Crm in Banking

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International Review of Business Research Papers Vol. 5 No. 6 November 2009, Pp.117-132

Customer Relationship Management: Strategies And Practices In Selected Banks Of Pakistan Iftikhar Hussain , Mazhar Hussain, Shahid Hussain and M. A. Sajid∗ As economic globalization intensifies competition and creates a climate of constant change, winning and keeping customers has never been more important. Nowadays, Banks have realized that customer relationships are a very important factor for their success. Customer relationship management (CRM) is a strategy that can help them to build long-lasting relationships with their customers and increase their revenues and profits. CRM in the banking sector is of greater importance. The aim of this study is to explore and analyze the strategic implementation of CRM in selected banks of Pakistan, identify the benefits, the problems, as well as the success and failure factors of the implementation and develop a better understanding of CRM impact on banking competitiveness as well as provide a greater understanding of what constitutes good CRM practices. In this study, CMAT (Customer Management Assessment Tool) model is used which encompasses all the essential elements of practical customer relationship management. Data is collected through questionnaires from the three major banks (HBL, MCB, and Citibank) of Pakistan. The evidence supports that CRM is gradually being practiced in studied banks; however the true spirit of CRM is still needed to be on the active agenda of the banking sector in Pakistan. This study contributes to the financial services literature as it is one of the very few that have examined CRM applications, a comparatively new technology, in the Pakistani banking sector, where very limited research has taken place on the implementation of CRM.

Field of Research: Relationship Management

1. Introduction
Over the last 5 years, Pakistan witnessed a phenomenal growth of consumer banking. This unprecedented development has followed privatization of nationalized banks, banking reforms brought about by the State Bank of Pakistan and an increasingly marketing-oriented approach primarily aimed by banks at a large urban consumer base. Hot on the heels were the newly privatized banks, UBL, HBL and MCB which have embarked in consumer financing activities in not just big cities but smaller ones too, by virtue of their huge branch network. In doing so, they have generated huge volumes of business while at the same time driving down the prices of the products they offer. But only generating huge volume of

The first author is a PhD student at School of Management Shanghai University China, e-mail:, second author is also a PhD student at Muhammad Ali Jinnah University Islamabad Pakistan, while third & fourth authors are Assistant Professor and Professor & Dean at Faculty of Administrative Sciences Kotli, University of Azad Jammu & Kashmir Pakistan

Hussain, Hussain, Hussain & Sajid

business is not so important, the critical thing is to maintain this huge volume through customer satisfaction and increase profitability of the business. This needs a strategy which can help banks in maintaining long term valuable relations with their customers and offer them life time value like CRM. Banking historically operated in a relatively stable environment for decades. However, today, the industry is facing a forceful competition and banks have lost a substantial proportion of their domestic business to essentially non-bank competition. Fighting competition is vital for the profitability and ultimate survival of banks. Zineldin( 2005 ). CRM is a growing trend in banks today and banks are spending a lot on CRM. According to Raffaella Molignani, research analyst for the European IT Opportunity Financial Services research program, CRM is still at the top of banking priorities. IDC . ( 2002 ) . CRM is a sound business strategy to identify the bank’s most profitable...
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