Crm in Indian Banks

Topics: Customer relationship management, Marketing, Customer service Pages: 16 (4575 words) Published: March 16, 2010
* Popli, G.S ** Rao, D.N.

1. Background
Relationship Marketing is the process of building long term mutually beneficial relationship with the customers. The Financial Institutions in the developed countries are using this marketing tool very effectively by taking full advantage of Information and Communication Technologies. The Indian Banking Industry which was operating in a bureaucratic style prior to 1991 had to undergo large scale transformation with the opening up of the economy. The Sector has been facing unprecedented challenges with the wave of liberalization, privatization and globalization of Indian Economy. Banks in India are under intense pressure in today’s volatile market place. Steep competition, globalization, growing customer demand and exposure to higher credit risks are forcing the banks to find new ways of improving profitability. On the other hand, cost-cutting measures have forced banks to manage

operations with few Customers Relationship Managers and Product Specialists. Industry consolidation also poses fresh challenges to this sector. Even today, most of the banks in India rely on the legacy of Customer Information System. In such a scenario, it is difficult to have a complete customer view across divisions. They face unprecedented challenges to sustain their growth path for survival. The challenges include customer retention, reducing transaction costs, risk management and Regulation Compliance. The result was a huge proliferation in customer’s choice. The strategic tool that was chosen for aiding this process was Information Technology and most of the banks went through adoption of various stages and forms of IT over the years and the process is still continuing. *Popli, G.S. is currently working as General Manager with Oriental Bank of Commerce. **Rao, D.N. is currently working as Director, Centre for Management Education, All India Management Association, New Delhi.


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The rapid growth in Information Technology and its potential to serve the customers in a new way awakened the marketers and enabled them to transform these challenges into opportunities. Under these circumstances, customer satisfaction became an important aspect of the business. The search for new strategies began to meet not only the high expectations of customers but the need to retain them. The competitive world witnessed many banks participating in the race to optimize their profits. It increased the pressure to perform leading to adoption of advanced technology and better skilled work force. Therefore, business model changed from bank-centric approach to customer-centric approach. The customer became not only an essential but the most important part of the business. The Service Sector has emerged as a key sector in Indian Economy. The contribution from this sector to our Gross Domestic Product (GDP) is approximately 55%, as per the current year’s Budget Report (2008-09). The continuous growth of GDP at 8% and above has

become possible due to the good performance of this sector. In the post - reforms era, there has been a sea change in the financial sector. In such a scenario, the services have grown rapidly and the customer has been more often a purchaser of services rather than a product. The Financial Services is the backbone of service sector. This is important not only for the banking sector but of the Indian economy as a whole. This is so because banking is a

catalyst and life of modern trade and commerce. It is an integral part of all the businesses and social activities. This rapid transformation of services in the banking system has led to the evolution of a highly competitive and complex market where there is a continuous refinement of services. Hence the increased role of banking in India’s economic

development on the one hand and the changes in the business climate on the other...

References: 15
Anand, S (2008), Customer Relationship Management in Indian Banks, Journal of Professional Banker, Dec. 2008 pp 66-70. Bholanath Dutta, CRM in Financial Services Marketing, Journal of Marketing Mastermind, Sept 2008. Davids M (1999), How to Avoid the 10 Biggest Mistakes in CRM, Journal of Business Strategy, Nov-Dec 1999, pp22-26. Day GS (2000), Managing Market Relationship, Journal of the Academy of Marketing Science Vol. 28 (1), pp – 24-30. Ed Thompson et al (2005), Organisations are beginning to think about CRM again, Management update, November, 2005. Kimberly, C et al (2005), CRM Marketing Strategies and Technologies Mature, Management update, November, 2005. Parvatiyar A and Sheth JN (2001), Conceptual Framework of Customer Relationship in Customer Relationship Management – Emerging Concepts, Tools and Applications, Tata McGraw Hill, New Delhi, pp. 3-25. Pisharodi R et al (2003), Relationship Strategy, Effectiveness and Responsiveness in Services Marketing, Journal of Relationship Marketing, Vol 2, No. 1, 2003 pp. 3-22. Rajiv Joshi, Customer Relationship Management : Free and Open Source CRM Software for SMEs, Journal of Marketing Mastermind, Dec. 2008. Sarangapani, A (2008), Customer Relationship Management in Banking Sector, Journal of Professional Banker May 2008 pp 39-47. Shainesh G and Sheth JN (2006), Customer Relationship Management – A Strategic Perspective, Macmillan India, New Delhi, pp 16-29. Sisodia R.S and Wolfe D.B (2000), Information Technology: Its Role in Building, Maintaining and Enhancing Relationships, in Handbook on Relationship Marketing, Saga Publications, pp 526-563. William, B (2005), Best Practices for CRM Deployment, The Forrester, December, 2005.
Websites: market/article/98266. www.crm – 2. Php.
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