Akanksha Project Report.R

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Vol.1,Issue.III/Sept 11pp.1-4ISSN No-2031-5063

Research Paper

1Golden Research Thoughts

INTRODUCTION:Rising competition, proliferating customer contact,

intensifying attacks on customer information, increasingcustomer expectations, identifying new marketingopportunities etc have made Banking Sector to face superiorchallenges than ever before in executing their Customermanagement strategies. Every organization believes in thesignificance of knowing the customer. The current economicenvironment and financial crisis has most probably led manyfinancial services institutions to focus on their CRMstrategies while screening customer relationship as a key to

profitability of a retail activity and managing the cost andrisk associated with it. Every bank wants to provide good-

quality customer service. Most of the Banks believe thatCRM is one of the best strategies for increasing revenue-

profit margin, developing new market share and to creategood brand image among the customers. In MarketingCustomer Relationship Management have assumedmounting importance in the overall of a Bank, particularlywhen competitive onslaught has been fiercely active,Customer Relationship Management has been recognized a,a new marketing paradigm and is emerging as the coremarketing activity. No wonder that it has emerged as astrategic tool in the hands of marketing people. Customerrelationship management is more focused on trust,commitment and conceptualized now. This paper deals with

the role of Customer Relationship Management in bankingsector, to gain better understanding of the role of CRM inmaximizing customer profitability and to serve theircustomer better and meet their business objectives.

Objectives:The research objective of this study is to try to identify thesuccess factors for an effective CRM implementation withinBanks in Western Vidarbha Districts. This thesis will providevaluable information on the viability of a CRMimplementation and on the barriers that are related to it. Thesteps taken and the issues that will be addressed in order toachieve the objective of this thesis are:- To study CRM in Banking Sector.

- To study the consumer behavior towards CRM inBanking Sector.

Customer Relationship ManagementIdeally, CRM defines an enterprise-wide program that helpsto align business processes and functions against customer-driven priorities. A broad definition of CustomerRelationship Management (CRM), beyond a tactical ortechnical being defined by Bottle (2003). "CRM isthe core business strategy that integrates internal processesand functions and external networks, to create and delivervalue to targeted customers at a profit. It is grounded on highquality customer-related data and enabled by informationtechnology".

CRM is not just a technology but rather acomprehensive customer-centric approach to an

organization's philosophy in dealing with its customers. Thisincludes policies and processes, front-of-house customerservice. Employee training. marketing. systems andinformation is important that anyCRM implementation considerations stretch beyondtechnology. Towards the broader organizationalrequirements. In other words, CRM is about managing thecustomer portfolio efficiently and effectively by designing

business policies which focus around the customer. CRMconsists of three main strategies, the acquiring, enhancingand retaining which companies can adopt as shown in thediagram below (Kolkata, 2002)

Emergence of CRMThe primary reason for the emergence of CRM is

the change in the marketing environment. As shown in thefigure below the marketing model is changing from the

product-centered approach to customer-centered approach(Gilbert, 2003)

project, is

management. Hence, it

Analytical study of CRM: As a strategic tool in Banking sector in Western

Vidarbha with reference to Akola District

Abstract :Customer relationship management systems are being widely across various sectors and have emerged as a popular

business strategy in today's competitive environment in companies. It has been viewed as a process aimed atcollecting customer data, find profiles of customers and use the customer knowledge in specific marketing activities.

It is a discipline which enables the companies to identify and target their most profitable customers. CRMimplementation is on way in many Indian banks. However such implementations are not without hiccups. This papertakes a look at the status of a CRM in major banks operating in Western Vidarbha District. CRM involves new andadvance marketing strategies which not only retain the existing customers but also acquire new customers and alsoanalyzes their efforts in terms of a strategic framework and points out some of the deviations that have occurred in

the implementations. It has been invented as a unique technique capable of remarkable changes in total output ofcompanies.

Prof. Dr. G. L. Pedhiwal.HOD (Co-ordinator)

Smt.L.R.T. College of Commerce, Akola.

& Sanjay J.TaleM.B.A


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Vol.1,Issue 11.III/Sept

2Golden Research Thoughts

Organization needs to create customized offers forcustomers and ensure relationship by providing bettercustomer service and management of customer expectations(Reichheld & Sassar 1990). In fact customers are the "raisonde etre" and marketing should be devoted at enhancingcustomer relationships. But one should take note of theincreasing use of the internet which is changing what is

possible and what is expected in terms of CRM astechnological advances in global networks, convergence andimproved interactivity are to explain the growth of CRM(Peppard, 2000). Now companies should go beyond CRMtowards whole relationship management by managingsuperior value chain delivers a high level of product quality,

and service quality.Goals of CRMBased on the study done by Swift (2001), Person (2004,

p.11), believes that byImplementing CRM strategies, firms can achieve manygoals such as:

Plummeting costs of salesPlummeting costs of acquiring new customersEnhanced customer satisfaction and profitabilityDecreasing the need to acquire so many new customersCalculate profitability of customersHigher customer retention rates

CRM Strategy:In any organization CRM strategy is a wide-ranging

and detailed definition of the scope of' the CRM programmedtowards organizational goals. "The strategy is needed to keep

businesses customer centric and to help the companyconstantly evolve internal processes and technology toacquire and retain customers," explains KrishnaKumar.CRM is fundamentally a strategy aligned with thesuperseding corporate strategy. It tries to attempts tooptimize a firm's profitability, revenue and customersatisfaction by focusing on a customer centric process. Theidea of CRM is that it helps businesses use technology andhuman resources to gain insight into the behavior ofcustomers and the value of those customers. With an

effective CRM strategy, a business can increase revenues by: providing services and products that are exactlywhat your customers wantoffering better customer servicecross selling products more effectivelyhelping sales staff close deals fasterretaining existing customers and discovering new onesNeed

The present day CRM includes developingcustomer base which made bank to pay adequate attention toincrease customer base by all means and it is possible onlywhen the performance is at satisfactory level and then onlythe existing clients can recommend others to have banking

connection with the bank which he is operating. Henceasking reference from the existing customers can developtheir client base. If the base increased, the profitability is alsoincrease. Hence the bank has to implement lot of innovative

CRM to capture and retain the customers.There is a shift from bank centric activities to customercentric activities are opted. The private sector banks in Indiadeployed much innovative strategies to attract newcustomers and to retain existing customers. CRM in bankingsector is still in evolutionary stage, it is the time for takingideas from customers to enrich its service. The use of CRM in

banking has gained importance with the aggressive

strategies for customer acquisition and retention beingemployed by the bank in today's competitive milieu. This hasresulted in the adoption of various CRM initiatives by these

banks. On top of that, implementing a CRM approach canachieve value for the company as shown on the diagram

below:

As shown above, CRM will provide and theeconomically advantage by enhancing the company value bycreating competitive advantage and customer retention(Heinze et al, 2004). But yet a number of reasons why CRMimplementations may not always fulfill their potential(Turban et al (2004)Weakening to provide again and again good experience forthe customerTop management failing to buy into CRM strategiesCRM ultimately depends on the quality of its employees

Technologies will guarantee successCRM in banking sector

According to a RBI statement, in future India willhave a competitive banking market as one of the mostattractive market after 2009. India will see foreign bankscome in, what with more freedom to come in. grow andacquire. Therefore, it is imperative that Indian banks wake upto 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 itsmarket share and boost growth. With intensifyingcompetition, declining market share, deregulations, smarterand more demanding customers there is competition

between the banks to attain a competitive advantage over oneanother or for sustaining the survival in competition. In Indiathe banking sector has been operating in a very stableenvironment from last thirty -forty years. In current scenarioof banking sector the falling of interest rates and toughcompetition between these players had made Indian bankersto realize that the purpose of their business is to create andretain a customer and to see that the entire business process isconsistent with an integrated effort to discover, retain andsatisfy customer needs. But the success Of' CRM Strategydepends upon its ability to understand the needs of thecustomer and to integrate them with the organization'sstrategy people and technology and business process.Financial services are in a structural change whereby

competition and customer demands are increasing. As suchfinancial companies need to focus shift from product

provider to relationship one on core competencies in order to

Analytical study of CRM: As a strategic tool in Banking sector in Western Vidarbha with ...


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deliver to the value of the customers (Lehman, 2000) asshown in the diagram below:

General survey of the Banks in Western Vidarbha:In Western Vidarbha one of the oldest systemssurvived in India is the money-lender's system districtthrough the centuries past. Even today major saucepan of thissystem holds good influence over the agricultural masses inthe district of Western Vidarbha. The main reason for this isthat he is an important source of credit supply to theagricultural people in the district. Another reason is thereluctance of the village people to invest their funds for

productive purposes or deposit them in savings banks. Thegrowth of modern banking in this district of WesternVidarbha was one of the factors responsible for reducing theinfluence of money-lenders. With the establishment of theIndian Banks the banking facilities spread in the Western

Vidarbha areas such as Amravati, Akola, Buldhana, Yavtmal,and Washim with the result that the hold of the money-lenderon rural credit declined to some extent. In the beginning ofthe 19th century some firms started banking business inAkola district including Washim district. The followingtable gives the list of banks in Akola district and Washimdistrict, their date of establishment and the place of location.

The nationalization of 14 eminent banks in 1969 by theGovernment of India was a very - important landmark in the

development of banking out of them the 14 nationalizedbanks. The Punjab National Bank, the Central Bank of India,the Bank of Baroda. The Bank of Maharashtra and theAllahabad Bank had their branches in the district in 1969.These bank, provide easier and better credit facilities anddevotes time and attention to expanding accountrelationships with those customers through individualizedmarketing and customized service-all delivered through thevarious sales channels that the bank uses to small industriesself employed and farmers than they used to provide prior tonationalization.Overview of the Banking Sector in Akola:-

Akola is emerging as a fast growing city in this part

of country. Like all other cities, the economy of Akola is alsoconnected to banking sector. So in Akola, this sector is alsowitnessing a boom for last so many years. Akola has anumber of public sector and private sector banks. The best

banking brands of world are having their branches in Akola.Almost all banks offer a huge potential in all types of jobs viz.teller jobs, bank manager, security, call center, courier andinvestigator jobs. The banking community all over doing alot of investment in Akola. The operative people are hired

preferably from Akola itself. Also a growth in demand ofexaminer jobs is being seen.

As shown in the Porter Analysis below, the threat of newentrance is higher with the opening of private banks such asICICI, HDFC, and Axis etc., which offers a different set ofservices. The threat of substitutes is also increasing wherebynow insurances companies are offering the opportunity to

put money. All these increase the barging power of customerswho will have variety of options:

Research MethodologyRising competition, proliferating customer contact,

intensifying attacks on customer information, increasingcustomer expectations, identifying new marketingopportunities etc have made Banking Sector to face superiorchallenges than ever before in executing their Customermanagement strategies. CRM is one of the approaches that is

build around the customer and provides banks with tools andtechniques to build up this relationship and strengthen the

bond between the customer and the bank. However asnoticed in literature, CRM in banking sector is acompanywide philosophy which is focus around thecustomer. But are banks really doing so or they are justmaking wrong use of the concept whereby its applicability isfar from evident. Bearing this in mind, the problem definitionwill be termed as Customer Relationship as a strategic toolsin the banking sector. For the purpose of the study, bothexploratory and descriptive research has been used foraccomplishment of the aims and objectives of the study.Exploratory research was used in a vision to discover howCRM brings competitive advantage and to supportexplanatory research; both quantitative and qualitative datawere used in completing the survey. For the purpose of thisstudy both secondary and primary data have been used.Secondary data were mainly from journal, articles etc. Forthe case of primary data, three methods namely interview,questionnaire and focus group were used in view to ensure agood synergy for the study. To ensure reliability, thequestionnaire was designed according to a process andvalidated.5.0 Findings and AnalysisThe major findings of the study will be illustrated in thissection. In view to get a concise and precise analysis, data has

been analyzed from the customer point of view and is listedas follows:

Table No. 21

List of banks in Akola & Washim District

Sr.

No.

Place Name of bank Date of opening

1. Akola

Central Bank of India 19/02/1945

Punjab National Bank 31/03/1954

State Bank of India 01/07/1955

Bank of Maharashtra 14/10/1956

Bank of Baroda 29/04/1961

State Bank of India 07/11/1968

Allahabad Bank 19/04/1969

2. Akot State Bank of India 14/12/19573. Balapur State Bank of India 28/10/19654. Karanja State Bank of India 28/10/1965

Bank of Baroda 29/04/1961

5. MurtizapurBank of Baroda 29/04/1961

State Bank o f India 13/09/1963

Bank of Maharashtra 03/05/1965

6. Mangrulpir State Bank of India 24/12/19657. Washim State Bank of India 30/07/1959



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As shown in the table above, 18% of respondents donot agree of whether there is an obligation to sustain a longterm relationship with the bank. This shows that theemployees are motivated to be part of the company andwhich may in turn affect the company ability to provide a

better customer service to its customers. On the other hand,only 12% of the employees do not agree that employeesshare a customer centric culture within the company which is

very low.5.2 Perception of the bank to the general public point ofviewStudy shows that only 19% strongly agree that the bank istrustworthy as compared to 12% and 10% who stronglyagree that the bank is committed to customer financial needsand providesValuable information as shown in the table below;

Yet, it should be noted that there is a high majority ofcustomers who agree that they trust the bank, committhemselves to the customer financial needs and providesvaluable information. It can clearly be deduced that the bankimage in the market is nearby from a customer centric bank,which customers are far from using the bank as a sole

banking business partner for transactions. Hence majority ofcustomers maintain relationships with other private bankswhich deliver to the expectations of the customer.

ConclusionIt is observed that CRM is the hot talk in the banking sectorand its services are far more favorably. This could be furtheraccredited to CRM a closer understanding andindividualized service to the customer. There is strongrecognition of its benefits for the long term organizationalsurvival at both top and middle levels of managementamongst Indian banking companies. This study shows that iforganizations want to attaina sustainable competitive advantage through CRM, theyshould efficiently apply allthe CRM resources to create CRM process capabilitieswhich are unique and can not

be copied by other organizations. There is a direct

relationship between perception and satisfaction,commitment and loyalty which underlines the significanceof CRM in service industry. For those planning to up-sell andcross-sell, raising customer perceptions is all the more

important. And employing CRM may only strengthen therelationship between perceptions and up-buying and cross-

buying which is all in support of introducing CRM in servicesector. Banks are realizing that CRM is the magic bullet thathelps financial institutions to build stronger and more

profitable relationships.Hence Banks should focus on delivering to customers byhaving a concise and precise ways of doing things through

effective CRM solutions rather than developing productstrategy.

Reference : Customer Relationship Management ( By,Roger J. Baran Robert J. Galka Daniel, P. Strunk. IndianEdition ISBN -13 : 978-81-315-05182-2).Marketing Strategy (Planning. Implementation, andControl) By Subhash C. Jain (ISBN 81-315-0543-X)Edited by V V Gopal year 2004. CRM In Banking Conceptsand Cases,The ICFAI University Press. Hyderabad,R.S. Prasad year 2005. Understanding CRM Present andFuture. The ICI FAI university Press. Hyderabadhttp://www.ameinfo.com/43019

http://networkmagazineindia.com/200505/coverstory01.shtml.

5.1 Internal CRM (Employees Point of View)

Statements StronglyAgree

Agree Neutral Disagree Stronglydisagree

Staff are endow withCRM Objectives

19 32. 34. 10 5

Recruits contribute to aCustomer CentricCulture

21 20 47 8 4

Obligation to sustainprotracted termrelationship

13 26 43 10 8

The banking strategy isfocused on excel thecustomer needs

16 33 31 12 8

Information about thecustomers is stored indatabases for futureanalysis

21 38 24 10 7

Statements Strongly

Agree

Agree Neutral Disagree Strongly

disagree

Credibilityof the bank 19 42 25 10 4

Dedicated to customerfinancial needs

12 33 36 9 10

The bank provides preciousinformation

10 34 32 12 12

Customer complaints are

welcomed and resolve quickly

15 36 33 9 7


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