INDEX

Content Content Page

No. No.

1 Chapter no: 1 INTRODUCTION

1.1 Introduction to banking

1.2 Introduction to CRM
1.3 Meaning and definition of CRM
1.4 Types of CRM
1.5 Origin of CRM
1.6 History of CRM
1.7 Need of CRM
1.8 The emergence of CRM
1.9 CRM in Indian banking
1.10 Benefits of CRM
1.11 Importance of CRM in banking
1.12 Implementation of CRM in banking
1.13 Challenges of CRM implementation by bank

2 Chapter no: 2 RESEARCH & METHODOLOGY

2.1 Importance of the of the study

2.2 Objectives of the study
2.3 Scope of the study
2.4 Research design
2.5 Data sources

a) Primary data
b) Secondary data

2.6 Limitation
3 Chapter no: 3 REVIEW OF LITERATURE

3.1 Kaujalgi (1999): IT performs better customer

satisfaction

3.2 Greenberg (2004): Bank maintain CRM through provide

Various services
3.3 Uppal R.K. (2008): Lack of awareness of e-banking
Services to manage CRM
3.4 Dutta at al (2009): Analyze the exists gap between
Customer satisfaction
3.5 Dixit at al (2010): Strategy applying to manage
Different age group of customer
3.6 Research gap

4 Chapter 4: DATA ANALYSIS & INTERPRETRATION

4.1 Analysis of questionnaire through

a) Pie chart
b) Bar graph

4.2 Analyze the different services provided by the bank

For customer satisfaction
4.3 Analysis the grievances redressed option provided by
Bank

5 Chapter 5: FINDINGS, CONCLUSION & SUGGESTIONS

6 Chapter 6: BIBLIOGRAPHY & ANEXURE

CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION TO BANKING

Sec 5 (b) of the Banking Regulation Act, 1949 defines banking as “accepting for
the purpose of lending or investment, of deposits of money from the public,
repayable on demand or otherwise, and withdrawal by cheque, draft, order or
otherwise.”

Prior to initiation of reforms in 1991, Indian banking industry suffered from lack of
competition, low capital base, inefficiency and high intermediation costs. Ever since
the bank nationalization of 1969, the banking sector had been dominated by the
public sector along with a high degree of financial repression characterized by
administered interest rates and allocated credit. Banking sector reforms of the last
two decades have placed greater emphasis on structural measures and improvement
in standards of disclosure and levels of transparency in order to align the Indian
standards with international best practices. Reforms have brought about considerable
improvements as reflected in various parameters relating to capital adequacy, asset
quality, profitability and operational efficiency.

The key objective of reforms in the banking sector in India has been to enhance
the stability and efficiency of banks. An outstanding feature of banking sector
reforms in India has been the emergence of micro credit as the most suitable and
practical alternative to the conventional banking in reaching the hitherto unreached
poor population. The Self-help Group (SHG)-Bank Linkage Programme was formally
launched in the year 1992 as a flagship programme by National Bank for
Agriculture and Rural Development (NABARD) an aptly supported by the Reserve
Bank of India (RBI) through its policy support.

IMPORTANCE OF BANKING
Banks play very important role in the economic life of the nation. The health of
the economy is closely related to the soundness of its banking system. Although
banks create no new wealth but their borrowing, lending and related activities
facilitate the process of production, distribution, exchange and consumption of
wealth. In this way they become very effective partners in the process of economic
development. Today, modern banks are very useful for the utilization of the
resources of the country. The banks are mobilizing the savings of the people for
the investment purposes.

In recent years, the banking industry around the world has been undergoing a rapid
transformation. In India also, the wave of deregulation of early 1990s has created
heightened competition and greater risk for banks and other financial intermediaries.
The cross-border flows and entry of new players and products have forced banks to
adjust the product-mix and undertake rapid changes in their processes and
operations to retain competitive.
1.2 INTRODUCTION TO C.R.M

CRM, or Customer Relationship Management, is a company-wide business strategy

designed to reduce costs and increase profitability by solidifying customer loyalty.
True CRM brings together information from all data sources within an organization
(and where appropriate, from outside the organization) to give one, holistic view of
each customer in real time. This allows customer facing employees in such areas as
sales, customer support, and marketing to make quick yet informed decisions on
everything from cross-selling and up-selling opportunities to target marketing
strategies to competitive positioning tactics.

Once thought of as a type of software, CRM has evolved into a customer-centric

philosophy that must permeate an entire organization. There are three key elements
to a successful CRM initiative; people, process, and technology. The people
throughout a company from the CEO to each and every customer service
representative need to buy in to and support CRM. A company’s business processes
must be reengineered to bolster its CRM initiative, often from the view of, how can
this process better serve the customer? Firms must select the right technology to
drive these improved processes, provide the best data to the employees, and be easy
enough to operate that users won’t balk. If one of these foundations is not sound,
the entire CRM structure will crumble.

It’s a strategy used to learn more about customers’ needs and behaviors in order to
develop stronger relationships with them. After all, good customer relationships are
at the heart of business success. A component to CRM, but thinking about CRM in
primarily technological terms is a mistake. The more useful way to think about
CRM is as a process that will help bring together lots of pieces of information
about customers, sales, marketing effectiveness, responsiveness and market trends. If
customer relationships are the heart of business success, then CRM is the vale the
pumps a company’s life blood. As such, CRM is best suited to help businesses use
people, process and technology to gain insight into the behavior and value of customer.
1.3 MEANING & DEFINEATION OF CRM

DEFINE CRM:

Customer Relationship Marketing is a practice that encompasses all marketing

activities directed toward establishing, developing, and maintaining successful long-
term relationships. The focus of relationship marketing is on developing long-term
relationships and improving corporate performance through customer loyalty and
customer retention.

Customer Relationship Management (CRM) as the name suggests, the primary focal
point is placed on the customer. The key objective is to increase customer value
over time by increasing customer loyalty. If a company develops better customer
relationships, it also improves business processes as well as its profits. In general,
CRM is a more efficient automated method used to connect and improve all areas
of business to focus on creating strong customer relationships. All forces are coupled
together to save, improve, and acquire greater business to customer relationships. The
most common areas of business that are positively affected include marketing, sales,
and customer service strategies.

CRM helps create time efficiency and savings on both sides of the business
spectrum. Through correct implementation and use of CRM solutions, companies gain
a better understanding of their strongest and weakest areas and how they can
improve upon these. Therefore, customers gain better products and services from
their businesses of choice. In order to achieve better insight on CRM, it is essential
to consider all of its components.
CRM- MEANING

Customer relationship management (CRM) is a business strategy that spans your

entire organization from front office to back-office. It is a commitment you make to
put customers at the heart of your enterprise. The right CRM strategy and solutions
can help you securely, reliably and consistently delight your customers every time
they interact with your business by empowering them with anytime, anywhere, and
any channel access to accurate information and more personalized service. Reach
more customers more, effectively, increase customer retention and boost customer
loyalty by leveraging opportunities to up-sell and cross-sell and driving repeat
business at lower cost Drive improvements in business performance by providing
your customers with the ability to access more information through self-service and
assisted-service capabilities when it is convenient for them. Enable virtualization in
your enterprise as more of your people and resources extend beyond your offices
and around the world Balance sophisticated functionality with rapid implementation
and effective support for a faster return on your CRM investment. Today’s
customers face a growing range of choices in the products and services they can
buy. They base their choices on their perception of quality, value, and service. Each
Consumer has a specific behavior. But buying habits are sometimes difficult to understand.
Therefore companies always want to gain some insight5 about consumer behavior
and habits in order to better control this behavior. Having an impact on consumer
behavior means being able to change consumer’s perception of the product or
service, to establish a relation between the company and its clients.
1.4 TYPES OF CRM

Nowadays, three major types of customer relationship management systems, namely

operational CRM, analytical CRM and collaborative CRM are being used in many
organizations.

 Operational CRM: It provides support to front-office business process that involves

direct interaction with customers through any communication channel, such as
phone, fax, e-mail, etc. The details of every interaction with customers, including
their requirements, preferences, topics of discussion etc., are stored in the customers’
contact history and can be retrieved by the organization’s staff whenever required.
This, it presents a unified view of customers across the organization and across all
communication channels. Examples of operational CRM applications are sales force
automation (SFA), customer service and support (CSS), enterprise marketing
automation (EMA), etc.
 Analytical CRM: It enables to analyze customer data generated by operational
CRM applications, understand the customers’ behavior, and derive their true value to
the organization. This helps to approach the customers with pertinent information
and proposals that satisfy their needs. The analytical customer relationship
management applications use analytical marketing tools like data mining to extract
meaningful information like the buying patterns of the customers, target market,
profitable and unprofitable customers, etc. that help to improve performance of the
business.

 Collaborative CRM: It allows easier collaboration with customers, suppliers, and

business partners and, thus, enhances sales and customer services across all the
marketing channels. The major goal of collaborative customer relationship
management applications is to improve the quality of services provided to the
customers, thereby increasing the customer’s loyalty. Examples of collaborative
CRM applications are partner relationship management (PRM), customer self-
service and feedback, etc.
1.5 ORIGIN OF CRM

CRM originated in early 1970s when the business units had a manifestation that it would be
advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was
because of this heedful perceptiveness. The famous writer and management consultant Peter
Drucker wrote; ‘The true business of every company is to make and keep customers’.

Traditionally every transaction was on paper and dependent on goodwill which created
hindrance in clutching customers. People used to work hard in entertaining customers by
presenting new products with astonishing services; they were ready to work overtime for
grasping more and more customers for increasing business, This too resulted in customer
satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding
or relation between the two to carry on with future business smoothly.

Previously business was quite easy as it was mere a one-to-one dealing without any specific
process. But with time, due to incoming complexities in communication, it found in troubled
waters. Emerging of new strategies and technologies on global marketplace and a mammoth
degree of competition in business, the approach needed to be changed to proactive rather than
reactive. Origination of CRM turned out to be a piece of cake for all suppliers and customers
due to its advantages. Customer relationship management came as a process that dealt with
customers surpassing the whole business.

Originally customer relationship management was based on three major principles; shielding
the current customers, fostering new customers and enhancing asset value of all technology,
business perspectives were totally changed. A CRM system eventually emerged as consisting
of company-full of information which is depicted sophistically to increase business profit and
meliorate customer satisfaction and loyalty, on the same hand reduces business cost and
investment. The outgrowth in origin of CRM as a strategic approach is result of some of the
following important perspectives:
1. The belief that customers are the real assets and not just the people in the audience.
2. The maturation of one-to-one transaction advent.
3. Extensive use of software and technologies to maintain useful information and no manual
labour.
4. The realization of the benefits of utilizing information proactively and no reactively.
5. The change of business view to relationship approach rather than transactional approach.
6. The approach of concentrating more on customer values rather than concentrating on how
the product is delivered to the customer.
7. The approach of focusing on customer satisfaction and loyalty rather than focusing self
satisfaction and profit.
8. The acceptance of the fact that using high end technologies and software the cost can
radically be decreased without compromising on quality and service of products.
9. The increasing tendency to retain existing customers and trying to get more and more
business out of them.
10. The realization that the traditional trends of marketing and selling are increasingly fading
out in the current economic scenario.
1.6 HISTRY OF CRM

CRM hasn’t always been the robust, stand-alone software that so many businesses rely on
today. Over the past four decades, it has evolved out of a variety of other business programs.
During that time, the CRM industry has undergone sea-changes and shakeups that could
have derailed the entire concept.

The 1980s: Pioneered by Robert and Kate Kestnbaum, database marketing collected and
analyzed customer information. Using statistical modeling, that data was then used to help
customize communications with other potential customers.

In 1986, ACT introduced the business world to contact management software. Essentially a
digital rolodex, ACT allowed for the efficient storage and organization of customer contact
information. Goldmine and other vendors also released CMS programs throughout the 80s.

Near the close of the decade, the proliferation of personal computers and the advent of
server/client architecture paved the way for an explosive growth in software development.

The1990s: The beginning of 90s brought the first major step toward true CRM software.
Early innovators like Brock Control Systems helped push the evolution of contact
management software toward sales force automation (SFA). SFA took many of the features
of database marketing, automated them, and combined them with contact management. This
provided businesses with much more useful customer information. It also automated
business tasks like inventory control, and sales tasks like customer interaction tracking. IN
1993, Tom Siebel left Oracle to create Siebel Systems. While at Oracle, Siebel tried
unsuccessfully to convince CEO Larry Ellison to package and sell their internal sales
application as a standalone product.

Siebel Systems quickly became the leading SFA provider on the market.

By 1995, SFA and contact management had evolved to closely resemble modern CRM
software. However, this emerging product still didn’t have proper name. A number of terms
use. By the end of 1995, CRM won out. Some attribute this to the technology research
company Gartner, while Tom Siebel is also named as a possible source. Either way, the
CRM industry finally had a name.

The last of the decade brought huge changes to the CRM industry. Enterprise resource
management (ERP) vendors like Oracle and Baan entered the market with the sole purpose
of capitalizing on emerging applications. All of this competition pushed CRM vendors to
provide a broader suite of services. More marketing, sales and service applications were
added to CRM on a near-constant basis.

1999 was a busy year for the CRM industry. A number of notable, high-value acquisitions
consolidated the overall market, while emerging e-CRM vendors provided fierce
competition. Using intranet, extranet, and internet, e-CRM vendors offered a level of intra-
organizational collaboration that hadn’t previously been available in the CRM industry.
CRM also made its first foray into the mobile market, with the introduction of Siebel
Handheld.

The 90s came to an end with the debut of the first major software as a service (SaaS)
vender. Geared toward smaller businesses, Sales force was initially ignored by larger
venders. Under the leadership of Mark Benioff, Sales force eventually grew to rival CRM
industry giants like Siebel Systems.

The 2000s: Like most software industries, the CRM industry was hit hard by the bursting of
the dot-com bubble. The entire industry retracted, with giants like Oracle reporting license
losses of more than twenty-five percent.

Due to reluctance to use “dot-com” technologies, e-CRM vendors were hit the hardest.

In the early years of the 2000’s, Paul Greenberg’s book “CRM at the Speed of Light”
suggested a more comprehensive CRM system that manages all business relationships. By
the end of the decade, this became the common thinking across the CRM industry.

Through the middle of the decade, interoperability with legacy software became more
important. Software giant Microsoft entered the CRM market with Dynamics CRM, and
Oracle acquired Siebel and numerous other enterprise application vendors.
In 2004, Sales force created the next big change in the CRM industry. Force.com introduced
the world to cloud-based CRM. Force.com addressed the criticism that cloud-based
applications weren’t customizable. Social CRM exploded onto the market with the
introduction of Comcast Care-an application that focused more on interaction than
transaction. Most large corporations quickly followed Comcast’s example, solidifying the
place of social CRM.

Through the end of the first decade, and up to the present day, cloud-based and SaaS CRM
solutions continue to integrate more features like customer service and social CRM. Cloud-
based and SaaS CRM solutions continue to gain popularity, largely due to their lower initial
cost and easy integration with mobile devices.
1.7 NEED OF CRM

Unlike in the past, the banks are market driven and market responsive. With
the entry of new players and multiple channels, customers (both corporate
and retail) have become more discerning and less “loyal” to banks. This
makes it imperative that banks provide best possible products and services
to ensure customer satisfaction. To address the challenge retention of
customers, there have been active efforts in the banking circles to
switch over to customer-centric business model. The success of such a
model depends upon the approach adopted by banks with respect to
customer data management and customer relationship management.

Over the years, Indian banks have expanded to cover a large geographic
& functional area to meet the developmental needs. They have been
managing a world of information about customers – their profiles,
location, etc. They have a close relationship with their customers and a
good knowledge of their needs, requirements and cash positions. Achieving
customer focus requires leveraging existing customer information to gain a
deeper insight into the relationship a customer has with the institution,
and improving customer service-related processes so that the services are
quick, error free and convenient for the customers.

As is proved by the experience banks are now realizing that one of

their best assets for building profitable customer relationships especially in
a developing country like India is the branch- branches are in fact a
key channel for customer retention and profit growth in rural and semi-
urban set up. However, to maximize the value of this resource, our banks need to
transform their branches from transaction processing centers into customer-centric
service centers. This transformation would help them achieve bottom line business
benefits by retaining the most profitable customers. Branches could also be used to
inform and educate customers about other, more efficient channels, to advise on and
sell new financial instruments like consumer loans, insurance products, mutual fund
products, etc.

There is a growing realization among Indian banks that it no longer pays to have a
“transaction-based” operating model. There are active efforts to develop a
relationship-oriented model of operations focusing on customer-centric services. The
biggest challenge our banks face today is to establish customer intimacy without
which all other efforts towards operational excellence are meaningless. The banks
need to ensure through their services that the customers come back to them. This is
because a major chunk of income for most of the banks comes from existing
customers, rather than from new customers.

Customer Relationship Management (CRM) solutions, if implemented and integrated

correctly, can help significantly in improving customer satisfaction levels. Data
warehousing can help in providing better transaction experiences for customers over
different transaction channels. This is because data warehousing helps bring all the
transactions coming from different channels under the same roof. Data mining helps
banks analyze and measure customer transaction patterns and behavior. This can help
a lot in improving service levels and finding new business opportunities.
1.8 THE EMERGENCE OF CRM

The developing customer relationship management has historical antecedents going

back into the pre-industrial era. In the recent years however several factors have
contributed to the rapid development and evolution of CRM. These include the
growing de-intermediation process in many industries due to the advent of
sophisticated computer and telecommunication technologies that allow producers to
directly interact with the end customers.

The recent success of on-line banking, Charles Schwab and Merryll Lynch’s On-line
investment programs, direct selling of books, automobiles, insurance etc. on the
internet all at least to the growing consumer interest in maintaining direct
relationship with marketers. The de-intermediation process and consequent prevalence
of Customer Relationship Management is also due to the growth of the service
economy.

Another force driving the adoption of customer relationship management has been
the total quality movement. When companies embraced Total Quality Movement
philosophy to improve quality and reduce cost, it become necessary to involve
suppliers and customers in implementing the program at all levels of the value
chain. This needed close working relationships with customers, suppliers and other
members of the marketing infrastructure. Other programs such as Just in Time and
Material resource planning also made the use of interdependent relationships between
suppliers and customers.

Similarly in the current era of hype-competition, marketers are forced to more concern
with the customer’s retention loyalty. As several studies indicated, retaining customer
is less expensive and perhaps a more sustainable competitive advantage than
acquiring new ones. Marketers are realizing that it costs less to retain customers
than to compete for new ones. Today many large internationally oriented companies
are trying to become global by integrating their world wide operation. To achieve
this they are seeking cooperative and collaborative solutions for global operations
from their vendors instead of merely engaging in transactional activities with them.
Such customers need to make it imperative for marketers interested in the business
of companies who are globally adopt the Customer relationship management
programs, particularly global account management programs. Global account
management is conceptually similar to national account management programs except
that they have to be global in scope and this they are more complex. Managing
customer relationship around the world calls for external and internal partnering
activities, including partnering across firms worldwide organizations.
1.9 CUSTOMER RELATIONSHIP MANAGEMENT IN INDIAN BANK

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 for long 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. Son banks had a windfall doing almost noting. 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 RBI road-map, India will have 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 venders, 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 multiple philosophy that places the customer at the heart of a business
organization’s 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 organization’s 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.

Only time will tell how Indian banks embrace the CRM philosophy and take on the
competition from foreign entities.
1.10 IMPORTANCE OF CRM IN BANKING

CRM primarily caters to all interactions with the customers or potential customers, across
multiple touch points including the Internet, bank branch, call center, field organization and
other distribution channels.

CRM can help in following ways:

1 Campaign Management – Banks need to identify customers, tailor products and

services to meet their needs and sell these products to them. CRM achieves this through
Campaign Management by analyzing data from banks internal applications or by
importing data from external applications to evaluate customer profitability and
designing comprehensive customer profiles in terms of individual lifestyle preference,
income levels and other related criteria. Based on these profiles, banks can identify the
most lucrative customers and customer segments, and execute targeted, personalized
multi-channel marketing campaigns to reach the customers and maximize the lifetime
value of those relationships.
2 Customer Information Consolidation – Instead of customer information being stored
in product centric silos, (for e.g. separate databases of savings account & credit card
customers)m with CRM the information is stored in a customer centric manner covering
all the products of the bank. CRM integrates various channels deliver a host of services
to customers, while aiding the functioning of the bank.
3 Marketing encyclopedia - Central repository for products, pricing and competitive
information, as well as internal training material, sales presentations, proposal templates
and marketing collateral.
4 360-degree view of company – This means whoever the bank speaks to, irrespective of
whether the communication is from sales, finance or support, the bank is aware of the
interaction. Removal of inconsistencies of data makes the client interaction processes
smooth and efficient, thus leading to enhanced customer satisfaction.
5 Personalized sales home page – CRM can provide a single view where Sales Manager
and agents can get all the most up-to-date information in one place, including
 opportunity, account, news, and expense report information. This will make sales
decision fast and consistent.
6 Lead and Opportunity Management – These enable organizations to effectively
manage leads and opportunities and track the leads through deal closure, the required
follow-up and interaction with the prospects.
7 Activity Management – It helps managers to assign and track the activities of various
members. Thus improved transparency leads to improved efficiency.
8 Contact Centre – It enables customer service agent to provide uniform service across
multiple channels such as phone, internet, email, Fax.
9 Operational inefficiency removal – CRM can help in strategy formulation to eliminate
current operational inefficiencies. An effective CRM solution supports all channels of
customer interaction including telephone, fax, e-mail, the online portals, wireless
devices, ATMs, and face-to-face contacts with bank personnel. It also links these
customer touch points to an operations centre and connects the operations centre with
the relevant internal and external business partners.
10 Enhanced productivity – CRM can help in enhanced productivity of customers,
partners and employees.
11 CRM with Business Intelligence – Banks need to analyze the performance of customer
relationships, uncover trends in customer behavior, and understand the true business
value of their customers. CRM with business intelligence allows banks to assess
customer segments, which help them calculate the net present value (NPV) of a
customer segment over a given period to derive customer lifetime value. Customers can
be evaluated within a scoring framework. Combining the behavior key figure and
frequency to monetary acquisition analysis with a marketing revenue quota can optimize
acquisition costs and cut the number of inefficient activities.

With such knowledge, banks can efficiently allocate resources to the most profitable
customers and reengineer the unprofitable ones.
1.11 BENEFITS OF CUSTOMER RELATIONSHIP MANAGEMENT

A properly implemented CRM system can bring significant benefits to organizations. But
when I talk about a system, I mean the 3 P’s, the complete consortium of people
(employees, culture), not just an application running on a computer.

CRM is more than just the next wave of computer-aided marketing; it’s a way of doing
business. Let’s take a look at the advantages that a CRM or Customer Relationship system
can bring.

1. Shared or Distributed data

As companies realize that customer relationships are happening on many levels (not just
through customer service or a web presence), they start to understand the need for
sharing all available data throughout the organization. A CRM system is an enabler for
making informed decisions and follow-up, on all the different levels.

2. Cost Reduction
A strong point in Customer Relationship Management is that is making the customer a
partner in your business, not just a subject. As customers are doing their own order
entry, and are empowered to find the info they need to come to a buy decision, less order
entry and customer support staff is needed.

3. Better Customer Service

All data concerning interactions with customers is centralized. The customer service
department can greatly benefit from this, because they have all the information they
need at their fingertips. No need to guess, no need to ask the customer for the n-th time.
And through the use of push-technology, customer service reps can lead the customer
towards the information they need. And, most of the timer, the customer can do this on
their own, as the CRM system (remember, the 3 P’s) is more and more able to anticipate
the need of the customer. The customer experience is greatly enhanced.
4. Increased Customer Satisfaction
The customer feels that he is more “part of the team” instead of just a subject for sales
and marketing (the proverbial number), customer service is better, his needs are
anticipated. There is no doubt that customer satisfaction will go up. If the products sold
exceed the customer expectation, of course, no CRM system can help you with shoddy
products. In my opinion, the term satisfaction is a contaminated. Many companies think
that if customers satisfied that this is a good predictor for repeat business. However, this
is not the case. Only delighted customers have a great level of loyalty.

5. Better Customer Retention

If a CRM system can help to enchant customers, this will increase customer loyalty, and
they will keep coming back to buy again and again, hence customer retention.

6. More Repeat Business

The repeat business is coming from the delighted customers, who are turned from
doubting clients into loyal advocates.

7. More new Business

If you are delivering the ultimate customer experience, this will seed the word-of-mouth
buzz, which will spawn more new business.

8. More Profit
More business at lower cost equals more profit.
1.12 IMPLEMENTATION OF CRM IN BANKING

Implementing a customer relationship management (CRM) system at a bank rakes careful

planning. Banks need to involve key employees in the vendor decision so that they choose a
system which will give them the most for their investment. Ease of use and ability to view
information quickly are equally important to employees and managers. As
Destinationcrm.com points out, CRMs helps firms manage customer relationships better,
and customer relationships are vital to any company’s success.

1. Step 1
Gain employees: opinions. Ask bankers which data is important to them when tracking
customers and prospects. Most bank CRM systems include contact information, account
information and potential sale amounts. They also include an estimate of how likely it is
that the banker will convert a prospect into a new customer. When employees provide
input into the new system decision, they will be more willing to use the CRM when it is
rolled out.
2. Step 2
Research venders: Ask similar sized banks for vendor recommendations. Find out if the
vendor provided appropriate CRM features for the Bank’s specific needs. Ask if the
company delivered the system on time and if the firm provided sufficient support and
training to employees after the sale. Create a spreadsheet comparing vendor features and
pricing.
3. Step 3
Narrow the choices to three or four vendors. Meet with department managers that will
use the CRM system. Review the vendor choices and make a vendor decision as a
group. Arrange training by combining vendor resources and internal training resources.
Allow ample time for employees to learn the CRM system before holding them
accountable for using it.
1.13 CHALLENGES TO CRM IMPLEMENTATION BY BANK

The most pervasive challenges to effective customer knowledge include:

 The difficulty of obtaining a complete view of customers.
 The need to move away from disjointed, standalone, and inconsistent channels to
provide a cohesive, multichannel offering.
 The burden of disconnected legacy systems and disparate databases that store client
financial data.
 The cost and complexity of meeting stringent government regulatory and client
security and privacy requirements.
 The pressure on margins and growth prospects form increased competition.
 The costs associated with retaining customers and developing customer loyalty.

Although CRM can help banking institutions efficiently manage their customers, many
banks fail to meld the concept into the prevailing work culture. But the high incidence of
CRM failure has very little to do with the CRM concept itself. Usually it’s a case of the
banks failing to pay attention to customer data they already have.

A lot of banks underestimate the magnitude of CRM. They tend to treat it just like any other
application technology, without realizing that CRM, if done properly, is a strategic initiative
that touches all areas of an organization. According to CRM software firm People soft,
banks need to be aware of three key problems:

 Measuring CRM benefits

A key basic CRM challenge is establishing the measurement method. Banks may find it
hard to build the initial business case justification and then to prove the worth or success of
their investment what makes the later task even more difficult is the fact that the metrics that
are best used to justify a significant IT investment are not always the most appropriate for
evaluating ongoing success.
When banks seek to justify the cost of their investment in CRM-related technology they
usually focus on hard numbers, typically those related to decreased costs and increased
sales. In other words, the proponents look to justify the top-line expenses with bottom-lines
benefits.

Traditionally, banks have determined the success of any project or product mainly in terms
of internal business gauges such as return on investment, units sold asset growth, or service
level agreement measures. One exception to the typical practice of focusing solely on
internal data for gauging success is market share, or market performance. Interestingly, most
CRM practitioners quickly default to marketing and sales measures when asked about the
success of CRM implementations. The tendency to frame the discussion of CRM
measurements in terms of sales and marketing measures is completely understandable given
the phased nature of most CRM projects.

Since the majority of CRM projects are expensive multiphase and multiyear projects that
often involve multiple technologies the funding for CRM projects is also often phased.
CRM sponsors grant funding to project leaders at the completion of one phase and start of
the next. To ensure that the subsequent phases will get funding, project leaders typically
build into each phase of a CRM project demonstrable business benefits.

At completion of each phase of a project, business benefits are expected to accrue rapidly to
the bank. Revenue generation-whether through sales or marketing improvements- is the
preferred business benefit for CRM project sponsors. Not surprisingly, it is far easier to
continue funding large; intricate IT projects when incremental revenue generation can be
squarely identified.

 Customer profitability

Many banks use profitability as a key component in determining how to treat their
customers. But measuring profit in a bank is not easy task. Many banks allow the use of an
accountant’s approach to the measurement process. This means the accounting and finance
people are in charge of the process, resulting in textbook-accurate allocations that often do
not accurately reflect the activities they are intended to measure.
For example, most bank costs are step-fixed. This means they are neither purely fixed nor
purely variable, with the resource able to process only a finite number of transactions before
more investment are required. The way the step-fixed resources are allocated can
dramatically affect the resulting measurement of account level profitability.

 The 80-20 Rule

Most banks make critical pricing decisions based n the so-called 80-20 rule, the notion that
80 percent of profits derive from 20 percent of customers. This may be true, but the use of
incomplete or inaccurate cost information and unproven hypotheses on customer buying
behavior make this rule difficult to apply. One significant problem is that banks let their
customers use the bank’s products and services in an unprofitable way.

By providing a lower level of service to these customers, the bank faces the danger of
driving them away to institutions that provide better service. Given the step-fixed nature of
bank costs as discussed, banks should not view losing unprofitable customers as the way to
improved profits.
 CHAPTER 2: RESEARCH & METHODOLOGY

2.1 IMPORTANCE OF THE STUDY

Customer relationship management is very essential to every organization to maintain

longer relationship with the customers. If one company not measures the customer
satisfaction and needs of the customers that cannot find the possible remedies to counteract
the competition. CRM also helps to make appropriate strategies which are needed to sustain
with environmental changes. Many studies were conducted to understand customer
satisfaction levels and needs. Many studies have done in this particular topic but there are
still some issues faced by the customers. So I have been taken up this study.

2.2 OBJECTIVES OF THE STUDY

The main objective of the study is to identify the importance of CRM in banking sector, and
its effect on the customer with a special reference to Banks. The other objectives are:

 To identify the Customer Relationship Management (CRM) practices in banking

sector in India.
 To analyze the service quality offered by bank.
 To portray the origin, need of CRM and CRM in banking sector.
 To analyze the socio-economic profile of the customers and their level of perception
towards Customer Relationship Management.
 To access the perception and satisfaction of the customers with the bank.
2.3 SCOPE OF THE STUDY

1. Scope of this research is limited Indian banking sectors only.

2. Research is carried out in Dadar, Mumbai only.
3. Research Explores certain customer related aspects such as attitude of employees,
Saving account portability, Locker facility, ATM facility, Passbook facility, internet
banking, timings, Issue of DD, Customer Care, Ambience, Collection of Cheques,
Issue of Cheque book, information about new products and services, Cheque
Deposit for collection and Handling of Grievances of the customers.

2.4 RESEARCH DESIGN

Research Design : Descriptive in Nature

Research procedure : Survey Method

Research instrument : A well design and structured Questionnaire

 Data Sampling
Sample Size : 30 respondents
Sampling procedure : Random Questionnaire
Statistical tools : Simple percentage
2.5 DATA COLLECTION

Data were collected from primary data and secondary sources

Primary Data : It were collected through the well designed questionnaires, schedule by
Direct contact methods

Secondary Data : The secondary data was gathered from various websites, newspapers,
Text books, Magazines

2.6 LIMITATIONS OF THE STUDY

Limitations as mentioned below:

 The study is mainly based on the data collected from the customer of various banks;
therefore, the accuracy of the data provided by them is relied upon the point of time
taking perceptions from the customers.
 The study is carried out through the customer of various banks availing with, so the
findings may not the entire banking sector.
 The study is carried out only in Dadar, so the findings may not represent the whole
country.
 Time, length, and depth of the study are limited as per the requirements of Mumbai
University.
 CHAPTER 3: REVIEW OF LITERATURE

Literature review was carried out of reviewing and analyzing information related to CRM,
which was collected from various sources like books journals, magazines and electronic
journals and articles from various websites. As the study was exploratory in nature,
literature on CRM was collected during the entire course of the study. The literature review
with the objectives of framing the research objectives, understanding the practical
implications of CRM, understanding emerging trends in CRM, and for gaining insights into
various theoretical concepts related to CRM. Following are some of the review of literature
of some researchers:

 According to Mr. Kaujalgi (1999), stated that information Technology (IT)

performs an important role for giving better customer services, at a lower cost.
Further he stresses that due to presence of advance automation technology, foreign
banks have the advantage in many banking area.
 According to Greenberg (2004), customer having many options among various
services provided by banks. He makes business relationship depends on his
economy, faith and products, efficiency and services.
 Uppal R.K. (2008) stated that in spite of lack of awareness among the customers of
e-banking services, most of the customers uses the e-banks are satisfied with various
e-link and available services. It is further observed through the responses of
respondents that the future of e-banking is bright and that this e - channels will
definitely help in transformation of banking in a positive manner.
 Dutta et al (2009), the statistical analysis further reveals that there exists of a gap
between the customer expectations and perception in the banking sector. The
expectations of bank customer higher than their perception. This gap varies cross the
banking sector with public sector banks showing the widest gap and foreign banks
showing a narrow gap. Factor analysis further showed that tangible, assurance,
empathy and reliability dimensions are the explanatory variables predicting
customers ‘satisfaction in India.’ ATM machines in convenient places and tele –
 banking and internet banking facility. The findings further show that public sector
banks are neutral about the quality services offered.
 Dixit et al (2010), the bank management may classify the market strategy on age
group basis. They obtain their opinion to enable imparting necessary guidance for
use of online banking transactions. Interestingly, the study reveals that online
banking has a very promising future, as emphasized by the majority (84%) of
respondents.

RESEARCH GAP

As discussed, the existing studies have multiple points of views but none of them had
discussed about the specific study of customer awareness about CRM. Thus a need is felt to
initiate research in this direction so as to evaluate a model and establish relationship
between different parameters that will reflects the effectiveness and efficiency of CRM.
 CHAPTER 4: DATA ANALYSIS AND INTERPRETATION

For the data analysis the survey was taken by me was a well designed questionnaire for the
primary study. Approximately 60 to 70 people got questionnaire but only 50 persons
responded on it.

According to gender:

Interpretation

From the above pie chart it shows that from the 50 respondent 80% of respondent are male
and 20% are female responded to the questionnaire.
According to age:

Interpretation

From the above pie chart from the 50 respondent it can be assumed that all the age groups
have bank account.

And according to occupation mostly are doing service at private sector.

Do you have bank account?

a) Yes
b) No

Particulars No. of respondents percentage

Yes 49 98%
No 1 2%

Interpretation:

From the above pie chart, 98% of the respondents have bank account. So it can be assumed
that all the people have bank account according to the banks age limit.
Which bank account do you have?

a) Private bank
b) Nationalized bank
c) Co-operative bank / scheduled bank

Particulars No. of respondents Percentage

Private bank 22 44%
Nationalized bank 24 48%
Co-operative bank 11 22%
/scheduled bank

Interpretation:

According to the survey from the 50 respondents 44% respondents have account in private
bank, 48% of the respondents have account in nationalized bank and the remaining 11% of
respondents have account in other banks like Co-operative / scheduled bank.
 Which account facility you are availing with?

a) Saving account
b) Current account
c) Fixed Deposits
d) Recurring deposits

Particulars No. of Respondents Percentage

Saving Account 49 98%
Current Account 2 4%
Fixed Deposits 3 6%
Recurring Deposits 1 2%

Interpretation:

According to data received most of the people have saving account. And some of them have
other account along with the saving account.