Black Book CRM IN BANKS
Black Book CRM IN BANKS
Black Book CRM IN BANKS
SUBMITTED BY
CHIRAG NARAYANAN
PROJECT GUIDE:
MRS. ARCHANA PRABHUDESAI
SUBMITTED TO
UNIVERSITY OF MUMBAI
COMMERCE
2015-2016
DECLARATION
I, MR. CHIRAG NARAYANAN student of MCOM PART II. semester III (2017-
I further declare that the information imparted is true and fair to the best of my
knowledge.
SIGNATURE
(MR.CHIRAG NARAYANAN.)
ROLL NO.45
CERTIFICATE
___________________________
(Principal)
____________________________ _______________________
______________________
4
TABLE OF CONTENT
1 6
OBJECTIVES & METHODOLOGY
2 CHAPTER 1 7-17
3 CHAPTER 2 18-31
4 CHAPTER 3 32-49
5 CHAPTER 4 50-59
6 CHAPTER 5 60-68
7 CHAPTER-6 69-70
ANALYSIS OF DATA
8 CHAPTER-7 71-72
RECOMMENDATION
9 CONCLUSION 73
10 BIBLIOGRAPHY 74
11 QUESTIONNAIRE 75-76
5
OBJECTIVES & METHODOLOGY
METHODOLOGY:
PRIMARY DATA:
SECONDARY DATA:
Newspaper articles
Books
Internet
6
CHAPTER-1
INTRODUCTION TO CRM
7
INTRODUCTION TO CRM
1.1. INTRODUCTION
CRM, or Customer relationship management, is a number of
strategies and technologies that are used to build stronger
relationships between companies and their customers. A company
will store information that is related to their customers, and they will
spend time analyzing it so that it can be used for this purpose. Some
of the methods connected with CRM are automated, and the purpose
of this is to create marketing strategies which are targeted towards
specific customers. The strategies used will be dependent on the
information that is contained within the system. Customer
relationship management is commonly used by corporations, and they
will focus on maintaining a strong relationship with their clients.
8
Customer relationship management could be better defined as
being a methodology, an approach that a company will use to achieve
their goals. It should be directly connected to the philosophy of the
company. It must guide all of its policies, and it must be an important
part of customer service and marketing. If this is not done, the CRM
system will become a failure. There are a number of things the ideal
CRM system should have. It should allow the company to find the
factors that interest their customers the most. A company must realize
that it is impossible for them to succeed if they do not cater to the
desires and needs of their customers. Customer relationship
management is a powerful system that will allow them to do this.
9
The architecture of CRM can be broken down into three
categories, and these are collaborative, operational, and analytical.
The collaborative aspect of CRM deals with communication between
companies and their clients. The operational aspect of the architecture
deals with the concept of making certain processes automated. The
analytical aspect of CRM architecture deals with analyzing customer
information and using if for business intelligence purposes. Each one
of these elements are critical for the success of a CRM system. A
company must learn how to use all three properly, and when they do
this proficiently, they will be able to build strong customer
relationships and ensure their profits for a long period of time. As
more businesses continue to compete on a global level, it will become
more important for them to use successful Customer relationship
management techniques.
10
CRM OVERVIEW
DEFINITION OF CRM
11
1.3FEATURES OF CRM:
1. Customers Needs-
An organization can never assume what actually a customer needs. Hence
it is extremely important to interview a customer about all the likes and
dislikes so that the actual needs can be ascertained and prioritized. Without
modulating the actual needs it is arduous to serve the customer effectively
and maintain a long-term deal.
2. Customers Response-
Customer response is the reaction by the organization to the queries and
activities of the customer. Dealing with these queries intelligently is very
important as small misunderstandings could convey unalike perceptions.
Success totally depends on the understanding and interpreting these queries
and then working out to provide the best solution. During this situation if
the supplier wins to satisfy the customer by properly answering to his
queries, he succeeds in explicating a professional and emotional
relationship with him.
12
customer loyalty is an influencing aspect of CRM and is always crucial for
business success.
13
1.4IMPORTANCE OF CRM:
14
5. The strongest aspect of Customer Relationship Management is
that it is very cost-effective. The advantage of decently
implemented CRM system is that there is very less need of
paper and manual work which requires lesser staff to manage
and lesser resources to deal with. The technologies used in
implementing a CRM system are also very cheap and smooth
as compared to the traditional way of business.
15
1.5 GOALS OF CRM
Implementing customer relationship management can be a
costly undertaking. Organizations spend a lot of money scrutinizing
vendors, buying the right CRM software, hiring, consultant, training
employees, etc. The only way in which a company can actually
measure its success is if it establishes CRM goals prior to the
implementation as in this way it is able to determine whether or not it
has successfully implemented CRM. Despite the fact that industries
have different business aspects they share some common CRM goals.
2) Increasing Efficiency:
One of the most important goals of CRM is the increase in
organization efficiency and effectiveness. This is almost always
adopted by every organization. It is necessitated by the fact that
increase in efficiency is required to boost success. CRM achieves this
through cost reduction and customer retention. Adequate CRM
training achieves this goal.
16
3) Lowering Operating Costs:
CRM goals also include the reduction of costs of operation.
This goal should be clearly established and conveyed to all those
involved in the CRM implementation process. CRM manages to
reduce operating costs through a workforce management system. This
helps to maximize skills and thus reduce cost. These reduced costs
enable an organization to achieve greater efficiency. If cost reduction
is management's objective then the CRM implementation should be
carried out in such a way that this is achieved. Throughout the
process maximum reduction in costs should be adhered to in order to
meet this particular CRM goal.
17
CHAPTER-2
CRM IN BANKS
18
2.1 INTRODUCTION
19
2.2CRM--A POWERFUL TOOL
20
2.3 CRM AND BANKS
21
2.4 OBJECTIVES OF CRM IN BANKS
The CRM processes should fully support the basic steps of customer
life cycle. The basic steps are:
22
• Speed to market for products and service
23
through the data to obtain a holistic view of each customer and
pinpoint areas where better services are needed.
1) Responses to campaigns,
4) Account information,
7) Demographic data,
24
2.5 NEED OF CRM IN BANKS
25
debit cum ATM card, creating awareness regarding online and e-
banking, adopting mobile request etc are required to keep regular
relationship with customers.
26
STEPS TO FOLLOW
The following steps minimize the work regarding adoption of CRM
strategy. These are:
27
2.6 CRM STRATEGIES
This is a new way of thinking for many banks with thousands, even
millions of customers. Managing customer relationships successfully
means learning about the habits and needs of your customers,
anticipating future buying patterns and finding new opportunities to
add value to the relationship.
28
might use this characteristic as a starting point for implementing a
CRM application. Another company may be very good at targeting
profitable customers. Each bank should seek a niche on which to
develop its CRM strategy.
Customer Data
A common problem many organizations share is integrating
customer information. When information is disparate and fragmented,
it is difficult to know who the customers are, and the nature of their
associations or relationships. This also makes it difficult to capitalize
on opportunities to increase customer service, loyalty and
profitability. For example, knowing that other family members are
also customers provides an opportunity to up-sell or cross-sell
products or services, or knowing that a customer uses several sources
of interaction with a supplier can also provide opportunities to
enhance the relationship.
• Prospecting
• Selling
29
Successful CRM implementations result from the capability of
the organization and its employees to integrate human resources,
business processes and technology, to create differentiation and
excellence in service to customers, and to perform all of these
functions better than its competitors. The current economic context
and financial crisis has most probably led many financial services
institutions to refocus their CRM strategies with the customer
relationship being more than ever the key to profitability of a retail
activity. These institutions have to design a new approach to regain
and reassure customers. Even if they have only started building a
“how to win back trust" strategy, there is a general movement towards
“refocusing on he customer” for the “post-financial” crisis phase.
Society General Integrate call centre, branch, and central office; link
80 banking applications to support unified view of customers.
Improve customer experience, support consistent message
30
Irrespective of whether it is a public sector bank or a private sector
bank; a regional rural bank or a foreign bank all banks commonly
store details of tens of thousands of customers and prospects - both in
a corporate database and in discrete documents on the desktops of
individual bank staff. Retrieving customer data to support targeted
marketing activities in this environment has traditionally involved
sorting hard copy by hand, which is time-consuming, inaccurate, and
increasingly cost-prohibitive. Hence the banks devise software, which
would mitigate this task of customer relationship management
solution, to take full advantage of their valuable customer data. It also
provides a way to quantify a campaign's success and aids in planning
future marketing strategies, better work flow tracking and
management, considerable increase in the speed of the marketing
campaign planning process, greater cost efficiency with improved
ROI, easy monitoring of multiple marketing campaigns and improved
workflow management.
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CHAPTER-3
32
3.1CRM IN INDIAN BANKS
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 remain competitive. The
deepening of technology has facilitated better tracking and fulfilment
of commitments, multiple delivery channels for customers and faster
resolution of miss co-ordinations.
Unlike in the past, the banks today are market driven and
market responsive. The top concern in the mind of every bank's CEO
is increasing or at least maintaining the market share in every line of
business against the backdrop of heightened competition. 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 of 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.
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a fundamental problem. During the period of planned economic
development, the bank products were bought in India and not sold.
What our banks, especially those in the public sector lack are the
marketing attitude. Marketing is a customer-oriented operation. What
is needed is the effort on their part to improve their service image and
exploit their large customer information base effectively to
communicate product availability. 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.
34
rural and semi-urban set up. However, to maximize the value of this
resource, our banks need to transform their branches from transaction
processing centres into customer-centric service centres. 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.
35
up serious governance systems for privacy risk management. It must
be remembered that customer privacy issues threaten to compromise
the use of information technology which is at the very centre of e-
commerce and customer relationship management - two areas which
are crucial for banks' future. The critical issue for banks is that they
will not be able to safeguard customer privacy completely without
undermining the most exciting innovations in banking. These
innovations promise huge benefits, both for customers and providers.
But to capture them, financial services companies and their customers
will have to make some critical tradeoffs.
36
3.2 IMPORTANCE OF CRM IN INDIAN BANK
For long, Indian banks had presumed that their operations were
customer-centric, simply because they had customers. These banks
ruled the roost, protected by regulations that did not allow free entry
into the sector. And to their credit, when the banking sector was
opened up, they survived by adapting quickly to the new rules of the
game. Many managed to post profits. For them an unexpected
bonanza came from government bonds in which most were hugely
invested.
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
37
not. Unfortunately, CRM has also become a misnomer for a range of
solutions from IT vendors, each providing its own spin on the idea.
38
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.
39
are becoming more and more dynamic and less loyal in their
behaviour. The development of the Internet is further adding to this
trend and the whole market becomes trans-parent and customers are
in a position to move easily from one bank to another. In such a
situation, customer satisfaction is the key to bank marketing, which
aims at retention of the old customers and their bringing in new
customers.
40
Another problem generally faced by a bank in implementing
CRM is resistance to change. The banking industry is passing through
a radical transformation, from a sellers market to a customers market,
a regulated economy to a more liberalized and open economy,
advancement in technology and a lot of other developments. These
complex changes are forcing the banks to change the way they do
business. A change denotes making things in a different manner. It
should be planned properly, proactive and goal oriented. It requires
two things:
41
3.4 CUSTOMERS RELATIONSHIP MANAGEMENT–
A NEW MANTRA IN INDIAN BANKING
Nowadays banks have to work keeping in mind the position of
the financial market and anticipate change in the market place and
prepare themselves accordingly. They have to make new resolutions
to build further on their own strengths to explore new avenues of
Customers Relationship Management. This is the only strategic
weapon to be pursued for excellence in the pursuit of performance
and achievement. Both the retention of old business as well as to
search for new business, CRM is the only choice. CRM, being the
essence of modern banking, a sound understanding of the key
principles, its theories and practices should be revisited and redefined
to provide a road map to new ideas and techniques in the field. Over
the years, banking institutions have been feeling the pressing need of
putting up greater thrust on this initiative for improving their
operations and appearances.
1. Customer focus
The first and foremost important guiding principle in CRM is
customer focus. Who is a customer? This question is very
fundamental. A customer is a person or group of persons who
receives the product or service—the final output of a process or group
of processes. A customer is the final arbiter of quality, value and price
of a product or service. A satisfied customer only assigns value to a
service, on the contrary, to a dissatisfied customer a product or
service has no value, even if the concerned service or product has
been designed with lot of effort, energy and cost after a thorough
planning.
42
A satisfied customer motivates his fellow members to go in
for the service or product that he has already acquired. But a
dissatisfied customer always counsels his friends, and fellow
members not to go to banks where his experience proved to be wrong
or other-wise. So customer’s delight or customer’s satisfaction is the
essence of any CRM program. As a part of this focus on customers,
banks should ensure that clients are identified; their requirements are
determined, understood and met enhancing customers’ satisfaction.
2. Leadership
Persuasion, judgment and decision-making abilities are the
main attributes of quality leadership. When there is a slight chance of
getting a business but the client is hesitating or in a fix, or not in a
position to decide properly, it should be followed up by the
relationship manager by patient hearing, mild counselling and to
stand by the side of the prospective client to help clear his doubts and
to make him feel happy by realizing that he is going in the right
direction and he is very right in choosing his requirements.
43
(a) It is to be communicated to all employees that all customers
should be given a proper hearing and it should be supported from all
levels.
(b) Ways and means should be identified and practiced of getting and
staying closer to customers.
3. Process approach
A process transforms an input into desired output by the use
of resources, energies and time. In producing an output there may one
single process or a group of inter-related processes. In case of inter-
related processes, often the output from one process directly forms
the input to the next. For effective functioning of an organization, it
has to identify and manage numerous linked activities with the help
of different processes for accomplishing its goal.
(b) All processes should meet the legal and statutory requirements to
perform the activity or deliver the product or service.
44
assignment of account-ability at various executive levels should be
addressed, revised and fine-tuned to meet the requirements.
(d) All the processes should be properly integrated to meet the goal
congruence and should not function at cross-purpose.
4. System approach
Customer’s requirement is one level of commitment. That
level implies a system that is reactive and provides to customers what
they want but the target should be to achieve more and to exceed the
customer’s expectation to accommodate future requirement and to
build a cushion against the competitors’ attributes.
45
5. Involvement of people
46
6. Mutually beneficial customer relationship
The relationship with the customer should be based on a
mutually beneficial relation-ship. A bank should not concentrate its
attention towards earning of profits only, but focus should be directed
to the customers’ wealth creation or value enhancement with the
motto of earning through service.
47
of dealing with the customer. In a mature relation-ship, such fee-
based income is a regular feature and is very much crucial in today’s
banking where interest spread is getting reduced due to competition
and fee based income can increase the bottom line. But in many
instances, the expenses in terms of time, effort, recognizing individual
needs and offering a customized investment solution are high.
Retention of customers and building a long lasting relationship is the
main criteria under this concept.
7. Continual improvement
Another objective of CRM is the efforts towards continuous
improvement in the customer relationship through the provision of
value added ser-vices at favourable cost. Business processes in the
areas of finance, system integration, human resource management etc.
are to be automated and optimized with an aim to increase the
efficiency and effectiveness of operations.
48
(iv) The ability to deliver the increasing levels service demanded by
customers.
49
CHAPTER-4
BENEFITS OF CRM
50
4.1BENEFITS OF CRM TO BANKS
Despite the fact that in most banks profits sometimes fail, they
seldom pay attention to or adopt any customer strategy. It has long
been the misconception that banks need not pay much attention to
customer focus just because they had customers. Some banks even if
they possess good customer relationships are unable to cross sell as
they have not figured out who to target with what product/service.
What happens is that customers are often approached for the wrong
products.
51
With such phenomenal statistics it is but a surety that CRM banking
solutions sales will soar in the coming years.
2. Overall Profitability
CRM enables banks to give employee's better training
that helps them face customers easily. It achieves better
infrastructure and ultimately contributes to better overall
performance. The by products of CRM banking solutions are
customer acquisition, retention and profitability. Banks that don't
implement CRM will undoubtedly find themselves with lesser
profitability coupled with a sharp decline in the number of customers.
52
3. Satisfied Customers
It is important to make a customer feel as if he / she is the only
one - this will go a long way in satisfying and retaining them. Bankers
need a return on investment and it has been proved that increase in
customer satisfaction more than contributes a fair share to ROI. The
main value of CRM banking lies in satisfaction and increased
retention of customers.
4. Centralized Information
CRM banking solutions manage to clearly integrate people,
processes and technology. CRM banking provides banks with a
holistic view of all bank transactions and customer information as
well and stores it in a single data warehouse where it can be studied
later.
They are just as much in need of CRM aid as the others. Small
banks on account of a limited amount of money have had to realize
that a large contribution to profits is directly the result of good
customer service. CRM makes sure that the bank delivers exactly
what the customer expects.
53
6. Customer Segregation
CRM enables a bank to see which customers are costing them
and which are bringing benefits. CRM provides them with the
required analytical tools that will help them focus on the importance
of segregating these two and doing what is required to avail of the
maximum returns.
54
9. Increased Operational Efficiencies and Collaboration
CRM solution supports business automation for processes and
business activities, eliminating manual tasks and reducing process
time. Straight through processing abilities enhance reduction in
turnaround and processing time, increasing output and enabling
speedy completion of tasks. The multilingual Web-based single
repository of information enables remotely located bankers to
collaborate and transact seamlessly.
55
multi-channel marketing campaigns to reach these customers and
maximize the lifetime value of those relationships.
56
16. 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.
57
4.2 BENEFITS OF CRM TO CUSTOMERS
58
► CRM when successfully deployed can have a dramatic effect on
bottom-line performance. For example, Lowe’s Home Improvement
Warehouse, in a span of 18 months, achieved a 265 percent return on
investment (ROI) on its $ 11m CRM investment.
59
CHAPTER -5
60
5.1CHALLENGES FACED BY BANKS IN
SUCCESSFUL IMPLEMENTATION OF CRM
The most pervasive challenges to effective customer knowledge
include:
61
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.
62
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.
2.Customer profitability
63
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
is required. The way the step-fixed resources are allocated can dramatically
affect the resulting measurement of account level profitability.
64
5.2 METHOD OF EFFECTIVE CRM
IMPLEMENTATION
65
3.Providing online `chatting'
66
5 Analyses the project's scope
67
7. Change accounts into customer
68
CHAPTER-5
ANALYSIS OF DATA
69
THE PRIMARY DATA HAS BEEN COLLECTED FROM
BRANCH MANAGER OF IDBI BANK LTD AMBERNATH
THROUGH QUESTIONNAIRE.THE ANALYSIS OF
FOLLOWING DATA IS BEEN DONE BELOW.
ANALYSIS OF DATA:
After the questionnaire I conducted with the BRANCH
MANAGER OF IDBI BANK LTD AMBERNATH I get to
know that it is very important in banks to have customer
relationship programs. People are also taking the advantage
of the CRM facility. Banks main aim is to build a good
relation through CRM. In this bank though they have not
initiated any special programs but they do their routine work
efficiently. Though they give special services like Insurance,
Government Schemes, Pradan mantri yojana etc. Time has
come to make use of CRM extensively in banks.CRM is
definitely going to increase the business in banks as if we
implement CRM the banks will gain more and more
customers. This bank has not yet evaluated CRM because it
is not under their jurisdiction .The bank have prepared the
employees to work in CRM environment so as to give good
customer service .The manager feels motivated with the
CRM policies because the customers are increasing in a huge
rate this could happen only because of the CRM policies
which the bank has followed. I get to know that it is very
essential for banks to follow CRM strategy so as to get more
customers and satisfying existing customers.
70
CHAPTER-6
RECOMMENDATION
71
RECOMMENDATION
Customer Relationship Management (CRM), the most exciting
strategies that emerged from networking technology revolution of the
nineties, is today’s fast emerging one of the most important
cooperates strategies. A well-executed Customer Relationship
Strategies can result in number of quantitative benefits, including
greater ability to sell and cross sell, improved retention besides cost
of services.
72
CONCLUSION
73
BIBLIOGRAPHY
BOOKS
• Customer Relationship Management-Mohamed HP
NEWSPAPERS
• Times of India
• Hindustan Times
WEBLOGRAPHY
• www.crm.com
• www.businessline.com
• www.customerrelation.com
• www.marketing.com
74
QUESTIONNAIRE:
1: - Do you think even though CRM is implemented but customers
are not using it adequately?
6: -Do you think time has come to make use of CRM extensively in
Banks?
75
10:-Have you evaluated CRM?.
76
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