CRM IN BANK WITH REFERENCE TO SBI

A STUDY OF CUSTOMER RELATIONSHIP MANAGEMENT IN BANKS WITH REFERENCE TO STATE BANK OF INDIA

CHAPTER-1

INTRODUCTION

1.1 INTRODUCTION

Today, many businesses such as banks, insurance companies, and other service providers

realize the importance of Customer Relationship Management (CRM) and its potential to

help them acquire new customers retain existing ones and maximize their lifetime value. At

this point, close relationship with customers will require a strong coordination between IT

and marketing departments to provide a long-term retention of selected customers. This paper

deals with the role of Customer Relationship Management in banking sector and the need for

Customer Relationship Management to increase customer value by using some analytical

methods in CRM applications.

Competition in the financial services industry has intensified in recent years, owing to events

such as technology changes and financial industry deregulation. Conventional banking

distribution has been gradually supplemented by the emerging use of electronic banking.

Many bank customers prefer using ATMs or a website rather than visiting a branch, while

technology has also reduced barriers to entry for new customers.

CRM is a sound business strategy to identify the bank’s most profitable customers

and prospects, and devotes time and attention to expanding account relationships

with Banking Industry in India has undergone a rapid changes followed by a series of

fundamental developments. Those customers through individualized marketing, repricing,

discretionary decision making, and customized service-all delivered through the various sales

channels that the bank uses. Under this case study, a campaign management in a bank is

conducted using data mining tasks such as dependency analysis, cluster profile analysis,

concept description, deviation detection, and data visualization. Crucial business decisions

with this campaign are made by extracting valid, previously unknown and ultimately

comprehensible and actionable knowledge from large databases. The model developed here

answers what the different customer segments are, who more likely to respond to a given

offer is, which customers are the bank likely to lose, who most likely to default on credit

cards is, what the risk associated with this loan applicant is. Finally, a cluster profile analysis

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is used for revealing the distinct characteristics of each cluster, and for modeling product

propensity, which should be implemented in order to increase the sales.

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.

1.2 EVOLUTION OF CRM

Customer Relationship Management (CRM) is one of those magnificent concepts that swept

the business world in the 1990’s with the promise of forever changing the way businesses

small and large interacted with their customer bases. In the short term, however, it proved to

be an unwieldy process that was better in theory than in practice for a variety of reasons. First

among these was that it was simply so difficult and expensive to track and keep the high

volume of records needed accurately and constantly update them. In the last several years,

however, newer software systems and advanced tracking features have vastly improved CRM

capabilities and the promise of CRM is becoming a reality

The evolution of CRM was gradual. The concentration at the beginning was only on

consumption. Human activities were confined to consuming whatever was available within

their reach. Then the concentration slowly moved towards production. Production was though

in starting just for consumption on later it moved towards production for exchange. During

the sales era, production was performed exclusively for sales and the attention was just on the

product. Whatever was produced became saleable because of the limited supply. This made

organization move towards marketing activities. It is at this stage the concentration shifted

from products to customers. Understanding and meeting customers’ needs became imperative

for any business survival. Thus the emergence of customer driven organizations, keeping

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customers as their focal point took place. However cut throat competition made it difficult

and challenging to retain customers. CRM emerged as a new approach enabling marketers

with brand new tool and techniques to reach, acquire, retain and expand customer base.

Through CRM companies tried to re-personalize their customer relationships by installing

sales technology - sales contact management, Web personalization of e-sales messages, and

sophisticated segmenting and predictive modeling tools for more tailored sales messages.

In the beginning…

The 1980’s saw the emergence of database marketing, which was simply a catch phrase to

define the practice of setting up customer service groups to speak individually to all of a

company’s customers.

In the case of larger, key clients it was a valuable tool for keeping the lines of communication

open and tailoring service to the clients needs. In the case of smaller clients, however, it

tended to provide repetitive, survey-like information that cluttered databases and didn’t

provide much insight. As companies began tracking database information, they realized that

the bare bones were all that was needed in most cases: what they buy regularly, what they

spend, what they do.

However database marketing was too costly, too difficult and didn’t pay out on the bottom

line, except in the case of business-to-business key account marketing. A little database

marketing went a long way, which was very good news for everyone except technology

vendors.

Advances in the 1990’s

In the 1990’s companies began to improve on Customer Relationship Management by

making it more of a two-way process. Instead of simply gathering data for their own use, they

began giving back to their customers not only in terms of the obvious goal of improved

customer service, but in incentives, gifts and other perks for customer loyalty.

This was the beginning of the now familiar frequent flyer programs, bonus points on credit

cards and a host of other resources that are based on CRM tracking of customer activity and

spending patterns. CRM was now being used as a way to increase sales passively as well as

through active improvement of customer service.

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1.3 DEFINITION AND MEANING OF CUSTOMER

RELATIONSHIP MANAGEMENT(CRM)

DEFINITION OF CRM

“Customer Relationship Management (CRM) is a co-ordinate approach to the selling

process allowing the various operational, customer contact and sales promotional functions of

an organization to function as a whole.”

MEANING OF CRM

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.

CRM stands for Customer Relationship Management. It is a strategy used to learn more about

customers' needs and behaviours in order to develop stronger relationships with them. Good

customer relationships are at the heart of business success. There are many technological

components to CRM, but thinking about CRM in primarily technological terms is a mistake.

The more useful way to think about CRM is as a strategic process that will help you better

understand your customers’ needs and how you can meet those needs and enhance your

bottom line at the same time. This strategy depends on bringing together lots of pieces of

information about customers and market trends so you can sell and market your products and

services more effectively

1.4 GOALS OF CRM IN BANKS

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

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whether or not it has successfully implemented CRM. Despite the fact that industries have

different business aspects they share some common CRM goals.

Some of the Commonly Established CRM Objectives are as follows :

1) Increase in Customer Service :

Establishing customer loyalty as one of your top CRM goals is absolutely

fundamental to CRM successful implementation .For this task it is essential that the whole

organization realize that they play a part in this goal. This objective cannot be achieved with

the help of a few employees only. Customers need to feel that they have received excellent

service. This ensures their continued patronage. This is by far one of the most essential goals

of customer relationship management. Customer retention and brand loyalty is absolutely

essential to ensure success. Undoubtedly it is far harder to gain a new customer than to

actually keep one. Customer service is the pivotal point around which CRM revolves.

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.

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.

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4) Aiding the Marketing Department:

Another goal of CRM is generally aiding the marketing department in all its efforts. This

includes marketing campaigns, sales promotions etc. If this is fixated as one of the goals of

CRM, then it should be communicated to those involved. This goal is fundamental as it

boosts sales indirectly thereby increasing the profitability.

1.5 NEED AND PURPOSE OF CRM IN BANKS

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.

According to a research by Reichheld and Sasser in the Harvard Business Review, 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. Therefore, banks are

now stressing on retaining customers and increasing market share.

STEP TO FOLLOW

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The following steps minimize the work regarding adoption of CRM strategy. These are:

Identification of proper CRM initiatives

Implementing adequate technologies in order to assist CRM initiative

Setting standards (targets) for each initiative and each person involved in that circle

Evaluating actual performance with the standard or benchmark

Taking corrective actions to improve deviations, if any

The important factors that establish the need for CRM in the Banking Industry are detailed

below:-

Intense Competition

There is intense competition among the Private Sector Banks, Public Sector Banks and

Foreign Banks and they are all taking steps to attract and retain the customers. New

technologies, research facilities, globalization of services, the flood of new products and the

concept of all the facilities under one roof to provide better customer service leading to

customer delight.

Well Informed Customers

The Customers in Banking Industry today are well informed. With the introduction of new

technology, the world has become like a small village. Thus, if a Bank wants to have more

customers, it should develop a good relationship with its present customers and try to

maintain the same in the future also.

Decline in Brand Loyalty

In the present scenario, brand loyalty is on decline. The customers are switching over

frequently to avail the better facilities from other banks. Newer and superior products and

services are being introduced continuously in the market. Thus, the banks have to upgrade

their products, improve customer service and create bonds of trusts through proper care of

customer needs and regular communications. With the help of CRM, strong customer loyalty

and a good image for the organisation can be developed.

Improved Customer Retention

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In the intensely competitive banking industry, retention of existing customers is vital, which

can be achieved through the process of CRM.

Customer Relationship Management is concerned with attracting, maintaining and enhancing

customer relationship in multi service organizations. CRM goes beyond the transactional

exchange and enables the marketer to estimate the customer’s sentiments and buying

intentions so that the customer can be provided with products and services before the starts

demanding. Customers are the backbone of any kind of business activities, maintaining

relationship with them yield better result.

1.6 BENEFITS OF CRM TO CUSTOMER AS WELL AS

BANKS

FOLLOWING ARE THE BENEFITS OF CRM TO BANKS:

CRM Banking Focuses on the Customer

CRM manages to places the customer at the focal point of the organization in order to

cater to his needs, satisfy him and thus maximize the profits of the organization. Banking

CRM understands the needs of the customer and integrates it with people, technology,

resources and business rocesses. It focuses on the existing data available in the organization

and uses it to improve its relationship with customers. Banking CRM uses information and

analytical tools to secure customer focus. Thus it is completely essential that banks

implement CRM in order to secure this

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 byproducts 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.

Satisfied Customers

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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.

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.

CRM Banking Boosts Small Banks

Banking CRM software meets the needs of banks of all sizes in terms of attaining the

required accuracy and understanding of customers. Merely assuming that banks that are

considerably smaller in size have a better customer approach and are able to deal with their

customers in a better manner is wrong.

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.

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.

After this segregation is done CRM easily enables banks to increase their

communication and cross-selling to their customers effectively and efficiently.

Aggressive Customer Acquisition

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CRM solution supports the creation of demand generation through multi-channel and

multi-wave campaigns. The solution ensures the bank’s marketing message is appropriately

personalized and targeted towards the most suitable segment of prospects. This optimizes

marketing efforts and results in greater conversion of prospects

Improved Cross-sell Framework

The solution presents a unified 360° view of the customer, allowing single point

access to all the relationships the customer has forged with the bank. This along with robust

customer analytics effectively supports true relationship banking, providing a robust

framework for cross-sell opportunities.

CRM solution also integrates with other white labeled solutions to facilitate

contextual and personalized customer engagement, with a keen focus on right-talk driven

right-sell.

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.

Lower Total Cost of Ownership (TCO)

A Web-based solution leveraging new-generation technologies, Finacle CRM solution

is future-proof and can be seamlessly integrated with other enterprise applications. With a

robust architecture and proven scalability, it ensures protection for the bank’s technology

investments.

Campaign Management

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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 preferences, 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

these customers and maximize the lifetime value of those relationships.

Customer Information Consolidation

Instead of customer information being stored in product centric silos, (for e.g. separate

databases of savings account & credit card customers), with CRM the information is stored in

a customer centric manner covering all the products of the bank. CRM integrates various

channels to deliver a host of services to customers, while aiding the functioning of the bank.

Marketing Encyclopedia

Central repository for products, pricing and competitive information, as well as internal

training material, sales presentations, proposal templates and marketing collateral.

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.

Personalized sales home page

CRM can provide a single view where Sales Mangers and agents can get all the most

up-to-date information in one place, including opportunity, account, news, and expense report

information. This would make sales decision fast and consistent.

Lead and Opportunity Management

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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.

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 center and connects the

operations center with the relevant internal and external business partners.

CRM with Business Intelligence

Banks need to analyze the performance of customer relationships, uncover trends in

customer behaviour, 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

behaviour 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. Data warehousing solutions have been

implemented in Citibank, Reserve Bank of India, State Bank of India, IDBI, ICICI, Max

Touch, ACC, National Stock Exchange and PepsiCo. And Business Intelligence players hope

many more will follow us

Managers are empowered with information that can help them manage customer relationships

and make better decisions. Optimum use of resources.Customer satisfaction and increased

loyalty.Improved customer acquisition and cross-selling.It helps in capitalizing on short

windows of opportunities in the market

BENEFITS OF CRM TO CUSTOMERS

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Customer relationships are becoming even more important for banks as market

conditions get harder. Competition is increasing, margins are eroding, customers are

becoming more demanding and the life-cycles of products and services are shortening

dramatically. All these forces make it necessary for banks to intensify the relationship with

their customers and offer them the services they need via the channels they prefer.

CRM helps banks to provide lot of benefits to their customers; some key

benefits are as follow.

► Service provisioning throughout the entire life cycle of the corporate customer, from the

initial stages to the establishment of a close, long-term relationship with profitable clients,

► Optimization of the use of bank resources, such as alternative channels of distribution

(internet and home banking),

► Significant reduction in and limitation of operational costs through system automation and

standardization,

► Low maintenance and expansion costs owing to the use of modern administration tools

which allow bank employees to make a wide range of modifications to the system

► CRM permits businesses to leverage information from their databases to achieve customer

retention and to cross-sell new products and services to existing customers.

► Companies that implement CRM make better relationships with their customers, achieve

loyal customers and a substantial payback, increased revenue and reduced cost.

► 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.

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► According to a study conducted in the sector of banking, convenience of location, price,

recommendations from others and advertising are not important selection criteria for banks.

From customers’ point of view, important criteria are: account and transaction accuracy and

carefulness, efficiency in correcting mistakes and friendliness and helpfulness of personnel.

Thus, CRM, high-quality attributes of the product / service and differentiation proved to be

the most important factors for customers.

► Another study conducted in a European bank shows that with CRM, the bank was able to

focus on profitable clients through efficient segmentation according to individual behavior.

Information about ‘who buys what and how much’ enabled the bank to have a commercial

approach based on the client and not solely on the product. Thus, the bank was able to better

satisfy and retain its customers.

Eventually, CRM results both in higher revenues and lower costs, making companies more

effective and efficient: effective in targeting the right customer base with the right services

via the right channels, and efficient in doing this at the lowest costs. For example, those

banks that are moving transactions from the more expensive channels to a less costly channel

– like the call centre or Internet– are therefore able to save money.

There is a more coordinated and professional approach to customer contactWith up-to-date

customer information, Banks can offer more personalized services.Customers feel

empowered if they have greater access to products and services. For example 24 Hours

banking. Targeted product and service offerings can be timed to coincide with customer

events and requirements e.g., Education Loans and Tourism Loans.

.

Benefits for Employees

Employees are empowered with the information to deliver high quality service and meet

customer expectations. Employees have more time to serve customers.

Employees have higher satisfaction ratings

Introduction of Innovative Services through CRM

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Banks have made several innovations for sustenance by using the CRM System such as: The

introduction of ATMs.

Biometric ATMs.

Single Window Service.

Teller System.

Internet Banking

Introduction of Plastic Money: Credit Card, Debit Card, Smart Card

. Mobile and E-Mail Alerts

Electronic Cash

Introduction of two in one Accounts.

Introduction of new loan schemes as per the customer’s needs viz. Education Loans,

Marriage Loans, Housing Loans, , Furniture Loans, Renovation Loans and Tourism Loans.

1.7 MODEL OF CRM IN BANK

We now consider the Business Strategy Perspective on CRM. Here, we propose a model,

which is a hybrid, and typical of many of the models and diagrams of CRM that you will find

on The Internet and in popular books on the topic of eMarketing/eCommerce. The model has

three key phases and three contextual factors:

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Three key phases:

1. Customer Acquisition.

2. Customer Retention.

3. Customer Extension.

Three contextual factors:

4. Marketing Orientation.

5. Value Creation.

6. Innovative IT.

1. Customer Acquisition - This is the process of attracting our customer for the first their

first purchase. We have acquired our customer.

Growth - Through market orientation, innovative IT and value creation we aim to increase

the number of customers that purchase from us for the first time.

2. Customer Retention - Our customer returns to us and buys for a second time. We keep

them as a customer. This is most likely to be the purchase of a similar product or service, or

the next level of product or service.


the number of customers that purchase from us regularly.

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3. Customer Extension - Our customers are regularly returning to purchase from us. We

introduce products and services to our loyal customers that may not wholly relate to their

original purchase. These are additional, supplementary purchases. Of course once our loyal

customers have purchased them, our goal is to retain them as customers for the extended

products or services.


the number of customers that purchase additional or supplementary products and services.

4. Marketing Orientation - means that the wholes organisation is focused upon the needs of

customers. Customer needs are addressed by the Three Levels of a Product whereby the

organisations not only supplies the actual, tangible product, but also the core product and its

benefit, and also the augmented product such as a warranty and customer service. Marketing

orientation will focus upon the needs of consumers for all three levels of a product. (N.B.

'market' orientation and 'marketing' orientation are not the same).

5. Value Creation - centres on the generation of shareholder value based upon the

satisfaction of customer needs (as with marketing orientation) and the delivery of a

sustainable competitive advantage.

6. Innovative IT - is exactly that - Information Technology must be up-to-date. It should be

efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not

the entire story for CRM, it is vital to its success. CRM software collects data on consumers

and their transactions. Huge databases store data on individuals and groups of individuals. In

some ways, CRM means that an organisation is dealing with a segment of one person, since

every consumer displays different purchasing habits and preferences. Organisations will track

individuals, and try to market products and services to them based upon similar buyer

behaviour seen in other individuals (e.g. When Amazon tells you that customers that

viewed/bought the same product as you, also bought another product).

Building Customer Relationship Management

Achieving the long-term value of customer relationship management (CRM) requires

a strategy involving the whole business and should be approached at an enterprise

level. Only a small, but growing, number of enterprises are tackling CRM at this

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level, with most CRM initiatives consisting of departmental projects or attempts to

integrate the work of multiple projects.

Executing CRM requires board-level vision and leadership to drive a “relentless focus

on the customer.” It involves learning new customer management skills, culture and

organization, and grappling with the technology challenges of multi-channel

alignment and systems integration. Even if the top management accepts the need for

enterprise-level CRM, the high reliance on meeting sales and profit targets often mean

that, although CRM is the most important challenge facing an enterprise, it is not seen

as the most urgent. Besides lack of leadership and support from top management, the

main reason that enterprises are not approaching CRM at an enterprise level is

inability to see the “big picture”, lack of a strategic framework to provide the support

for the CRM journey.

Gartner created the Eight Building Blocks of CRM— a framework to help enterprises

see the big picture, make their business cases and plan their CRM implementation.

The framework can be used to develop the CRM vision and strategies. It can also be

the basis of an assessment of the enterprise’s existing and required CRM capabilities,

to help understand its current position and future strategy.

The framework emphasizes the need to create a balance between the requirements of

the enterprise and the customer. The two central building blocks in Figure 1 (valued

customer experience and organizational collaboration) are joined by a yin and yang

motif to emphasize that this is where people meet, build relationships and provide

value to each other. Too many CRM initiatives suffer from an inward focus on the

enterprise, whereas the point of CRM is to achieve a balance between value to

shareholders or stakeholders and value to customers for mutually beneficial

relationships.

The Eight Building Blocks of CRM are

1. CRM Vision: Leadership, Market Position, Value Proposition

2. CRM Strategy: Objectives, Segments, Effective Interaction

3. Valued Customer

4. Organizational Collaboration

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5. CRM Processes: Customer Life Cycle, Knowledge Management

6. CRM Information: Data, Analysis, One View Across Channels

7. CRM Technology: Applications, Architecture, Infrastructure

8. CRM Metrics: Value, Retention, Satisfaction, Loyalty, Cost to Serve

“Creating a CRM Vision”

Successful CRM demands a clear vision so that a strategy and implementation can be

developed to achieve it. The CRM vision is how the customer-centric enterprise wants

to look and feel to its customers and prospects — the customer value proposition

(CVP) and the corporate brand values are key to the CRM vision. Without a CRM

vision, the enterprise will not stand out from the competition, target customers will

not know what to expect from it and employees will not know what to deliver in terms

of external customer experience. A successful CRM vision is the cornerstone to

motivating staff, generating customer loyalty and gaining a greater market share.

“Developing a CRM Strategy”

A CRM strategy is not an implementation plan or road map. A real CRM strategy

takes the direction and financial goals of the business strategy and sets out how the

enterprise is going to build customer loyalty — that “feel-good factor” of customer

connection with an enterprise that means customers stay longer, buy more,

recommend the enterprise to others and are more willing to pay a premium price. The

objectives of a CRM strategy are to target, acquire, develop and retain valuable

customers to achieve corporate goals.

“Customer Experience: The Voice of the Customer”:

Customers’ experiences when interacting with the enterprise play a key role in

shaping their perception of the enterprise — the value it provides and the importance

it places on the customer relationship. Good customer experiences drive satisfaction,

trust and long-term loyalty. Poor customer experiences have the opposite effect and,

because bad news travels faster and further than good news, they harm the

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enterprise’s ability to create new relationships with prospects. No amount of internal

“second guessing” can simulate what it’s really like to be a customer.

“True CRM Requires Organizational Collaboration”

Many enterprises believe that implementing CRM technologies makes them a

customer-centric organization. They forget, ignore or deliberately avoid the necessary

changes to the enterprise itself. True CRM means that individuals, teams and the

whole enterprise must become more focused on the needs and wants of the customer.

The term “organizational collaboration,” highlights the many facets of the customer-

centric internal change needed to deliver the required and desired external customer

experience. As a critical part of a CRM program, it will involve changing

organizational structures, incentives and compensation, skills and even the enterprise

culture

“Customer Process Re-engineering: Talk to Your Customers”

Past efforts to re-engineer processes were primarily driven by the desire to improve the

efficiency of an enterprise and reduce costs. The beneficiary was the enterprise, not its

customers. The rise in CRM has led to a focus on reworking key processes that touch the

customer and asking customers which processes matter to them. Enterprises frequently do not

realize that their functionally fragmented processes often mean that the customer has a poor

experience and receives less than the expected value. Successful re-engineering should create

processes that not only meet customers’ expectations, but also support the customer value

proposition, provide competitive differentiation and contribute to the desired customer

experience.

“Customer Information: Is the Lifeblood of CRM”

Successful CRM requires a flow of customer information around the organization and

tight integration between operational and analytical systems. Having the right

information at the right time is fundamental to successful CRM strategies, providing

customer insight and allowing effective interaction across any channel. Unfortunately,

most enterprises’ CRM information capabilities are poor — the result of numerous

and fragmented departments, initiatives, databases and systems. Enterprises that

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establish a business plan for sourcing, managing and leveraging their customer

information assets are more likely to achieve their CRM goals and objectives and gain

a competitive advantage

“Technology Decisions Are Key to Enabling CRM Strategies”

For most technologists, CRM is all about technology. CRM technologies are an

essential enabler for any modern CRM business strategy, but they are just one piece

of the puzzle. Key Technology decisions that enterprises have to take are in three

areas namely CRM applications, architectural issues and integration. In many CRM

projects, integration issues start as a relatively low priority, and then rise in

prominence (cost and time) as enterprises realize that true CRM requires seamless

customer-centric processes, supported by integrated technology across the enterprise

and its supply chain

“Getting the Best Out of CRM Performance Metrics”

The other seven building blocks depend on performance targets and metrics to gauge

their success, and enterprises must set measurable CRM objectives and monitor CRM

indicators to successfully turn customers into assets. Without performance

management, a CRM strategy a program is destined to fail. “Getting the Best out of

CRM Performance Metrics” introduces a framework for measuring an enterprise’s

success with CRM by creating a hierarchy of performance metrics with four levels,

namely: corporate, customer strategic, operational and process, and infrastructure

input metrics. These metrics have an internal and an external focus and link

operations to strategy and corporate financial benefits. Each enterprise will have a

unique set of metrics applicable to their situation.

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CHAPTER-2

IMPLEMENTATION OF CRM IN BANK

METHOD OF EFFECTIVE CRM IMPLEMENTATION

Banks can take several steps to strengthen their customer relationship management in

an effective manner.

1. Acknowledge email enquiries

At the very minimum, banks should send out an automated email response that

acknowledges receipt of a customer's email and lets the sender know when to expect a more

complete response.

It is then vital to get back to the customer within the promised time frame. Banks can

earn more customer goodwill if they respond faster than the imposed deadline. To handle

significant volumes of email, banks need adequate routing technology. Many banks regard a

voice call centre as a cost of doing business, but they don't look at it the same way with

email.

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2. Develop the right contact strategy

By knowing which offers and incentives to offer to which customers and when, banks

will not annoy customers with unwanted marketing offers, building customer loyalty along

the way. Such goals can be at least as important as realizing cross-sell opportunities.

3. Providing online `chatting'

An alternative to telephone support, online chatting is providing a service via emails

or any other form of immediate response. This service also offers some of the immediacy of

the phone but primarily allows customers to remain online. With online chatting, service

agents can usually handle between one and three customer inquiries at once.

Given that the average call lasts about four minutes, a customer-service representative

can handle 10 to 12 customers per hour using "chat", compared with six to eight per hour

over the telephone. One of chat's important advantages is that it keeps customers in an online

store environment where they remain exposed to merchandise and promotions.

4. Reduce costs by improving website design and self-service

Email, telephone support, and chat all involve considerable staffing costs. But to

reduce these expenses a site should anticipate customer needs. Sites that is difficult to

navigate and don't provide needed information chase away some customers and force those

who stay to resort to more expensive channels to satisfy their service needs.

5. Analyses the project's scope

Before recommending or embracing CRM, bank executives must analyses the

business issues, the customer relationship model and the exact nature of customer interactions

and how they tie together. Banks should not embrace top-line growth as an objective until

they can understand precisely how CRM technology will provide those new revenues.

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6. Know thy limitations

Many CRM implementations are severely limited because they fail to provide a

complete and meaningful view of the customer. CRM is primarily a business program, and it

requires a genuine partnership between various departments to ensure that both business and

technology issues are managed effectively.

Furthermore, CRM not only takes existing business processes and makes them more

efficient, but it also requires these processes to be modified. For a CRM implementation to be

successful, decision makers within the bank need to make sure that all the stakeholders

understand and support the required process changes.

7. Change accounts into customer

Traditionally banks have closely associated customers with accounts, to the point of

calling the account the customer and vice versa. Customers will tend to feel alienated when

they are treated like a number instead of a person. A conventional account structure usually

contains very little information about customers and their needs, or their relationship with

competitors or other divisions within the bank.

The way ahead Banks have excellent reasons to adopt comprehensive CRM strategies

to cultivate a lifetime customer relationship. As banks move from transaction-centric to a

relationship-centric business approach, effective leveraging of customer relationship becomes

all the more critical.

Today, customers are expecting even more individual attention, responsiveness and

product customization, yet are unwilling to pay a premium for these services. They are

willing, however, to build a long-term relationship with banks that offers differentiated and

more personalized services.

This is where electronic banking can offer a competitive advantage. Successful CRM

implementation in electronic banking needs to integrate data from all customer touch points,

24


employee feedback and even shareholders' perceptions. If used effectively and in an

innovative way, this approach will enable banks to develop a strategy to deliver to the

customer the most appropriate products and services.

CHAPTER-3

A STUDY OF CRM WITH REFERENCE TO STATE BANK OF

INDIA

3.1 HISTORY OF SBI

The evolution of State Bank of India can be traced back to the first decade of the 19th

century. It began with the establishment of the Bank of Calcutta in Calcutta, on 2 June 1806.

The bank was redesigned as the Bank of Bengal, three years later, on 2 January 1809. It was

the first ever joint-stock bank of the British India, established under the sponsorship of the

Government of Bengal. Subsequently, the Bank of Bombay (established on 15 April 1840)

and the Bank of Madras (established on 1 July 1843) followed the Bank of Bengal. These

three banks dominated the modern banking scenario in India, until when they were

amalgamated to form the Imperial Bank of India, on 27 January 1921.

An important turning point in the history of State Bank of India is the launch of the first Five

Year Plan of independent India, in 1951. The Plan aimed at serving the Indian economy in

general and the rural sector of the country, in particular. Until the Plan, the commercial banks

25


of the country, including the Imperial Bank of India, confined their services to the urban

sector. Moreover, they were not equipped to respond to the growing needs of the economic

revival taking shape in the rural areas of the country. Therefore, in order to serve the

economy as a whole and rural sector in particular, the All India Rural Credit Survey

Committee recommended the formation of a state-partnered and state-sponsored bank.

The All India Rural Credit Survey Committee proposed the take over of the Imperial Bank of

India, and integrating with it, the former state-owned or state-associate banks. Subsequently,

an Act was passed in the Parliament of India in May 1955. As a result, the State Bank of

India (SBI) was established on 1 July 1955. This resulted in making the State Bank of India

more powerful, because as much as a quarter of the resources of the Indian banking system

were controlled directly by the State. Later on, the State Bank of India (Subsidiary Banks)

Act was passed in 1959. The Act enabled the State Bank of India to make the eight former

State-associated banks as its subsidiaries.

The State Bank of India emerged as a pacesetter, with its operations carried out by the 480

offices comprising branches, sub offices and three Local Head Offices, inherited from the

Imperial Bank. Instead of serving as mere repositories of the community's savings and

lending to creditworthy parties, the State Bank of India catered to the needs of the customers,

by banking purposefully. The bank served the heterogeneous financial needs of the planned

economic development.

BranchesThe corporate center of SBI is located in Mumbai. In order to cater to different functions,

there are several other establishments in and outside Mumbai, apart from the corporate

center. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices,

located at major cities throughout India. It is recorded that SBI has about 10000 branches,

well networked to cater to its customers throughout India.

ATM Services

SBI provides easy access to money to its customers through more than 8500 ATMs in India.

The Bank also facilitates the free transaction of money at the ATMs of State Bank Group,

26


which includes the ATMs of State Bank of India as well as the Associate Banks – State Bank

of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, etc. You may also

transact money through SBI Commercial and International Bank Ltd by using the State Bank

ATM-cum-Debit (Cash Plus) card.

Subsidiaries &ASSOCIATES BANK

The State Bank Group includes a network of eight banking subsidiaries and several non-

banking subsidiaries. Through the establishments, it offers various services including

merchant banking services, fund management, factoring services, primary dealership in

government securities, credit cards and insurance.

State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Patiala ,State Bank of Saurashtra ,

Growth

State Bank of India has often acted as guarantor to the Indian Government, most notably

during Chandra Shekhar's tenure as Prime Minister of India. With 10000 branches and a

further 4000+ associate bank branches, the SBI has extensive coverage. Following its arch-

rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan,

urban and semi-urban branches under its Core Banking System(CBS), with over 4500

branches being incorporated so far. The bank has the largest ATM network in the country

having more than 5600 ATMs The State Bank of India has had steady growth over its history,

though the Harshad Mehta scam in 1992 marred its image.

In recent years, the bank has sought to expand its overseas operations by buying foreign

banks. It is the only Indian bank to feature in the top 100 world banks in the Fortune Global

500 rating and various other rankings. According to the Forbes 2000 listing it tops all Indian

companies

3.2 SWOT ANALYSIS OF SBI BANK

27


SWOT Analysis:-SWOT Analysis is mainly to see what are the various strength,

weakness, opportunities and threats of the organization. As we know that every organization

is specialize in one field and weak in other field. No one organization can be specializing in

every field because it is beyond its scope. If every organization will be specialize in every

field then there will not be any competition between various organizations and it will not

have fear of lose the business to other organizations. So this analysis is given as follow:

STRENGTHS:-

Main strength of this bank is, it is the largest bank of the INDIA, it has wide network

of branches and ATM overall pan INDIA.

Less charges are taken from the customers for providing the services. Most of

customers are happy due to this complaint of this.

This bank also keeps that type of customers which are of low profitability. It believes

not only in profit which is main aim of every organization. It is also perform social

responsibility.

This bank has monopoly in most of fields as it provide clearance house, come most

important after RBI, provide loans to the poorest farmers and needing persons.

It has seven subsidiary banks ,all of these capture more market growth rate by more

synergy.

WEAKNESS:- First weakness of this branch is ,it doesn’t issue the memo immediately if any one

work is not perform in time or any one come late. No one take responsibility on his

shoulder .

High networking technology is used in some branches. All branches are not

computerized and high security softwares are not used.

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Daily performance chart of the organization doesn’t come on the computer of every

employee as in private sector bank. Even performance of the employee also doesn’t

come.

No incentives are given to the employees for motivating them. Even the incentive is

also not fixed for the employee who has operation work. Only they have to perform

customers work.

High discipline is not used in the branch as it is requirement of every organization. No

organization can exist in this competitive environment without it.

In this bank, account is open with minimum of Rs.1,000. Some low class person

cannot manage this amount in initial stage

Every employee in this branch is overloaded with work. The work distributed is more

than working capacity of the employee.

This bank spends less on basic facilities what I have found that are very old ATM

which mostly remain out of work, no sitting and standing arrangement etc………….

OPPORTUNITIES:

It can increase its network more as good response is coming as customer base is

increasing, it means people are ready to take services of this bank.

It can relax some of its internal rules to catch more customers. Many other banks have

not rules which this bank has put in ahead of customers.

From the customer feedback it is found that its customers have mainly saving, current

accounts and fixed deposits. Its customers have no insurance policy of its bank, less

awareness of mutual fund. These customers should be provided full knowledge about

its all products. As this bank’s customer base is increasing, knowledge of all products

should be given.

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It can open branches in foreign also as many of its customers are NRIs. It has tied up

with other banks in foreign to handle the foreign transactions.

THREATS:-

New banks are coming in INDIA. This will increase the competition and this has to

consecrate on its marketing activities.

New banks are giving relaxations to its customers. So it will have to change its rules.

New banks are poaching the employees of this branch. So this bank has to retain its

employees with it.

New banks are spending more to capture the more customers so this bank will have to

change its policy of less spending or it will have to find new mean to retain its

customers with it.

3.3 CRM AT STATE BANK OF INDIA

SBI is a leading public sector bank in INDIA with large customer base and excellent

infrastructure facility. It caters the prospective customers with wide range of products and

banking facility

The need for system automation became critical at SBI. The challenge was to meet the demanding

service and fulfillment levels of the growing. SBI was on the lookout for a technology solution that

was easy to implement, cost-effective and robust to expand its presence in the insurance sector and

achieve a higher degree of service differentiation. Although the organization had a centralized system,

most of the work was done manually. they had a client/server architecture in place. But it was not

integrated with the legacy systems.

Early on, the top management realized that technology was a crucial driver for product and service

delivery. Although using the extensive SBI group platform for cross-selling products and services was

a viable option, reaching and engaging the customer cost effectively required a technology backbone.

Earlier, they had little enterprise software to support its business and the processes were carried out in

an ad hoc manner

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Benefits

• Reduction in TAT (Turn Around Time)

• SBI can now integrate and manage content, campaigns and merchandising to patrons via the Web

• Streamlined product delivery and support processes with a single contact point on the Web Site

offers a one-stop-shop for customers' needs

There were hiccups as various centres had problems connecting to the CRM portal, which have been

solved. They are using multiple types of connectivity, leased lines that terminate at the central data

centre in Mumbai, broadband connections, dial-up connections, telephone lines, etc. The type of

connectivity depends on the number of users in that particular branch and the kind of work being done

there. They have there mail server and other functionalities on the portal too. The development tool,

WebLogic Workshop, is Java-based, allowing people at SBI to develop and customize applications at

a faster pace. Applications running on the system permit the management of content, merchandise and

campaign-related details. The company has even moved its internal applications to the portal. Thus,

even when a staff member is working internally, he is working with an interface of a browser/portal.

What used to be on a client/server environment is now on the portal..

Functions like cash management, proposal details and issuing policies all happen on the portal.

Having deployed WebLogic, SBI is able to run its cycle-all its processes right from claims processing

to CRM-on the portal. Some features of the system are load balancing, effective code deployment and

clustering support (24x7). Plans are afoot to use the portal for providing selfservice to customers,

partners and employees. One can just come in, log on to the portal, and access any kind of

information.

SBI implemented the system in a different manner. With this initiative, SBI has derived quite

a few benefits. For instance, it has been able to reduce the Turn Around Time (TAT).

“Because of this initiative they could spot a few processes that would otherwise never be

realized. they have outsourced some routine work which was done centrally and was manual.

Now, irrespective of the location of the work, it’s done through the portal and they are able to

manage it better.

Saving time and money

Process improvements are evident. All of this happened with minimal system changes

without adding to the existing infrastructure The solution has also brought down by 50

percent the time taken for specific processes like cash management. With a view to

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understanding the data quality gaps and to develop a road map to closing them, SBI engaged

Spectrum Business Support Ltd's Data fix Solutions team (now Datafix Technologies Pvt.

Ltd.) to undertake a Data Quality Study and Audit (DQ Audit). There was requirements of

time and funds to obtain a true foundation of customer-oriented information, by running a

De-duplication pilot on a significant portion of the migrated Phase I data, numbering 3.3

million records

SBI is equipped to develop a blue-print for their Customer Quality Initiatives to create long-term

competitive advantage.State Bank of India (SBI), India’s largest financial services conglomerate has

contracted to implement Anti Money Laundering (AML) software AMLOCK from 3i Infotech Ltd .it

helps the bank in managing its government clients better. Cash@WillTM helps SBI improve revenue,

maximize profits, optimize costs, and establish efficient management systems to accelerate

growth.SBI is now using Nucleus Software’s Cash@WillTM for Drafts, Income Tax Refund Orders

(ITRO), Multi City Cheque (MCC) and Collections services. The implementation was done in a

phased manner where Payments and Collections modules implemented initially were subsequently

replaced by the newer version of Cash@WillTM. Nucleus' Cash@WillTM will power the cash

management product of State Bank of India. It supports the bank in handling of government business

like ITRO, SBI rights issue.. Nucleus Cash Management Solution Cash@WillTM built on new

generation technologies of Oracle empowers banks to offer their corporate customers optimized cash

management services, dramatically improving funds collection and inflow forecasting, payment

dispatch and funds utilization. It provides anytime, anywhere access to quality real-time consolidated

information and seamlessly supports multibank, multi-currency, multi-lingual transactions, ensuring

smooth flow of information and cash.

3.4 DIFFERENT STRATEGIES ADOPTED BY BANK TO

RETAIN CUSTOMERS

Customer application form

Centralized software where the whole data is collected.

Wide range of offerings

Cross – selling

Feedback forms

1) Customer Application Forms:

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Bank collects all the data from customer application form and gets the personalized

information to know which product to offer to which customer. This process helps in

collecting the data and knowing what the customer wants.

2) Centralized Software where the Whole Data is Collected:

The data collected through customer application forms is available at one server and can be

accessed anytime, anywhere. So, this helps in the further process of customized offerings and

cross –selling.

3) Wide Range of Offerings:

After collecting the data from the customer, team decides what product to offer to which

customer. In case the bank recognizes you as a valuable customer then is offers a more

customized service.

4) Cross – Selling:

It refers to offering another product from the service offering of the bank to the customer

which he has not gone for. For example If customer has savings account with the bank then

they offer him a insurance, fixed deposits etc. This depends on the value of the customer to

the bank. Cross selling is not offered to every customer. It depends on how loyal the customer

is to the bank. The more business he gives us, the more are his chances of being special

services offered.

5) Feedback Forms:

The bank distributes feedback forms at all its branches. The customers feedbacks on the

service, technology used, employee behavior and promptness in solving customer’s

problems, are taken and they are analyzed. CRM helps to know the needs and wants of the

customer. So, on the basis of this company can decide which product to offer to which

customer. It has been observed that cross – selling is the best weapon. It enhances the

relationship value with the customer. This satisfies the customer and that is the reason why

the customer keeps on coming again and again to the company. This helps in retaining the

33


market share. Now ,the satisfied customers help in the word- of – mouth promotion of the

bank, which eventually increases our market share

Additional Features of CRM in SBI Bank: Most banks have their own databases but because

of the huge technological investments done by SBI the databases in all the branches are

integrated, which means they can be accessed from anywhere and at anytime.

.Different Channels and Services Offered by SBI Bank. Bank Branch, ATM, Phone Banking,

Internet Banking, , Mobile Banking, Call Centre. SBI Bank offers a host of products and

services to its clients, which include Deposits .Loans, Cards, Investments, Insurance, Demat,

NRI Services and Online Services etc.

Customer Behaviour Patterns

For example, in the financial sector, early beneficiaries of successful CRM strategies

have been the banks. These organizations use data warehousing and data mining technologies

to learn from the millions of transactions and interactions with their customers, and to

anticipate their needs. The patterns of customer behavior and attitude derived from this

information enable the banks to effectively segment customers on pre-determined criteria.

Detailed customer data can provide answers to the following questions:

Which communication channel do they prefer?

What would be the risk of leaving the bank to go to the competition?

What is the probability the customer will buy a service or product?

This knowledge assists financial institutions with CRM solutions in place to develop

marketing programs that respond to each customer segment, support cross-selling and

customer retention programs and enables the staff to understand how to maximize the value

of each customer’s interaction.

CRM applications provide functionality to enhance customer interactions. Banks

known for its high level of customer service 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 relationship management has become need of an hour without which it is difficult

to survive in the competitive market. Customers in long-term relationships are more

comfortable with the services, the organization, methods and procedures. This helps reduce

34


operating cost and costs arising out Educate more customers about the various banking

services available and how to use them. Bank has to ensure the security of ATM cards and

credit cards etc.

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.

The creation and execution of a successful CRM strategy depends on close

examination and rationalization of the relationship between an organization’s vision and

business strategy.Building toward a CRM solution and evaluating the use of customer data

requires analysis and alignment of the following core capabilities:

Customer value management

Prospecting

Selling

Collection and use of customer intelligence

Customer development (up-selling and cross-selling)

Customer service and retention

Protection of customer privacy

3.5 CUSTOMER CARE AT SBI BANK

Customers of the Bank can meet senior executives of the Bank on 15th of every month

(between 3.00 p.m. and 5.00 p.m.) without any prior appointment and discuss issues relating

to their accounts/banking transactions. In case 15th of month is a holiday, customer can meet

on the next working day.

35


In case, excessive delay in resolving their problems is experienced, customers can contact the

helpline of the Local Head Office, under whose control the branch functions

I. State Bank of India strongly believes that a satisfied customer is the most important factor

for growth of its business. The Bank was the first in India to introduce a code of Fair Banking

Practices in India called “Towards Excellence”. The code reflected the commitment of the

Bank to provide Banking services of a high order to individual banking customers. The code

came into effect from October 1997 as part of the Golden Jubilee Celebrations of Indian

Independence. The Code was substantially revised in the year 2005 taking into consideration

the transformation in banking practices and customer service standards that have since taken

place.

II. In February 2006, Reserve Bank of India set up the Banking Codes and Standards Board

of India (BCSBI) as an independent autonomous watchdog to ensure that customers get fair

treatment in their dealings with Banks. The BCSBI has published the “Code of Banks’

Commitments to Customers “ (the Code) which sets minimum standards of banking practice

and benchmarks in customer service for banks to follow. SBI is a member of the BCSBI and

has therefore voluntarily adopted the Code as its Fair Practice Code in dealings with its

customers. The complete copy of the Code is available at

http://www.bcsbi.org.in/Code_of_Banks.html

III. This document called the “Citizens’ Charter of State Bank of India” provides key

information on various facilities/services provided to customers in ordinary branches of State

Bank of India. The Code together with the Citizens’ Charter will thus ensure high standards

of accountability, responsibility and transparency in the Bank’s dealings with customers. The

Charter also provides comprehensive information on Bank’s Grievance redressal mechanism.

It also specifies the obligations on the part of the customers for healthy banker-customer

relationship.

IV. This is not a legal document creating rights and liabilities. The information on general

terms and conditions provided herein may not apply to special branches of the Bank like

Personal Banking Branches etc. (The information on services provided by these branches can

be obtained from the branches or the helplines of the respective Local Head office Centres).

Loans and advances may also have specific terms and conditions not mentioned in the

36


Charter. However, all terms and conditions will comply with the principles and commitments

undertaken by the Bank in the Code.

V. Copies of the Code and Citizens’ Charter will be available on request to all our customers

at our branches, administrative offices and at our web site. We will ensure that all our staff

members are aware of the commitments contained in these documents and faithfully

implement them.

VI. The Charter provides essential information on transactions relating to savings, current and

fixed deposit accounts, collections and remittances, grievance redressal etc. For further

details and complete information on terms and conditions of service visit our branches or

write to our Local Head Offices (addresses and contact nos. available on our website

www.sbi.co.in).

VII. Information given in the Charter is current as of March 31 2007. Information given is

subject to change/revision. The Bank will endeavour to update the information on the website

when changes are made but please contact the nearest branch/Zonal Office/Local Head Office

for the latest changes, If any.

VIII. We request all our customers to keep us informed of their experiences about the

customer services rendered at our branches and feel free to comment on the Code and

Citizens Charter. Your feedback will help us evaluate, improve and widen our range of

services. Your comments and feedback may be sent to the address given in paragraph VI

above.

3.6CHALLENGES FACED BY BANKS IN

IMPLEMENTATION OF CRM

The most pervasive challenges to effective customer knowledge include:

► The difficulty of obtaining a complete view of customers.

37


► 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 from 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:

1. 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 latter 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

38


sales. In other words, the proponents look to justify the top-line expenses with bottom-line

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

2. 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 an 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 is required. The way the step-fixed resources are allocated can

dramatically affect the resulting measurement of account level profitability.

3. The 80-20 Rule

Most banks make critical pricing decisions based on the so-called 80-20 rule, the

notion that 80 per cent of profits derive from 20 per cent 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.

39


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-4

SUGGESTIONS &RECOMMENDATIONS

The research shows that the teller is the most crowded counter and always having

long queues, so teller should be increased.

Bank should also have to improve its infrastructure as customers feel inconvenience

in sitting and standing.

As e- commerce is going on increasing, many customers want this bank improve net

banking more.

Customers say that may be this public bank does not services more than private

banks but it can try to provide services as equal. . Pay attention for a long time to

40


only one customer with whom staff is dealing, as other customers are also waiting

and staff should understand we should not waste other customers’ valuable time

Banking hours should be increased .as the bank close the customers’ visit by

3:30p.m. Which is very incontinent to the customers?

As the cheque is not cleared in time due to lack of attention. So staff should pay

proper care that cheque should be credited in customers’ a/c in time.

Bank should decrease its AQB’s non maintenance charges.

CHAPTER -5

CONCLUSION

Banking can be mysterious for consumers and how they interact with their finances can be a

complex matter. The challenges faced by banks and their customers are many but the trick

lies in de-mystifying complex financial relationships.

Technical solutions deployed by banks today are flexible, user-friendly and meant to

facilitate specific workflow and requirements in implementation processes. In order to

simplify lives, banks have begun to implement end-to-end technologies through all

41


departments with the intention of removing human error from processes. Previously existing

manual environments could not have been adequate for future visions, growth plans and

strategies.

In this day and age, customers enjoy complete luxury in terms of customized technical

solutions and banks use the same to cement long-term, mutually-beneficial relationships. For

a bank to succeed in adopting a CRM philosophy of doing business, bank management must

first understand CRM as a holistic concept that involves multiple, interlocking disciplines,

including market knowledge, strategic planning, business process improvement, product

design and pricing analysis, technology implementation, human resources management,

customer retention, and sales management and training.

Turning the business strategy into actionable items is a difficult undertaking. For which

Customer Relationship Management works a magic wand.

CHAPTER-6

BIBLIOGRAPHY

WEBLOGRAPHY

www.crm.com

www.businessline.com

www.investopedia.com

www.scribd.com

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http://www.scribd.com/

http://www.investopedia.com/

http://www.businessline.com/

http://www.crm.com/


ARTICLES ,JOURNAL &BOOKS

NEWSPAPERS

Times of India

Hindustan Times

BOOKS

Customer Relationship Management-Mohamed HP

Marketing Management-Philip Kotler

JOURNALS

Sugnadhi.R.K. (2003), CRM, (New Age International Publishers), New Delhi

Gureja, Gopal, K, Creating Customer Value, Tata Mc Graw Hill, New Delhi,

1997.

CHAPTER-7

APPENDIX

QUESTIONNAIRE

Dear Respondent,

The purpose of this project is to assess the effectiveness of Customer Relationship Management (CRM) Practices adopted by State Bank of India. Please answer the following questions. Needless to say, your response would be treated confidential and would be used only for the purpose of study.

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Name : - ……………… Account No :-…………………

Age : - ……………… City : - ………………..

Q: 1 Since when are you availing the services of SBI?

< 1 yr 1- 3 yr > 3 yr

Q: 2 Which type of services are you availing at present?

Current a/c Saving a/c

Fixed deposit Mutual Fund

If any other, specify…………….

Q: 3 Are you satisfied with the services offered by the bank staff ?

Yes No

Q: 4 If yes, what are the various factors on which you are satisfied?

Co-operative Behaviour Less Time Consuming

Provide Valuable Information Others

Q: 5 If no, what are the various factors on which you are not satisfied?

Less Co-operative Behaviour More Time Consuming

Doesn’t Provide Any Other Valuable Information


Q: 7 In addition to SBI Bank, which Bank’s services currently you are availing?

Kotak Mahindra OBC None

PNB HDFC


Q: 8 What is prompting to you not avail the services of only SBI Bank?

Not do fast proceSsing Strict Requirements

More emphasis to Private Sector Banks Others

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Q: 9 Are you aware of the various services offered by the SBI Bank?

Yes No Can not say

Q: 11 Tick the following which services are you aware of?

E- Banking Phone Banking

Money Transfer Facilities through ATM (mini statement, bill payment etc.)

Q: 12 What are the various problems that you come to face while dealing with Bank?

ATM is not working Rigid requirements

Long queues at teller counter Less customer dealing time

Cheque is not credited to a/c Taking more time to resolve the queries

If any other please specify

1)………………………. 2)………………………

Q: 13 What would you recommend to improve SBI Bank’s services further?

Increase customer dealing time Improvement in infrastructure

Improve net banking more Provide services equal to private sector bank

If any other, specify…………………….

Thank You

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CRM IN BANK WITH REFERENCE TO SBI

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