Customer Relationship Management in Banking—A Strategic Tool Adopted By Banks

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International Journal of Research and Development - A Management Review (IJRDMR)

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ISSN (Print): 2319–5479, Volume-4, Issue–4, 2015 19

Customer Relationship Management in Banking—A Strategic Tool Adopted By Banks

1Mahaswar Sahu, ²Sweta Leena Hota

1Head Department of Commerce, Utkal University

2Asst. Professor, SAI International College, Bhubaneswar

Abstract: The modern day banking has moved from pure banking to need based banking. This need based banking is all about customer satisfaction as customers are the focal point in the success of an organization. Customer retention has assumed significance in revenue analysis of various organizations. Customer Relationship Management has become inevitable for the growth and profitability of banks in the present age, which is the age of competition and innovation. Indian banks are realizing the concept of need based banking and the importance of CRM which links people, process and technology to optimize an organization’s revenue and profits through optimum customer satisfaction. CRM is focus on creating, satisfy and retaining customer through uncompromising services.

The main purpose behind this study is to analyze whether banks are really implementing the whole concept and philosophy of CRM as a means of securing competitive advantage through customer loyalty. Building a lifelong relationship with customers is the key to success for any business.

Key Words: Customer Relationship Management, Customer Satisfaction, Banking

I. INTRODUCTION

Competition has changed the focus of companies from selling concept to marketing concept with customer satisfaction as the core. Customer Relationship building and management has now become the focal point of success for every organisation. In this age of liberalisation, globalisation and cut throat competition, the challenge lies in retention of customers and not just acquisition of customers. Earlier the customers being passive and ignorant the producers were able to sell them everything. But today’s customers are highly educated and individualistic in their approach. They have their own choice preferences with quality and value for money taking the top most position in the pyramid. It has become imperative for organisations to build trust and relationship with customer so as to win the customers for lifetime. Jason Jennings and Laurence Houghton have said, “The purpose of business is to find, keep and grow the right customers.”

Customer Relationship Management is one of the strategies to manage customers as it focuses on understanding customers as individuals instead of as part of a group (Lamber 2010). CRM as defined by (Could

Well 1998) from a marketing prospective is “ a combination of business, process and technology that seeks to understand a company’s customers from the prospective of who they are, what they do and what they are like.”

II. LITERATURE REVIEW

Brown(2000) has said that CRM is a process of acquiring new customers, retaining the existing customers, and at the same time understanding, anticipating and managing the need of existing and potential customers. Bhaskar(2004) has analysed that when good service is provided to a customer, then a loyal customer will work as an ambassador and help in the organisation’s growth. Berry(1983) has defined relationship marketing as attracting, maintaining and enhancing the relationship with customers in a multi- service organisation. Shani and Chalasani(1992) have defined relationship marketing as an integrated effort to identify, maintain and build a strong network with individual customers and continuous strengthening of relationship for mutual benefits of both sides.

Vavra(1992) considers CRM as a technique of retaining customers by using various marketing tactics thus leading to bonding with customer even after sale.

Bickert (1992) has given a narrow observation of CRM as database marketing emphasizing on promotional aspects of marketing linked with database. Oliver (19970 has considered customer loyalty as a vital element to organisational success and profit. Girdhar (2009) observed that by satisfying the internal customers and building good relationship with them, the relationship with the external customers can also be retained and satisfied by the banks. Kumar & Rajesh (2009) reveals that any bank that wishes to either grow in size of its banking operation or improve its profit ability must consider the challenges affecting its customer relationship

III. CRM IN BANKING

Banks in recent years have adopted the principles of Marketing Orientation and focussed on relationship development. The technical revolution has had its impact on the banking industry as well (Sherif 2002).

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The beginning of the millennium saw the introduction of new technology into the banking industry which has helped to remove the hurdles in the progress of banking sector. The concept of anywhere and anytime banking took shape for the benefits of customers. The modern day customer is not only quality conscious but also very particular about time and services offered. Any gap in their perception and reality will prompt them to change their brand preferences. This has induced the banks to focus on relationship marketing and CRM has become the need of the hour for banks. CRM stand for:-

Factors like rise in competition level, rising customer expectations, increasing attacks on customer information, maximising customer profitability through up sales and cross sales, segregating customers on different parameters and developing products and services to suit each segment are just a few that are influencing banks to implement CRM. Sanjay Kanti Das (2012) has observed that a greater focus on CRM is the only way the banking industry can protect its market share and boost growth. With ever increasing competition, declining market share, deregulations, smarter and more demanding customers, banks are competing to attain a competitive advantage over one another or for sustaining the competition.

IV. OBJECTIVE OF THE STUDY

1. To examine the need for CRM in Banking.

2. To evaluate the service quality offered by Axis Bank Bhubaneswar

3. To offer suggestions based on the findings of the study.

V. RESEARCH METHODOLOGY

To meet the objectives of the present study primary and secondary data were collected. Primary data has been collected through a well structured questionnaire. The main respondents targeted were customers of various branches of Axis Bank Bhubaneswar. Secondary data has been collected through different journals, magazines, websites, records of banks, various publications, etc.

VI. NEED FOR CRM IN BANKING

Pravatiyar and Sheth (2001) have observed that CRM is a comprehensive strategy and process for acquiring, retaining and partnering with selective customers to create superior values for the company with the customers. CRM has become a comprehensive tool for creating, maintaining, expanding customer relationship and improving customer satisfaction thus leading to maximisation of profits. Liberalization and globalisation has brought about tremendous transformation in the Indian banking industry. It has brought about intense competition between the public sector banks, private sector banks and foreign banks. This intense competition has induced banks to adopt CRM. The main factors that have fuelled the need for and adoption of CRM by banks are:

 Increase in competition level

 Change in customer expectations

 Well informed customers

 Customer retention and loyalty

 Globalisation of services

The growing expectations of consumers, fast changing preferences, access to wide information and plethora of opportunities available to them have made them quench their satisfaction to the fullest which has turned into a matter of concern for banks. CRM has been recognised as that powerful tool which not only helps in retaining customers but also creating an edge over the competitors. CRM helps the banks to build and enduring relationship with customers by providing accurate information and satisfying their needs. CRM is instrumental in identifying and capturing the most profitable customers of a bank. It combines technology with human resources in order to create new strategies to acquire new customers and retain the existing ones.

CRM is the information technology face of business process which aims at establishing long lasting and mutually beneficial relationship with customers so as to acquire and retain profitable customers. It provides the platform for creating brand loyalty. Groff el at (1995) has observed that CRM facilitates better handling of the obstacles of the interweaving customer relationship strategy at all levels. Panda (2003) has observed that CRM is fundamental to building a customer centric organisation. CRM is a key element that allows a bank to develop its customer base and sales capacity. The

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goal of CRM is to manage all aspects of customer interactions in a manner that enables the organisation to maximise profitability from every customer. The author has said that customer expectations are difficult to manage but are often the cause of dissonance which results in loss of existing customer base. Thus CRM has emerged as the most widely prescribed solution for diminishing market share and customer retention through customer satisfaction.

VII. ANALYSIS AND INTERPRETATION:

1. Satisfaction with services of Axis Bank

YES 42

NO 8

As per the chat more than 80% of the customers are satisfied with the services of the bank.

2. TIME SPENT IN THE BANK TO GET THE WORK DONE

LESS THAN 15MINS 35

15 MINS TO 30 MINS 9

MORE THAN 30 MINS 6

The chart depicts that 70% of the customers get quick services from the bank, within 15minutes on reaching the bank.

3. GRIEVANCES REDRESSED BY BANKS

YES 39

NO 11

The chart shows that 78% customers’ grievances are redressed by the bank within a limited span of time.

On analysing the figures collected from branches of Axis Bank in Bhubaneswar, it is found that Axis Bank customers are satisfied with the services offered by the different branches of the bank.

4. REASONS FOR CUSTOMER

SATISFACTION

PARTICULARS POSITIVE CONFIRMATION

PERCENTAGE (TOTAL RESPONDENTS 50)

TIME SAVING 39 78

EASY

ACCESSIBILITY

37 74

CONVENIENCE 43 86

EMPLOYEES ATTITUDE

45 90

The above graph clearly indicates that more than 50% of the customers contacted were happy with the services provided by Axis Bank, Bhubaneswar and this satisfaction has led them to be loyal with the bank. An interaction with the employees has brought to light that CRM has been influential with building customer relationship.

SOME CRM STRATEGIES ADOPTED BY AXIS BANK BHUBANESWER

1. Customer care departments at each branch.

Satisfaction with Services

Yes No

GRIEVANCES REDRESSES

YES NO

0 10 20 30 40 50

REASONS FOR SATISFACTION Column1

Column2

Time spent to get the work done

Less than 15 mins

15 to 30Mins

More than 30

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2. Priority lounge in the city to cater to the priority customers of the bank.

3. Relationship Managers for every level of customers.

4. Axis Bank toll free numbers.

5. Axis Bank Customer Care SMS services.

6. ATMs at all important places in the city.

7. Internet Banking.

VIII. CONCLUSION

The Economic Reforms have brought about phenomenal growth to the banking sector. The banks have now become more profit oriented and are also playing an important part in the development of the economy.

Customer satisfaction has become the key to success for the banks in this competitive age. CRM is one of the tools which helps in meeting the customer’s expectations and improve the service quality of the banks thus leading to retention of the customers and improve profitability. Banks have realised that CRM is that magical tool which will help them to build stronger and more profitable relationship with their clients. This study has helped us to understand that CRM has helped in establishing customer relationship with clients and will go a long way in developing a lifelong relationship.

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