Professional Documents
Culture Documents
European Commission issue directives to streamline retail
bank pricing policies.
Second scenario
Several big players enter a domestic market putting
pressure on interest rates and other variables breaking
the domestic pricing pattern.
Retail Banking Scenario-14
Consumer Credit Counselling
United States has National Foundation for Credit Counseling (NFCC) established in 1954
to promote financial literacy and among consumers to avoid bankruptcy.
Credit counselling now is well developed credit counselling industry.
Telephone as also face-to-face counselling exists.
Over the last several years, a whole host of countries have undertaken significant
initiatives towards credit counselling.
The Consumer Credit Counseling Service (CCCS) in the UK, established in 1993, helps
consumers with budgeting and better money management as also their debt repayment
plans.
Canada established a non-profit counselling organization in 2000. Termed Credit
Counseling Canada (CCC), the organization seeks to enhance the quality and availability
of not-for-profit credit counselling for all its citizens.
The Bank Negara Malaysia has established a Credit Counseling and Debt Management
(CCDM) agency to provide credit counselling and loan restructuring advice to individuals.
Counseling of Singapore (CCS), established in 2003, is meant to assist financially
distressed consumers.
Retail Banking India
Present Scenario
Indian retail banking has been showing
phenomenal growth
Over the last 5 years CAGR has been over 35%
Comprises of multiple products,channels of
distribution and multiple customer groups
Retail Banking India-2
Economy vs. Retail Banking
Retail assets are just 22% of the total banking
assets of India
Contribution of retail loans to GDP:
India 6% , China 15 %,Thailand 24% Taiwan
52%
Indians below 35 yrs of Age 70 %
Reach of Formal Banking Channels 20-25% of
Indian population
Retail Banking India-3
Drivers Of Retail Growth
CHANGING CONSUMER DEMOGRAPHICS
Growing disposable incomes
Segmentation/Differentiation of customers
Customer driven strategies
Building relationships
Retail Banking India-5
Industry's response to the change
The accelerated retail growth has been on a historically
low base
Penetration continues to be significantly low compared to
global bench marks
Share of retail credit expected to grow from 22% to 36%
Policy Guidelines
Acceptable Loans
House Loans
Personal-Unsecured
Car Loans
Education Loans etc
Credit Analysis-4
Policy Guidelines
Unacceptable Loans
Loans for speculative purposes
The Banking Codes and Standards Board of India is not a Department of the
RBI. Reserve Bank has agreed to lend it financial support for a limited period.
Consumer Credit Regulations-4
BCSBI – Code of Conduct-A voluntary Code
Advertising and promotional literature is clear and not misleading
Providing you regular appropriate updates.
Inform about changes in the interest rates, charges or terms and conditions.
Do not discriminate on the basis of age, race, gender, marital status, religion or
disability.
Provide information about the penalties etc.
Treat all personal information as private and confidential
To give information to credit reference agencies about the personal debts only if
overdue.
Collection policy to be built on courtesy, fair treatment and persuasion.
Contact borrower ordinarily at the place of his choice and in the absence of any
specified place at the place of his residence and if unavailable at his residence, at
the place of business/occupation.
Contact borrower between 0700 hrs and 1900 hrs.
Document Time and number of calls and contents of conversation.
Customer Relations Management
Definition .
"CRM is the business strategy that aims to understand,
anticipate, manage and personalize the needs of an
organization's current and potential customers"
CRM is a business strategy, one that puts the customer at
the heart of the business.
Central to the CRM concept is the idea that businesses
should select, cultivate and manage the most profitable
customer relationships with a view to increasing long-term
profitability
Customer Relations Management-2
Nothing new..... Think of the “Kirana Wala” who
knows every customer's name, habits etc i.e.
Information storehouse of the colony.
There now exists the technology to enable this
customer-centricity on a much larger scale.
Customer Relations Management-3
CRM was first coined in the mid-1990s.
Evolution from Sales force automation software
(SFA) focusing on customer contact management
to integrated knowledge management solutions to
ultimately a more strategic approach.
Customer Relationship Management-4
CRM solutions include:
• data warehouses for storing customer
data,
• analytical tools for better understanding
and segmenting customer bases,
• data mining tools for discovering previously
unknown customer knowledge, and
• marketing and campaign management
tools for automating more focused marketing
efforts.
Customer Relationship Management-5
Information technology, particularly Internet and
call centre technology enable personalisation,
user identification, and relationship marketing at
the customer level possible.
All customers are not of equal value but that there
are opportunities to enhance value.
Target under-value customers through cross
selling or up-selling.
May “fire” unprofitable customers.
Customer Relationship Management-6
Customer value, customer lifetime value and customer
profitability are common measures used to understand
customers from a financial perspective.
Calculate revenue from products and services a customer
purchased in a fixed period and subtract the costs of
supplying them to arrive at net revenue of the customer
during a fixed period.
Use modelling techniques to arrive at the net present
value of probable future revenues. Such modelling will
include frequency of purchases and the channels used by
a customer.
Customer Relationship Management-7
Knowing customer value and being able to pinpoint
profitable customers is just the beginning of
CRM. To build customer relationships firms need business
strategies and practices that enable them to nurture the
relationship beyond its simple money value.
With increasing numbers of relationships, employees are
often assigned several or many relationships to manage,
locally, across the nation, or around the globe.
Customer Relationship Management-8
Customer Data and Information
Business operations require product,
transactional, and customer data.
CRM focuses on customer data, for
customer data is central to creating
customer profiles.
Customer Relationship Management-9
Customer Data and Information
Five important areas of customer data:
Contact information
Household Information
Group Information: population segment based on
interest, profession and other factors,
Account Information: including account history,
account conduct, account balances, credit limit etc.
Analytical or Customer Profitability Information:
Customer credit score ,profitability and lifetime
value
Customer Relationship Management-
10
Considerations while designing Information
Deployment System
Not all information can be, nor should it be,
delivered to front end sales staff.
Would providing customer profitability
information to front end sales staff
encourage them to discriminate higher value
customers from lower value customer?
Is the information relevant?
Customer Relationship Management-
12
CRM Strategy in Banking
Bank customers are frequently segmented into
groups based on the number of products used
and balances held.
Transactional exchanges
Value-adding exchanges
Collaborative exchanges
Customer Relationship Management-
13
Transactional exchanges –
Customers with a low number of products and low
balances may be treated as having a ‘transactional
exchange relationship’. The focus is on providing
cost-effective transactions through ATMs, Internet
etc.
Value-adding exchanges –
Customers holding many products and high
potential balances.
The focus is on keeping customers by developing
an understanding of their needs and changing
requirements, then tailoring services.
Customer Relationship Management-
14
Collaborative exchanges –
Customers holding many products and high
balances.
Banks maintain close information, social and
process linkages and mutual commitments
made in expectation of long run benefits with
customers.
Specialist managers maintain close
relationships with these clients to gather
information to anticipate client’s future
requirements.
Customer Relationship Management-
15
However, the majority of the banks' customers are
transactional exchange or value-adding
relationships.
This large group of customers most often
approach the bank through branches or call
centres (sometimes referred to as customer
contact centres).
To manage these relationships, branch and call
centre staff must be armed with both bank product
information and customer information.
Customer Relations Management-16
First Things First
Successful CRM always starts with a business
strategy, which drives change in the organization
and work processes, enabled by technology.
Re-engineer your business processes to make
them more effective for your customers.
Customer Relations Management-17
The Future
Customer Relationship Management is about
people first and technology later.
CRM may or may not prove to be the answer to
providing excellent customer care, but the
philosophy of putting customers at the heart of our
business is definitely a step in the right direction.
Customer Relationship Management-
18
CRM Resurgence in Asia: Which Banks Lead the
Charge?
Financial Insights report identifies eight banks —
the Bank of the Philippine Islands, Chinatrust
Commercial Bank, DBS Bank, HDFC Bank, HSBC
Hong Kong, ICICI Bank, OCBC Bank, and United
Overseas Bank — as representing the region's
leading CRM capabilities.
Customer Relationship Management-
19
CRM in Indian banks
Indian banks protected by regulations presumed
that their operations were customer-centric,
simply because they had customers.
When the banking sector opened up, they
survived by adapting quickly.
RBI's efforts to cut rates brought bonanza to the
banks in bonds where they made huge profit.
Customer Relationship Management-
20
According to a RBI road-map, India will have a
competitive banking market after 2009.
India will see foreign banks come in, what with
more freedom to come in, grow and acquire.
Indian banks waking up and re-focusing on their
core asset — the customer.
Customer Relationship Management-
21
CRM would also make Indian bankers to "create
and keep a customer" and to "view the entire
business process as consisting of a tightly
integrated effort to discover, create, and satisfy
customer needs."