INTRODUCTION Banks play a vital role in the socio-economic development of our country. The CRM is an overall business strategy. CRM is an integrated business approach that connects back office and front office, uniting them into a single entity for the benefit of the customer. CRM stands for Customer Relationship Management and helps the management to deal with customer concerns and issues. “Customer Relationship Management is the process of identifying, attracting, differentiating and retaining customers.” Customer has has its root from Relationship marketing. Relationship management implies attracting, maintaining and enhancing customer relationships. Servicing and selling to existing customers is view to be just as important to the long term marketing success as acquiring new customers. Thus in this era of increased competition, in order to prosper it will be imperative for banks to focus on developing long-term relationships with their customers. The focus of banks should be to shift their orientation from transaction marketing to the cultivation of relationship marketing. Building a long lasting, mutually beneficial relationship with the customer has assumed tremendous importance in today‟s business environment. Marketers now understand that retaining the customers is far more challenging though profitable than acquiring new customers in the fast moving competition. The most profitable companies are those that make the smartest decisions about investments in attracting and retaining customers. Thus the traditional transactional approach to achieve marketing goals became insufficient. This situation necessitated the emergence of new approach namely relationship building through “CUSTOMER RELATIONSHIP MANAGEMENT”. Customer Relationship Management (CRM) has now become a strategic necessity for the sales and business development professionals who continuously strive to be one up their competitors.
CUSTOMER RELATIONSHIP MANAGEMENT: MANAGEMENT: THE CONCEPT CRM-Customer Relationship Management is the latest buzzword. In the era of growing competition it is very important to identify the new customers, to retain the old customers and to service the existing and new customers. Customer Relationship Management is the establishment, development, maintenance and optimization of long-term mutually valuable relationships between consumers and the organizations. Successful customer relationship management focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization‟s strategy, people, technology and business processes. processes. At the heart of a perfect CRM strategy is the creation of mutual value for all the parties involved in the business process. It is about creating a sustainable competitive advantage by being the best at understanding, communicating, and delivering and developing existing customer relationships in addition to creating and keeping new customers.
WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT (CRM)? The key term in CRM is relationship. CRM (customer relationship management) is a term for methodologies, software and internet capabilities to help manage enterprise customer relationships. It‟s It‟s the ability of the banker to maintain a healthy relationship with the customer by keeping the level of interaction between the bank and its customers at high standards. “CRM deals with long term mutually beneficial relationship among consumer, companies and other stakeholders.” “CRM is a well defined series of functions, skills, processes and technologies which together will allow companies to more profitable manage customers as tangible assets.” assets.” “CRM is a now technology enabled way to do business that revives a simple, old-fashioned old -fashioned notion: keep pleasing customers and they will keep coming back. The relationship manager is like a communication node between the customer and the bank, understanding customers needs and preferences and orchestrating orchestrating the products and services to to meet those needs. needs. The latest downturn in the stock market will put increasing pressure on bank to perform and give good cause for examining how CRM can achieve cost savings and enhance revenue. This focus on CRM is in line with transition-based model, concentrating on the acquisition, development and retention of profitable customer relationships. Bankers in order to gain competitive advantage must fully integrate mission-critical business intelligence such as data warehousing and data mining into the CRM. A key part of successful CRM is not only to engage with customers as much as possible but also to recognize their differing needs. The CRM technology has been a massive influence in banking series. It has resulted in much hyped gains in the banking sector. According to the last survey by the RBI there has been a significant increase in the number in commercial banks and their branches in India, compared to yesteryears. Gone are those fears of nationalization and takeovers.
CRM STRATEGIES The strategic outline for an effective implementation of CRM would be as follows: 1. 2. 3. 4. 5.
Improving Customer Knowledge Targeted Customer Contact Meaningful marketing Strengthening Customer Base Impact Analysis
IMPROVING CUSTOMER KNOWLEDGE Improving customer knowledge requires capturing more and more and relevant information about the customer and integrating it with the existing data. Most of the banks today do not have information on the income levels, spending preferences, investment patterns, family size, age and other useful data about their customers. The next step that follows data capture and integration is other useful data about their customers. The next step that follows the data capture and capture and integration is creation of useful and meaningful customer profiles. TARGETED CUSTOMER CONTACT Improved customer knowledge will enable the banks to target their initiatives precisely. Products and services can be fine tuned to fully serve the interest on target customers. Marketing can be targeted with much more precision with the increasingly higher rate of success. Banks would be able to understand the contribution from each customer group/segment and give them due recognition and attention to add value to the relationship.
MEANINGFUL MARKETING The more precisely we can target your customer initiatives in marketing the more meaningful and productive our attempts would be. The customer would be able to relate and respond initiatives readily and willingly. The customized and need-based marketing approach would also attract the appreciation of the customers and improve brand loyalty and equity. STRENGTHENING CUSTOMER BASE Bank functioning with the help of find-tuned CRM systems would be able to add a large number of customers to the existing customer base. They would be able to add more and more customers to the captive customer because of the perceived or real value of doing business with the bank. Banks can improve customer loyalty programs, incentives and attractive pricing of products and services and flexible channels of delivery. IMPACT ANALYSIS The sharper focus provided by CRM would help the bank management in making key decisions and impact analysis on various group of customers and their contribution to the bank. CRM would even help in identifying unprofitable customer groups and services and ways of either dropping their or upgrading them through appropriate persuasive techniques or pricing policies and programs.
SEVEN GUIDELINES FOR EFFECTIVE CRM The CRM market and our collective experience have matured. Whether we are embarking on an enterprise-wide strategy or a specific functional point solution, to help ensure success from our CRM investments. i.
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iii. iv.
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vi. vii.
Changes in process, people and technology should be evaluated and the business impact should be quantified and prioritized, supported by a solid business case and tangible return on investment (ROI). Develop an iterative and incremental approach focused on addressing the highest value opportunities first-think big, start small and deliver results quickly. Align to corporate strategy, ensuring that CRM initiatives are in complete alignment with the organizations overall business goals. Measure the effectiveness of your initiatives and create accountability for customer and business results. What is your baseline performance and what key performance indicators (KPIS) will you measure to know that you are getting results from your CRM initiatives? Create an overall CRM vision for the company. Develop and communicate the CRM vision to the organisation and key constituents, such as customers, employees and partners. Secure the commitment and buy-in of senior management to the overall project vision, project objectives and management of success. Recognise the organisation change and motivations required to achieve full benefits and create the action plans to achieve and sustain the future state of organizational readiness.
TEN PRINCIPLES OF CUSTOMER RELATIONSHIP MANAGEMENT
1. VALUE SEGMENTATION Based on customer needs, preferences, behaviors and economic potential, which provides the basis for resource allocation decision in marketing, sales and services. 2. COLLABORATION The customer is involved in the specification, design and/or delivery of a desired result. 3. INSTITUTIONAL MEMORY When a customer interacts with banks everyone in the bank is aware of prior interactions, outstanding issues and pending opportunities. 4. TOUCH-POINT ALIGNMENT Customers are able to do business with banks through multiple channels which are aligned to customer need and value. 5. REAL-TIME INFORMATION MANAGEMENT Employees have real-time access to the right information in order to make customer-based decisions and resolve issues immediately. 6. CLOSED-LOOP PROCESSES Integrated from front and back office systems ensure that information and workflow carry through the entire enterprise to their logical conclusion, closing the customer loop and enabling continuous knowledge capture. 7. CUSTOMER SCORECARD Employee performance requirements and measures are designed drive specific customer behavior. 8. LISTENING POSTS Forums to facilitate information sharing and learning about the customers that help to do business with learn from each other and provide valuable customer input to banking. 9. ONE AND DONE Solving customer needs first time. 10.TOTAL EXPERIENCE MANAGEMENT:-
Mapping all of the touch-points between bank and its customers and attempting to deliver a consistent quality experience as perceived by the customer.
CRM'S BENEFITS TO THE BANKING INDUSTRY
Benefits of CRM can be categorized into three groups namely: i. BENEFITS FOR CUSTOMERS, ii. BENEFITS FOR EMPLOYEES and iii. BENEFITS FOR BANKS.
BENEFITS FOR CUSTOMERS: i.
Co-ordinated and professional approach to customer contact.
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Up-to-date customer information, Banks can offer more personalized services.
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Customers feel empowered if they have greater access to products and services. For e.g. 24 hours banking.
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Targeted product and service offerings can be timed to coincide with customer events and requirements. For e.g. Education loans, and tourism loans.
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Develop better communication channels.
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Collect vital data, like customer details and order histories.
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Create detailed profiles such as customer preferences.
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Deliver instant, company-wide access to customer histories.
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Identify new selling opportunities.
BENEFITS FOR EMPLOYEES: i. Employees are empowered with the information to deliver high quality service and meet customer expectations. ii. Employees have more time to serve customers. iii. Employees have higher satisfaction ratings.
BENEFITS FOR BANKS: i. Managers are empowered with information that can help them manage customer relationships and make better decisions. ii. Optimum of bank resources.
iii. iv.
v. vi.
Customer satisfaction and increased loyalty. CRM permits businesses to leverage information from their databases to achieve customer retention and to cross-sell new products and services to existing customers. It helps in capitalizing on short windows of opportunities in the market. Significant reduction in and limitation of operational costs through system automation and standardization.
CONCEPT OF E-CRM The concept of adding „e‟ to CRM and make it as „e-CRM‟ seems to get attached to everything in CRM space. The „e‟ stands for electronic or web-based technology to customers and architecture. The „e‟ enables an organization to extend its infrastructure to customers and partners in ways that offer new opportunities i. ii. iii. iv. v.
To reach new customer, To do all this in real time, To learn customer needs, To gain new customers, To add value.
e-CRM strategy and therefore requires the direction and involvement of top management. e-CRM is a new face in Relationship Management of customers with which the organization presents itself to the world. Use of internet helps in enhancing the relationships. e-CRM gives global real time view to the customer. Organizations can acquire, retain and built loyalty customer groups. There can be two way communication between customers and the organization from any where, at any time, and by any means. The nodes of communication include e-mail, internet(web), chat, telephone, fax, WAP, interactive voice response(IVR) and other electronic methods that lets a business to one-to-one experience to customer helps to manage a vast customer database and to serve the customers better and faster. The virtual channels used by e-CRM systems help to achieve broader reach with no great incremental cost. The e-CRM can lead to the benefits like: a. b. c. d. e. f. g.
Call centres, Customer information systems, System integration, Automation of customer support process, Life time value of customer, EPOS(electronic point of sale) and Customer database.
DISTINCTION BETWEEN CRM AND E-CRM CRM is philosophy of interaction with the customers and e-CRM is electronic CRM, which is conceptually the same as CRM, but the difference being it is a new term where all integration in the purview takes place with help of web enabled electronic media. e-CRM beverages technology solutions to offer such businesses in sight in a manner that integrates various functions in an organization like call centre, marketing, sales support, manufacturing and billing. The following are some differences between CRM and e-CRM: a. In CRM emphasis made on personal selling while in e-CRM there is customer database is readily available at every time. b. In CRM customer contact by mail, telephone, in person while in e-CRM customer information system is readily available. c. In CRM services of After Sales; Complaint handling; Account management; Customer care; and Customer satisfaction is available while in e-CRM services; of EPOS sales force; Automation of customers; support processes; Call centers; System integration and Life value of customer. Process is important for driving workflow development, which in turn is the result of technology. Technology is the key for developing and modifying the actual applications that customers and customer service agents will be in need use.
PRINCIPLES OF E-CRM The following four key principles form the basis upon which the e-business can evaluate the success of e-CRM implementation and its transition to the new economy. i. ii. iii. iv.
The e-business knowledge is captured and given context during the customer interaction. The e-business delivers real value to the customers with every interaction. The e-business systems are integrated throughout the value chain, not just at the level of the financial transaction. The e-business offers its customers multiple channels for communication.
TECHNIQUES OF E-CRM USED BY THE BANKS:-
The following techniques are used by Indian banks:1. Automated Teller Machines (ATMs) 2. Tele Banking / Phone Banking 3. Internet Banking 4. Mobile Banking 5. Total Branch Mechanization (TBM) 6. Electronic Fund Transfer (EFT) 7. Swift 8. Wireless Banking Services 9. Electronic Clearing Services
1. AUTOMATED TELLER MACHINES (ATMs): An ATM is a machine that can deliver cash to the customers on demand after authentication. This service is made available 24 hours a day. 7 days in a week and 365 days of the year through ATMs.
2. TELE BANKING / PHONE BANKING: The face of banking industry has totally changed by the technology. Phone/ tele banking means carrying out of banking transaction through telephone. A customer can call up the banks help line or phone banking number to conduct transactions. 3. INTERNET BANKING / E-BANKING: Net banking means carrying out banking transactions through the Internet. It comprises a variety of projects that aim to improve not only the bank‟s efficiency,
but customer service levels as well. E-Banking program allows customers to use the Internet for basic functions in corporate and retail banking and credit cards. Thus the technology has completed eliminated the need for branch. 4. MOBILE BANKING: Now banks help the customers to conduct certain transactions through mobile phone with the help of technologies like WAP, SMS etc. This helps a bank to combine the Internet and telephone and leverage it to cut costs and at the same time provide its customer the convenience.
5. TOTAL BRANCH MECHANIZATION (TBM): Dr. Rangrajan Committee – II in 1988 had suggested TBM. Local Area Network has installed by banks at the major centers of the country to make all banking services available at single window to their customers. 6. ELECTRONIC FUNDS TRANSFER (EFT): The RBI has introduced Electronic fund transfer technique for public sector banks to help them offer their customer money transfer service from any bank‟s branch to any other bank‟s branch. EFT system presently covers more than 4800 branches of PSBs at four metro cities. 7. COMMUNICATION TECHNOLOGY (SWIFT): International banks and foreign investors have forms a cooperative organization SWIFT. It stands for Society for Worldwide Inter Bank Financial Tele Communication (SWIFT). It provides a computerized network for stage transmission amongst international banks in the member countries. This technology made available the fastest banking services/facilities to customers who are engaged in international business. 8. WIRELESS BANKING SERVICES: Wireless banking services is an imaging trend in banking. Wireless banking service enables one to manage their accounts with GSM/GPPS WAP (Wireless
application protocol) technology to allow access to accounts more convenient, secure and flexible. With wireless banking service the following operations can be performed: a. Check account balance and transaction details. b. Make fund transfer to self or third party accounts. c. Buy and sell foreign currency. d. Trade securities. e. Inquire mutual funds and securities trading a/c portfolio and account balance. f. Personalized stock watch list to monitor stock price performance. g. Inquire free real time stock quotes. h. Inquire deposits / exchange / loan rate. 9. ELECTRONIC CLEARING SERVICE: Electronic clearing service is a simple, reliable and cost effective solution for bulk and repetitive payment transactions like salary, pension, interest, commission, dividend etc. by public or private companies and government departments through banks.
BENEFITS OF E-CRM For a business enterprise to achieve return on investment (ROI) from e-CRM, investment in the application domain and technology of e-CRM must contribute to measurable benefits, in addition to intangible benefit i.e. customer loyalty. The benefit categories that enterprises should consider are: 1. COST SAVINGS:Cost savings results from the elimination of non-value added activities and can significantly reduce transaction processing cost. 2. INTANGIBLE BENEFITS:Intangible or soft benefits are difficult to quantify. 3. EFFICIENCY:Efficiency from performing and operating quickly and accurately in the least wasteful manner. 4. EFFECTIVENESS:Effectiveness results from operating in the most impressive and extraordinary manner. 5. MARKETING COSTS:Reduce marketing costs by developing effective and targeted campaigns. 6. PROFITABLE CUSTOMERS:Identify the most profitable customers and treat them accordingly. Roughly 20% of the customers generate 80% of the profits. 7. CUSTOMER RETENTION:Increase customer retention by enhancing satisfaction as a result of higher responsiveness. 8. COMPETITIVE ADVANTAGE:Increase sales and customer loyalty to generate competitive advantage. 9. CUSTOMER UNDERSTANDING:Improve understanding of customer needs by using their preferred channel of communication. 10.PREDICTION OF FUTURE:Project after estimating, the future sales, marketing and service activities expected by the customers, based on the analysis of past and performance.
TYPES OF CRM
Generally, there are types of CRM adopted by banks: a. OPERATION CRM: In this, CRM software packages are used to track and efficiently organize inbound and outbound interactions with customers including the management of marketing campaigns and call centres. Operational CRM supports frontline processes in sales, marketing and customer service, automating communications and interactions with the customers. b. ANALYTICAL CRM: It is about analyzing customer information to better address marketing and customer service objectives and deliver the right message to the right customer at the right time through the right channel. It involves the use of data analysis to extract knowledge for optimizing customer relationships. c. COLLABORATIVE CRM: These involve system facilitating customers to perform services on their own through a variety of communication and interactive channels.
IMPORTANCE OF CRM FOR HDFC BANK
The aim of this dissertation was to examine the importance of CRM for HDFC bank. To achieve this aim, following objectives was set: a) To analyze the effectiveness and efficiency of CRM services provided by the HDFC bank, b) To examine the effects of CRM on business performance an operational effectiveness and to evaluate the improvements in customer service due to it, to assess the awareness of the bank employees to the concept of CRM and its benefit for the organization, c) To determine the extent of customer satisfaction level by conducting interviews, distributing questionnaire and carrying out a survey in HDFC Bank, d) To gather relevant data and critically analyzing it using a vast variety of sources and research tools. By adapting CRM processes, the bank has provided its customers with satisfactory services with increased customer and helped build better relations. CRM has an impact on every bank operation and function. CRM has guided bank to induct latest technological system and application to collect, analyse and use customer information effectively and efficiently run the day to day operations of the bank. CRM has provided a means to better communication and coordination of employees with customers. Other benefits that have gained include reduction in cost, speedy transactions, reliable flow of information. The bank has achieved the overall objectives of using technology to organize, automate and synchronize business processes with the implementation of CRM and has been successful in finding, attracting and wining new clients and reducing the costs of marketing and client service. The bank realizes the importance of CRM today's competitive environment that it considers it as an integral part of its strategic business plan. CRM integrated approach makes all the difference to satisfying customers, retaining their loyalty, providing added value and generating growth. In fact, CRM might be the difference between the bank to flourish and failure to survive. The chapter encompass the analysis and evaluation of the data collected via different research methods and includes both qualitative and quantitative measures taken into account. Interviews were purposely kept informal and qualitative data was
collected about the banks strategy, plan, objectives, and actions taken regarding the adaption and use of CRM system and application. The survey from employees was mainly concerning the effects of CRM on their performance and how it affected their day to day bank functions and operations. The data gathered by interviews provided helpful information about the bank strategic plans and policies and gave insight into the banking operations. It also provided information and technology, and its effects on the employee performance, customer satisfaction, increased sales targeting, overall culture of the organization, etc. The objective of the interviews was to have the complete picture of what the aims of the management were to evaluate the efficiency and effectiveness of the CRM systems. The researcher analyzed the current situation of the CRM and how effective it was and in line with the IT services and if it supported the business strategy keeping in view the future developments and enhancements in IT. HDFC Bank has, for the first time in India made the e-shopping experience secure online and real time with the launch of its payment gateway. This will allow any Visa/Master credit card holder to make payments for global services anywhere in the world over the Internet. The bank has tied up with 15 portals and is in talk with several others to offer secure business to customer e-com. transactions. The first secure, on-line and real-time e-com. credit card transaction in the country was done on the Easy.2 shoppe.com shopping mall, enabled by HDFC bank on a Visa card, heralding the launch of the payment gateway. HDFC Bank also offers a direct debit option whereby its customer can pay for the goods or services by a secure CRM based alone on Internet will seems to be a wrong strategy for banks in India.
CONCLUSION The data collected by applying primary sources has been analyzed and presented in data analysis section. The data collected from secondary sources like books, latest journals and articles, websites, etc has been critically analyzed by taking into account theories, concepts, etc on CRM and related issues by various academic scholars. The result provided gives information on how effectively HDFC Bank has managed to use CRM system and applications and how efficiently it has been in applying CRM tools, processes and strategy. By incorporating CRM efficiently, the bank has improved its performance as well as the performance of its satisfaction. Changes produced by CRM are intense. CRM has helped the bank to access ideas and experiences from variety of sources. CRM applications have delivered many benefits across bank operations, organizational processes and functions. CRM has improved information and increased knowledge management. It helped to reduce costs of transaction and increased speed and reliability of transactions. CRM technology has also improved effective communications and service quality. HDFC Bank has achieved almost all its objectives by introducing CRM technology and processes with the bank. They have received better response from employees and customers than expected. The bank can improve further by updating its CRM policies and procedures. In conclusion CRM, is important as it has positively influenced every business functions which helped in improving the customer service and relations.
Definition - What does Customer Relationshi p M arketing (CRM ) mean?
Customer relationship marketing (CRM) is a business process in which client relationships, customer loyalty and brand value are built through marketing strategies and activities. CRM allows businesses to develop long-term relationships with established and new customers while helping streamline corporate performance. CRM incorporates commercial and client-specific strategies via employee training, marketing planning, relationship building and advertising.
WHY CRM IN BANKING ?
Consumers largely select their banks based on how convenient is the location of bank to their homes or off The pressures of competitive and dynamic markets have contributed to the growth of CRM in the Financial Services Sector. Analysis suggests that a 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they believe to be highly personalized services to the High Net Worth Customers. Traditionally, few people changed their banks unless serious problems occurred. Today, financial institutions can no longer rely on these committed relationships or established marketing techniques to attract and retain customers. The Internet revolution.
CRM IN BANKING SECTOR
Over the last few decades, technical evolution has highly affected the banking industry. For more than 200 years, banks were using branch based operations. Since the 1980s, things have been really changing with the advent of multiple technologies and applications. Different organisations got affected from this revolution; the banking industry is one of it. In this technology revolution, technology based remote access delivery channels and payment systems surfaced. ATM displaced cashier tellers, telephone represented by call centers replaced the bank branch, internet replaced the mail, credit cards and electronic cash replaced traditional cash transactions, and interactive television will replace face-to-face transactions. In recent years, banks have moved towards marketing orientation and the adoption of relationship banking principles. The key motivators for embracing marketing principles were the competitive pressure that arose from the deregulation of the financial services market particularly in India. This essentially exposed clearing banks and the retail banking market to increased competition and led to a blurring of boundaries in many traditional product markets. The bank would need a complete view of its customers across the various systems that contain their data. If the bank could track customer behaviour, executives can have a better understanding, a predicative future behaviour and customer preferences. The data and applications can help the bank to manage its customer relationship to continue to grow and evolve. Most sectors of the financial services industry are trying to use CRM techniques to achieve a variety of outcomes. In the area of strategy, they are trying to: • Create consumer -centric culture and organisation; • Secure customer relationships; • Maximize customer profitability; • Integrate communications and supplier – customer interactions across channels; • Identify sales prospects and opportunities; • Support cross and up-selling initiatives;
• Manage customer value by developing propositions aimed at different customer segments; • Support channel management, pricing and migration. CRM is a sound business strategy to identify the bank‟s most profitable customers and prospects, and devotes time and attention to expanding account relationship with those customers through individualised marketing, reprising, discretionary decision making, and customised service through the various sales channels that the bank uses. Any financial institution seeking to adopt a customer relationship model should consider six key business requirements they are: 1. Create a customer-focused organisation and infrastructure. 2. Gaining accurate picture of customer categories. 3. Assess the lifetime value of customers. 4. Maximise the profitability of each customer relationship. 5. Understand how to attract and keep the best customers. 6. Maximise rate of return on marketing campaigns. CRM is developing into a major element of corporate strategy for many organisations. A greater focus on CRM is the only way the banking industry can protect its market share and boost growth. With intensifying competition, declining market share, deregulations, smarter and more demanding customers, there is competition between the banks to attain a competitive advantage over one another or for sustaining the survival in competition. In India, the banking sector has been operating in a very stable environment from last thirty -forty years. In current scenario of banking sector, the falling of interest rates and tough competition between these players had made Indian bankers to realise that the purpose of their business is to create and retain a customer and to see that the entire business process is consistent with an integrated effort to discover, retain and satisfy customer needs. But the success of' CRM Strategy depends upon its ability to understand the needs of the customer and to integrate them with the organisation's strategy, people, technology and business
process. Financial services are in a structural change whereby competition and customer demands are increasing.
NEED OF CRM IN BANKING INDUSTRY
A Relationship-based Marketing approach has the following benefits: 1. Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. 2. Long-term customers are more likely to become a referral source. 3. The longer a relationship continues; the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell the product / service range. 4. Customers in long-term relationships are more comfortable with the service, the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error. With increased number of banks, products and services and practically nil switching costs, customers are easily switching banks whenever they find better services and products. Banks are finding it tough to get new customers, and more importantly, retain existing customers.
BANKING INDUSTRY REVOLVES AROUND THREE BASIC FEATURES: 1. Intangibility:
Unlike a product which can be seen and benefits derived accordingly, the banking industry thrives practically on the quality of the services rendered. The experience of the customer determines the growth of the business. 2. Variability:
The present day customer is impatient and is highly demanding and dos not compromise on the quality of the service rendered, as he expects that high cost equals high quality and vice versa. 3. Satisfiers:
Unlike the manufacturing industry that wholly depends on the tangibility and extrinsic factors, the service industry is totally dependent on the intrinsic and extrinsic factors, which have a close earring on the core benefits. It is obvious from these features that the customer is the fulcrum for the banking industry and any initiative adopted for its growth is to be aimed at, for and through the customer. And the banks to be competitive it build up a strong CRM by convergence model in the financial industry and financial liberalization. CRM about a business strategy , which drives changes in the banking and work processes, enabled by information technology. Banking institution must initially develop a strategy to understand and anticipate the need of the current and potential customer base.
IMPORTANCE OF CRM IN BANKING INDUSTRY
Customer relationship management, or CRM, is very important to the banking industry. Banks and other financial services companies invest billions of dollars annually on operating CRM programs.
CUSTOMER SATISFACTION:Delivering a better total customer experience has been a primary goal of CRM programs. In banking, this caused bankers to add ATM machines and Internet banking. The result was improved customer retention and loyalty. These results prompted more banks to explore the benefits of a CRM program. BUNDLING:Bundling of services has become common in financial services. Banks not only want to retain customers but try to leverage relationships through bundling of services. CRM solutions help banks maintain individual views of customer accounts in order to offer the best customer value, to offer upgrades and additional financial products, and to analyze customer data for relationship-building and marketing. CUSTOMER BENEFITS:For many customers, a strong banking relationship is as vital as any other business relationship they maintain. This gives CRM-driven banks an advantage in that customers want the benefits of a solid relationship. Common benefits for customers of banks using CRM include wider access with branch locations, Internet and ATMs; access to service and support; discount credit rates and enhanced savings; and other customization opportunities.
CUSTOMER RELATIONSHIP MANAGEMENT IN FINANCIAL SERVICES
Consumer loyalty is a major concern throughout the financial services sector, particularly in the mortgage market. However, like many other services, financial services have characteristics that pose a number of problems for those seeking to create successful customer relationships. Today, many financial services organisations are rushing to become more customer focused. A key component of many initiatives is the implementation of Customer Relationship Management(CRM) software. Our research has highlighted that most institutions take a rather narrow view of CRM and as such, benefits have been limited. While second generation CRM has emerged to embrace the total organisation (hence Enterprise CRM), success in general has still not been widespread. In the paper, a framework is presented which is based on incorporating e-business activities, channel management, relationship management and back-office/ front-office integration within a customer centric strategy. Once upon a time retailers, banks, insurance companies and car dealers had a close relationship with their customers. They often knew them individually, understood what they wanted, and satisfied their needs through personal customised service. As a result, they earned loyalty and a large share of their customers‟ business. This, however, was a costly and inefficient system and customers effectively subsidised this relationship by paying higher prices. Over the years, through mass marketing and increased consumerism customers traded relationships for anonymity, reduced variety and lower prices. Although CRM is a recent concept, its tenets have been around for some time. Marketeers have always promoted close relationships with customers. Customer profitability has been touted as significant for many years, but has been difficult to determine as many institutions are organised along product or channel lines as opposed to customer. Similarly, the concept of mass customisation has been in the literature for nearly a decade.
THE EMERGING TRENDS OF CRM IN FINANCE INDUSTRY
The growing demand for financial CRM is supported by demands for a comprehensive customer relation management solution that will help with customer retention. Adoption hasn‟t been more fluid and flexible like this before. Even since the introduction of CRM solutions during 1990s financial sector had been reserve in adoption software solutions. But things are taking a different turn now. The coming days of CRM solution for finance industry will be commanded by the following emerging trends.
Banks and financial institutes are now focusing more on offering customer centric business. Services like interactive voice responses (IVRs) and selfservice account management solutions have been adopted to improve customer experience. Banks are also opening new channels of communications where customers can get faster response to their finance related questions. The industry is now putting forth effective customer experience monitoring and measuring standards that will tell them more about what their customers feel about them. A positive move in this regard is acceptance of social media as a platform to offer customer services. Some banks and many financial institutions are now offering customer services and taking initiatives in engaging customers Financial agencies are promoting CRM adoption to standardize agent action to meet compliance guidelines. The software has helped them creating a unified platform that promotes interaction and collaboration within team. It has given more control to the banks and other financial firms to monitor agency activities and minimize revenue leak. Integrating business intelligence to CRM software solutions can prove extremely useful for a regulated industry like financial sector. This helps in improving compliance and audit standards and promotes uniformity across organization. The financial sector is increasingly moving their services to hosted environment. When during the 90s financial institutions invested heavily on the integrity of software hosted on their internal servers today there is a growing trend that shows increasing inclination towards software as a service (SaaS) solutions. CRM automation has helped with saving money. It has further helped with improving efficiency; introduced flexibility and agility to banking services. Many financial institutions now promote online filling in and submission of forms.
EXECUTIVE SUMMARY
This project is to know about the effectiveness of customer relationship management in HOUSING FINANCE DEVELOPMENT CORPORATION BANK (HDFC). Today Consumers largely selected their banks based on how convenient the location of bank's branches was to their homes or offices. With the advent of new technologies in the business of bank, such as Internet Banking and ATMs, now customers can freely chose any bank for their transactions. The pressures of competitive and dynamic markets have contributed to the growth of CUSTOMER RELATIONSHIP MANAGEMENT (CRM) in the Financial Services Sector. Banks have abandoned traditional method of serving the customers. They are using newly method of fulfilling the need of the customers. They are giving emphasizes on maintaining the customer relation as product of all the banks are the same and in order to differentiate from others, they are targeting the customer by fulfilling their individual needs. These branches are providing every type of the facility to its customers like accounts, loans, mutual funds, insurance etc… This project is based on the data collected by the personal interview, questionnaire method and other secondary sources, mostly and covered customer of all age group and I have covered 100 respondents, who have their accounts in banks which include students, businessmen and employees. From analysis of this project I have concluded that most of the customers are satisfied from the dealings, products, services, and the facilities provided by the bank. The bank is providing all the competitive products and services to the customers suit to their particular requirements. It has different types of Saving accounts, Current accounts, Loans, and Investment proposals etc., which are highly technical products to compete with other banks. People who are using the services of other banks are generally attracted with the highly efficient staff and services like InstaAlert etc. Majority of the people prefer to open their accounts in HDFC Bank because of their wide network and tie up with other bank‟s branches and companies. Though it is in the mind of the people that public sector banks don‟t give the best service but my project result is totally opposite to this. The survey shows that 88% customers are fully satisfied with the bank‟s performance and their dealings. But the other side that come into light while this study is that some customers are also not satisfied with the dealings of the bank because of some reasons and Bank has to take corrective measures.
