Chapter-1

Introduction

Chapter 1: Introduction

Under this chapter an introduction of our topic will be explained, the background is first
presented, proceeding into the problem discussion where the research area is discussed. The
problem discussion will lead to the research purpose and the research questions. Finally,
demarcations and overview of this thesis are presented.
1.1 Background

Changes are taking place dramatically in the marketing environment during the last few years.
Information technology has encouraged several new innovations in the fields of marketing and
business. Effects of information technology in the fields of marketing and management have
emphasized the importance of re-arranging a new plan for marketing that gets benefited from web
technology. In year 1990, many organizations were focusing on how to perform their transactions
with the customers, and how they are going to address their strategies for sales promotions
effectively. But after 1990 it was found that many companies have diverted their attention towards
how organizations can maintain positive and long lasting relationship with customers. At the same
time how to raise loyalty of customers. Thus strategies of organization have shifted towards
customer-oriented strategies. Important factors like providing added services, recognizing the needs
of the customers are termed as factors to decide the fate of companies. Organizations investigations
have put light on importance of retaining customers is not a great deal than that of attracting new
ones. Relationship marketing has turned out to become important factor in financial services.

Customer relationship management (CRM)

Bose, (2002) described the customer relationship management (CRM), essential and vital function
of customer oriented marketing is to gather and accumulate related information about customers in
order to provide effective services. CRM involves attainment analysis and use of customers
knowledge in order to sell goods and services. Reasons for CRM coming into existence are the
changes and developments in marketing environment and web technology. Relationship with
customers is a newly distinguished as a key point to set competitive power of an organization.
Companies gather data related to their customers, in order to perform customer relationship
management more effectively. Web has disclosed a new medium for business and marketing scope
to enhance data analysis of customers behaviors, and environments for one to one marketing have
been enhanced. CRM lies at the heart of every business transaction. (ibid)

Massey et al., 2000 believes that CRM is about attracting, developing maintaining and
retaining Profitable customers over a period of time. In this increased heightened global
competition arena, the new ways of working are firmly shifting into the hands of paying
customers and organizations adapting to e-CRM to CRM.

Electronic customer relationship management (e-CRM)

E-CRM is combination of software, hardware, application and management commitment. E - CRM

can be different types like Operational, Analytical. Operational E-CRM is given importance to
customer touch up points, which can have contacts with customers through telephones or letters or
e-mails. Thus customer touch up points is something web based e-mails, telephone, direct sales,
fax etc. Analytical CRM is a collection of data and is viewed as a continuous process. It requires
technology to process customers data. The main intention here would be to identify and
understand customers demographics pattern of purchasing etc in order to create new business
opportunities giving importance to customers. Vital and important key point is that e-CRM takes
into different forms, relying on the objectives of the organizations. It is about arranging in a line
business process with strategies of customers provided back up of softwares. E-CRM is about
people, process and technology and these are key paramount to success. Traditional definition of eCRM according to Stanton et al., (1994) is to include attitude for entire business. Like identifying
and defining the prime goal to everyone in the organization and creating a sustainable competitive
advantage. Their study explores how e-CRM enhances the traditional definition of marketing
concepts and enabling the organizations to meet their internal marketing objectives. It is identified
that aim of e-CRM systems is to improve customer service, develop a relationship and retain
valuable customers. Furthermore added advantage would be that it enhances delineation in
customers value. Means to motivate valuable customers remain loyal with the enhanced features
of e-CRM, where e makes the huge difference.

The liberalization and globalization of Indian economy has taken place almost a decade ago the
focus point in any service organization is customer service. It is more so in the banking industry.
The phrases such as Customer is the king, service to customer is service to god are more
myths but turned out to be realities. Customer service is the base for business expansion because of
the stiff competition prevalent in the banking industry. With the advent of new private banks in 1995
the concept of customer service has become an important and pivotal issue in banks, be in the
public sector, private sector. The survival of banking business is dependent on customer services.
FOR long, Indian banks had presumed that their operations were customer-centric, simply because
they had customers. These banks ruled the roost, protected by regulations that did not allow free
entry into the sector. And to their credit, when the banking sector was opened up, they survived by
adapting quickly to the new rules of the game. Many managed to post profits. For them an
unexpected bonanza came from government bonds in which most were hugely invested.
Ironically, the Reserve Bank of India's moves to cut aggressively the interest rates after 1999,
pushed up the prices of bonds. So banks had a windfall doing almost nothing. The bond profits,
like manna from heaven, improved the balance-sheets of all banks irrespective of their core
performance. However, the era of lazy banking is soon to end. The mesh of rules that propped up the
Indian banking industry is now being dismantled rapidly.
According to a RBI road-map, India will have a competitive banking market after 2009. As one of
the most attractive emerging market destinations, India will see foreign banks come in, what with
more freedom to come in, grow and acquire. Therefore, it is imperative that Indian banks wake up
to this reality and re-focus on their core asset the customer. A greater focus on Customer
Relationship Management (CRM) is the only way the banking industry can protect its market share
and boost growth.
CRM would also make Indian bankers realize that the purpose of their business is 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." What is CRM, and what will it deliver to the
banks? CRM is, probably, one of the least clearly defined business acronyms, as there is no single
definition for it. It is probably easier to say what CRM is not. Unfortunately, CRM has also
become a misnomer for a range of solutions from IT vendors, each providing its own spin on the
idea.

CRM is variously misunderstood as a fancy sales strategy, an expensive software product, or even
a new method of data collection. It is none of these. CRM is a simple philosophy that places the
customer at the heart of a business organizations processes, activities and culture to improve his
satisfaction of service and, in turn, maximize the profits for the organization.
A successful CRM strategy aims at understanding the needs of the customer and integrating them
with the organizations strategy, people, and technology and business process. Therefore, one of the
best ways of launching a CRM initiative is to start with what the organization is doing now and
working out what should be done to improve its interface with its customers. Then and only then,
should it link to an IT solution.
While this may sound quite straightforward, for large organizations it can be a mammoth task
unless a gradual step-by-step process is adopted. It does not happen simply by buying the software
and installing it. For CRM to be truly effective, it requires a well-thought-out initiative involving
strategy, people, technology, and processes. Above all, it requires the realization that the CRM
philosophy of doing business should be adopted incrementally with an iterative approach to learn
at every stage of development.
Indian Retail Banking continues to redefine the credit growth in the country. It grew by a whopping
44.4% in 2005-06 to touch Rs 3538 billion. This leap was despite the increase in risk weight by
RBI for housing and real estate loans during August, 2005. Housing, which constitutes more than
52% of all retail loans, grew at a robust rate of 44.35% during 2005-06. In order to help banks in
India to understand the market and competition and plan future strategies, Cygnus Business
Consulting and Research has just come out with an Industry Insight on Indian Retail banking
2006 edition. This report analyses the retail banking market and its segments in India and presents
the key trends, along with issues and challenges. The report also paints a future outlook for the
market. Besides it profiles 21 major players in the retail banking space and their strategies.

Importance of Customer Satisfaction:

The importance of customer service for capturing business in banks has become a focus point in all
stages of marketing of banking services, since almost all banks are offering more the same
products with little changes in nomenclature. In the present day situation customer becoming more
and more demanding, bankers need to evolve new approaches, new and innovative products to
keep pace with growing expectations. In order to service the customer more efficiently and to the
highest level of satisfaction technology up gradation is an important aspect to speed up the
servicing in all sphere of banking and to fulfill the customer needs.

Technology
Through technology is helpful in upgrading the services to meet the competition, it will become a
fallout if not operated effectively and efficiently.
Technology-driven products such a debit cards, credit cards, tele-banking, mobile phone banking,
internet banking, fax, e-mail, help desk services, etc. have given more access to customers to
communicate their needs instantly and transact their business promptly. For technology up
gradation banks have to recruit specialists in each field efficient people a all levels to provide
these services. Bankers have to gear up the customers expectation. Bankers have to learn to use
the technological advance to gain the maximum advantage in the business.

Customer Expectations
Customer service is required to be upgraded to satisfy the customer expectations. To render
efficient customer service the banker has to first understand what really the customer wants.
Therefore the bank managements have to continuously innovate and make strategies and evolve
new products to attract the customer. In order to achieve this task banks have to prepare projects
keeping in view the priorities of each segment of customer classified into middle value customers
and high net worth customers. This will enable banks to innovate products to customer needs.
Therefore to attract more and more business bankers are offering products linked with insurance
investments etc. Segmentation is an important aspect in innovating a new service product. What
the customer wants is a priority in this direction. All these efforts are ultimately providing a better
service to the customer.

Communication
Interaction with customer is an important aspect in providing better service to the customer to their
fullest satisfaction. Communication with customer at front office level will help bankers to really
identify the needs and priorities of customers. Therefore the role of human resource department of
the bank is to provide efficient staff at all levels. Wherever there is an interaction with the staff to
deal with the customer. It is one of the top priorities of banks to provide good services.

Relationship management
Relationship managers role in providing a better service to the customers is pivotal to the
expansion of banking business. These RMs maintain rapport particularly with high net worth
customers and provide them all the services they need. This will help in not only retaining the
existing customer base but also to capture the new clientele. Relationship is more important to
provide good customer services. Alternatively good services will help the bankers to build up
relationship. Unless the service is provide to the fullest satisfaction of the customers taking further
reference from the existing customer to establish new relationship is difficult. Again this requires
the service to the existing to the existing customers and their patronage to bank.

Mapping the customer needs

In the present day banking though the banking services are technology driven and major role is
played technology in all decision on customer services the tested methods like customer surveys
continue to help the managements in identifying the customer needs. Identifying the customer
needs is important before providing the service so that will help managements to have an insight
into customer needs and attitudes. In order to identify the customer needs banks have to develop a
proactive approach. Such approach will not only enhance the image of the bank in the customers
view point but also provides a satisfaction to the bank for having served the customer for his actual
need customer surveys will help to know the good feeling among customers about the bankers
services bankers enhance customer satisfaction by giving continuous attention to customer service.
Mapping the customer needs is therefore an important aspect in servicing the customer.

In order to maintain good service delivery standards in the operations and the branches of banks
efficient and skilled staff are to be deployed by banks in all branches particularly in front office
these staff should have better communication skills to maintain standards in service delivery. The
concept of service delivery denote proper servicing of the customer by giving an appropriate
answer and solution to the queries raised and service them to the fullest satisfaction. An expected
level of the standard is required to be maintained. To maintain this standard banks branches should
have adequate infrastructure and required literature to explain the products and the personnel at
front office. Besides this, the amenities, like seating arrangement to customers, cash deposit queues
etc. are properly maintained; adequate ambience is also maintained for attraction. The bank should
provide all the required facility and operate the schemes provided by their competitors. These
services delivery standard are the basic ones and bankers should maintain to cater Good customer
service. Service with a smile should be the motto of all the personal working in the front office
and to maintain service delivery standards. This is a wider concept and can be implanted at all
levels and echelons of banking organization.

Customer relationship management (CRM) became the number one focus when todays
competitive retail banks and the Indian banking market space were getting more saturated and
competitive. Retail bank customers are demanding a different relationship with bankers and
suppliers of financial than the traditional sales and transaction model. The new database
technologies enable retail bankers to get the knowledge of who the customers are, what they
bought and when they bought, and even predictions based on the historical behavior.
Customer Relationship Management is a process by which a company maximum customer
information in an effort to increase loyalty and retain customer business over their lifetimes.
The primary goals of CRM are to:

Build long term and profitable relationship with chosen customer.

Get closer to those customers at every point of contact.

Maximize your companys share of the customers wallet.

Managing customers is one of the main issues that banks face in today's hyper competitive
environment. If the service levels are not up to customer expectations, in all likelihood the
customer might take his business elsewhere. This is where Customer Relationship Management
(CRM) practices (most important) and software (on the technology side) play an important role.
Banks, who have absorbed CRM systems have been able to achieve transparency in customer
interface and have made sure that customers receive offers which match with their needs. No easy
task this! Consequently this has resulted in greater income for the bank as CRM 'satisfies
customers and immediately builds loyalty'. Appropriate deployment of CRM systems also attracts
newer customers, which can only be beneficial for any financial institution in the face of harsh
competition.
Another advantage of CRM is that employees are no longer burdened with the task of identifying
opportunities by manually reviewing reports by studying client trends. Cross sell processes can be
launched automatically by connecting transactions to CRM. This empowers the bank and
simultaneously provides information to employees.
Customers are always undergoing life-changing experiences like marriage, birth of a child,
investing in a new house or opening new accounts. The magic of technology lies in gathering this
knowledge and transforming them into means and ways of strengthening relationships with

customers. Technology helps change the vision of the banks along with important changes in the
lives of their customers.

Mobile banking service is another luxury, which customers can enjoy today. Technology has
enabled customers to access information through the phone instead of physically traveling to bank
locations for the slightest of queries. Phones and advanced web phones have made it possible for
customers to get details of balances, accounts and other transactions without traveling. Services
such as money transfers and personal payments online and through the phone are already available.
Technologies such as Internet banking and mobile banking have certainly simplified our lives. The
best part is that these transactions (online and mobile) can be done in complete confidentiality and
within a secured network, thus, protecting the customer/user from any fraudulent practices.
Customers are enjoying technology in every sense in their financial relationships with banks. For
example: Account aggregation is an existing technology in the arena of online banking. Moreover
features such as chip, PIN, TIN are armed with the potential of dealing with multiple applications
and that too on one card. In this day and age, customers enjoy complete luxury in terms of
customized technical solutions and banks use the same to cement long term, mutually beneficial
relationships.

CRM
Customer:

A person who buys on products or services from a shop on business.

A person or thing of a specific kind that one has to deal with.

Relationship:

The way two or more people are connected or in a state of being connected. The way in
which two or more groups of people regard & behave towards one another.

An emotional association between two people.

Management:

The process of managing.

The people managing an organization.

The purpose of CRM

The focus of CRM is on creating value for the customer and the company over the longer
term.

When customers value the customer service that they receive from suppliers, they are less
likely to look to alternative suppliers for their needs.

CRM enables organisations to gain competitive advantage over competitors that supply
similar products or services.

Why is CRM important

Todays businesses compete with multi-product offerings created and delivered by

networks, alliances and partnerships of many kinds. Both retaining customers and building
relationships with other value-adding allies is critical to corporate performance.

The adoption of CRM is being fuelled by recognition that long-term relationships with
customers are one of the most important assets of an organisation.

Benefits of CRM

Improved customer retention & loyalty- customers stay longer, buy more & more often

Higher customer profitability lower cost in retaining customers, no need for more
recruitment

Reduced cost of sales- existing customers are more responsive

It offers customers an insight into the Company

It builds a long-term relationship with customers and maximises revenue

Es of E-CRM
The e in e-CRM not only stands for electronic but also can be perceived to have many other
connotations. Though the core of e-CRM remains to be cross channel integration and organization
the e in e-CRM can be used to frame alternatives decisions of e-CRM based upon the channels
which e crm utilizes the issues which it impacts and other factors, the es of e-CRM are briefly
explained as follows:
1. Electronic channels: New electronic channels such as the web and personalized e - messaging
have become the medium for fast, interactive and economic communication, challenging
companies to keep pace with this increase velocity. E-CRM thrives on these electronic
channels

2. Enterprise: Through e-CRM a company gains the means to touch and shape a customers
experience through sales, services and corner offices- whose occupants need to understand and
assess customer behavior.

3. Empowerment: e-crm strategies must be structured to accommodate consumers who now

have the power to decide when and how to communicate with the company through which
channel, at what frequency. An E-CRM solution must be structured to deliver timely pertinent,
valuable information that a consumer accepts in exchange for his or her attention.

4. Economics: An e-crm strategy ideally should concentrate on consumer economics, which

delivers smart assets-allocation decisions directing efforts at individuals likely to provide the
greatest return on customer-communication initiatives.

5. Evaluation: Understanding customer economic relies on a companys ability to attribute

customer behavior to market programs, evaluate customer interactions along various customer
touch point channels and compare anticipated ROI against actual returns through customer
analytic reporting
Companies that focus in E-CRM have several benefits

Serve their customer better, 24 x 7 (and better than competition)

Reach out new customers more easily and build stronger ties with the exiting customers.

Deliver most effective and accountable one to one communication.

Reduce administration and customer support cost.

Speed up order to deliver cycles for faster, better, customer services and more turns.

Maximize the lifetime value of a customer.

Reduce time to market.

 Ability

to use customer data to drive business decision.

1.5 Starting of E-Marketing

Electronic market
Electronic market is relatively new concept and has crept into business vocabulary around 1970s.
Electronic commerce denote the seamless application of information and communication
technology from its point of origin to its end point along the entire value chain of business
processes conducted electronically and designed to enable the accomplishment of a business goal.
These processes may be partial or complete and may encompass B2B as well as B2C and C2B
transaction (Wigand, 1997).
The E-commerce further leads to the emergence of the ''market space'' - a virtual world of
information paralleling the real marketplace of goods and services - enables marketers to manage
content, context, and infrastructure in new and different ways, thereby providing novel sources of
competitive advantage (Rayport & Sviokla, 1994). With electronic marketing one can think for
business across the globe that was not possible earlier. Traditional way of market segmentation
with an internet audience may not be fruitful. In electronic marketing, segmentation can be done
effectively by considering two key dimensions i.e. potential value of the segment to the particular
market sector and comparative attractiveness of the channel to the customer (Hymas, 2001).
The 4Ps frame work of traditional product marketing is not appropriate for electronic marketing
due to unavailability of demographics and psychographics of electronic customers. Booms and
Bitner (1981) considered 7Ps frame work for electronic Marketing. All most all the product can be
made available for customer via electronic marketing but few product categories like Software,
music, reports, games, videos etc, products can be delivered online at the same time, for other
products it can be delivered later at the doorstep of the customers. It was initially believed that the
Internet could benefit organizations because of the decreased costs involved with distribution,
hence improving profit margins if they chose not to pass these benefits on to customers. But there
are some electronic marketers like Amazon.com, have also contributed to price competition,
effectively forcing the competitors to reduce the price. But same time Bromage (2001) argued that
online customers buy online for convenience rather than for price advantages.
Regarding place, electronic marketing offers potential to shift from a non-virtual marketplace to a
market-space instead, incorporating virtual transaction/distribution spaces. Websites have the

potential to give information, to entertain and be interactive in their communication. Internet can
take over some of the activities offered by the personal sales person (e.g. accepting purchase
orders), but some of the activities undertaken by sales representatives cannot be replaced by
technology.
The Internet allows organizations to make their service delivery system flexible. Because of the
lack of physical proximity in electronic marketing, marketers make use of "virtual evidence" in the
virtual environment. Lack of the personal interface may result in customer distrust of first-time
interaction with electronic channels. It is also more difficult for marketers to build a relationship
with customers whom they never see (Dobie et al., 2001); in such a situation trust (to reduce
transaction cost) can be generated by other means, such as communication messages and brands.
Electronic marketing proved its effectiveness by reducing the time of shopping and made it easy
for the people to shop. Most of the business houses adopted electronic marketing so far and many
more are in pipe line .Although electronic marketing has proved its success in facilitating
communication and exchange but still it has long way to travel.
E-Commerce
Electronic commerce (E-Commerce or EC) is an emerging concept that describes the process of
buying and selling or exchanging of products, services, and information via computer networks
including the Internet. It is the use of the Internet and the Web to transact business. Doing business
online, typically via the Web. It is also called "e-business," "e-tailing" and "I-commerce." Although
in most cases e-commerce and e-business are synonymous, e-commerce implies that goods and
services can be purchased online, whereas e-business might be used as more of an umbrella term
for a total presence on the Web, which would naturally include e - commerce (shopping)
component. E-commerce may also refer to electronic data interchange (EDI), in which one
company's computer queries and transmits purchase orders to another company's computer.
E-commerce in the banking sector
The impacts of e-commerce on the banking sector potentially can be profound. Banking assets and
products are primarily intangibles, many of which seem ideally suited to digitization and on-line
distribution. Wholesale banking already relies heavily on electronic systems, but these are mainly
proprietary networks, open only to restricted groups of users. Internet-based banking

applications are superficially ideal for many types of retail banking services, but this is as yet a
relatively small segment of the banking market.
Use of the Internet in banking operations can be considered a logical step as the new technology is
basically an increment in an already evolving operational infrastructure. For a time, predictions were
common that the increasing use of the Internet would shake up existing market structures and threaten
the dominance of established companies. In the financial sector a myriad of internet start-ups quickly
began tapping into product markets traditionally served by banks.

Moreover, established companies from related markets (like insurance) and unrelated markets were
expected to be well suited for offering online banking products. The reality is that the established banks
are still the major suppliers of banking products and services. Alternative suppliers (especially internet
start-ups) have not (yet) been able to form serious competition in the Netherlands or elsewhere. There
are a number of reasons for this. First, the supply of financial services through the Internet has
similarities with the existing banking business and its infrastructure. Second, gaining and keeping new
customers for banking services comes at great expense (Bagijn, 2001).

Established banks hold a preferential position over newcomers in this respect. Also, start-ups have a
number of disadvantages compared to the traditional financial service suppliers. Banks in general have
the advantage of a well-known brand name and well-established customer trust. Moreover, a number of
factors can make large companies (such as banks) better suited for implementing new technologies.
Comparing small companies (Internet start-ups) with the large banking organizations, Wolffen buttel
and Stegwee (2001) mention a number of reasons why the larger banks generally are more innovative if
it comes to the use of e-commerce.

E-Business
E-Business is a revolution that is transforming companies round the world, and it is impacting all the
industries. E-business is much more than online purchase and implementation of computer
applications by the IT departments; or putting up a company website. E-business affects the whole
business and the value chains in which it operates.
It enables a much more integrated level of collaboration between the different components of a
value chain than ever before. Adopting e-Business also allows companies to reduce costs and
improve customer response time. Organizations that transform their business practices stand to
benefit immensely from innumerable new possibilities brought about by technology.

Although it's early days for e-Business in India, we believe there are greater opportunities over the
long term for India and Indian businesses. There is urgent need to usher in farsighted policies &
practices to become a major economic force in the emerging world of E-Business.
E-business includes
E-business is not just about selling over the Internet. It's a 'catch-all' term for any business done
electronically. Amongst other things, it can include:

Computers and computer networks, sometimes called IT (Information Technology) or ICT

(Information and Communication Technology)

Communicating by email

Running a website

Using the Internet to market your business or service

Using databases for contact management, stock control, or to communicate with suppliers

Using business software.

Electronic banking
It is an umbrella term for the process by which a customer may perform banking transactions
electronically without visiting a brick-and-mortar institution. The following terms all refer to one
form or another of electronic banking: personal computer (PC) banking, Internet banking, virtual
banking, online banking, home banking, remote electronic banking, and phone banking. PC
banking and Internet or online banking are the most frequently used designations. It should be
noted, however, that the terms used to describe the various types of electronic banking are often
used

interchangeably.

PC banking
PC Banking is a form of online banking that enables customers to execute bank transactions from a

PC via a modem. In most PC banking ventures, the bank offers the customer a proprietary financial
software program that allows the customer to perform financial transactions from his or her home
computer. The customer then dials into the bank with his or her modem, downloads data, and runs
the programs that are resident on the customer's computer. Currently, many banks offer PC banking
systems that allow customers to obtain account balances and credit card

Internet banking,
Sometimes called online banking, is an outgrowth of PC banking. Internet banking uses the
Internet as the delivery channel by which to conduct banking activity, for example, transferring
funds, paying bills, viewing checking and savings account balances, paying mortgages, and
purchasing financial instruments and certificates of deposit. An Internet banking customer accesses
his or her accounts from browser- software that runs Internet banking programs resident on the
bank's World Wide Web server, not on the user's PC. Net Banker defines a true Internet bank" as
one that provides account balances and some transactional capabilities to retail customers over the
World Wide Web. Internet banks are also known as virtual, cyber, net, interactive, or web banks.
To date, more banks have established an advertising presence on the Internet- primarily in the form
of informational or interactive web sites-than have created transactional web sites. However, a
number of Banks that do not yet offer transactional Internet banking services have indicated on
their web sites that they will offer such banking activities in the future.
Internet banks generally have lower operational and transactional costs than do traditional brickand-mortar banks, they are often able to offer low-cost checking and high-yield Certificates of
deposit. Internet banking is not limited to a physical site; some Internet banks exist without
physical branches, for example, Telebank (Arlington, Virginia) and Bank net (UK). Further, in
some cases, web banks are not restricted to conducting transactions within national borders and
have the ability to make transactions involving large amounts of assets instantaneously. According
to industry analysts, electronic banking provides a variety of attractive possibilities for remote
account access, including:

Availability of inquiry and transaction services around the clock;

worldwide connectivity;

Easy access to transaction data, both recent and historical; and

"Direct customer control of international movement of funds without intermediation of

financial institutions in customer's jurisdiction."

E-Marketing:
Before trying to define the term of E-marketing (or electronic marketing, so to speak), we should
first take a look at the premises of its apparition and development.
The theories concerning E-Marketing have not been unified yet, due to a large diversity in
specialists' opinions. Still, one of the aspects that is established and has ceased being discussed in
contradictory is the fact that electronic marketing first appeared under the form of various
techniques used by companies distributing their products through online channels (Internet
based). That happened back in the pioneering age before 1995. These companies that opened the
road were called "E-tailers", as opposed to the traditional retailers (also known as "brick-andmortar" retailers). During their limited life, these electronic retailers began to develop and
frenetically introduced new marketing techniques based on the support offered by the internet.
The online technologies mentioned above developed in the context created by the E-Tailers, they are
widely used these days by B2C and B2B organizations. In other words, they evolved towards what
we call now E-Marketing (you can also spell it e-Marketing if you wish, the "e-" stands in both
cases for "electronic").
You might find as extremely useful and suggestive the perspective offered by the E-Marketing
Association (EMA). You heard a lot, especially over the past 2 years, about the decline of online
businesses (or the decline of dotcoms), but this temporary difficulty can be viewed as a similarity to
the impasse of Columbus during his expedition that made him famous more than half millennium
ago. The initial "business plan" with which Columbus started this trip (that of bringing the Asian
resources in his country and getting fabulously rich) was a complete disaster: catastrophic
estimations, not enough resources allocated, total lack of information upon the environment he
will develop his "business" in, but... he discovered America instead and changed the world for
ever. In a similar manner, we can say that the dotcoms, despite their terrible strategies (if any),
"discovered" by mistake the world of E-Marketing.
As we already noticed, defining E-Marketing is still highly problematic. Still, what do we mean
when we use this term? As many other English words, the term was born by adding the prefix "e-"
to a term already known and used, in this case "marketing". The prefix "e-" is actually the extreme
contraction of the word "electronic" and is quite omnipresent in todays language of many people:
"e-marketing", "e-business", "e-mail", "e-learning", "e-commerce", "e-", "e-", "e-"...

E-Marketing is the use of internet as a media to market and promote your business globally.

E-Marketing is a generic term utilized for a wide range of activities advertising, customer
communications, branding, fidelity programs etc

Advantages of E-Marketing:

When compared to traditional marketing, E-Marketing is the apt way to promote your
products and services globally. There are many advantages some of which are listed below.
Global Reach

No physical or geographical limitations- The use of the internet as the mainstay of

operations virtually eliminates geographical boundaries.

Access to unknown buyers and sellers.

Own your virtual office.

Always accessible (24/7)

Enhance your business prospects and profits.

Reach target audience.

Publicizing your business through various chambers of commerce & Industry and
Trade Associations.

Easy Marketing

Classified information on competitive products.

Acquire product knowledge.

Compare products & Services.

Economics

Cost effective strategies.

Faster & easier access to products, buyers and sellers.

Save Time and money you spend on sending faxes, couriers etc.

Save money you spend on printing Catalogs, Brochures and other promotional
material.

Updates

Change of content is possible immediately.

Add new products and services.

Link other principle sites to your e Brochures for wider content reach.

Add latest news, events and other information immediately.

More attractive compared to physical brochures

Graphical user interface.

Provide product animations.

E-Marketing services

In order to effectively use e-Marketing to promote your products and services globally, there are
various methods and tools used to do the same. You can use our services listed below to enable
you in effectively e-Market you company.
E-brochure
Similar to a normal printed brochure, an E-brochure (Web site) also provides company related
information. The difference arises from its power to reach global markets at a negligible cost.
An E-brochure contains information such as company history, team, infrastructure, products,
services, contact information and an Enquiry-Form for prospective clients to send enquiries.
E-Catalog

Just as any printed catalog, an E-catalog provides product information. However, the E-catalog
furnishes product details on a more intricate level, supported by superior presentation techniques.
Category-wise product description, Different views of products including an animated presentation
with voice facilities can be achieved through the E-catalog.
E-Mailer
E-mail is the fastest and most economical method of communication in business communities.
You can rarely find a business card without an E-mail address. The potential uses an E-mailer

can be put to be.

Sending promotional material to buyers or suppliers.

Updating clients or users about the latest upgrades on the product.

Reminders about renewal of business contracts or services.

Six simple steps to start e-Marketing

Starting e-Marketing is easy but walking on the right path is not so easy. There are just too many
options you can consider! However, typically I would recommend my clients to follow 6 simple
steps to plan and start doing e-Marketing and they are:
1.

Building Effective Website

2.

Designing Compelling Messaging

3.

Sending Strategic Newsletters

4.

Online Advertising

5.

Managing Customer Databases

6.

Building Alliances

Building an Effective Website - I have shared in other articles how important it is a website for e Marketing to be successful. It is not only design and layout but also the real business strategy
behind. You have to consciously to make your website effective for your business and engaging your
customers interactively. A website will only perform well when it is being revised and updated
according to the environmental changes with Compelling Messaging.
Designing Compelling Messaging - It is really back to marketing basics about communications.
You have to high play your products/services' benefits rather than functionality in order to
distinguish your differential advantages over your competition. A lot of time, customers' buying
decisions are based on trusts that built on the success references you are giving of other cases.
Before

you

get

this

right,

e-Marketing

will

never

be

success.

Sending Strategic Newsletters - e-Newsletters are so easy to send out if you have any emails of our
suppliers, partners, customers and prospects. However, your compelling messaging must be ready
before your e-Newsletters can be successful. In additional, you need to send out useful information
or knowledge occasionally other than sales promotions in order to attract your target audience

to

keep subscribing your newsletter.

Online Advertising - The most basic Online Advertising option I recommend is Search Engine
Marketing. It is becoming mandatory for any companies nowadays to make sure their company
information/advertisements are showing on the first page of search results. Without doing this, your
website will just never be found in a very long while, Other Online Advertising options can

be Web Banner Ad on your target customers populated websites or contextual advertising, etc.
Managing Customer Databases - When you start doing e-Marketing, the next important thing is to
keep up with your customer database(s). This is very crucial because your customer database will
grow throughout your e-Marketing activities. The most basic way to do this is to use Excel or
Outlook or any other mail clients but as you grow your customer database, it is better to adopt
Customer Relationship Management software or a e-Marketing campaign software.
Building Alliances - No one can be successful by doing e-Marketing alone and this is the fact!
Hence, building alliances and letting your alliances to promote your products/services in their
websites and other channels are the very key to success with e-Marketing. You potential return on
investment (ROI) will grow even better than you can imagine.

1.6

Overall research purpose

Considering the discussion above, the purpose of this study is to gain a better understanding of
the benefits of e-CRM to customers and organization in banking industry.

To justify the purpose the following questions are addressed:

RQ1: How can the benefits of e-CRM for banks are described?
RQ2: How can the benefits of e-CRM for bank customers are described?

Chapter 2
Literature Review

Chapter 2: Literature Review

In the previous chapter, an introduction and background to the research area of this study was
presented as well as overall purpose and research questions. This chapter presents a review of
literature relating to each of the 2 mentioned research questions.

2.1 E-CRM-BENEFITS TO BANK

Computers, information technology, and networking are fast replacing labor-intensive business
activities across industries and in government. Since the early 1990s, the computer, the Internet,
and information technology have been merged to become a viable substitute for labor- and paper
intensive banking processes between and across commercial banks. This has been seen in the
widespread use of the ATM, credit cards, debit cards, smart cards, and lending through e-CRM via
the Internet. This type of computer-based bank-to-bank, bank to consumer and consumer-to
consumer transactional and informational exchange has been referred to as Electronic Commerce
(EC). The term EC which taken place out of e-CRM and benefits of e-CRM to bank and its
customers presented below.
RELATIONSHIP WITH CUSTOMERS
A CRM is an idea, which has its heredity line in the technology. In the earlier days relationship
marketings sole aim was to get information about the preferences of the customers and the
information, which was stored by them in their databases, So as to protect and deal with one to one
relationship with customers CRM was developed. Once when the organization acquires the
customers and is able to have them lastingly forever, this implies that the customer becomes more
loyal and making good use of the services of the organization. Trust, cooperation and satisfaction
have to be seen as the face of assurance between both the parties, for a long lasting relationship
with customers. Organizations need to be in constant touch with their customers in order to build
up long-term relationships.
USING E-MAIL FOR BUSINESS COMMUNICATION
The most popular tool for customer service is e-mail. Inexpensive and fast, e-mail is used to
disseminate information (e.g. catalogues), to send product information and order confirmations, to
conduct correspondence regarding any topic with customers and business partners, and responding
to enquiries from customers. To answer a large number of emails quickly and cost-efficiently
automated e-mail reply systems are increasingly implemented. Automated e-mail reply responses
to customer inquiries are developed using intelligent agents that recognize key words and quickly
respond to common queries. However, the greatest advantage of e-mail as a communication tool is

providing quick and accurate information to all customer queries. E-mails

can include forms, reviews, referrals and new contacts sent to customers as attached files and how
e-CRM bringing bridge between bank and customer through email business communication.
PERSONALIZED SERVICES OR ONE TO ONE SERVICES
Personalization is a strategy that can be easily differentiated and which cannot be simulated by
competitors in the market. A good personalized idea will enhance in the increase of sales, improves
the customer relationship. Personalization can be defined as serving the unique needs of individual
customers. By improving the customer conversations the organization can improve the customer
relationships. Personalized services are not only limited in cheering new sales, but its successful
implementation allows the organization to improve its effectiveness and efficiency in serving the
customers established already. Identifying the needs of the customers and providing them a best
solution before he makes a request shows excellence in service of the customers. Presently
customers do not visit their banks for other kind of additional services such as finance, credit cards
etc. customers still see the banks as providing bank services. Customers of the banks are becoming
choosier and the success of the banks does depend upon this.
ESTABLISHING A WEB SITE TO MARKET PRODUCTS OR SERVICES
E-CRM providing cost savings, opportunism, and threats drive action and innovation even in
conservative banks. They have influenced how banks must reposition themselves to take advantage
of new opportunities that include establishing new service delivery channels and new markets for
existing services (loans, letters of credit, etc.) Many banks have already built web sites on the
Internet, offering banking services. Leveraging the power of the web is a move from static pages to
dynamic applications that are connected to bank data. (ibid)
TRANSACTION SECURITY
Safety was seen as a major barrier to Internet banking. Banks were worried about unauthorized
access to their systems, and customers were concerned about the protection of their personal data
and the risk of false transactions. Banks have been able to manage security with least
repercussions. Banks are exploring alternate security measures such as electronic signatures,
digital certificates, smart cards and biometrics. A major problem with most of these measures is,
their complications and cost to adopt and maintain. Furthermore, in many countries, electronic
signatures are not enforceable by law. the e-purse bombed several years ago, and smart cards have
been lukewarm at best. It is evident that banks are trying to ensure secure payment on the Internet.

However, most favorable solutions keep on avoiding them.

Bank customers form expectations derived from many sources proposed that customers form
expectations of what will happen in their next encounters based on what they deserve. Identify
two levels of expectations, desired service and adequate service. Desired service represents the
wished for level of performance and adequate service reflects showing more basic service
expectations. The model permits exploration of the perceived difference between expected service
and the experienced service, particularly the zone of tolerance developed by Parasuraman. Theyre
by customer specific benefits are under for the study.
CUSTOMER INTERACTION AND SATISFACTION
The importance of e-CRM technology in bank-customer interactions remains undisputed,
commentators; nevertheless, emphasize how customer evaluation is shaped by social and personal
forces. Interaction has got a very prime place in the banking services. However in order to make
the interactions good it is highly important that both banks as well as customers actively involve
themselves in the interaction. The relationship, which is maintained between customer and
organization, has always a special place in the banking industry when compared to other industries.
The interaction process has includes three major factors.

1.) Information exchange

2.) Business or financial (transactions)

3.) Social exchange

He further explained thus the transaction process involves engaging both bank and customers in
common satisfying terms. The bank should know what exactly the client wants; at the same time
client should also make sure that has enough knowledge about the bank offerings. Social exchange
involves more of maintaining long-term relationship with the customers. Confidence, trust, ethics
and friendship to some extent are the aspects of the social exchange.
CONVENIENCE
With the increasing knowledge and superiority, of the customers banks are now trying to woo the
customer by determining the aspects, which are really vital for them. Thus the aspects may include
facilities, reputations, service, operation hours, interest on savings as well as on loan, location of

the bank, convenience, friendliness, responsiveness, efficiency of employees, ambience of the

banks, etc. Convenience plays a vital role when selecting a brand and if the customers are not
happy with the convenience of a particular brand. It doesnt take much time to switch brands. The
extent of influence of the convenience on the customer is that it can also make the loyal customers
to switch the brands. Location is considered to be convenient if it helps the customer to reduce the
travel costs. Location also has broader impact on convenience includes time, place, acquisition etc.
It has also greater influence on other convenience

dimensions and is believed to be a precondition for other types of convenience. A convenient

location is often considered o be an additional service aspect of the core services.
SPEED OF PROCESSING THE TRANSACTION THROUGH E-RESPONSE
Faster processing the transaction by e-CRM, the fact that responses to customer queries, order
acknowledgement, delivery and payment information via emails or automated responses are
greatly appreciated by customers. It has also been highlighted that the nature of e-responses also
helps strengthen the relationship between the supplier and the customer and makes up for the
personal response that prevails in the traditional shopping arena. One of the business respondents
emphasized that via e-mail order acknowledgment, we recognize and address our customers by
their first names, strengthening e-relationships with this service. Another business viewed that a
close relationship with customers can be developed from a distance with e-responses. E-mail
responses were widely used by businesses to acknowledge receipt of orders, payment and delivery
of information. An e-response to say thank you, an apology for any delays, tailored e - mails from
analysis of shopper profile to provide online shopping guidance and to announce the release of
new products and specials supported online shoppers. Customer responses confirmed the value of
e-responses in the B2C e-space, E-CRM how timely responds to customer for their requirement?
TRUST
it is an attitude of trust among the partners of substitute. Its a vital aspect for understanding the
potency of marketing relationships. Trust is an essential relationship structure, which is found in
most of all relationship models. Trust factor can be seen in many ways like motivation to depend
on a substitute partner and one who sees confidence in him.
SERVICE QUALITY
Service quality has its connections with the events that are behavioral like the outcomes from a
mouth of a human being. Theres a lot of attention that has been focused in the relationship
between service quality and its outcomes such as profitability and retention of customers and their
loyalty. Five proportions of service quality are reliability, responsiveness, quality, empathy and
assurance. Service quality is an important criterion that is being used by the customers in selecting
a bank. Accounts, transactions accuracy, carefulness, factors in subject with functional quality,
availability of the information technology, helpful and friendly personal and effectiveness in
correcting mistakes are the most important determinants for the customers to determine the bank.

Chapter - 3
ANALYSIS AND INTERPRETATION

CHAPTER -3

ANALYSIS AND INTERPRETATIO N

3.1 Cost/Benefit Analysis

Cost of E-Marketing:

Revenue increases

ISP Costs

Cost decreases

Costs

Intangible benefits

Design Costs

Goodwill

Maintenance Costs

Brand/Image Building

3.2 Budgeting
Evaluate the cost/benefits analysis & Identify Potential Revenue Streams

E-Commerce Do we sell on-line

Content Sponsorship Banners, Buttons, Sponsorships

Intermediary Fees Broker and Agent Fees

Revenue Streams

Initial funds to support a Web site come from:

Investors

Loans

Firms operating budget

Revenue streams that produce Internet profits come mainly from:

Direct sales

Advertising sales

Other fees

Cost Savings By Selling and Marketing On-line

Eliminating elements of the traditional distribution chain

Increases possibilities of greater revenue

Saves on traditional marketing costs (printing, postage)

Increases target market to world-wide audience

Intangible Benefits
The industry is developing exponentially creating new marketing opportunities, although they
may be hard to measure.

Goodwill

Brand Equity

Audience Measurement

Public Relations

Customer Satisfaction

3.3 Situation Analysis

Conduct An Environmental Scan

Legal/Political Environment:
Taxation, access, copyrights, & encryption
Technological Environment
Communication Infrastructures
Bandwidths, and New browsing devices

Conduct an Environmental Scan

~ USER

Trends:
Focus on how the net audience has changed over the last six months, last
year, etc

Are there any trends.

 Is there any important target segments coming online.

~ World

Economies :
Understand overseas economies, also do they have the proper infrastructures
to support what we are doing?

Develop a Market Opportunity Analysis

Market Opportunity Analysis includes both demand and supply analyses.

The demand portion reviews various market segments in terms of potential profit.

The supply analysis review competition in selected segments that are under consideration

The purpose of the supply analysis is to assist in forecasting segment profitability and
finding competitive advantages in the online market.

SWOT

Culture,

ERP

skills, knowledge management, leadership and

systems, legacy applications, networks, Web site,

Chapter - 4
Methodology

Research methodology
Research methodology means the various means or methods used for collecting the data for our
study. During the course of this study we come across many people and completed research by the
help of receiving data from these people.

4.1 Title of Study

A Management Thesis on an Impact of E-Marketing in Banking Services Focusing on
(Relationship Approach)

4.2 Objective of study:

To analyze about E-Marketing.

To analyze the importance of E-Marketing in financial services.

To analyze how E-Marketing differs from traditional marketing.

To analyze the advantages of E-Marketing to the organizations.

To analyze the impact of E-marketing in banking services.

To analyze about E-Marketing strategies in banking industry.

How are the characteristics of banking evolving within the financial sector as a whole as a
consequence of e-commerce?

What is the influence of electronic commerce on the value-added structure of the banking
market?

4.3 Research Process

Research work done through questionnaires/ survey

Probable sample size of 100 respondents

Internet/ research findings

4.4 SCOPE OF STUDY:

Two types of data have been collected for completing the study, those were:

Primary Data

Secondary Data

Primary Data:

Primary data was collected through Questionnaire

Data was collected from employees separately.

Sample of the employees was taken on random basis.

Secondary Data:
Secondary Data was update from companys Broachers, Internet, Journals, and Magazines etc.

4.5 Limitation of study:

Although sincere efforts were made to collect maximum and authentic information from the
respondents, even then this report is subject to following limitations and problems:

The respondents were quite reluctant in providing exact data.

The time was also major hindrance, which was not enough for research.

While formulating the questionnaire there might be some errors that could affect the
research.

Data was collected from limited people due to time constraint.

Chapter 5
Findings and conclusions

5.1

SYNOPSIS

This study attempted to shed lights on benefits of E-CRM both with the organization and the bank
customer who are benefited with E-CRM in relation to the E-business environment. In particular
the purpose of my research was to gain a understanding of the benefits of E-crm to customer and
organization in banking industry. Based on this purpose researcher formulated the two research
questions which researcher thought would provide us with a good insight regarding the E-CRM
benefits. These research questions aimed to explore how the companies would take these benefits
into consideration and implement to acquire more customers in order to generate more revenue to
the organization. And how the benefits would benefits the customer.
Since benefits of E-CRM theory refers to the application of the concept as part of the companys
strategies the empirical data be collected from the organization management perspective. Thus the
analysis of the acquired of the empirical data can provide the researcher with a more holistic and
general picture of E-CRM benefits that the companies and customers would bet benefited.
However the data is collected for these two research questions by interviewing the bank employees
and customers in order to get good quality of data. In general researcher believes that respondent
provided the relevant information which balanced the quality of the two research questions. Taking
the above into consideration below researcher discussing the findings and conclusions regarding
each research question.
5.2 How can the benefits of E_CRM foe the banks be described?
Researcher has found that banks have maintained good relationship with customers due to the
usage of E-CRM by mainly providing good products and services according to the need of the
customer. Banks are using e-mail to a very little extent in order to communicate with their
customers and this is mainly due to the security and privacy reasons it was further founded i the
banks havent been working on a large scale for using e-mail for communication to market their
products and services.
E-CRM has enabled both the banks to provide personalized services and one to one services to
their customers both the bank have successfully implemented e-CRM in order to ensure efficiency
and effectiveness in the service to its customers but these services are offered only at the request of
the customers.
Organizations have ensured and have taken enough measures to see that the latest and updated
information is available through their websites. Websites have become their new and effective
means of communication with the customers. Information about their products and services can be
found very easily.

With the implementation of e-CRM and the latest technologies banks have ensured full security for
the transaction processed by their customers. Initially convincing them to use the online banking
facilities was found to be a hard task. But banks have demonstrated their abilities for safe and
secure transaction which resulted in customer making full usage of the online services.

Conclusion
The following conclusions are drawn from the above findings.

E-CRM enables financial institutions and organization to maintain relationship with

customers.

Less usage of e-mail for their business purpose was adapted by the both the organizations.

E-CRM facilitates the organization to provide personalized and one to one effective service.

The organizations have made it certain that latest and updated information is available in
their organization website.

Latest techniques and measure and E-CRM were used to improve and maintain transaction
security of the customers.

5.3 How can the benefits of e-CRM for banks customers be described
Almost all of the customers considered customers interaction and satisfaction as an important
benefits provide by the banks through the usage of E-CRM, they emphasized the importance of
good response to the customer queries, providing assistance to the customers, exchange of business
information and employees having excellent knowledge about the offerings and services of the bank.
All the customer perceived convenience factor a vital benefit provided by E-CRM. All of the
customer considered location of the bank, friendliness of the bank staff their services as important
benefits for building good relationship. Most of the customers considered speed of processing
transaction through e-response as an important benefit though few did not consider it as an
important benefit. Speed of processing the transaction through e-response was found to be an
important advantage perceived by most of the customer. But few customers were found to

have partially negative feeling towards the speed at which their transactions have been processed.
Quality in the products and services of the bank is an important benefit perceived by the customer.
Reliable employees of the organization responsive rate of bank personal availability of the latest
information technology were found to be the most important determinant advantages perceived by
the customers.
Trust in the services all the customers in their respectful bank found activities of the organization.
Confidence in the banks personal their effectiveness in handling the accounts of the customers
were seen as some of the factors enhancing the trust factor of the customer. This is an essential
benefit that improves customers relationship with the organization.

Conclusions

Customer interaction and satisfaction is found to be an important benefit provided by

banks using E-CRM.

Convenience is a major benefit provided to the customer of the banks.

Speed at which the transactions have been processed and their rate of accuracy is an
advantage provided by banks through the usage of E-CRM.

Reliable employees availabilities of the latest information technology were some of the
added benefits provided by banks to its customers.

Trust in all overall services of the organization is an important benefit provided to the
customers.

RECOMMENDATIONS
Banking CRM needs to improve

A new report indicates that banks are moving towards a customer-centric approach and investing in CRM
technology - but that it is a slow process. What's holding them back and what lessons still need to be
learned

Banks are facing increased competition, credit crunch consolidation and a need to improve brand
image, so you'd think that CRM would be a major priority, helping them to identify and retain
profitable customers. And it is up to a point. According to a report commissioned by SAP and
conducted by the European Financial Management and Marketing Association (EFMA), banks are
moving towards a customer-centric approach, but it is proving to be a very slow process. More
than half of banks in Europe and the Middle East claim to view customer-centric activities as a
strategic differentiator and plan to invest in CRM technology, but also cite many challenges
including price competition, pressure to lower operating costs, fragmentation of customer
segments and channel proliferation. "In the current economic climate, it is more important than
ever for banks to have as much insight as possible into the financial needs and behaviors of their
customers and prospects "In recent months, SAP has experienced the investment banks are making
in standardized software for their core processes," said Julian Johnson, senior vice president,
industry business solutions, Global Field Operations, SAP."As the survey results support, a bank's
customer-facing activities are now an integral part of its business and included in its criteria for
selecting standardized software. The value this brings to a bank is seamless integration of its backoffice functions, which will provide a true end-to-end view of the customer."
The report also found that CRM at a typical bank is driven by individual departments and is
primarily a front-end process, rather than extended across the enterprise and that once
implemented, banks have limited information to measure the success or otherwise of their CRM
deployments. Respondents to the survey said that their CRM strategies are still primarily front-end
focused and situated on old legacy systems that lack the flexibility and scalability needed to look
across the enterprise and connect customers in different lines of business to each other.
Martha Bennett, research director, financial services technology at Data monitor, said: "Providing a
level of service that makes the client feel well-looked after and valued is as critical as the ability to
offer the most optimal product at the right time. In order to achieve this, banks need to ensure that
they have systems and processes in place that allow a view across distribution channels and avoid
organizational silos.

REFERENCES

1. WWW.Google.Com

2. WWW.Wikipedia.Com

3. CRM in Banking edited by- V.V. Gopal

4. Effective CRM edited by- Braj Mohan Chaturvedi

5. E-MARKETING- The Emerging Trends ICFAI