A STUDY ON CUSTOMER PERCEPTION TOWARDS CUSTOMER RELATIONSHIP MANAGEMENT (CRM) PRACTICES IN NATIONALISED BANKS

Transcription

1 INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) International Journal of Management (IJM), ISSN (Print), ISSN (Online), ISSN (Print) ISSN (Online) Volume 5, Issue 11, November (14), pp IAEME: Journal Impact Factor (14): (Calculated by GISI) IJM I A E M E A STUDY ON CUSTOMER PERCEPTION TOWARDS CUSTOMER RELATIONSHIP MANAGEMENT (CRM) PRACTICES IN NATIONALISED BANKS *Mr. T.Partha Saradhy, **Dr. S.E.V.Subrahmanyam, ***Dr. T.Narayana Reddy *Assistant Professor, Department of Management Studies, Sreenivasa Institute of Technology and Management Studies, Chittoor. **Director, Department of Management Studies, Sreenivasa Institute of Technology and Management Studies, Chittoor. ***Assistant Professor, Department of Humanities, JNTU College of Engineering, JNTUA, Anantapur. ABSTRACT The CRM practices are adopted to generate better understanding of the customers for product development, segmentation, appropriate targeting, campaign management and maintenance of long term profitable and mutually beneficial relationships with customers. A very small proportion of its potential has been utilized. The paper investigates the successful implementation of CRM. An attempt is made to clear the benefits of Customer Relationship Management. These results were discussed and analyzed to get results about how far CRM is implemented to secure competitive advantage. A set of recommendations will be made so as to pinpoint how CRM can be used to secure competitiveness. The present level of MIS covers, information needed for control, performance monitoring, decision making. The purpose of this research is to study the comparative use of CRM in various private sector banks. Customer Relationship Management is an approach to identify the tastes and preferences of individual, every customer is viewed with his life time value, and not only for customer satisfaction but customer retention is also more important. Keywords: Public Sector Banks, CRM Practices, Customers Satisfaction, Retention. 1. INTRODUCTION TO CUSTOMER RELATIONSHIP MANAGEMENT Customer Relationship Management is the business buzzword in these days. Customer Relationship Management promises faster customer service with lower costs, more customer satisfaction with better customer retention and ultimately achieving customer loyalty. All this is done in hope for more sales and profits. According to company s goals can be best achieved through 34

2 identification and more satisfaction of the customers' needs and wants. CRM is a system to identify, target, acquiring, and retaining the best outcome of customers. Customer Relationship Management helps in understanding customer needs, and in building relationship with customers by providing the most suitable products and services with enhanced customer service. It integrates all sub systems to maintain a database of customer contacts, purchases, and technical support, among other things. This database helps the company in identifying the needs of the customers to improve the quality of the relationship. Customer is the king. Forget the meaning of royal treatment of customers, many of the organizations are not treating the customer with dignity. Doing a favor by answering a few questions of the customers on the phone after putting them on hold for an hour! Standing in line to buy something was common and expected. The customers go to airports to buy a ticket because the airlines kept them there. Nowadays, 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. The phenomenon of globalization has paved the way for the entry of new generation multinational (foreign) banks in general and private sector banks in particular into the Indian banking market. Several banking experts argue that the world class services that are offered by these new generation banks have a tremendous bearing on the mindset and expectations of Indian banking customers. The services that are offered by these banks are characterized on a 24 hour X 7 day a week basis with a focus on delivering higher quality of service across the multiple channels. In this context, phone banking and internet technologies have emerged as a major option before the Indian banks. In addition to these modern services such as Tele-banking, Internet banking, Mobile banking, and Automated Teller Machine (ATM) banking are also offered by Indian banks to serve customers better. It is against this backdrop, the studies on understanding the demographics of customers and their attitudes towards customer relationship management (CRM) practices are gaining importance. Several researches studies that were conducted on the customer service aspects of Indian banking scenario, highlighted the need for designing effective Customer relationship management (CRM) systems for enhancing the customer satisfaction and loyalty, Reserve Bank of India (RBI) instructed all public sector banks to focus on implementing innovative customer relationship management (CRM) systems through multiple touch points of CRM systems such as call centers, websites, systems and interactive kiosks across various service units and support processes. Research studies further revealed that customer relationship management (CRM) is emerging as an offshoot of the modern technological landscape by incorporating customer demographics, business intelligence, and Internet proximity and therefore takes its place at the heart of the modern banks. These technological advancements and global competitive pressures have reoriented the public sector commercial banks in India to pay more attention to the changing customer needs and effective CRM interventions in the light of the changes in the consumer demographics. The forces of change shaping the banking and financial system worldwide are fundamental and constant. The intense competitive pressure on the financial system has generated a variety of products and services to meet the specialized needs of millions of customers. The impact of these changes in the international financial system was felt in India in the early nineties when she initiated the process of integrating her economy with the global economic order. This ushered in the phase of financial sector reforms in our country. Reforms, which are primarily aimed at aligning the Indian banking system to the international best practices, are having lasting effect on the entire fabric of the Indian financial system which is presently undergoing a major phase of metamorphosis. While 35

3 reflecting on the dynamics of this change and its implications in the management of banks, one need to emphasize the phenomenal growth profile of the Indian banking industry in retrospect and prospect in terms of business, branch network, etc. Correspondingly, the average population served per bank branch has come down significantly. The cultural diversity, vast geographical spread and federal character of the country are amply represented in the complexity of the banks' operations. There has been a perceptible change in the environmental scenario in banking and finance since the early nineties, and, consequently, managing these institutions efficiently is a major and continuous challenge. Adoption of CRM Technology in Banking System Information Technology revolution had a great impact in the Indian banking sector. The use of computers software had led to introduction of online banking system in India. The use of the modern innovation and computerization of the banking industry in India has improved after economic liberalization in the year 1991 as the country's banking sector has been exposed to the world's market. The Indian banks were finding it difficult to compete with the international banking standards in terms of customer service to provide convenience without the use of the information technology and computer system and software. Reserve Bank of India in the year 1984 formed Committee on Mechanism in the Banking sector whose chairman was Dr C Rangarajan, Deputy Governor, Reserve Bank of India. The major recommendations of the committee were implementing MICR Technology in all the banks in the metropolis in India. It provided us standardized cheque forms and encoding and decoding system. In the year 1994, the Reserve Bank of India set up Committee on Computerization in Banks was headed by Dr. C.R. Rangarajan which emphasized that the settlement operation must be computerized in the clearing houses of Reserve Bank of India in Bhubaneswar, Guwahati, Jaipur, Patna and Thiruvananthapuram. It further stated that there should be National Clearing of inter-city cheques at Kolkata, Mumbai, Delhi, Chennai and MICR should be made Operational. It also focused on computerization of banking services in all branches and increasing connectivity among branches through computers. It also suggested implementing on-line banking facilities. The committee submitted reports in the year 1989 and computerization of all branches started form the year 1993 with settlement between IBA and bank employees' association. In the year 1994, Committee on Technology Issues relating to Payments System, Cheque Clearing and Securities Settlement in the Banking sector was set up with chairman Shri.WS Saraf, Executive Director, Reserve Bank of India. It emphasized on Electronic Funds Transfer (EFT) system, with the internet communication network as its carrier. It also said that MICR clearing should be set up in all banks with more than branches. Introduction to State Bank of India The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in the year Three years later the bank received its charter and was re-designed as the Bank of Bengal in the year A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay established in the year 18 and the Bank of Madras in the year 1843 followed the Bank of Bengal. These three banks remained at the apex of modern banking system in India till their amalgamation as the Imperial Bank of India in the year Primarily Anglo-Indian creations, the three presidency banks came into existence with a compulsion of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernize Indian banking system and it helps for developing Indian economy. Their evolution was shaped by ideas from similar developments in 36

4 Europe and England and was influenced by changes occurring in the structure of both the local and urban trading environment. Introduction to Andhra Bank Andhra Bank is a public sector bank, with a network of many branches, it has 15 extension counters, 38 satellite offices and 1563 ATMs as on 30 Nov 13. During 11 12, the bank entered in to the states of Tripura and Himachal Pradesh. The bank now operates in 25 states and three Union Territories. The government of India owns 58% of its share capital and is planning to increase it to 62.14% by infusing 2 billion in capital. The state owned Life Insurance Corporation of India holds 10% of the shares. The bank has done a total business of 2230 billion for the fiscal year ended 31 March 13. Andhra Bank has ranked No.1 in terms of number of Life Insurance Policies mobilised amongst all the agency banks dealing with the Life Insurance Corporation of India. The bank also has tie-up with United India Insurance Company Limited under Banc assurance Dr. Hhogaraju Pattabhi Sitaramayya founded Andhra Bank in 1923 in Machilipatnam, Andhra Pradesh. The bank was registered on November 1923 and commenced business in the year 1923 with a paid up capital of 000 and an authorized capital of 1million in the year 1956, linguistic division of states was promulgated and Hyderabad was made the capital of Andhra Pradesh. The registered office of the bank was subsequently shifted to Andhra Bank Buildings, Sultan Bazar, Hyderabad, Telangana. In the second phase of nationalization of commercial banks commenced in the year 1980, the bank became a wholly owned Government bank. 2. REVIEW OF LITERATURE This study was relevant to the previous studies and researches in the related fields. The subject to find out and fill up if any research gaps existed. Literature on banking services can generally be found, number of books is available on banking related aspects as merchant banking, loan syndication, securitization, profitability and productivity etc. but, few studies are undertaken on the role of Customer Relationship Management in the banking services. Uppal R.K. (10) Explains in his study about the extent of mobile banking in Indian banking industry during The study concludes that among all CRM is the most effective while mobile banking and it does not hold a strong position in public and old private sector but in new private sector banks and foreign banks in mobile banking is good enough with nearly 50 pc average branches providing mobile banking services. Mobile banking customers are also the highest in e-banks which have positive impact on profits and business per employee of these banks. Among all, foreign banks are in the top position followed by new private sector banks in providing mobile banking services and their efficiency is also much higher as compared to other groups. The study also suggests some strategies to improve mobile banking services. Oghenerukeybe E. A. (09) he explained in his study about user s perception of factors influencing the effective implementation of existing objectives and to evaluate the effectiveness of banking web browsers using the Communication-Human Information Processing Model, a model proposed by Wogalter in the year 06 in the field of warning sciences. Findings reveal that is not very effective at alerting and shielding users from revealing sensitive information. 27 percent participants do not understand the full meaning of the banking sites while the attention of some users is not captured enough, for they ignore the warnings completely. Even with the presence of participants still go ahead to submit sensitive ive information. These outcomes may help the management of banks develop effective security strategies for the future of electronic banking in Nigeria. 37

5 Migdadi Y.K.A. (08) he revealed in his investigation to identify the quality of internet banking service encounter of the retail banks in Jordan, and to identify the quality aspects that should be improved or sustained. The study evaluates the banks' web sites by using the web site quantitative evaluation method in the year 08 for sixteen retail banks in Jordan. The results indicate that the banks in Jordan have significant positive quality of the internet banking system and service encounter, further the banks' web sites are rich in their content and significant in the navigation, but the speed of home page down load and web site accessibility should be developed in the future for better results. Banknet India (06) he concluded after conducting an online survey on 316 ATM users during the month of August-September, 06 and survey is limited to India to get insight into users perceptions. It is concluded from the survey that the most use (56 pc) of ATM services is for bill payments and pre-paid mobile recharge where 64 pc respondents feeling comfortable with depositing of cash/cheques through ATM but they have to wait in long queues and find no money left in the machine. Most of the respondents claimed to know about fee charged at other bank ATMs and pc demand more privacy. Overall conclusion is ATMs are preferred over branch banking by majority of the respondents show the increasing popularity of e-banking among the public sector banks. 3. NEED FOR THE STUDY Advanced Customer Relationship Management technology requirement increased because of competitive pressures in banking industry, particularly in banking services. Indian banks are functioning increasingly with competitive pressure within the banking system from non banking institutions as well as from domestic and international capital markets. In this era of increased competition, in order to improve standards it will be benefit able for the banks to develop long term relationship with the customers by offering superior quality and services. Developing long term relations with the potential customer depends on three dimensions like service quality, product quality and relationship quality. In banking industry since the perceived service quality acts as a foundation for developing long-term customer relationship, the present study is mainly undertaken to present the customer perception on CRM and to study the perceived services and its quality provided by the bank system. 4. THE PRIMARY OBJECTIVE OF THE STUDY The primary focus of this study is on the role of customer relationship management in banking sector, the banking employees relation with its customer to maximize customer satisfaction. The study conducted to find out the customer relationship management factor influencing on customer satisfaction as well as customer retention through analysis To identify the important factors for select a particular bank and identified factors influencing the bank with selected sample customers of focus pre selected banks. The identified factors which are influencing are quality of service, and personal relation effectiveness of customer relationship management techniques. This study is based on 250 customers of SBI and ANDHRA banks. 5. OBJECTIVES OF THE STUDY The main objectives of the study are as follows. 1. To study the perception of SBI & ANDHRA BANK customers about Customer Relationship Management. 2. To analyze the perceived service quality of the customers towards their bankers. 3. To study the CRM practices adopted by the banks to improve banking performance. 38

6 6. SCOPE OF THE STUDY The scope of the study is limited to the survey of customers perception of selected public sector commercial banks namely State Bank Of India(SBI), ANDHRA Bank in chittoor district of Andhra Pradesh. 7. RESEARCH METHODOLOGY To achieve designed objectives of the study and to analyze the different factors with appropriate methodology has been adopted. The present study is exploratory as well as descriptive. The survey was conducted during August and October 14. The present study is based on primary and secondary data. The primary data has been collected from a sample of 250 customers of State Bank of India and ANDHRA Bank Chittoor in district of Andhra Pradesh. The Primary data has been collected with a well structured and pre tested questionnaire which was based on Likert five point scale, secondary data has been collected through internet and websites of selected banks. The customer perception of State Bank of India and ANDHRA bank on Customer Relationship Management was judged on the variables like Routinely asking the customer to provide feedback, Providing customized services and products, Transparent and well defined system, Bank website is user friendly, Communication tools are very effective, Well developed privacy policy, Increasing customer convenience, Consistent customer experience, Customer is the biggest asset of the organization, Retaining existing customers, Conducting customer loyalty programmes, Excellent employee response, ATMs are adequately provided. Apart from the questionnaire being used for data collection, personal discussions were also conducted with the respondents to get further information. The data so collected has been analyzed with statistical techniques like percentages, averages and charts. 8. ANALYSIS AND INTERPRETATION Table 8.1: representing customer perception on CRM in banks S. No Variable Name SA A N D SD 1. Routinely asking the customer to provide feedback Providing customized services and products Transparent and well defined system Bank website is user friendly Communication tools are very effective Well developed privacy policy Increasing customer convenience Consistent customer experience Customer is the biggest asset of the organization Retaining existing customers Conducting customer loyalty programmes Excellent employee response ATMs are adequately provided

7 Table 8.2: representing customer perception on the statement Routinely asking the customer to provide feedback 25 Neutral Inference: 8% of customers are strongly agree the statement bank routinely asking customers to provide feedback 10% of customers agree, % of customers are neutral and 42% of customers disagree the statement. Table 8.3: representing customer perception on the statement Providing customized products and services Neutral Inference: 44% of customers are strongly agree the statement bank providing customized services and products, 28% of customer agree, 24% of customers are neutral and 4% of customers disagree the statement.

8 Table 8.4: representing customer perception on the statement Transparent and well defined system 1 Neutral Inference: 48% of customers are strongly agree that bank is maintaining transparent and well defined system, % of customers agree, 4% of customers are neutral and 8% of customers disagree the statement. Table 8.5: representing customer perception on the statement Bank website is user friendly 50 1 Neutral Inference: % of customers are strongly agree that bank website is user friendly, 48% of customer agree 12% of customers are neutral and % customers s disagree the statement. 41

9 Table 8.6 representing customer perception on the statement Communication tools are very effective Neutral Inference: 29% of customers are strongly agree that bank has effective communication tools, 32% of customer agree, % of customers are neutral and 19% of customers disagree the statement. Table 8.7: representing customer perception on the statement Well developed privacy policy 1 Neutral Inference: 48% of customers are strongly agree that bank has well developed privacy policy, % of customer agree, 8% of customers are neutral and 4% of customers disagree the statement. 42

10 Table 8.8: representing customer perception on the statement Increasing customer convenience 60 Neutral Inference: 16% of customers are strongly agree that bank increasing customer convenience, 24% of customer agree, 24% of customers are neutral and 36% of customers disagree the statement. Table 8.9: representing customer perception on the statement Consistent customer experience 90 1 Neutral Inference: 36% of customers are strongly agreed that they have consistent customer experience 48% of customer agree 8% of customers are neutral and 8% of customers disagree the statement. 43

11 Table 8.10 representing customer perception on the statement Customer is the biggest asset of the organization Neutral Inference: 38% of customers are strongly agree that customer is the biggest asset of the bank, 44% of customers agree, 16% of customers are neutral and 2% customers disagree the statement. Table 8.11: representing customer perception on the statement Retaining existing customers Neutral Inference: % of customers are strongly agree that bank retaining existing customers, 60% of customer agree, 12% of customers are neutral and 8% of customers disagree the statement. 44

12 Table 8.12: representing customer perception on the statement Conducting Customer loyalty programmes Neutral Inference: % of customers are strongly agree that bank conducting customer loyalty programmes, % of customers agree, % of customers are neutral and % customers disagree. Table 8.13: representing customer perception on the statement Excellent employee response 30 Neutral Inference: 12% of customers are strongly agreed about excellent employee response, % of customers agree, % of customers are neutral and 8% of customers disagree the statement. 45

13 Table 8.14: representing customer perception on the statement ATMs are adequately provided 1 Neutral Inference: 48% of customers are strongly agree about adequate provision of ATMs, % of customers agree, 12% of customers are neutral and no customer disagree the statement. 9. CONCLUSION The findings of this research study revealed that the tenure of banking transactions of the respondents has an influence on the CRM efficiency especially in public banking sector. Nationalized banks are succeeding in collecting feedback regularly from the right customers and succeeding in maintaining transparent and well defined system, customers are highly satisfied with privacy policy and ATMs provision. Customer Relationship Management is now becoming a new comprehensive approach for developing business sustainability in nationalized banks. This is because Customer Relationship Management is important for banking industry because that has close contact with end customers but have lesser value to industries that are further away from the end customers. The implementation of CRM yields more number of benefits to the bank one of the important benefits is cost reduction. Secondly, the integrated view of the customer provides the bank an opportunity to understand its customers well and accordingly cater to their needs with individualized offering. Strategic approach towards CRM implementation will enable attainment of the desired benefits of the CRM investments made by banks. It was also observed that the occupation of the respondents has an influence on the consumers awareness of CRM. Further analysis of the data revealed that the gender of the respondents has no influence on the CRM efficiency The strategic framework suggested for effective implementation of CRM emphasizes the importance of understanding CRM as an organization wide strategy and need for alignment of bank s culture and processes ses to bring customer centricity at the core of operations 46

14 REFERENCES 1. Kothari C R (04), Research Methodology, New Delhi, New Age International Publishers 2. Ravichandran N (03), Indian Banking Sector: Challenges and Opportunities, Vikalpa, vol. 28, No. 3, pp Uppal K R and Rimpi Kaur (08), Customer Service in Banks: An Empirical Study, The Icfaian Journal of Management Research, vol. VIII, No. 4, pp Saurbhi Chaturvedi and Dr. Rishu Roy (08), Impact of CRM on Organizational Effectiveness: An Exploratory Study of Services Sector, Management Trends, vol. 5, No. 1, pp Kotler P, `Marketing Management (09), Pearson India. 6. Ravi V, Raju N P, Sridhar S, `Big Data, Analytics, CRM: A Formidable Triumvirate for Banking, The Indian Banker, vol. III, No.2, Feb 12, pp Mukherjee K, `Using CRM Effectively, TMTC Journal of Management, Vol. 8, No. 2, Dec 10, pp Navdeep Agarwal and Mohit Gupta (05) Dissemination of Customer Oriented Strategy to Customer Contact Service Employees-Application of Hartline, Macham and Mckee(00) Model in Indian Settings, South Asian Journal of Management, January- March 05, 12,1, p Rajnish, Jain, Sangeeta, Jain and Upinder, Dhar,(07),"CUREL: A Scale for Measuring Customer Relationship Management Effectiveness in Service Sector, Journal of Services Research, Volume 7, Number 1 (April - September 07). 10. Divya Prabha D and Dr. Krishnaveni R (08), A study on Corporate Customer Relationship Management in Banking Industry, PSG Journal of Management Research, vol. 1, No. 2, pp Kale, Sudhir, CRM Failure and the Seven Deadly Sins, Marketing Management, Sept- Oct 04, Vol 12, Issue 5, pp Sureshchander, G.S, Chadndrashekharan, Rajendran, Anantharaman, (03), "Customer Perceptions of Service Quality in the Banking Sector of a Developing Economy-A critical Analysis", International Journal of Bank Marketing, 21/5, Coltman T., Can Superior CRM Capabilities Improve Performance in Banking, Journal of Financial Services Marketing, Vol.12,2 (07). 14. Sandip Dhakecha, A Study on Effectiveness of Cause Related Marketing [CRM] as a Strategic Philanthropy in Terms of Brand Popularity & Sales, International Journal of Marketing & Human Resource Management (IJMHRM), Volume 4, Issue 1, 13, pp , ISSN Print: , ISSN Online: X. 15. Allahyar Beigi Firoozi, Mehran Aslaniyan, Faranak Yusefvand and Mojtaba Pahlavani, Formulating and Prioritizing CRM Implementation Strategies in Mehr Eghtesad Bank of Iran using Combinational Model of PIP and ANP, International Journal of Marketing & Human Resource Management (IJMHRM), Volume 4, Issue 2, 13, pp. - 53, ISSN Print: , ISSN Online: X. 16. Dr. V.Antony Joe Raja, New Strategy in Today Banking Sector: Bank Customer Relationship Management (CRM) & Marketing Mix in World, International Journal of Marketing & Human Resource Management (IJMHRM), Volume 4, Issue 3, 13, pp , ISSN Print: , ISSN Online: X. 17. T.Vijayakumar and Dr. R. Velu, Customer Relationship Management in Indian Retail Banking Industry, International Journal of Management (IJM), Volume 2, Issue 1, 11, pp , ISSN Print: , ISSN Online: