Customer Relationship Management In Retail Banking: CAIIB Retail banking (Module C),Unit 4

Customer Relationship Management In Retail Banking: CAIIB Retail banking (Module C),Unit 4

Dear Bankers,
We all know that CAIIB exams are conducted by the Indian Institute of Banking and Finance (IIBF).  CAIIB is said to be one of the difficult courses to be cleared for the bankers. But we assure you that with the help of our “CAIIB study material”, you will definitely clear the CAIIB exam.
CAIIB exams are conducted twice in a year. Candidates should have completed JAIIB before appearing for CAIIB Exam. Here, we will provide detailed notes of every unit of the CAIIB Exam on the latest pattern of IIBF.
So, here we are providing “Unit 4: Customer Relationship Management In Retail Banking” of “Module C: Marketing in Retail Banking” from “Optional Paper: Retail Banking”.

The Article is CAIIB “Unit 4: Customer Relationship Management In Retail Banking”

♦Customer Relationship Management In Retail Banking

What is Customer Relationship Management (CRM) in banking in general and retail banking in particular? As we are all aware, there are three elements in CRM viz.

• Customer
• Relationship
• Management

The purpose of CRM is to increase the share of wallet of the customer with the banks’ services and increase the per customer profitability of banks. The stages involved in a CRM initiative are

• Capturing the customers’ profile through a technology enabled model.
• Dissecting the profiles into common information buckets.
• Designing suitable products and services to cater to the different information buckets.
• Offering the products and services to the targeted and segmented customers from the information buckets with the right pricing.
• Providing the right sales and service processes to achieve total customer satisfaction.
• Tracking the customer information on a dynamic basis to design new products and services to meet the changing dynamics of the customers.

Customer optimisation is the essence of CRM and can be addressed through three dimensions viz.

• Acquisition of New Customers who are immediately profitable to the bank.
• Retention of Existing Customers who are most profitable and valuable to the Bank for the longest duration.
• Expansion of the customer relationship with the bank encouraging more purchases and shifting the less profitable customers to lower – cost delivery channels.

♦WHY CRM?

Why CRM? This is an important question which has to be answered by all concerned in retail banking Without CRM, whether banks cannot track the customers’ profile and offer those products and services to match their expectations and needs? But the following needs for banks for implementation of a CRM program will answer the above questions.

• Need to increase operational efficiencies
• Need to derive more value from employees.
• Increasing Competition in retail banking.
• Rising NPAs.
• Increasing Importance of Fee Based Income.
• Delivery Channel Efficacy
• Application of Technology

CRM is not just an option for the banks but a compulsion to achieve business synergies and optimization of resources. CRM as a tool can be effectively utilized to explore new frontiers in product development and management and improve the per customer profitability in addition to building and sustaining customer loyalty and brand equity. Let us discuss each of these needs in detail for a better understanding of CRM.

Implementation Aspects of CRM in Bank

How does CRM Work?

CRM systems are designed to compile information on customer across different channels- or points of contract between the Customer and the Bank. Likes telephone, live chat, direct mail, social media Etc.

Security concerns of CRM

Business need to ensure that the strange and analysis of the customer data must have the highest levels of protection against cyber criminals, identity theft and other breaches of securities.

Features of CRM Software

• Marketing automation
• Sales force automation
• Contract centre automation
• Geolocation technology or location-based services

Main Component of CRM

The main Component of CRM are building and managing customer relationship through marketing, observing relationship as they mature through distinct phases, managing these relationship at each stage and recognizing that the distribution of value of a relationship to the firm is not homogenous.

Implementation Process of CRM In Banks

Though CRM is a must in the retail banking scenario in India, the process of implementation is a tough one because of the different nature of business process structure, organization structures and the technology structure and architecture, to name a few. Let us see the different key issues in the implementation of CRM by banks.

• Business Processes
• Information Processes
• Information Systems
• Internal Organisational Culture

Implementation Stages In CRM

Four stages through which CRM is implemented. Let us now discuss the four stages.

• Identification of Customers
• Classification of Customers
• Interaction With the most Valued Customers
• Customisation of Bank’s Products and Services for Different Customer Segments

Benefits of CRM

An effective CRM implementation in retail banking will benefit the banks in more than way. The following are some of the important benefits that accrue to banks and enhance the customer focus of the banks:

• Improves the customer satisfaction and cross selling potential for the banks.
• Helps the banks to derive increased share of wallet from the customer.
• Enhances the operational efficiencies of the banks.
• Helps to take on competition as CRM results in more customer focus and retention.
• Helps to understand Customer Lifetime Value through the structured data base on a dynamic basis.
• Improves customer service through effective integration of all remote delivery channels.
• Helps to manage multi delivery channels in a better way to adopt and maintain uniform service standards across channels.
• Enables to achieve seamless information flow across functions in delivery.
• Results in better relationship marketing as customer segments are better target based on the data available in CRM.

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