The Strategy Seminar: Applied strategy- CRM Is All About Bringing People, Processes & Technology Together - A Case Study Of Banking Sector In India

Bihari, Suresh Chandra. "CRM Is All About Bringing People, Processes & Technology Together - A Case Study Of Banking Sector In India." Romanian Journal of Marketing 1 (2012): 50-56. Business Source Complete. Web. 17 Oct. 2012.

The main purpose of this article is to define what Customer Relationship Managements (CRM) is, “the process or methodologies used to understand customers’ needs and behaviors to build stronger relationships with them,” how to develop it, what are the challenges in the implementation, and how it can be applied to the banking sector, specifically, the Indian banking sector. (Bihari 2012)  Second, the article shows why CRM is important in banking, an industry which historically is focused on transactions not creating customer relationships.  Third, it focuses on innovations in CRM and what the future of CRM will look like in India.  Lastly, the author analyzes select Indian and global banks to provide examples of CRM in action. 

The paper’s research found CRM is currently popular because of increased competition between banks through globalization.  Banks used to be transaction based but are now focusing more on customers.  Customers are increasingly expecting more services and products from their banks.  Increases in information technology (IT) not only give consumers more banking options from banks, but it also gives banks more options to analyze their customers’ behaviors.  Banks realize there is a significant advantage in acquiring new customers and by keeping customers they already have profits can increase up to 35% (Bihari 2012). 

The study suggests banks can develop a CRM strategy by identifying and creating initiatives with the overall strategy of the firm in mind.  Bank must set growth objectives for each of the initiatives.  Initiatives should include increases in new and existing customers (Bihari 2012).  There are, however, problems associated with CRM. First, it is hard to establish good and effective measurements of CRM.  If effective measurements cannot be established it is easy to see how banks would not go forward with an investment with its Net Present Value (NPV) unknown or hard to measure (Bihari 2012).  Second, true profitability of a bank is hard to measure and accounting standards for financial performance may not replicate true performance (Bihari 2012).  Third, banks have a rule for pricing decisions.  The 80-20 Rule is that 80% of profits come from 20% of customers.  If a bank provides poor services to these customers they can move to competitors (Bihari 2012).

The implications for bank managers are with increased competition banks need to come up with new ideas.  Good customer experience leads to customer acquisition and retention which then leads to increased profits.  By focusing on customers, banks can acquire vast quantities of customer information and make informed decision about what customers want and when.  CRM can increase overall profitability through better infrastructure and performance as it relates to customers relationships (Bihari 2012).  Much like in marketing, CRM allows banks to study and segment their customers.  This permits banks to see which customers are profitable and which are not (Bihari 2012).