CRM in Banks

 

CRM : Making it simple

for

 banking industry.

 

Submitted To:

Submitted by:

Prof. K. Siva Reddy

Sachin Bansal

09BSHYD0711

Tanmay Garg

09BSHYD0912

Prerak Dhawan

09BSHYD0586

Preetish Kr. Singh

09BSHYD0585

Sarita Sethi

09BSHYD0742

Priyanka Gu Gunturu

09BSHYD0600

 

Index  1. Introduction to banking Importance of banking  Need for CRM

3 3

4 2. Introduction to CRM Phases of CRM Benefits of CRM Types/variations of CRM Implementations of CRM Importance of CRM in banking Challenges in CRM implementation

5 5 6 7 10 12 14

3. CRM initiatives at SBI CRM and SBI Life

16 16

4. CRM initiatives at HDFC Bank About HDFC bank Challenges CRM solutions Results VbV facility for HDFC customers Offers RAP computer telephony integration

19 19 20 20 21 21 21 22

5. Research Methodology Objective Methodology Demographics of sample Data Analysis Qualitative Analysis Quantitative Analysis Data Interpretation

23 23 23 23 24 25 27 29

6. Conclusion

30

7. References

31

pg. 2

 

Introduction to Banking Sec 5 (b) of the Banking Regulation Act, 1949 defines banking as “accepting for the purpose of  lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise”. Prior to initiation of reforms in 1991, Indian banking industry suffered from lack of competition, low capital base, inefficiency and high intermediation costs. Ever since the bank nationalization of 1969, the banking sector had been dominated by the public sector along with a high degree of  financial repression characterized by administered interest rates and allocated credit. Banking sector reforms of the last two decades have placed greater emphasis on structural measures and improvement in standards of disclosure and levels of transparency in order to align the Indian stan standa dard rdss wi with th inte intern rnat atio ional nal be best st prac practi tices ces.. Refo Reform rmss have have br brou ought ght about about co cons nsid ider erab able le improvements as reflected in various parameters relating to capital adequacy, asset quality,  profitability and operational efficiency. The key objective of reforms in the banking sector in India has been to enhance the stability and efficiency outstanding feature of banking sector alternative reforms in to India been the emergence of of banks. micro An credit as the most suitable and practical the has conventional  banking in reaching the hitherto unreached poor population. The Self-help Group (SHG)-Bank  Linkage Lin kage Programm Programmee was formall formally y launch launched ed in the year 1992 1992 as a flagsh flagship ip progra programme mme by  National Bank for Agriculture and Rural Development (NABARD) and aptly supported by the Reserve Bank of India (RBI) through its policy support.

Importance of Banking Banks play very important role in the economic life of the nation. The health of the economy is closely related to the soundness of its banking system. Although banks create no new wealth but their borrowing, borrowing, lending lending and related related activities activities facilitate facilitate the process process of production, production, distribution distribution,, exchange and consumption of wealth. In this way they become very effective partners in the  process of economic development. Today, modern banks are very useful for the utilization of the resources of the country. The banks are mobilizing the savings of the people for the investment  purposes. In rece recent nt year years, s, the the ba bank nkin ing g indu indust stry ry ar arou ound nd the the worl world d ha hass be been en un unde derg rgoi oing ng a ra rapi pid d 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 an and d entr entry y of ne new w playe players rs and prod product uctss ha have ve forc forced ed ba bank nkss to adjus adjustt th thee pr produ oduct ct-m -mix ix an and d undertake rapid changes in their processes and operations to remain competitive.

pg. 3

 

Need for C.R.M. Unlike in the past, the banks today are market driven and market responsive. With the entry of  new players and multiple channels, customers (both corporate and retail) have become more discerning disce rning and less "loyal" to banks. This makes it imperative imperative that banks provi provide de best possible 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 customercentric business model. The success of such a model depends upon the approach adopted by  banks with respect to customer data management and customer relationship management. Over the years, Indian banks have expanded to cover a large geographic & functional area to meet me et the the devel developm opmen enta tall ne need eds. s. They They have have be been en mana managi ging ng a worl world d of in info form rmat atio ion n ab about out customers - their profiles, location, etc. They have a close relationship with their customers and a good knowledge of their needs, requirements and cash positions. Achieving customer focus requires leveraging existing customer information to gain a deeper insight into the relationship a customer has with the institution, and improving customer service-related processes so that the services are quick, error free and convenient conv enient for the customers. As is proved by the experience, banks are now realizing that one of their best assets for building  profitable customer relationships especially in a developing country like India is the branch branches are in fact a key channel for customer retention and profit growth in rural and semiurban set up. However, to maximize the value of this resource, our banks need to transform their   branches from transaction processing centers into customer-centric service centers. This transformation would help them achieve bottom line business benefits by retaining the most  profitable customers. Branches could also be used to inform and educate customers c ustomers about other, more efficient channels, to advise on and sell new financial instruments like consumer loans, insurance products, mutual fund products, etc. There is a growing realization among Indian banks that it no longer pays to have a "transaction based" operating model. There are active efforts to develop a relationship-oriented model of  operations focusing on customer-centric services. The biggest challenge our banks face today is to establish customer intimacy without which all other efforts towards operational excellence are meaningless. The banks need to ensure through their services that the customers come back to them. This is because a major chunk of income for most of the banks comes from existing customers, rather than from new customers. Customer relationsh Customer relationship ip management management (CRM) solutions, solutions, if implemented implemented and integrated integrated correctly, correctly, can help significantly significantly in improving improving customer satisfaction satisfaction levels. Data warehou warehousing sing can help in  providing better transaction experiences for customers over different transaction channels. This is because data warehousing helps bring all the transactions coming from different channels under the same roof. Data mining helps banks analyze and measure customer transaction patterns an and d behav behavio ior. r. This This ca can n he help lp a lot lot in im impr provi oving ng se serv rvic icee le level velss an and d fi find ndin ing g ne new w busin busines esss opportunities.

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Introduction to C.R.M. The term term “CRM” “CRM” st stands ands for Custom Customer er Relati Relations onship hip Managem Management. ent. Custom Customer er relati relations onship hip management (CRM) is a broadly recognized, widely-implemented strategy for managing and nurturing a company’s interactions with customers, clients and sales prospects. It is a process or  a methodology used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. CRM is as a process that will help bring together lots of pieces of informatio information n about customers, customers, sales, sales, marketing marketing effectiven effectiveness, ess, responsiveness responsiveness and market trends. This process helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers .  It involves using technology to organize, automate, and synchronize business processes—principally sales activities, but also thos th osee for marketing, marketing, customer service, service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former  client clientss back into the fold, fold, and reduce the costs costs of market marketing ing and client client servic service. e. Whe When n an implementation is effective, people, processes, and technology work in synergy to increase  profitability, and reduce operational costs.

Phases of CRM

The three phases in which CRM can help to support the relationship between a business and its customers is explained below:

ACQUIRE

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ENHANCE

RETAIN

Acquire: A CRM initiative can help a business in acquiring new customers through excellent contact management, direct marketing, selling and fulfillment. Enhance: A web-enabled CRM combined with customer service tools offers customers excellent excell ent service from a team of trained trained and skilled skilled sales and service specialists, specialists, which offers customers the convenience of one-stop shopping.

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Retain: CRM software and databases enable a business to identify and reward its loyal custom cus tomers ers and furthe furtherr develop develop its target targeted ed market marketing ing and relati relations onship hip market marketing ing initiatives.

Benets of C.R.M. These CRM initiatives have been shown to help companies attain the following objectives:       

To provide better customer service. To increase customer revenues. To discover new customers. To cross sell/up sell products more effectively. To help sales staff close deals faster. To make call centers more efficient. To simplify marketing and sales processes.

The advantages can also be summarized according to the domain it contributes to: Marketing     

To make intelligent business decisions with enhanced customer cu stomer insights. To increase marketing velocity and speed to market. To maximize visibility into and control of your entire marketing process. To drive customer demand up. To increase returns on the marketing investments.

Sales         

To grow profitable relationships. To maintain focus on productive activity. To eliminate barriers to productivity. To improve sales efficiency service. To transform service into a profitable line of business. To increase customer loyalty. To increase the sales revenue. T reduce costs of customer service and field service To decrease service giveaways/ Poka yokes.

pg. 6

 

Web channel enablement     

To drive revenue and extend market reach. To increase customer convenience and satisfaction. To reduce the cost of sales and support. To build lasting customer loyalty. To improve sales and service profitability.

Running and customer interaction center     

To increase customer satisfaction. To improve credibility with your customers. To increase revenue and productivity. To manage the customer interaction life cycle.

Types/variaons of CRM in terms of the desired benets

Sales force automation Sales force automation (SFA) involves using software to streamline all phases of the sales  process, minimizing the time that sales representatives need to spend on each phase. This allows sales representatives to pursue more clients in a shorter amount of time than would otherwise be  possible. At the heart of SFA is a Contact management system for tracking and recording every stage in the sales process for each prospective client, from initial contact to final disposition. Many SFA applications also include insights into opportunities, territories, sales forecasts and workflow automation, quote generation, and product knowledge. Marketing Systems for marketing (also known as marketing automation) help the enterprise identify and target its best clients and generate qualified leads for the sales team. A key marketing capability is tracking and measuring multichannel campaigns, including email, search, social media, and direct mail. Metrics monitored include clicks, responses, leads, deals, and revenue. Customer Service and Support

pg. 7

 

Recognizing that service is an important differentiator, organizations are increasingly turning to technology platforms to help them improve their clients’ experience while aiming to increase ef effi fici cien ency cy an and d mini minimi mize ze co cost sts. s. The The co core re for for thes thesee ap appl plic icat atio ions ns ha hass be been en an and d st stil illl is comprehensive call center solutions, including such features as intelligent call routing, computer  telephone integration (CTI), and escalation capabilities.

Analytics Relevant analytics capabilities are often interwoven into applications for sales, marketing, and service. These features can be complemented and augmented with links to separate, purpose built applications for analytics and business intelligence. Sales analytics let companies monitor  and underst understand and client client action actionss and prefer preferenc ences, es, throug through h sales sales foreca forecasti sting, ng, data data qualit quality, y, and dashboards that graphically display Marketing applications generally come with predictive analytics to improve segmentation and targeting, targe ting, and features features for measuring the effectivene effectiveness ss of online, offline, offline, and search search marketing marketing campaign. Web analytics have evolved significantly from their starting point of merely tracking mouse clicks on Web sites. By evaluating “buy signals,” marketers can see which prospects are most likely to transact and also identify those who are bogged down in a sales process and need assistance. Marketing and finance personnel also use analytics to assess the value of multifaceted programs as a whole. Integrated/Collaborative Departments within enterprises—especially large enterprises—tend to function in their own little worlds.  Traditionally, inter-departmental interaction and collaboration have been infrequent and rivalries not uncommon. More recently, the development and adoption of the tools and services has fostered greater fluidity and cooperation among sales, service, and marketing. This finds expression in the concept of collaborative systems which uses technology to build bridges  between departments.

Social Media Social media sites like Twitter and Facebook are greatly amplifying the voice of people in the marketplace and are predicted to have profound and far-reaching effects on the ways companies manage their clients. This is because people are using these social media sites to share opinions and experi experienc ences es on compani companies, es, produc products ts and servic services. es. As social social media media isn’t isn’t modera moderated ted or  censored, individuals can say anything they want about a company or brand, whether pro or con. Increasingly, companies are looking to gain access to these conversations and take part in the dialogue. More than a few systems are now integrating to social networking sites. Social media  promoters cite a number of business advantages, such as using online communities as a source of  high-q hig h-qual ualit ity y leads leads and a vehicl vehiclee for crowd crowd sourci sourcing ng soluti solutions ons to cli client ent-su -suppor pportt proble problems. ms. Companies can also leverage client stated habits and preferences to personalize and even “hypertarget” their sales and marketing communications.

pg. 8

 

 Non-profit and Membership-based Systems for non-profit and membership-based organizations help track constituents and their  involvement invol vement in the organizatio organization. n. Capabiliti Capabilities es typically typically include include tracking tracking the following: following: fundraisin rais ing, g, demogr demograp aphi hics cs,, memb member ersh ship ip communications with individuals.

le level vels, s,

memb member ersh ship ip

di dire rect ctor orie ies, s,

vo volu lunt ntee eeri ring ng

and

Strategy Choosing and implementing a system is a major undertaking. For enterprises of any appreciable size, a complete and detailed plan is required to obtain the funding, resources, and companywide support that can make the initiative successful. Benefits must be defined, risks assessed, and cost quantified in three general areas: 

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Processes Proces ses:: Though Though these these system systemss have many many technol technologi ogical cal compon component ents, s, busine business ss  processes lie at its core. It can be seen as a more client-centric way of doing business, enabled by technology that consolidates and intelligently distributes pertinent information aboutt client abou clients, s, sales, sales, market marketing ing effect effective ivenes ness, s, respons responsive ivenes ness, s, and market market trends trends.. Theref The refore ore,, before before choosin choosing g a techno technolog logy y platfo platform, rm, a company company needs needs to analyze analyze its  business workflows and processes; some will likely need re-engineering to better serve the overall goal of winning and satisfying clients. Moreover, planners need to determine the types of client information that are most relevant, and how best to employ them. People: For an initiative to be effective, an organization must convince its staff that change is good and that the new technology and workflows will benefit employees as well as clients. Senior executives need to be strong and visible advocates who can clearly stat statee an and d supp suppor ortt the the ca case se for for ch chan ange ge.. Coll Collab abor orat atio ion, n, te team amwo work rk,, an and d twotwo-wa way y communication communicati on should should be encouraged encouraged across hierarchical hierarchical boundaries, especially especially with respect to process improvement.

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Technology: In evaluating technology, key factors include alignment with the company’s  business process strategy and goals; the ability to deliver the right data to the right employees; and sufficient ease of use that users won’t balk. Platform selection is best underta unde rtaken ken by a carefu carefully lly chosen chosen group group of exe execut cutive ivess who underst understand and the busine business ss  processes to be automated as well as the various software issues. Depending upon the size of the company company and the breadth of data, choosing an applicatio application n can take anywhere anywhere from a few weeks to a year or more.

pg. 9

 

Implementaon of CRM in Banking Sector  Implement Implem enting ing a custom customer er relati relations onship hip managem management ent (CRM) (CRM) system system at a bank takes takes carefu carefull  planning. Banks need to involve key employees in the vendor decision so that they choose a system which will give them the most for their investment. Ease of use and ability to view information quickly are equally important to employees and managers. As Destinationcrm.com  points out, ou t, CRMs helps firms manage customer relationships better, and customer relationships are vital to any company's success.

Implementing a CRM system at a bank is a first step toward improved customer relationships. \

1. Step 1 Gain employees' opinions. Ask bankers which data is important to them when tracking customers and prospects. Most bank CRM systems include contact information, account information and potential sale amounts. They also include an estimate of how likely it is that the banker will convert a prospect into a new customer. When employees provide input into the new system decision, they will be more willing to use the CRM when it is rolled out.

pg. 10

 

2. Step 2 Research vendors: Ask similar sized banks for vendor recommendations. Find out if the vendor provided appropriate CRM features for the bank's specific needs. Ask if the company delivered the system on time and if the firm provided sufficient support and training to employees after the sale. Create a spreadsheet comparing vendor features and  pricing.

3. Step 3  Narrow the choices to three or four vendors. Meet with department managers that will use the CRM system. Review the vendor choices and make a vendor decision as a group. Arrange training by combining vendor resources and internal training resources. Allow ample time for employees to learn the CRM system before holding them accountable for  using it.

pg. 11

   

Importance of CRM in Banking Sector  Customer Relationship Management deals with the interactions with the customers (current or   potential) across multiple touch points including the Internet, bank branch, call center, field organization and other distribution channels. It helps banks in the following ways:

   R    O    T    C    E    S    G    N    I    K    N    A    B    N    I     M    R    C    F    O    E    C

CAMPAIGN MANAGEMENT CUSTOMER INFORMATION CONSOLIDATION 360-DEGREE VIEW OF COMPANY PERSONALIZED PERSONALIZE D SALES HOME PAGE ACTIVITY MANAGEMENT OPERATIONAL INEFFICIENCY REMOVAL ENHANCED PRODUCTIVITY CRM WITH BUSINESS INTELLIGENCE

1.  Campaign Management - Banks need to identify customers, tailor products and services to meet meet thei theirr ne need edss and se sell ll thes thesee prod product uctss to th them em.. CRM CRM ac achi hieve evess th this is th thro rough ugh Campai Cam paign gn Manage Managemen mentt by analyz analyzing ing data data from from banks banks intern internal al applica applicatio tions ns or by importing data from external applications to evaluate customer profitability p rofitability and designing comprehensi compre hensive ve customer customer profiles profiles in terms of individual individual lifestyle lifestyle preferences preferences,, income levels and other related criteria. Based on these profiles, banks can identify the most

pg. 12

 

lucrative customers and customer segments, and execute targeted, personalized multichannel marketing campaigns to reach these customers and maximize the lifetime value of those relationships. Customer Information Information Consolidat Consolidation ion - Instead Instead of storing storing customer customer informatio information n in 2.   Customer  product centric manner (for e.g. separate databases of savings account & credit card customers), CRM stores the information in a customer centric manner covering all the  products of the bank, thereby integrating various channels to deliver a host of services to customers.

ba nk speaks to, irrespective 3. 360-degree view of company – Means that who so ever the bank of whether the communication is from sales, finance or support, the bank is aware of the interaction. CRM removes inconsistencies in data, thereby making the client interaction  processes smooth and efficient, thus leading to enhanced customer satisfaction. p rovides a single view where Sales Mangers and 4. Personalized Sales Home Page – CRM provides 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. 5. Activity Management – CRM helps managers to assign and track the activities of various members. This improves transparency and leads to improved efficiency.

Operational Inefficiency Inefficiency Removal – CRM helps in Strategy Strategy Formulati Formulation on to eliminate eliminate 6. Operational 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. Enhanced Productivi Productivity ty – CRM helps banks in enhanced productivit productivity y of customers, customers, 7. Enhanced  partners and employees. It enables customer service agents to provide uniform service across multiple channels such as phone, Internet, email, Fax. 8. CRM with Business Intelligence - Banks need to analyze the performance of customer  relationships, uncover trends in customer behavior, and understand the true business value val ue of their their custom customers ers.. CRM with with busine business ss int intell ellige igence nce all allows ows banks banks to assess assess customer segments, which help them calculate the net present value (NPV) of a customer 

segmen seg mentt over a given given period period to derive derive custom customer er lif lifeti etime me value. value. Custom Customers ers can be

pg. 13

 

evaluated evaluat ed within within a scorin scoring g framew framework ork.. With With suc such h knowled knowledge, ge, ban banks ks can effici efficient ently ly allocate resources to the most profitable customers and reengineer the unprofitable ones.

Challenges in CRM implementaon

Despite the benefits, many companies are still not fully leveraging these tools and services to align marketing, sales, and service to best serve the enterprise. Tools and workflows can be complex to implement, especially for large enterprises. Implementation Issues Dramatic increases in revenue, higher rates of client satisfaction, and significant savings in operating costs are some of the benefits to an enterprise. Proponents emphasize that technology should sho uld be imple implemen mented ted only only in the context context of carefu carefull str strate ategic gic and operat operation ional al planni planning. ng. Implementations almost invariably fall short when one or more facets of this prescription are ignored: 

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Poor planning: planning: Initia Initiativ tives es can easily easily fail fail when when effort effortss are limite limited d to choosin choosing g and deploying software, without an accompanying rationale, context, and support for the workforce. In other instances, enterprises simply automate flawed client-facing processes rather than redesign them according to best practices. Poor integration: For many companies, integrations are piecemeal initiatives that address a glaring need: improving a particular client-facing process or two or automating a favore fav ored d sales sales or client client support support channel. channel. Such Such “point “point solution solutions” s” offer little little or no integr integrati ation on or alignm alignment ent with with a company company’s ’s overal overalll str strate ategy. gy. They They offer offer a less less than than complete client view and often lead to unsatisfactory user experiences. Siloed thinki Siloed thinking: ng: Expert Expertss advise advise organi organizat zation ionss to recogni recognize ze the immens immensee value value of  integrating their client-facing operations. In this view, internally-focused, departmentcentric views should be discarded in favor of reorienting processes toward informationsharing shari ng across across marketing, marketing, sales, and service. service. For example, sales representati representatives ves need to know about current issues and relevant marketing promotions before attempting to crosssell to a specific client. Marketing staff should be able to leverage client information from sales and service to better target campaigns and offers. And support agents require quick  and complete access to a client’s sales and service history.

Specialists offer these recommendations for boosting adoptions rates and coaxing users to blend these tools into their daily workflow:

pg. 14

 

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Choose a system that’s easy to use: All solutions are not created equal. Some vendors offer more user-friendly applications than others, and simplicity should be as important a decision factor as functionality. Choose the right capabilities: Employees need to know that time invested in learning and usage will yield personal advantages. If not, they will work around or ignore the system. Provide training: Changing the way people work is no small task, and help is usually a requirement. with today’s more usable systems, many staffers still need assistance with learning Even and adoption Lead by example: Showing employees that upper management fully supports the use of a new application by using the application themselves may increase the likelihood that employees will adopt the application.

Privacy and data security system One of the primary primary functi functions ons of these these tools tools is to collec collectt inform informati ation on about about cli client ents, s, thu thuss a company must consider the desire for privacy and data security, as well as the legislative and cultural norms. Some clients prefer assurances that their data will not be shared with third parties without their prior consent and that safeguards are in place to prevent illegal access by third  parties.

pg. 15

 

Customer Relationship Management initiatives at State Bank of India State Bank of India offers its products and services in domains like: 

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Personal Banking  NRI Services

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Agriculture

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International

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Corporate

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SME

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Domestic Treasurer 

Customer Relaonship Management and SBI Life

 Need for CRM The need for system automation became critical at SBI Life Insurance. The challenge was to meet the demanding service and fulfillment levels of the growing insurance sector. SBI Life 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 needed 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. The portal initiative started sometime in 2003. Earlier, the insurance major  had little enterprise software to support its business and the processes were carried out in an ad hoc manner. The system went live in 2004, taking just four to five months to go online.

pg. 16

 

It was clear as far back as 2002 that a durable and scalable system was going to be essential, and it was felt that a Web portal would be the best solution as a part of SBI’s CRM initiative. Various options optio ns were taken into consideration-r consideration-recreat ecreating ing their entire operations in-house, allowing a vendor to provide the basic platform and then build applications on it, etc. SBI also spoke to some leading providers in the industry, did some spadework, and finally decided to go for BEA WebLogic. Benefits of CRM in SBI Life 

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Reduction in TAT (Turn Around Time) SBI Life 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' insurance needs

The insurer was looking at a system that would be up and ready in the shortest span of time, in a stable manner, and roll out business-critical applications. The other concern for SBI Life was connectivity; it decided to use the Internet to tackle the problem of linkage across locations in India. (SBI has a network of over 9,000 branches.) Since laying out the network, application and infrastructure is time consuming and not very cost-effective, using the Internet fits perfectly into their scheme of things. BEA faced tough competition from industry biggies who were also bidding for the project. Sanjay Dhingra, Dhingra, BEA’s Director Director of Sales believes believes that the most challenging challenging part of the project was to put a technology backbone in place that could handle SBI’s transactions and also scale up as and when required-the insurer was looking at a system that could be upgraded every six months. When looking for vendors SBI sought cutting-edge technology that did not cost the earth. Anotherr import Anothe important ant is issue sue was suppor support. t. Typical Typically, ly, Indian Indian servic servicee provid providers ers do not have have the capability to deliver the required services. They believe that the product by itself should be mature enough to manage both its own complexity as well as that of the business, and also offer  ease of use for those who work on it. Most importantly, the vendor had to have a roadmap extending well into the future. In India, many implementations are not up to the mark due to cultural aspects of business. Acceptance among staff and familiarity of employees with the system were two of the things we considered before they decided to go in for a full-fledged implementation. There were hiccups as various centers 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.

pg. 17

 

The type of connectivity depends on the number of users in that particular branch and the kind of  work being done there. Outcome: Saving time and money Process improvements are evident. All of this happened with minimal system changes without adding to the existing infrastructure. As a result, SBI has been able to decentralize 36 branches. The solution has also brought down by 50 percent the time taken for specific processes like cash management, insurance claims, and accounting. The insurer has managed to save about 30  percent of costs on infrastructure, with better utilization of manpower. Unlike separate frameworks for integration and custom application development, the BEA solution was a model that enabled faster customization and development of applications. With almost 30 functions already running on the site, they feel that in future the portal has the ca capa pabi bili lity ty to scal scalee up to ha handl ndlee a much much bigg bigger er tr tran ansa sact ctio ion n lo load. ad. Th Thee co comp mpan any y is to ad add d applications in a phased manner, and is looking at service oriented architecture (SOA) in the future. They are still adding new functionalities, and with an SOA (using WebLogic Integration 8.1) they can maintain the value provided to our customers while minimizing investments in maintenance and development.

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Customer Relationship Management initiatives at HDFC Bank   About HDFC bank

Promoted Promot ed in 1995 by Housing Housing Develo Developme pment nt Financ Financee Corpor Corporati ation on (HDFC) (HDFC),, India' India'ss leadin leading g housing finance company, HDFC Bank is one of India's premier banks providing a wide range of  financial products and services to its over 11 million customers across over three hundred cities using multiple distribution channels including a pan-India network of branches, ATMs, phone  banking, net banking and mobile banking. Within a relatively short span of time, the bank has emerged as a leading player in retail banking, wholesale banking, and treasury operations, its three principal business segments. The bank's competitive strength lies in the use of technology and the propensity to deliver world-class service with rapid response time. Over the last 13 years, the bank has been successfully able to gain market share in its target customer franchises while maintaining healthy profitability and asset quality. As on December 31, 2007, the Bank had a network of 754 branches and 1,906 ATMs in 327 cities. For the quarter ended December 31, 2007, the bank reported a net profit of Rs. 4.3 billion, up 45.2%, over the corresponding quarter  of previous year. Total deposits were Rs. 993.9 billion, up 48.9% over the corresponding quarter  of previous year. Total balance sheet size too grew by 46.7% to Rs.1.3144 billion.

pg. 19

 

The challenges 

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With HDFC Bank’s success and rapid growth, it needed an effective way to increase customer profitability through deeper, stronger customer relationships. It also needed a way to detect important events in a customer’s life so that targeted communications could be sent at the right time to build relationships and increase profit. A central, automated process was required to access data across systems as well as plan, design, test, optimize and execute marketing efforts across channels including direct mail, email, SMS and call centers.

CRM soluon

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After evaluating several vendors, HDFC Bank selected Unica’s Affinium solution for  enterprise marketing management. Affinium was chosen for its ease of use, quick implementation as well as its robust modeling, customer analysis, and right-time interaction management capabilities. For instance, Credit card activation In order to boost credit card activation by a goal of seven to 16 percent, a targeted multichannel,, multi-wave channel multi-wave campaign campaign has been designed. As ten days after a new cardholder cardholder is approved, inactive members are identified. These members are then segmented segmented into distinct groups and are sent targeted targeted offers via email, SMS or direct mail which vary from product For cardholders who don’t respond to the offer in the first wave, a second communication with a different offer is sent. This campaign automatically runs every ten days, in order to make sure new inactive card members are identified and communicated with on a timely basis.

Results pg. 20

 

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With Affini With Affinium um , HDFC HDFC Bank has boosted boosted custome customerr retent retention ion by four four percent, percent, and executed acquisition campaigns, which resulted in reduction of acquisition cost by 60  percent due to effective targeting and channel optimization. Following the implementation implementation of Affinium, Affinium, the campaign volume increased by over 200  percent Lastly, the credit card activation campaign has achieved an incremental activation rate of  30 percen percentt compar compared ed to activa activatio tion n effort effortss withou withoutt predic predictiv tivee modeli modeling. ng. Debit Debit card card early activation program resulted in incremental response of   five percent over the normal activation rates.

VbV facility for HDFC customers

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HDFC Bank has introduced Verified by Visa (VbV) facility for all its credit and debit cardholders. VbV is a global program by Visa, based on 3-D secure technology, for identifying and authenticating cardholders when they purchase on the Internet. It allows cardholders cardholders to create a secret secret password, password, which they require require to authenticate authenticate the  payment and complete the transaction when shopping online. The bank also offers its cardholders NetSafe, a virtual card through which they can shop online without revealing their card number. HDFC uses the data bases in its varied ways. They get the data from the various companies and formulate the offers keeping in mind the needs and the usage of the customers. For eg. HDFC Bank Gold Credit Card.

Oers

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Exclusive travel benefits only on HDFC Bank Gold Credit Card. 5% Cash back on domestic air ticket bookings through domestic airline websites. 5% Cash back on rail ticket bookings through www.irctc.co.in. Free Airmiles across leading airline ness on redemption of reward points. Get 5% CashBack* on railway ticket booking through IRCTC on HDFC Bank Gold and Value Plus Credit Cards

RAP computer telephony integraon pg. 21

 

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The bank is currently currently working working on a customer customer data model that covers covers over 6,000 fields, fields, which should allow it to have one comprehensive and intelligent view of its customers. With regard regard to operational operational CRM, HDFC HDFC Bank has brought online online its RAP Computer  Computer  Telephony Integration (CTI) initiative for the bank's 14 contact centers, which service as many as 650,000 actual calls per month. The system system gives the bank's bank's conta contact ct center agents agents a view of data most often often needed in standard customer interactions. The RAP CTI system system pulls the select select data from various various screens in the host and makes it available as the agent picks up the call. With the new system, the agent does not need to toggle between data sources any longer. If the agent were to toggle, it would affect the customer experience and adds to the call time. The agent is also able to see outstanding outstanding offers. The bank has populated the host system with offers available for qualified q ualified customers.

pg. 22

 

Research h Methodology  Methodol ogy  Researc

Objecve  To find the consumer perception about the CRM services offered by public and private sector   banks in India and to conduct a comparative analysis between the CRM practices of public and private sector banks.

Methodology 

The survey research was carried out in the following four steps: Step1. Questionnaire Preparation and Validity – A questionnaire was prepared for conducting the survey research among IBS, Hyderabad students. The validity of the questionnaire was done by carrying out a pilot study for selecting the right CRM services offered by banks. Step2. Selection Selection of the Sample – A sample of 120 students of IBS, Hyderabad was selected and was asked to fill the questionnaire. q uestionnaire. Step3. Data Collection – The data was collected through online questionnaire filled by students of IBS, Hyderabad. Step Step4. 4. Data Data Anal Analys ysis is and and Inte Interp rpre reta tati tion on – This This was was do done ne both both qu qual alit itat ativ ivel ely y an and d quantitatively. For quantitative analysis, factor analysis technique was used to determine the consumer perception about the most important CRM services provided by the banks.

Demographics of the sample

The age of the selected sample was between 20-30 years and the male to female ratio was 60:40.

pg. 23

 

Data Analysis

The study is more descriptive in nature as CRM is a widely used concept in banking sectors today. Both qualitative qualitative and quantitative quantitative research approaches approaches are used for this study to get a  better understanding of the research area. Based on our research question we have specifically chosen two banks: Private Sector Bank: HDFC Public Sector Bank: SBI Two major banks (HDFC and SBI) were selected because they had wide network of branches in the city i.e. over 20 branches of HDFC and 80 branches of SBI. Also the presence of  HDFC, SBI ATM machines in the campus was a selection criterion. Furthermore, these three  banks proven business success also are very famous banks of India and are working in the capacity to represent the banking sector of India. Selection criteria were: • Banks having nationwide representation • Banks having different target customer; individuals, and groups •• Banks national and /orsuccess and/or international representation Banks having with proven business While framing framing the online survey questionnaire, questionnaire, we had coded the options for our questions questions as: ‘1’ as Very Satisfied ‘2’ as Satisfied ‘3’ as Neutral ‘4’ as Dissatisfied ‘5’ as Very Dissatisfied Thus,, the factor Thus factor with with the lowest lowest averag averagee score score is given given the highest highest prefer preferenc encee by the consumers.

pg. 24

 

Qualitave Analysis

The basic knowledge of customer relationship management in these banks was augmented by the use of Questionnaire, which was the main instrument for data collection. The instrument aimed to explore the implementation of CRM in banking sector. The following table gives the average scores of the respondents to the 10 parameters of CRM initiatives of the two banks. The results are arranged in the firm of a comparative analysis model: Parameter 1) Variety of Products Offered by the Bank 2) Time Taken to Process your Transactions 3) Personalized Attention Provided by the Bank 4) Safety of your Transactions 5) Professional Behavior of the Employees of the

Bank  6) Value Added Services Provided by the Bank 7) Technologically Advanced Services Provided  by the Bank (Internet Banking, Mobile Banking etc.) 8) Promptness in Handling Complaints/Grievances 9) Ease of Acquiring Loans/Other Financial Products 10) Promotional/Discount Offers Provided by the Bank 

HDFC 1.96 1.85 2 1.85 2.14

SB SBI

2.1 2.55 2.85 1.81 2.78

2.1 1.78

2.52 2.1

2.1

2.91

2.17

2.78

2.25

2.79

The results are shown in horizontal and vertical form. The horizontal showing the parameters and the vertical showing the average scores of the respondents of each of the banks. The result for Variety of Products Offered by the Bank shows HDFC with 1.96 and SBI with 2.1. This shows that HDFC customers are more satisfied by the products offered by the respective bank. Overall score is high for the two banks and therefore should give importance to the products offered. In today’s scenario speed of transactions is an important criterion for customers to evaluate  bank’s performance. HDFC has better performance than SBI. Both banks should give importance to this parameter as it can be a differentiating feature. Personalized attention is another parameter that customers value while wh ile choosing a bank. HDFC with mean score of 2 has better customer relations than SBI with 2.85 points. Therefore SBI should focus more on the personal attention given to the customers.

pg. 25

 

Safety of transactions is the most important parameter for banks. As there is money being transferred and customers give more importance to the safety of transactions. HDFC with 1.85 and SBI with 1.81 are equally good in providing safety to customers. Professional behavior of employees is similar to the personalized attention parameter and  both banks should focus on this parameter as both have high mean scores. HDFC however  has a better Professional behavior of employees than SBI. VAS: These are the differentiating services that banks look to offer to customers to create competitive advantage. HDFC with 2.1 provides more value added services than SBI with 2.52. Some of these services are: Real time Gross Settlement, Corporate Salary Accounts, and Reimbursement Account.  Now day’s customers lay more emphasis on convenience in banking services. That is why use of features like Internet banking and Mobile banking has increased rapidly in the last 2-3 years. HDFC with 1.78 was a far better Technological advanced services than SBI with 2.1. Complaint handling is also important as the customers face many difficulties in the banking services the bank which their HDFC problems in 2.1 a more efficient way increases the customerand loyalty towards theaddresses respectivetobank. with handles complaints better than SBI with a score of 2.91, which is far too high. Loan acquiring is a parameter that most customers need. The ease of availing the loans is therefore an important parameter that the banks should consider. HDFC again has a lower  mean score than SBI in the ease of acquiring loans. The last parameter is the Promotional offers/Discount offers given by the banks. It is an im impor porta tant nt pa para rame mete terr as most most cu cust stom omer erss us usee Cr Cred edit it/D /Debi ebitt cards cards in tr tran ansa sact ctio ions ns.. The The  promotional/discounts that these cards offer to the customers gives them an added advantage advan tage of using the banking services. Here again HDFC with 2.25 has a better score than SBI with 2.79.  FINAL RESULT: Average Score

HDFC SBI 2.02 2.52

From the table it is inferred that SBI should focus more on the CRM activities adopted as it has a higher mean score of all the parameters than HDFC.

pg. 26

 

Quantave Analysis Factor Analysis technique was used to carry out quantitative analysis of the collected data. dat a. Factor Factor analysi analysiss is a technique technique used to get a small small set of variab variables les (usual (usually ly homoge hom ogene neou ous) s) from from a la larg rgee nu numb mber er of unrel unrelat ated ed varia variabl bles es.. It is condu conduct cted ed in a mathematical tool called SPSS. The output of SPSS is analyzed and interpreted to get the  best set of variables as perceived by the consumers. Factor Analysis Output: 1. Kaiser Kaiser Meyer Olkin Olkin Test and Bartlet Bartlett’s t’s Test Test of Sphericity: Sphericity:

The KMO test value of 0.781 (greater than 0.6) and the significance value of Bartlett’s test of Sphericity (less than 0.05) indicates that this is a good model and we can proceed with the factor analysis. 2. Number of Factors Factors to be considered: considered:

The Scree Plot (a graphical relation between the no. of factors and their corresponding Eigen values) gives us the number of factors to be considered for conducting the factor 

pg. 27

 

analysis. The number of factors having Eigen values greater than ‘1’ is considered. Here, in our output we have three factors with Eigen values greater than ‘1’; hence we have a three factor solution. 3. Factor Descripti Descriptions: ons: The Rotated Rotated Component Component Matri Matrix x gives a brief brief descript description ion about about each factor, telling which variable is included in which factor. This matrix for our  output is as shown below:

From the above matrix, it is clear that: Factor ‘1’ consists of the following variables: 1. 2. 3. 4. 5. 6.

Variet Variety y of Produc Products ts Offe Offered red by by the Bank  Bank  Time Time Taken Taken to Proc Process ess your Transa Transacti ctions ons Person Personali alized zed Atten Attentio tion n Provide Provided d by the Bank  Bank  Professional Professional Behavior Behavior of the the Employe Employees es of the Bank  Bank  Value Value Added Added Servi Services ces Prov Provide ided d by the the Bank  Bank  Promptness Promptness in Handling Handling Complaints Complaints/Gri /Grievances evances

Thus we have named this factor as ‘Core Services’ Factor ‘2’ consists of the following variables: 1. Promptness Promptness in Handling Handling Complaints Complaints/Gri /Grievances evances 2. Promotional/ Ease ofional/Disco Acquiring Acquir ing Loans/Othe Loans /Other r Financia Financial l Products Pr oducts 3. Promot Discount unt Offers Offers Provided Provid ed by the Bank 

pg. 28

 

Thus we have named this factor as ‘Utility Services’.

Factor ‘3’ consists of the following variables: 1. Safet Safety y of your your Tra Trans nsac acti tions ons 2. Technological Technologically ly Advanced Advanced Services Services Provided Provided by the Bank Bank (Internet (Internet Banking Banking,, Mobile Banking etc.) Thus we have named this factor as ‘Tech Services’

Data Interpretaon

For the purpose of interpretation, the data collected for both the banks (SBI and HDFC) was separated and analyzed. The average values of the three factors for both the banks are:   Factor 1 8.10 Factor 1 10.50

HDFC Bank  Factor 2 4.78 State Bank of India Factor 2 6.17

Factor 3 3.05 Factor 3 3.22

In both the type of banks (Public and Private) factor ‘3’ has the lowest average score. Hence the segment of the people covered in our research study give most preference to the following CRM services provided by the banks: 1. Safet Safety y of Trans Transac acti tions ons 2. Technological Technologically ly Advanced Advanced Services Services Provided Provided by the Bank Bank (Internet (Internet Banking Banking,, Mobile Banking etc.) Also, between the two banks considered, people like the above mentioned CRM services of HDFC Bank more than that of SBI (as is visible from the average factor scores). This is followed by factor ‘2’. Factor ‘3’ is least liked by the target population.

Conclusion pg. 29

 

With the advent of privatization, deregulation, globalization there has been a significant increase in competition. in order to survive this competition, banks need to understand the needs of their  customers better, and formulate strategies and technology accordingly so that the customer is served efficiently and effectively and is thus retained. CRM comes as successful answers to this scenario given the following critical issues are taken care of:   

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Banks should recognize the diversity of experience and needs of different customers. Banks need to develop the propositions both relevant and practical, but not too complex Customer education programmes should be launched to improve understanding of bank’s  procedures and decision making and increase comfort levels. Measur Meas urem emen entt is a key to the the un unde ders rsta tand ndin ing, g, le lear arni ning ng an and d im impr prov ovem ement ent custo custome mer  r  experience. Banking sector management needs actively to articulate the need for an improved and consistent customer experience and branch mangers should localize this approach and coach their staff to deliver it. Banks should use customer friendly technology – which their customer can use and  brings value in their life.

pg. 30

 

References 

http://www.ehow.com/how_6808577_implement-crm-banks.html

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http://www.g-cem.org/eng/content_details.jsp?contentid=1804&subjectid=101

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http://www.thehindubusinessline.com/2005/11/04/stories/2005110401230900.html

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http://www.expresscomputeronline.com/20050704/management02.shtml

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http://en.wikipedia.org/wiki/Bank 

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www.statebankofndia.com

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  www.hdfcbank.com

pg. 31