resulted in higher customer retention and growing franchise value. Bankers invested in Internet banking, believing that the Internet was a lower-cost delivery channel and a way to increase sales. Studies have now shown, however, that the primary value of offering Internet banking services lies in the increased retention of highly valued customer segments. Again customer satisfaction drives the value proposition. Thus, banks need to retain existing customers with enhanced personalized services and products, which best suits their needs and satisfies them the most. Utility of CRM in Banks

Customer Relationship Management (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. Customer Relationship Management (CRM) can help banks in following ways: 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. 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. Marketing Encyclopedia Central repository for products, pricing and competitive information, as well as internal training material, sales presentations, proposal templates and marketing collateral. 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. 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. 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.

Activity Management It helps managers to assign and track the activities of various members. Thus improved transparency leads to improved efficiency. Contact Center It enables customer service agent to provide uniform service across multiple channels such as phone, Internet, email, Fax. 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, email, 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. Enhanced productivity CRM can help in enhanced productivity of customers, partners and employees. 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, MaxTouch, ACC, National Stock Exchange and PepsiCo. And Business Intelligence players hope many more will follow suit.

Limitations of CRM in Baking Sector Customers may not want what they get: A CRM system apart from improving front office operations and customer servicing also helps in coping with many services that do not need manual intervention. These are serviced by channels like IVR, Internet and ATM. Customers can get account information, information on credit

balance, issue instructions for drafts or even transact through these. At the same time there may be a few customers who still prefer the traditional methods of banking. Banks need to be flexible enough to continue to extend the personal touch that such customers prefer. Make changes internally before going for CRM: Many banks have spent a lot of money on CRM, finding it easier to buy CRM technology than to make the major internal changes necessary to really make CRM work for them. Unfortunately for these banks, the software has often failed to deliver. Customer Service Strategies in Banking Sector Share Today, banking sector is seen as a catalyst in economic growth of a country and, lot is expected from the banking fraternity. The recognition of banking, as a tool for all inclusive growth by economists, financial planners, reformist etc has made it an important sector in the Governments planning of economic growth. The banking sector in India is there fore witnessing tremendous changes because of political, social and economic changes that are taking place domestically and internationally. The concept of banking, which was earlier restricted to accepting of deposits from public for the purpose of, has also undergone sea change. Today the banking sector is seen as a vehicle for all inclusive economic growth, social responsibility and equiv-distribution of national resources. Today banks are wooing existing customers, prospective customers by offering new facilities, products, and services in order to retain/increase their base in market. The way the banking has changed, so has the customer changed. The customer of today is not what he was yesterday. Today the customer is more knowledgeable, demanding, analytical and aware of his rights. It is therefore a challenging task before the banking sector to revisit their entire working modules, up gradation of skills, technology, and policies so that they are competent to withstand the international competitive environment in future. All customers from different backgrounds have different expectations. Unless the service standards fit to each persons expectations, he will not be satisfied. Therefore one has to understand each type of customer thoroughly to be able to provide customer specific services. The entire process of customer service is dependent on following. 1. Human resources Any organizations success or failure is the result of success or failure of its employees collectively. Here the employee doesnt mean only the staff working

down the ladder, but also includes people right up to the top. All the functions in an organization are undertaken by humans, whether it is selection of staff, development of product, making software, formulating policies, devising systems, procedures, defining processes, delivery channels, undertaking market studies etc. Humans may be assisted by the technology for arriving at the decisions. In all the functions enumerated above, different departments do the work separately but the same are ultimately linked to each other to achieve the corporate goal. It is just like gears though rotating independently, move the entire structure in the desired direction. If any gear malfunctions, it brings the entire process to halt. Thus the human beings working in an organization are very important. Handling of humans by humans is a very complex job also. The job requirements of HRD are to select, train, develop, deploy, and motivate the human resources in the organization so as to get optimum results for the organization. 2. Products/services Banks do not provide physical goods to its customers. The products which a bank offers are mostly financial products and along with these products also provide other services which are not financial in nature, like safe deposit vaults, Locker facilities etc. In financial products there are basically two types of activities, namely deposit procurement and its deployment profitably. These two activities constitute more than 80% of banking business in all the banks. Deposits: Basic structure of deposit is to attract the customer by offering interest on funds or some facility in lieu of interest. However depending upon the needs of different set of customers various types of deposit schemes are formulated. For example, savings bank accounts are for those who want short term savings with liquidity and to make regular deposits and withdrawals etc. Term deposits are for those who want to invest for longer duration having surplus funds not needed immediately. Some may want savings to grow gradually by contributing smaller amounts at set intervals. The ultimate goal of depositor is to keep his money safely in the bank and be able to use when needed. Like wise there are various combinations of deposit schemes based on liquidity, returns and safety. Advances: Banks, in a similar way deploy deposits by lending to those who need it at a cost in the shape of interest. Here again the products differ depending upon the need of the customer. It may be overdraft facility, working capital finance, term loan, etc for business or personal needs.

Other products/ services: Apart from deposit and advances, banks offer various other facilities/services to their clients, like remittances, investment services, fund management, financial advisory services, tax collections, bill payment services etc. to earn fee based incomes. The flexibility of banks to adopt changing needs and expectation of customers and bring out products/ services to suit customers is an important area in banking services. A robust Research and Development department which can effectively and efficiently bring out newer products/ services based on market feel and futurist visualization of customer preferences is an important aspect in banking services. 3. Processes. Todays customer is short of time and feels uncomfortable when the process involved in getting the product or service is lengthy and cumbersome. The customer wants very simple processes to get his work done. The processes for any product or service should be at the minimum and at one go. Frequent back references and repeated information and excessive documentation dissatisfy the customer. The processes devised for getting the services should be very customer friendly, easy to understand and complete. The forms, applications, documents should be simple, easy to understand with proper column and space to write. Sometimes it is observed that the space provided for writing is very small. The quality of paper, the font size and the language should be proper. 4. Delivery channels. Customer satisfaction is also dependent upon the delivery channels used by banks in providing the services. Todays customer wants effortless, efficient, secure, simple and dependable channels of delivery, whether it is through humans or technology driven channels. To quote an example, suppose a customer uses internet banking and made a third party payment. He would like to know what happened to his payment instructions. He should be able to track the payment on line till it reaches the beneficiaries account. If this facility is not available, he may not be comfortable with the internet banking. Another thing mostly observed in Public sector banks is that their websites are not updated regularly and navigation is very tardy. The forms/ applications are scanned and can not be filled on line. The information/ forms etc. are outdated and not properly tagged. 5. Customer feedback and complaints. Feed back from customers is of immense help in formulating products, fine tune services and plug the loopholes. However most of the time, feed backs are generally not available and public sector banks are normally not enthused about taking feed back on their services. Rather wherever a customer gives his feedback (read complaint), it is not taken in right spirit by the bank/ concerned staff. Instead of looking into the real cause an effort is made to provide alibis or blame the staff.

It may be possible that that the procedure itself is the cause of complaint or it is because of reasons which are not under control of the branch. Customers may be of three types. One type of customer never complains and continues the relationship. Second type of customer does not complain but changes the bank silently and third type of customer complains. First and second type of customers does not give an opportunity to bank to improve upon its services. Third type of customer however gives opportunity to the bank to improve the service though he may not be preferred over the other two types of customers. Today no bank is willing to accept complaints from the customers and normally effort is made to somehow get the complaint withdrawn or resolved without analyzing why the complaint has originated. It becomes very difficult for field level staff to get the complaint redressed when the cause or reason of complaint is not because of them. However they are made to beg the customer to give satisfaction letter. Each complaint when made may be because of so many factors, not necessarily the fault of the person or branch against which it is made. It may be due to system lapse, procedural deficiency, inapt technology, poor in-house work allocation, work flow module etc. Some times the complaints are frivolous and made to harass the person concerned. Though in customer oriented markets, customer is always right but care should be taken that the staff is also protected from frivolous complainants. Each complaint of the customer should be properly analyzed, assessed. It may be possible that route cause may be some where else which should be rectified rather then the concerned staff or branch made the scapegoat. 6. Grievances redressal Mechanism. Improving upon the services is an ongoing process. The essential inputs are customer feedback, market surveys and the complaints received by an organization. No organization can say that they have zero customer complaints. However an organization which has robust mechanism to redress the complaints and resolve problem of the customer gets recognition as a customer friendly organization. Accepting the mistake and offering compensation goes a long way in retaining the customer. Most of the banks have come out with their compensation policies and customer grievances cells. However they are mostly on paper and seldom followed in the spirit in which they are framed. Even where the compensation policy provides automatic payment of compensation, interest in case of delays etc., it is seldom paid unless the customer demands it. 7. Market Studies. Market studies are effective tools to study the behavior of customers and their response to present standard of services. It also helps to understand future trends and requirements as needs of the customers keeps of changing with change of times. Market research gives way to innovations in products and services. Market

studies may be done in-house, or assigned to outside expert agencies or both depending upon the vision of the bank.

Focus on ICICI Banks Initiatives The use of Customer Relationship Management (CRM) in banking has gained importance with the aggressive strategies for customer acquisition and retention being employed by banks in todays competitive milieu. This has resulted in the adoption of various CRM initiatives by these banks to enable them achieve their objectives.

The steps that banks follow in implementing Customer Relationship Management (CRM) are: Identifying CRM initiatives with reference to the objectives to be attained (such as increased number of customers, enhanced per-customer profitability, etc.), Setting measurable targets for each initiative in terms of growth in profits, number of customers, etc. and Evaluating and choosing the appropriate Customer Relationship Management (CRM) package that will help the company achieve its CRM goals

(a comparison of pay-offs against investments could be carried out during the evaluation exercise). Customer Relationship Management (CRM) has been deployed in retail banking. The challenges in managing customer relations in retail banking are due to the multiple products being offered and the diverse channels being used for the distribution of the products. Customer expectation from banks can be summed up as: Any time anywhere service, personalized offers, and lower payouts. Aggressive marketing and promotions on the part of the banks have resulted in most customers happily switching loyalties to enjoy better privileges, thereby making the task of retaining them more difficult for the banks. The use of Customer Relationship Management (CRM) in banking has been essentially done for the following purposes: Targeting customers: It is necessary for banks to identify potential customers for approaching them with suitable offers. The transactional data that is generated through customer interactions and also by taking into account the profile of the customer (such as the lifecycle stage, economic background, family commitments, etc.) needs to be collated into one database to facilitate its proper analysis. For example, a customer interacts with the banks for savings accounts, credit cards, home loans, car loans, demat accounts, etc. the data generated through all these services needs to be integrated to enable effective targeting. After the integration is done, a profitability analysis of the customer needs to be undertaken to acquire an understanding of the profit-worthiness of the customer before targeting him with new offers. Sales reference material: A consolidated information database on all products, pricing, competitor information, sales presentations, proposal templates and marketing collateral should be accessible to all the people concerned. These prove to be very helpful in Sales Force Automation (SFA) wherein the salesperson gets instantaneous access to all relevant material as and when it is required (especially when he/she is in a meeting with a client.) Consistent interface with customers: The communication to customers from various departments like sales, finance, customer support, etc. should be consistent and not contradictory. Therefore, all departments should be privy to a unified view of the customer to enable a consistent approach. Removal of inconsistencies is necessary to ensure that customers are not harassed and frustrated owing to poor internal co-ordination. This is bound to enhance

customer satisfaction. The contact centres used to interface with customers should ensure consistency in customer interaction, irrespective of the medium used for the interaction such as telephone, Internet, e-mail, fax, etc. Banks can use the data on customers to effectively segment the customers before targeting them. Proper analysis of all available data will enable banks to understand the needs of various customer segments and the issues that determine value for that segment. Accordingly, suitable campaigns can be designed to address the issues relevant for that segment and to ensure higher loyalty from these customers. When data analysis is done in the right manner, it helps in generating opportunities for cross-selling and up-selling. Read More: Customer Relationship Management in the Banking Sector ICICI Banks CRM Initiatives ICICI Bank has to manage more than 13 million customers. The bank has over 550 branches, a network of 2025 ATMs, multiple call centres, Internet banking and mobile banking. Its customers often use multiple channels, and they are increasingly turning to electronic banking options. Business from the Internet. ATMs and other electronic channels now comprises more than 50 per cent of all transactions. In the process of making its business grow to this level, ICICI Bank has distinguished itself from other banks through its relationship with customers. The Teradata solution focuses on a Customer Relationship Management (CRM) platform. Information from various legacy and transaction systems is fed into a single enterprise called wide data warehouse. This allows the bank to generate a single view of its customers. The warehouse has the capability to integrate data from multiple sources comprising Oracle and flat files. The Behaviour Explorer enables profiling of customers and querying on various parameters. These enable the bank staff create suitable campaigns for targeting individual customers on the basis of their requirements. The logistics in the system have also led to other benefits like interactive reports, unearthing cross-selling opportunities as well as finding out about the channel usage undertaken by a segment. The data access was facilitated through the use of Cognos Power Cubes. The Benefits of CRM Customers usage pattern: ICICIs CRM data warehouse integrates data from multiple sources and enables users to find out about the customers various transactions pertaining to savings accounts, credit cards, fixed deposits, etc. The warehouse also gives indications regarding the customers channel usage.

New product development: Analysis at ICICI guide product development and marketing campaigns through Behaviour Explorer, whereby customer profiling can be undertaken by using ad hoc queries. The products thus created take into account the customers needs and desires, enabling the bank to satisfy customers through better personalization and customization of services. Central data management: The initial implementation of CRM allowed ICICI to analyse its customer database, which includes information from eight separate operations systems including retail banking, bonds, fixed deposits, retail consumer loans, credit cards, custodial services, online share trading and ATM. Some Noteworthy CRM Initiatives of ICICI Bank Mobile ATMs: Customers of ICICI Bank can access their bank accounts through mobile ATMs. These ATMs are kept in vans and parked at locations that have a high traffic of bank customers such as the commercial areas in a city or upmarket residential areas ICICI Bank now provides standard ATM facilities through ATM vans. This facility has been tried at Mumbai, Chandigarh and various places in Kerala during specified timings. Bulk Deposits: The ICICI Banks Bulk Deposit ATMs enable customers to deposit large amounts at one time. Unlike conventional ATMs, which are able to accept only 30 notes at a time, these ATMs allow the deposit of huge amounts. The Bulk Deposit ATM is available in Mumbais Vashi sector branch office of ICICI. The bulk deposit facility can be availed of by select customers who need to deposit huge amounts of cash. ICICI Bank issues a special card called the `Deposit Only Card to facilitate this service. This card allows for deposit transactions only. The service is further facilitated by the provision of special bags at ATMs in which a customer can put his money. After the deposit slip is filled, the bag can be inserted in the ATM. The transaction slip is then generated by the ATM as an acknowledgement of the deposit. ICICI Bank also has cash pick-up service for business customers under the business banking segment. ATMs for the visually challenged: ICICI Bank has launched ATMs with special voice-guided systems, which guide a visually challenged person to access ATMs without any help. The jack on the terminal enables headphones to be connected to it and voice commands enable the customer to transact business. Customers may choose a suitable language to get voice commands. After the language selection is done, the customer is guided to ensure that the ATM card is inserted in the right slot and thereafter, guidance is provided for entering the PIN by using the keypad. A raised button is provided on number 5 to enable users to identify the numbers easily through touch. The slot for cash collection has such raised `pips that enable easy identification through touch.

Other Services through ATMs: Apart from the usual transactions involving the bank, some other services can also be availed of by ICICI Bank customers. These include: Prepaid mobile recharge Buying and renewing Internet packs (such as those of TATA Indicom Internet service provider and Sify). Making donations for Tirupati Tirumala Devasthanams, Nathdwara temple and Shri Mata Vaishnodevi shrine. Mutual fund transactions, and Bill payments Mobile phone as a Virtual Wallet: The mobile phone has been transformed into a virtual wallet a new innovation in mobile commerce. On September 19, 2005, Airtel, ICICI Bank and VISA announced the launch of mChq a revolutionary new service which is a credit card using the mobile phone. This is the first mobile-to-mobile payment option which enables Airtel customers and ICICI Bank Visa cardholders to pay for their purchases with their Airtel Mobile phones. The service has eliminated the need for carrying physical cash for making a purchase and also the problems associated with the point of sale (POS) terminal since the mobile phone services as a secure POS and a payment mechanism. Social Events: ICICI Bank organized the largest domestic invitational amateur golf event for HN1 (high-net-worth individuals) customers. This nation-wide golf tournament had over one lakh high-net-worth clients of ICICI Banks private banking division participating in the event. Mobile Banking Benefits: Mobile banking enables the customer to avail of many facilities by just sending an SMS. These facilities, which are currently offered free of cost, are as follows: Locating ATM Locating branch Locating drop box Alert facilities like salary credit, account debit/credit, cheque bounce, etc., and Queries on banking, cards and demat account Note: type of crm, e-crm, type from banking principles and operations