International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 10 -

CU5TOMER RELATION5HIP MANAGEMENT: 5TRATEGIE5

AND PRACTICE5 IN BANKING 5ECTOR

Authnrcd By

NAVEEN KUMAR 5HARMA
Assislanl Irofessor
Dearlmenl of Managemenl and TechnoIogy
Governmenl Ingineering CoIIege, ikaner
Mob: +91-9166455449
I-maiI: nksharma.a|mer+gmaiI.com

DR. VIJAY MOHAN VYA5
Assislanl Irofessor
Dearlmenl of Managemenl and TechnoIogy
Governmenl Ingineering CoIIege, ikaner
Mob. +91-9928226700
ImaiI: vi|aymohanvyas+yahoo.com

Abstract
Tc!aq, nanq |usincsscs sucn as |anks, insurancc ccnpanics, an! cincr scrticc prcti!crs rca|izc
inc inpcriancc cj Cusicncr |c|aiicnsnip Managcncni (C|M) an! iis pcicniia| ic nc|p incn
acquirc ncu cusicncrs rciain cxisiing cncs an! naxinizc incir |ijciinc ta|uc. Tnc purpcsc cj
inis papcr is inicn!c! ic jin! cui inc taricus C|M praciiccs in sc|ccic! |cca| an! nu|iinaiicna|
|anks in |n!ia. Tnis rcscarcn ucu|! |c |cncjicia| jcr |anking in!usirq an! as uc|| as ii ui|| |c
nc|pju| jcr inc siu!cnis in |carning a|cui inc taricus C|M praciiccs in |anking sccicrs. |i uas
jcun! inai a grcai !ijjcrcncc in C|M praciiccs is prcscni |ciuccn |cca| an! nu|iinaiicna| |anks,
inis !ijjcrcncc is a|sc |asc! cn inc iqpc cj cusicncrs |anks arc iargciing, |cca| |anks arc carrqing
cui C|M scrticcs cn in!iti!ua| |asis ncuctcr nu|iinaiicna| |anks arc sirici|q jccusing cn
sian!ar!izc! C|M scrticcs a|cng uiin |T an! |-|anking scrticcs. Hcncc C|M praciiccs in |cin
|cca| an! nu|iinaiicna| arc cnanging acccr!ing ic cusicncrs ncc!s. Tnc rcascn jcr sc|cciing
|anks jcr cur rcscarcn is inai |anking in!usirq nas |cng na! a rcpuiaiicn cj |cing s|cu ic

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 11 -

rcspcnsc ic cusicncr ccnccrns, inrcugn inis rcscarcn uc arc a||c ic ana|qzc inai ncu |anks arc
jccusc! cn inc cjjcris cj kncuing inc cusicncrs, !cicciing incir ncc!s, an! a|sc raising inc
prcjiia|i|iiq cr inc |cncjiis cj inc ccsiuncr ic inc |usincss.
Ke Words. C|M, Banking sccicr, Icca| an! Mu|iinaiicna| Banks

INTRODUCTION
ReIalionshi Markeling is lhe rocess of buiIding Iong lerm muluaIIy beneficiaI
reIalionshi vilh lhe cuslomers. The IinanciaI Inslilulions in lhe deveIoed counlries
are using lhis markeling looI very effecliveIy by laking fuII advanlage of Informalion
and Communicalion TechnoIogies.
The Indian anking Induslry vhich vas oeraling in a bureaucralic slyIe rior lo 1991
had lo undergo Iarge scaIe lransformalion vilh lhe oening u of lhe economy. The
Seclor has been facing unrecedenled chaIIenges vilh lhe vave of IiberaIizalion,
rivalizalion and gIobaIizalion of Indian Iconomy. anks in India are under inlense
ressure in loday's voIaliIe markel Iace. Slee comelilion, gIobaIizalion, groving
cuslomer demand and exosure lo higher credil risks are forcing lhe banks lo find nev
vays of imroving rofilabiIily. On lhe olher hand, cosl-culling measures have forced
banks lo manage oeralions vilh fev Cuslomers ReIalionshi Managers and Iroducl
SeciaIisls. Induslry consoIidalion aIso oses fresh chaIIenges lo lhis seclor. Iven loday,
mosl of lhe banks in India reIy on lhe Iegacy of Cuslomer Informalion Syslem. In such a
scenario, il is difficuIl lo have a comIele cuslomer viev across divisions. They face
unrecedenled chaIIenges lo suslain lheir grovlh alh for survivaI. The chaIIenges
incIude cuslomer relenlion, reducing lransaclion cosls, risk managemenl and
ReguIalion ComIiance.
The resuIl vas a huge roIiferalion in cuslomer's choice. The slralegic looI lhal vas
chosen for aiding lhis rocess vas Informalion TechnoIogy and mosl of lhe banks venl
lhrough adolion of various slages and forms of IT over lhe years and lhe rocess is
sliII conlinuing. The raid grovlh in Informalion TechnoIogy and ils olenliaI lo serve
lhe cuslomers in a nev vay avakened lhe markelers and enabIed lhem lo lransform
lhese chaIIenges inlo oorlunilies. Under lhese circumslances, cuslomer salisfaclion
became an imorlanl asecl of lhe business. The search for nev slralegies began lo
meel nol onIy lhe high execlalions of cuslomers bul lhe need lo relain lhem. The
comelilive vorId vilnessed many banks arlicialing in lhe race lo olimize lheir

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 12 -

rofils. Il increased lhe ressure lo erform Ieading lo adolion of advanced lechnoIogy
and beller skiIIed vork force.
Therefore, business modeI changed from bank-cenlric aroach lo cuslomer-cenlric
aroach. The cuslomer became nol onIy an essenliaI bul lhe mosl imorlanl arl of lhe
business. The Service Seclor has emerged as a key seclor in Indian Iconomy. The
conlribulion from lhis seclor lo our Gross Domeslic Iroducl (GDI) is aroximaleIy
55%, as er lhe currenl year's udgel Reorl (2008-09). The conlinuous grovlh of GDI
al 8% and above has become ossibIe due lo lhe good erformance of lhis seclor. In lhe
osl - reforms era, lhere has been a sea change in lhe financiaI seclor. In such a scenario,
lhe services have grovn raidIy and lhe cuslomer has been more oflen a urchaser of
services ralher lhan a roducl.
The IinanciaI Services is lhe backbone of service seclor. This is imorlanl nol onIy for
lhe banking seclor bul of lhe Indian economy as a vhoIe. This is so because banking is a
calaIysl and Iife of modern lrade and commerce. Il is an inlegraI arl of aII lhe
businesses and sociaI aclivilies. This raid lransformalion of services in lhe banking
syslem has Ied lo lhe evoIulion of a highIy comelilive and comIex markel vhere
lhere is a conlinuous Refinemenl of services. Hence lhe increased roIe of banking in
India's economic deveIomenl on lhe one hand and lhe changes in lhe business cIimale
on lhe olher has ul increased ressure on lhem. These changes are comeIIing lhe
banks lo reorganize lhemseIves in order lo coe vilh lhe resenl condilions.
Nov, lhe IinanciaI Inslilulions are lrying lo rovide aII lhe services al lhe cuslomer's
doorsle. The cuslomer has become lhe focaI oinl eilher lo deveIo or mainlain
slabiIily in lhe business. Ivery engagemenl vilh lhe cuslomer is an oorlunily lo
eilher deveIo or deslroy a cuslomer's failh in lhe ank. The execlalions of lhe
cuslomers have aIso increased many foIds. Inlense comelilion among lhe banks has
redefined lhe concel of lhe enlire banking syslem. The banks are Iooking for nev vays
nol onIy lo allracl bul aIso lo relain lhe cuslomers and gain comelilive advanlage over
lheir comelilors. The banks Iike 3 olher business organizalions are deIoying
innovalive saIes lechniques and advanced markeling looIs lo gain suremacy.

EVALUATION OF CRM
One of lhe imorlanl markeling looIs in lhe deveIoed counlries is ReIalionshi
Markeling. The CRM is a comrehensive aroach for crealing, mainlaining and

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 13 -

exanding reIalionshi vilh lhe cuslomers. Il has emerged as one of lhe mosl videIy
rescribed soIulions for diminishing markel share and sIuggish grovlh of many
induslries in generaI and banking and financiaI seclor in arlicuIar. CRM is a simIe
hiIosohy, vhich Iaces lhe cuslomer al lhe hearl of lhe business rocesses, aclivilies
and cuIlures for imroving cuslomer salisfaclion and maximizing rofils. In one of lhe
encomassing definilions, CRM is described as lhe eslabIishmenl, deveIomenl,
mainlenance, and olimizalion of Iong lerm, muluaIIy-vaIuabIe reIalionshi belveen
lhe cuslomers and lhe organizalions. Il is a comrehensive aroach for crealing,
mainlaining and exanding reIalionshi vilh lhe cuslomers.
The concel of CRM is very imorlanl lo lhe business seclor. The essence of lhe
business has been described by Mr. Ieler Drucker, lhe Managemenl Guru as, lhe
urose of lhe business is lo allracl and relain a good cuslomer. Good Cuslomer
Service is lhe besl brand ambassador for any bank. The enlire business rocess consisls
of highIy inlegraled efforls lo discover, creale, arouse and salisfy cuslomer's needs. The
modern business has reaIized il and is making aII oul efforls lo become 'cuslomer-
cenlric' across lhe gIobe. Hence, CRM is nol a once-for-aII affair bul a conlinuous
rocess. Il is lhe vay of carrying oul business covering aII lhe asecls of lhe modern
business. Il is an inlegraI aroach of deaIing vilh cuslomers by deIoying lhe
advanced informalion lechnoIogy.

COMPONENT5 OF CRM
Il is a bundIe of saIes, Markeling and Cuslomer suorl aIicalions. Inlegralion of lhe
aIicalions lhrough lhe veb makes lhe CRM aIicalions reaIIy allraclive.
Transaclions are lracked lhrough CRM and Dala mining is used for lhe anaIysis of dala.


Thc n!d cnnccpt (Diag.1)







THE BACK OFFICE (General Manager, Manager Finance, HR
etc.)
THE FRONT OFFICE (Cashier, Clerk)
THE CUSTOMER

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 14 -







Thc Currcnt Cnnccpt (Diag.2)


OBJECTIVE5
To undersland lhe use of CRM in lhe banks.
To evaIuale lhe CRM slralegies and raclices in Indian banking seclor

NEED FOR 5TUDY
The imorlanl faclors lhal eslabIish lhe need for CRM in lhe anking Induslry are
delaiIed beIov:-
Intcnsc Cnmpctitinn
There is inlense comelilion among lhe Irivale Seclor anks, IubIic Seclor anks
and Ioreign anks and lhey are aII laking sles lo allracl and relain lhe
cuslomers. Nev lechnoIogies, research faciIilies, gIobaIizalion of services, lhe
fIood of nev roducls and lhe concel of aII lhe faciIilies under one roof lo
rovide beller cuslomer service Ieading lo cuslomer deIighl.
THE BACK OFFICE
THE FRONT OFFICE
THE FRONT OFFICE THE CUSTOMER
THE BACK OFFICE

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 15 -

Wc!! InInrmcd Custnmcrs
The Cuslomers in anking Induslry loday are veII informed. Wilh lhe
inlroduclion of nev lechnoIogy, lhe vorId has become Iike a smaII viIIage. Thus,
if a ank vanls lo have more cuslomers, il shouId deveIo a good reIalionshi
vilh ils resenl cuslomers and lry lo mainlain lhe same in lhe fulure aIso.
Dcc!inc in Brand Lnya!ty
In lhe resenl scenario, brand IoyaIly is on decIine. The cuslomers are svilching
over frequenlIy lo avaiI lhe beller faciIilies from olher banks. Never and
suerior roducls and services are being inlroduced conlinuousIy in lhe markel.
Thus, lhe banks have lo ugrade lheir roducls, imrove cuslomer service and
creale bonds of lrusls lhrough roer care of cuslomer needs and reguIar
communicalions. Wilh lhe heI of CRM, slrong cuslomer IoyaIly and a good
image for lhe organizalion can be deveIoed.
Imprnvcd Custnmcr Rctcntinn
In lhe inlenseIy comelilive banking induslry, relenlion of exisling cuslomers is
vilaI, vhich can be achieved lhrough lhe rocess of CRM.

REQUIREMENT5 OF AN EFFECTIVE CRM 5TRUCTURE
An effeclive CRM syslem consisls of lhe foIIoving:
Pcrsnna! Custnmcr Nccds
IersonaI conlacl
A knovIedgeabIe and reIiabIe banker.
ReIevanl Informalion.
Cuslomized and limeIy soIulions
VaIue for money.
Busincss Custnmcr Nccds
A rofessionaI arlnershi aroach.
High IeveIs of informalion.
Cuslomized and highIy resonsive service.
QuaIily Cuslomer Informalion.

BENEFIT5 OF CRM
enefils of CRM can be calegorized inlo lhree grous nameIy: enefils for cuslomers,
benefils for emIoyees and benefils for banks.

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 16 -

(i) BcncIits Inr Custnmcrs
There is a more coordinaled and rofessionaI aroach lo cuslomer conlacl.
Wilh u-lo-dale cuslomer informalion, anks can offer more ersonaIized
services.
Cuslomers feeI emovered if lhey have grealer access lo roducls and
services. Ior examIe 24 Hours banking.
Targeled roducl and service offerings can be limed lo coincide vilh
cuslomer evenls and requiremenls e.g., Iducalion Loans and Tourism Loans.
(ii) BcncIits Inr Emp!nyccs
ImIoyees are emovered vilh lhe informalion lo deIiver high quaIily
service and meel cuslomer execlalions.
ImIoyees have more lime lo serve cuslomers.
ImIoyees have higher salisfaclion ralings.
(iii) BcncIits Inr Banks
Managers are emovered vilh informalion lhal can heI lhem manage
cuslomer reIalionshis and make beller decisions.
Olimum use of resources.
Cuslomer salisfaclion and increased IoyaIly.
Imroved cuslomer acquisilion and cross-seIIing.
Il heIs in cailaIizing on shorl vindovs of oorlunilies in lhe markel.

INTRODUCTION OF INNOVATIVE 5ERVICE5 THROUGH CRM
anks have made severaI innovalions for suslenance by using lhe CRM Syslem such as:
The inlroduclion of ATMs.
iomelric ATMs.
SingIe Windov Service.
TeIIer Syslem.
Inlernel anking
Inlroduclion of IIaslic Money: Credil Card, Debil Card, Smarl Card.
MobiIe and I-MaiI AIerls
IIeclronic Cash
Inlroduclion of lvo in one Accounls.

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 17 -

Inlroduclion of nev Ioan schemes as er lhe cuslomer's needs viz. Iducalion
Loans, Marriage Loans, Housing Loans, IersonaI Loans, VehicIe Loans,
Iurnilure Loans, Renovalion Loans and Tourism Loans.

CONCLU5ION
Indian anks have recorded a henomenaI grovlh in lhe asl decade vilh lhe inilialion
of Iconomic Reforms. The banks, bolh IubIic and Irivale, have lransformed lhemseIves
inlo rofil-orienled business organizalions besides Iaying a deveIomenlaI roIe in lhe
economy. In an alleml lo be more rofilabIe, lhe banks have become comelilive and
more cuslomer orienled. This nev orienlalion has comeIIed lhem lo lake a more
ragmalic aroach for conducling lhe business. The CRM is one such looI vhich heIs
in meeling lhe cuslomer's execlalions according lo lheir changing needs. WhiIe
anaIyzing lhe CRM ImIemenlalion in bolh lhe seclors, il vas found lhal lhe Irivale
Seclor anks have been abIe lo imIemenl lhe CRM raclices more effecliveIy vhen
comared lo lheir IubIic Seclor counlerarls. This indicales lhal slralegicaIIy seaking,
lhe Irivale Seclor anks have been more innovalive in underslanding lheir cuslomers
and in buiIding good reIalions vilh lhem.
The CRM aroach adoled by banks focuses on maximizing lhe vaIue for lhe
cuslomer and lhe bank. The key drivers lo cuslomer IoyaIly are:
(a) Iosilive Slaff Allilude.
(b) Honesly, Inlegrily and ReIiabiIily.
(c) Iroduclive advice and deIivery of lhe romised service.
(d) Consislenl deIivery of suerior quaIily service.
(e) SimIicily and easiness of doing business.
(f) A fair and efficienl comIainls resoIulion.

REFERENCE
Anand, S (2008), Cuslomer ReIalionshi Managemenl in Indian anks, }ournaI of
IrofessionaI anker, Dec. 2008 66-70.
agozzi, Richard I. (1974), Markeling as an Organized ehavioraI Syslem of
Ixchange, }ournaI of Markeling, 38 (4), . 7781.
enlum, Van, RaIh, and MerIin Slone (2005), Cusicncr |c|aiicnsnip Managcncni san!
inc inpaci cj Ccrpcraic Cu|iurc A |urcpcan Siu!q, Dalabase Markeling and
Cuslomer Slralegy Managemenl, VoI. 13, No. 1, . 28-54.

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 18 -

hoIanalh Dulla (2008), CRM in IinanciaI Services Markeling, }ournaI of Markeling
Maslermind
Davids M (1999), Hov lo Avoid lhe 10 iggesl Mislakes in CRM, }ournaI of usiness
Slralegy, Nov-Dec 1999, 22-26.
Day GS (2000), Managing Markel ReIalionshi, }ournaI of lhe Academy of Markeling
Science VoI. 28 (1), 24-30.
Dvyer, I. Roberl, IauI H. Schurr, and Se|o Oh. 1987. Octc|cping BuqcrSc||cr
|c|aiicnsnips, }ournaI of Markeling, 51 (AriI), . 1128.
Id Thomson el aI (2005), Organisalions are beginning lo lhink aboul CRM again,
Managemenl udale, November, 2005.
Ioss, . and Slone, M. 2001. Succcssju| Cusicncr |c|aiicnsnip Markciing. Ncu Tninking,
Ncu Siraicgics . Nev TooIs for Gelling CIoser lo Your Cuslomers, Kogan Iage,
London.
GaIbrealh, }. and Rogers, T. 1999, Cuslomer reIalionshi Ieadershi, TQM magazine,
VoI. 11 No. 3, . 161-71.
Gaski, }ohn I. 1984. Tnc Tnccrq cj Pcucr an! Ccnj|ici in Cnannc|s cj Oisiri|uiicn, }ournaI
of Markeling, VoI. 48, . 930.
Heskell, L., }ones, O., Sasser, }nr, W. and SchIesinger, A. 1994. Puiiing inc scrticc Prcjii
Cnain ic Wcrk, Harvard usiness Reviev, VoI. 72 (2), .164.
IDC. 2002. Surtcq |T A!cpiicn Paiicrns in inc |urcpcan Banking Sccicr. |ccus cn
Sc|uiicns. 24 December 2002.
}ohnson, MichaeI D. and Ired SeInes. 2004. Cuslomer IorlfoIio Managemenl: Tovard
A Dynamic Theory of Ixchange ReIalionshis, }ournaI of Markeling, 68 (AriI), .
117.
KaIe, S. H., 2004, CRM IaiIure and lhe Seven DeadIy Sins Markeling Managemenl,
voI. 13, no. 5, . 42-46.
KimberIy, C el aI (2005), CRM Markeling Slralegies and TechnoIogies Malure,
Managemenl udale, November, 2005.
KohIi, A|ay K. and ernard }. }avorski. 1990. Markel Orienlalion: The Conslrucl,
Research Iroosilions, and ManageriaI ImIicalions, }ournaI of Markeling, 5
(AriI), . 118.
Levill, Theodore. 1960. Markeling Myoia, Harvard usiness Reviev, 38 (}uIy
Augusl), . 4560.

International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 19 -

Iarvaliyar A and Shelh }N (2001), ConceluaI Iramevork of Cuslomer ReIalionshi in
Cuslomer ReIalionshi Managemenl Imerging Concels, TooIs and AIicalions,
Tala McGrav HiII, Nev DeIhi, . 3-25.
Shanmuganlhan, IremaI, Sinder DhaIIvaI, MerIin Slone and ryan Ioss. 2005. Occs
|innic |ccus Cnangc Hcu Banks Sncu|! |np|cncni Cusicncr |c|aiicnsnip Managcncni,
}ournaI of IinanciaI Services Markeling, VoI. 8 (1), . 49-62.
Shelh, }agdish. 2005. The enefils and ChaIIenges of Shifling Slralegies, Cuslomer
Managemenl, (MSI conference summary). Cambridge, MA: Markeling Science
Inslilule, . 45.
Srinivasan, Ra|i and Chrisline Moorman. 2005. Slralegic Iirm Commilmenls and
Revards for Cuslomer ReIalionshi Managemenl in OnIine RelaiIing, }ournaI of
Markeling, 69 (Oclober), 193200.
SlringfeIIov, A., Winler, N. and oven, D. 2004. CRM: Irofiling from underslanding
cuslomer needs, Busincss Hcrizcns , VoI. 47 , No. 5, Selember Oclober , . 45
52
Thomas, }acqueIyn S. and UrsuIa Y. SuIIivan. 2005. Managing Markeling
Communicalions vilh MuIlichanneI Cuslomers, }ournaI of Markeling, 69
(Oclober), . 239251.