55 CRM Implementation in Banks

Customer Relationship Management (CRM) has been in India for over a decade
but its penetration into the industry in general and financial services sector in
particular has not been very impressive. With the entry of many foreign banks
and the setting up of many private sector banks, there is an increased
competition in the banking sector to attain a competitive advantage. Banks have
slowly but surely realized the importance of building and maintaining customer
relationships. CRM is a holistic strategy which can help the banks to become
customer-oriented and implement customer-focused strategies, which in turn
will help them build long-lasting relationships with the customers and hence
increase their profits. CRM in the banking sector is of strategic importance.
In this study, a single descriptive case study of ICICI Bank, which implemented
CRM in the 1990s, has been used. The objective of the study is to understand
the implementation of CRM in the bank and to identify the lessons learnt from
the same.
Sanjit Kumar Roy*
CRM Implementation in Banks
Introduction
In India, the banking industry has been operating in a very stable environment
for decades. The initiation of financial sector reforms in 1991, which included
industry, trade, taxation, external sector, banking and financial markets, had
a great impact on the Indian economy. It strengthened the fundamentals of
the Indian economy and transformed drastically the operating environments
of banks and financial institutions of the Indian subcontinent (Purwar, 2003).
The financial health of Indian commercial banks, in terms of capital adequacy,
profitability, and asset quality, has improved significantly. This sector is
experiencing major changes as a result of the economic reforms. The economic
ref orms have al so creat ed new and demandi ng cust omers
(the ever-increasing Indian middle class) and the new mix of players consisting
of the public sector units, private banks, and the foreign banks. Because of
this competition customers expectations regarding service and innovative
products have risen (Ravichandran, 2003). The new rules of competition
require recognition of the importance of consumers and the necessity to
address their needs through innovative products supported by new
technology. In this environment, the managerial challenges include market
segmentation, product positioning, innovative delivery channels, cross-selling, etc.
* Research Scholar, The Icfai Institute for Management Teachers (IIMT), Hyderabad, India.
E-mail: roysanjit2004@yahoo.co.in
2008 The Icfai University Press. All Rights Reserved.
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 56
There is an urgent need to introduce new products. Existing products need
to be delivered in an innovative and cost-effective way by taking full advantage
of emerging technologies. In the present scenario of falling interest rates and
increasing number of players, the banking industry is finding it very difficult
to meet the high growth rate expectations. They are constantly looking for
newer ways to achieve organic growth. They are adopting strategies which
enable them to acquire new customers and transform them into loyal
customers. But the success of a banks strategy depends upon its ability to
develop customer insights and translate them into effective operating
strategies. The core of a successful growth strategy for a bank is to ensure
a good customer experience at each and every customer touch point. Herein
lies the importance of Customer Relationship Management (CRM). The emphasis
has to be on CRM in order to sustain and achieve growth and profits. CRM
in banking industry focuses on how companies are adopting the concept to
converge people, processes and products more effectively to get along with
true relationship marketing. This study focuses on various issues of CRM, its
effectiveness, application, and the challenges in the banking industry. A number
of CRM implementations have grown dramatically in recent years. However, few
academic studies on the issues associated with the implementation of the
concept are available. This study highlights the fact that implementing CRM
requires effective leadership, sourcing, targeting, and evaluation strategies.
In recent years, many organizations have identified the need to become more
customer-friendly due to increased global competition. As a consequence, CRM
has become an important factor in many organizational strategies. Fundamentally,
however, CRM systems can be viewed as information systems aimed at
enabling organizations to realize a customer focus. Clearly, an increasing
number of diverse organizations are adopting CRM, yet surveys are beginning
to highlight the potential risks. Even though CRM systems are proving to be
an incredibly popular choice for implementation, success is proving to be
illusive. According to a study, of the 202 CRM projects, only 30.7 percent of the
organizations claimed that they had achieved improvements in the way they
sell to and service customers (Dickie, 2000). Moreover, a recent and broader
survey estimated that 70 percent of the companies will ultimately fail. The Giga
survey also revealed that companies generally underestimate the complexities
of CRM, lack clear business objectives, and tend to invest inadequately in the
provision of CRM software. While the findings by Giga highlight a fairly gloomy
scenario, it is clear that all the organizations are not facing failure. Therefore,
there is a great need for more empirical research on the implementation of
CRM.
In this study, a single descriptive case study of one major private sector Indian
bank, i.e., ICICI Bank, that has implemented CRM is presented. The aim of this
study is to analyze the implementation and design of CRM in the bank.
Literature Review
The review of the CRM literature has been conducted to define CRM, and identify
the issues associated with the implementation of CRM and the factors related
to the success and failure of CRM in organizations.
57 CRM Implementation in Banks
CRM Defined
In the marketing literature, the terms CRM and relationship marketing have
been used interchangeably (Parvatiyar and Sheth, 2000). These terms have
been used to reflect a variety of themes and perspectives. A narrow perspective
of CRM is database marketing emphasizing the promotional aspects of marketing
linked to database efforts (Bikert, 1992). Another narrow yet relevant view is
to consider CRM only as a customer retention strategy in which a variety of
after-marketing tactics are used for customer bonding or staying in touch after
the sale is made (Vavra, 1992). A more popular view is that CRM is an information
industry term for methodologies, software, and the Internet capabilities that
help an enterprise to manage customer relationships in an organized manner
(Xu et al., 2002). CRM is more commonly used in the context of technology
solutions and has been described as information-enabled relationship
marketing (Ryals and Payne, 2001). There are many such views prevalent in
the literature, but the following definitions capture the essence of CRM to a great
extent.
Parvatiyar and Sheth (2000) defined CRM as a comprehensive strategy and
process of acquiring and partnering with selective customers to create superior
value for the company and the customer. Payne and Frow (2005) support their
view that CRM is a strategy and define it as a strategic approach that is
concerned with creating improved shareholder value through the development
of appropriate relationships with key customers and customer segments.
CRM unites the potential of relationship marketing strategies and IT to create
profitable, long-term relationships with customers and other key stakeholders.
CRM provides enhanced opportunities to use data and information to both
understand customers and co-create value with them. This requires a
cross-functional integration of processes, people, operations, and marketing
capabilities that are enabled through information, technology, and applications.
Benefits of CRM
Brown (2000) claims that CRM has several advantages over traditional
mass-media marketing. Some of them are:
Reduces advertising costs;
Makes it easier to target specific customers by focusing on their needs;
Makes it easier to track the effectiveness of a given campaign;
Allows organizations to compete for customers based on service, not
prices;
Prevents overspending on low-value clients or underspending on
high-value ones;
Speeds the time it takes to develop and market a product (the customer
relationship lifecycle); and
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 58
Improves the use of customer channel, thus making the most of each
contact with a customer.
Similarly, Xu and Walton (2005) have put forward some reasons for which
companies implement CRM. These are:
Improving the customer satisfaction level
Retaining the existing customers
Enhancing the customer lifetime value
Providing better strategic information to sales, marketing, finance, etc.
Attracting new customers, and
Cost savings
In addition to the reasons mentioned above, Brown (2000) states that
a company implements CRM to cross-sell and up-sell services to the customers
and to bring in prospective customers. Moreover, CRM allows a company to
address all types of customers; it serves at different points in their lifecycle and
helps to choose the marketing program that best fits a customers attitude
towards the company and willingness to purchase its products and services.
According to Blery and Michalakopoulos (2006), whose views are congruent with
Browns, CRM permits businesses to leverage information from their databases
to achieve customer retention and cross-sell new products and services to the
existing customers. They also emphasize that CRM, when successfully
implemented, can have a dramatic effect on the bottom line performance.
Zineldins (2005) study on the Swedish banking industry found that the
important criteria about a bank from the customers point of view are account
and transaction accuracy, carefulness, efficiency in correcting mistakes, and
friendliness and helpfulness of the employees when dealing with the customer.
They also identified that convenience of location, price, recommendations from
others, and advertising are not important selection criteria for banks. So, three
factors figured out very distinctly from their study, viz., CRM, quality of products/
services, and differentiation. In another study on a European Bank by Lindgreen
and Antioco (2005) the bank treated CRM as a strategy which allowed them
to focus on the profitable clients through discriminated segmentation;
understanding different combinations of clients, products and volumes; taking
a proactive approach; and setting up a mix of distribution channels with
standardized or specialized services on a one-to-one basis with the clients. This
helped them to satisfy and retain their customers. The study of the Royal Bank
of Canada by Khirallah (2001) reflects that their approach to CRM was a perfect
balance between technology, people and business processes. The emphasis of
this bank on this reality of the industry and its willingness to allocate resources
accordingly separates Royal Bank from others in the country.
CRM: Implementation Issues
The number of CRM implementations in different companies has grown drastically
in recent years. However, studies on the issues associated with the
implementation of the concept appear to be very fragile. In recent years,
59 CRM Implementation in Banks
organizations have identified the need to become more customer-oriented with
the increase in global competition. As a result of this, CRM has taken a front seat
in the agenda of many organizational strategies. Payne and Frow (2005) advocate
that for the proper implementation of CRM, there is a great need to
re-conceptualize CRM. They emphasize that CRM should be cross-functional and
process-oriented which position CRM at the strategic level. They propose a holistic
approach to manage customer relationships to create shareholder value. The
holistic approach puts CRM at the heart of the organization with customer-oriented
business processes and the integration of CRM systems (Girishankar, 2000).
According to Bull (2003), CRM involves business process change and the
introduction of new technology. Here the leadership is very important because
they set the strategic vision of the organization in respect of the external
environment of the organization. Moreover, they will act as motivators for the
key employees associated with the process. Sourcing is another implementation
issue for CRM. Many organizations revert to outsourcing the CRM solutions by
selecting the most appropriate vendor for the business. Brown (2000) states
that the issue lies in the functional alignment of the vendor/supplier with the
company and the cross-functional needs and ways of managing the vendors.
As pointed out by Bohling et al. (2006), top managements support is
essential for the success of CRM implementation. They also identified that CRM
success was more strongly associated with CRM ownership being at the
corporate level. Another success factor for CRM is the alignment of the CRM goals
and objectives with that of the key stakeholders, viz., employees, customers,
and shareholders. Newell (2000) states that CRM is a successful tool for
identifying the right customer groups and targeting the profitable ones. But
Clemons (2000) argues that there is a big difference between the most
profitable customers and the average ones. He advocates that one method of
identifying customer groups is the idea of distinguishing between transactional
customers and relationship customers. The focus should be on the relationship
customers. This view is also supported by Peck et al. (1999). So the job of CRM
should be to identify the transactional customers so that the organization can
respond adequately. According to Galbreath and Rogers (1999), for CRM
implementation, a vision or strategic direction for the project is very essential,
otherwise the project will fail. Payne (2006) confirms his view by stating that
a business vision should be an enduring statement of purpose behind the CRM
project. He further emphasizes that a companys business vision should reflect
the shared value systems which are held within the organization. It will provide
a framework to enable the diverse staff of the organization to work together in
a coordinated manner towards the overall objectives and philosophy of the
enterprise. Light (2001) states that CRM involves business process change in order
to align with the entire organizational system. Another important issue is the
selection of the appropriate project team (Bull, 2003). He also emphasizes the
integration of CRM systems as well as the selection of a suitable software package
which integrates well with other enterprise applications. Peppard (2000) in his
study on CRM implementation in the internal services puts forward that customers
should not have to deal with the complexities of the companies and CRM should
make things easier for the customers. Payne (2006, pp. 346) opines that as the
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 60
enterprise addresses each of the key CRM processesstrategy development,
value creation, multi-channel integration, information management, and
performance assessmentit needs to consider the change management
implications of them. He states that in order to implement CRM on a large scale
and set off complex CRM initiatives, companies need to undergo substantial
organizational and cultural changes. So a critical element in any large CRM
program is an effective change management program within the organization.
Therefore, Paynes study summarizes the barriers to CRM implementation as:
Lack of skills
Inadequate investment
Poor data quality
Failure to understand the business benefits
Functional boundaries
Lack of leadership and top management involvement, and
Inadequate measurement systems
Research Methodology
Case Study Approach
According to Blery and Michalakopoulos (2006), CRM as a discipline is still very
young and there is very little consensus on the accepted constructs or guiding
principles of CRM. Hence, they contend that it is very difficult to begin with a
theory or a set of hypotheses. Yin (1994) states that the case study approach
enables the researcher to pose questions relating to what happened, how
things happened, and most importantly why. Lindgreen and Antioco (2005)
opine that the case study method facilitates the researchers to have a holistic
view of the real life events pertaining to the case under consideration. Therefore,
to have an initial understanding of the CRM practices in an organization, it was
decided to focus on a single private sector Indian bank (ICICI Bank). Hence,
a case study method is used since its fundamental characteristic is the focus
on a particular setting or an event (Stake, 1995).
Sampling Method
According to Patton (1990), the purposive sampling is most appropriate for the
case study based research. He also proposes that information rich cases should
be selected so as to learn much about the issues associated with the case. In
this study, a combination of two types of purposive sampling, viz., snowball
sampling and maximum variation sampling were used. In snowball sampling, a
few potential respondents were contacted and asked whether they could suggest
anyone who could be of use for the research (Patton, 1990). As Patton proposes,
a gatekeeper, who can bring the researcher into contact with respondents from
the bank, would be useful for this study. The maximum variation sampling was
required to be used because it allows this study to select a set of cases purposely
and non-randomly which exhibit maximal differences on the variables of interest.
Thus, the respondents were selected from the different departments of the bank.
61 CRM Implementation in Banks
An ex-manager of the bank was used as the gatekeeper who suggested six
more people in the bank to be interviewed from different departments. In all,
seven in-depth interviews were conducted with the heads of department, viz.,
Information Technologies (IT), CRM, human resource management, credit cards,
customer services department, and phone banking.
Data Collection
Mwason (1996) and Cresswell (1998) have suggested that it is useful to collect
data from multiple sources while conducting qualitative research. They defined
this as data triangulation. This refers to the use of different data sources which
should be distinguished from the use of different methods for producing data.
Cresswell (1998) proposes that triangulation is essential while undertaking a
case study. In this study, three methods were used to collect the data. In
particular, seven in-depth interviews were conducted with the banks executives
and secondary data about the general information and operations were gathered
through published articles and papers and the website of the bank.
According to Lincoln and Guba (1985), in-depth interviews are considered to
be the most useful data collection method since the objective of the study is to
analyze the complex phenomenon of CRM implementation and other processes
associated with it. The in-depth interviews were based on a questionnaire
constructed based on a set of topics related to CRM (Exhibit 1). The questionnaire
was prepared based on Blery and Michalakopoulos study of the CRM
implementation in a Greek bank. The questions were purposely kept broad to
allow the respondents to feel free while responding. The responses were then
Exhibit 1: Questionnaire
When was the CRM implemented in ICICI for the first time?
Challenges and/or problems faced by the bank during the technological and/or
business intervention.
Methods used to solve those problems related to CRM implementation.
What operations does CRM cover in your bank (marketing, sales, customer service,
loyalty system, relationship management)?
How did CRM influence the operations of the bank (departments and divisions)?
What are the expected business and technological benefits for the bank?
Issues that need attention during CRM implementation.
Has CRM an interface with the other technological tools of the bank such as ERPO,
supply chain business intelligence, and knowledge management?
Is the customer base of the bank in danger if the competition adopts CRM?
Has your customer base increased after adopting CRM?
Name:
Designation:
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 62
content analyzed under certain heads, viz., implementation, the CRM roadmap,
the benefits, and the success factors.
CRM Application in the Bank Under Study
General Information About ICICI Bank
ICICI Bank is Indias second largest bank and the largest private sector bank,
with total assets of about Rs. 3,446.58 bn (US$79 bn) as on March 31, 2007
and profit after tax of Rs. 31.10 (US$715 mn) for the fiscal 2007.
1
The bank was
established in 1994 as a wholly-owned subsidiary of an Indian financial
institution. The motto of the bank was to become a flexible, innovative, and
customer-friendly bank so as to acquire a sizeable share of the Indian banking
industry. In terms of market capitalization, it is the most valuable bank in India
and is ranked third amongst all the companies which are listed on the Indian
stock exchanges in terms of free float market capitalization.
2
Today, the bank has a network of about 950 branches and extension
counters and over 3,300 ATMs in India and is present in 17 countries. At present,
it has subsidiaries in the UK, Sri Lanka, Thailand, Malaysia, Indonesia, the US,
China, South Africa, the United Arab Emirates, Singapore, Bangladesh, Dubai,
Canada, and Bahrain.
In addition to the normal banking services, it offers a variety of financial
services and banking products to its retail customers and corporate clients
through an array of delivery channels and specialized subsidiaries. The other
retail initiatives (Exhibit 2) of the bank are:
1
www.icicibank.com/pfsuser/aboutus/overview/overview.htm
2
www.icicibank.com/pfsuser/aboutus/overview/overview.htm
Exhibit 2: ICICI Banks Other Retail Initiatives
Source: www.icicibank.com
I CI CI
Venture
I CI CI
Lombard
General
Insurance
Company
I CI CI
Prudenti al
Li fe
Insurance
Company
I CI CI
Bank Ltd.
Prudenti al
I CI CI
AMC &
Trust
i
I CI CI
Securi ti es
63 CRM Implementation in Banks
ICICI Lombard General Insurance Company
ICICI Prudential Life Insurance Company
Prudential ICICI AMC and Trust
ICICI Securities, and
ICICI Venture
The bank is customer-focused and has taken certain initiatives in the form
of implementing various projects to establish world-class CRM practices which
have provided an integrated view of the customer to all the departments in the
organization.
The bank is considered to be innovative; it uses modern technology and
comes up with innovative products and services for its customers. Its strategy
is focused on: continuing to develop and further improve its financial
performance; being abreast with the latest technologies; increasing and
retaining its huge talent pool; offering better products and services to its
customers so that they feel the bank cares for them; and moving towards
becoming a universal bank.
The Situation Before CRM Implementation
In the mid-1990s, the bank had a small customer service department with less
number of employees who were not well trained. The waiting time to contact
the phone center (call center) of the bank was long, and the only information
the customer could get was his/her account balance. The bank also faced the
problem of long queues in its branches, and this resulted in the dissatisfaction
of customers who had to come to the branches for transactions. The percentage
of dissatisfied customers was increasing. The cost per transaction was high.
The working hours of the bank were from 9 a.m. to 5 p.m. from Monday to Friday.
Thus, the bank recognized the need to improve the level of the services offered
by implementing modern technology to differentiate itself from the host of
private sector banks and become an innovative and successful bank. The other
main problem faced by the bank was high operational costs which reduced
profits. The implementation of a CRM solution will allow the bank to integrate
all the functions of the bank which would improve and strengthen the banks
relationship with customers by offering them a differentiated service, apart from
the branches, and would increase the productivity of the bank in all areas.
As one of the phone banking managers stated that before the implementation
of CRM, the services offered by the call centers were concerned with the account
balances only and now the call centers can serve the customers with various
banking services.
The Implementation of CRM
The CRM software to the ICICI Bank was provided by Teradata in the late 1990s.
3
It was actually an enterprise data warehouse solution. The award-winning
Teradata Enterprise Data Warehouse (EDW) solution has enabled ICICI Bank to
3
www.teradata.com
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 64
establish business intelligence market leadership in the fast-growing Indian
financial market.
4
The bank uses its Teradata platform to develop tailored
marketing campaigns that have boosted customer acquisition rates significantly.
The Teradata solution centers on a CRM platform. Information from various legacy
and transaction systems is fed into a single enterprise-wide data warehouse.
This allows the bank to generate a single view of every one of its customers.
ICICI Bank is also using Teradata tools such as behavior explorer and
communication manager for better understanding of its customers.
5
According
to Amrish Rau, Teradata Business Manager, India, The solution was the first
large-scale CRM implementation in the Indian banking sector. Teradata commends
ICICI Bank for its vision and willingness to take on such a monumental project.
This shows how an Indian company embracing enterprise data warehousing
solutions can very quickly rise to stand alongside the very best businesses in
the world. ICICI Bank has set a precedent that others can follow.
6
In 1999,
ICICI bank used symantec to leverage comprehensive data center availability
and data protection solutions.
In the present customer-centric business environment, implementation of
a good CRM solution is the key to the success of a bank. In 2000, ICICI Bank
realized the same and decided to implement Siebel CRM software across its
retail businesses. In India it became the biggest implementator of Siebel CRM
solution. This move of the bank helped it to have an integrated view of its
customers across companies and delivery channels which enabled them to fine
tune its offerings to suit the specific needs of individual customers and
customer groups.
7
This was the largest implementation of Siebel in India and
one of the largest HTML thin-client (browser-based) Siebel implementations in
the world. But the going was not very smooth for the bank because the bank
faced a number of challenges during the Siebel implementation. The company
faced challenges in terms of meeting the business requirements of the group
companies without impacting schedules.
8
There was also an issue of ensuring
the smooth functioning of the browser-based applications which tends to be
limited in comparison to the full-blown applications. The reason for this was
that the bank was moving to a Web-based banking model. The bank, then,
decided to go for HTML thin client implementation of Siebel. In addition, ICICI
bank opted for Finacle Universal Banking Solutions from Infosys in 2003 for
its foolproof future technology. It has enabled ICICI Bank to achieve
competitive advantage by enabling rapid roll out of new products, faster
customer services and reduced time to market to cater to the ever-growing
needs of the customers. Its open architecture and flexibility have enabled easy
integration with multiple systems.
9
4
ICICI Bank won the DM Review World Class Solution Award 2003 in the Business
Intelligence category for its Teradata enterprise data warehouse solution.
5
www.prodomain.com
6
www.prodomain.com
7
ICICI Ropes i n Si ebel to Care for Its Customers, by Prashant L Rao,
http://www.expresscomputeronline.com/20011210/ebiz1.shtml
8
http://www.expresscomputeronline.com/20011210/ebiz1.shtml
9
www.infosys.com/finacle/customers_casestudies.asp
65 CRM Implementation in Banks
Enterprise CRM Strategy
Choudhuri and Shainesh (2000) state that CRM at ICICI is viewed as
a discipline as well as a set of discrete software technologies which will focus
on automating and improving the business processes associated with managing
customer relationships in the areas of sales, marketing, customer service, and
support. The ultimate goal of the bank is to achieve one-to-one marketing.
The CRM software solutions adopted by the ICICI Bank enabled them
to coordinate multiple channels of communication with the customer, viz.,
face-to-face, through call center, ATM, the Internet, kiosk, bank, telephone,
branch, sales personnel, etc., so that it can offer the customer cradle-to-grave
customer management. It allowed ICICI Bank to engage in one-to-one
marketing by tracking and managing the life cycle of individual customers.
Campaign management can also be done efficiently with the help of the CRM
software adopted by the bank. From the perspective of the CRM architecture
(Exhibit 3), the enterprise side CRM solution helped the bank to integrate the
front office and the back office of the bank. For creating the enterprise CRM
strategies nine steps were integrated which are depicted in Figure 1.
Exhibit 3: ICICI Bank Architecture
Source: www.symantec.com
SAP, Infosys Finacle, and other
banking applications running on
Oracle Real Clusters (RAC),
Oracle9; database, Microsoft SQL
Server 2000
150 Sun servers, including Sun
Fire E15K, E6600, E6500 and
V880 servers, running Solaris 9
Operating System; 550 HP
Proliant servers running HP-UX
and Microsoft Windows Server
2000 and 2003
HP Storage Works
Virtual Array 7410, HP
Storage Works XP502,
HP Storage Works
XP1024, HP Storage
Works XP12000 Disk
Array; Hitachi Thunder
V9580 System Nett pp
FAS940c Storage
System
Veritas Volume
Replicator
Maintains a copy
of vital enterprise
data at remote
site for disaster
recovery
800 km
Hyderabad
Disaster
Recovery
Site Veritas Net
Backup Shared
Storage Option
Creates a virtual
pool of tape
resources to
improve
efficiency and
reduce backup
windows
HP Storage Works
tape Library, EMC
CLARiiON virtual
tape drive
Mumbai Main Data
Center
Veritas NetBackup Bare Metal
Restore Option dramatically
reduces the time needed to
rebuild a corrupted server
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The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 66
Figure 1: CRM Strategy
Source: Creating the Enterprise CRM Strategy: Basics and Best Practices by Aslam Handy.
1. Customer
2. Strategy
3. Process
4. Organization
5. People
6. Intelligence
7. Automation
8. Data
9. Technology
By combining these nine steps the bank could listen to each and every
customer individually in real time. Choudhuri and Shainesh (2000) further add
that on integration of the above-mentioned nine steps in Figure 1, the bank
was able to achieve the dual goals of effective change management and
technology-enabled evolution of the bank. As stated by one of the senior
executives of the bank, ICICI Bank recognized that customers look for overall
experience, including the price, product, sales, service, recognition and support,
in making any business transaction with the bank.
The CRM Action Plan
Nykamp Consulting Group prepared a detailed and comprehensive CRM Action
Plan as done by the ICICI Bank. This required the understanding that CRM
requires an enterprise-wide transformation. ICICI Bank identified five functional
areas which, when integrated, will give the bank its CRM Business Transformation
Map. They are:
Core Areas of Business Transformation
Business Focus
Organizational Structure
Business Metrics
Marketing Focus, and
Technology
Business Focus
Elements included in business focus are: (a) product; (b) sales; (c) channel;
(d) marketing; (e) service; and (f) customer.
67 CRM Implementation in Banks
Organizational Structure
The elements covered under organizational structure are: (a) product
management; (b) place management; (c) promotion management
(d) channel management; (e) contact management; and (f) customer
management.
Business Metrics
The elements included in business metrics are: (a) product performance;
(b) place performance; (c) program performance; (d) customer revenues;
(e) customer patterns and profitability; and (f) customer life time value and loyalty.
Marketing Focus
The elements included in marketing focus are: (a) mass advertising; (b) sales
promotion; (c) marketing campaigns; (d) integrated marketing communications;
(e) segment specific marketing; and (f) CRM.
Technology
The elements covered under technology are: (a) transaction processing; (b) data
maintenance; (c) data access; (d) data warehouse; (e) data marts; and
(f) customer touch point systems.
The CRM action plan is in consonance with the CRM strategic framework as
proposed by Payne (2006) (Exhibit 4), where he states that the five cross
functional CRM processes should be integrated for the success of any CRM
Exhibit 4: Conceptual Framework for CRM Strategy
Source: Payne (2006, p. 31).
Information Management Process
Strategy Development
Process
Value Creation Process Multichannel Integration Process
Performance
Assessment Process
Business
Strategy
Business vision
Industry and
Competive
Characteristics
Value
Customer
Receives
Value
Proposition
Value
Assessment
Co-creation
Customer
Strategy
Customer
Choice and
Customer
Characteristics
Segment
Granularity
Value
Organization
Receives
Acquisition
Economics
Retention
Economics
Data Repository
IT Systems Analysis Tools
Front Office
Applications
Back Office
Applications
Sales Force
Outlets
Telephony
Direct Marketing
Electronic
Commerce
Mobile Commerce
Shareholder
Results
Employer Value
Customer Value
Shareholder
Value
Cost Reduction
Performance
Monitoring
Standards
Quantitative and
Qualitative
Measurement
Results and Key
Performance
Indicators
I
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t
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g
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C
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a
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M
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t
o
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S
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g
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e
n
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L
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f
e
t
i
m
e

V
a
l
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e

A
n
a
l
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s
i
s
V
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t
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P
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s
i
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a
l
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 68
implementation. These functional areas are: (a) the strategy development;
(b) the value creation process; (c) the multi-channel integration process; (d) the
information management process; and (e) the performance assessment process.
The Benefits of CRM
The bank has benefitted immensely in the form of lower Total Cost of Ownership
(TCO), efficient management of volume growth, improved efficiency, greater
responsiveness to market needs and improved operations (increased employees
capabilities, reduced problems of maintenance and support because of the
unique platform). The integration of voice banking in CRM helped the bank to
come closer to its customers and offer phone banking services (stock exchange
transactions, loans, etc.). Many operations of the bank were transferred from
the branches to the call centers, and as a result the banks operational costs
decreased. The branches now can deal with customer relationships and
specialized products. One of the prime benefits of Siebel implementation is the
reduction in the turnaround time. According to Madhavi Puri Buch, General
Manager, ICICI Bank, We believe that Siebel e-Business Applications have
dramatically improved our customer service, increased customer satisfaction and
retention and provided a strong competitive edge to the ICICI Group.
10
The adoption of the CRM solution by the bank resulted in an integrated
platform for all the applications of the bank. It created a platform which needed
easier maintenance and was able to support newer applications. The easier
architecture is because of the decreased needs for integration and the low
cost of maintenance and support for one platform. The cost is also reduced
because the supplier of the CRM solution shoulders a higher degree of
responsibility for the technology platform. All the processes were mapped on
to product by understanding the details. During the course of process mapping,
opportunities for improvement were identified and implemented. Because of
this, the unique platform is in a position to offer a simple and integrated
solution, which integrates all the applications. The benefits of the platform are:
(1) a decreased need for data management since data is now taken from a
central system; (2) up-to-date information and phone calls appearing on the
screen of the employee to improve performance and higher degree of
coordination and services; (3) all the customer contact points are now
coordinated (call center, branch, and ATMs); and (4) above all, the employees
of the banks call center are now in a better position to serve the customers
and get the customers feedback to enhance the level of service offered to
customers.
According to an IT Manager of the bank, The bank is much ahead of the
competition as a result of the unique and integrated platform.
10
www.expresscomputeronline.com
69 CRM Implementation in Banks
As a result of the technology component of the total CRM strategy adopted
by the bank, it can now have a better understanding of its customers through
data analysis and predictive modeling and support the sales and marketing
activities. It enabled the bank to have:
Single View of a Customer
An integrated view of the customer drawn from all contact points and product
purchases has enabled ICICI bank to better understand their customers and,
therefore, serve them more efficiently.
Profit Prediction
The bank can now predict with a higher degree of accuracy which products and
services will appeal to existing customers and which products and/or services they
are most likely to purchase.
Customer Lifetime Value
With the implementation of the CRM platform, the bank can now easily calculate
the profitability of a customer over their lifetime which ensures that the bank does
not make a mistake of considering the low value customers as high value.
Personalized Services
With a better and closer understanding of customers on a one-to-one or smaller
segment basis, the bank has adopted the individual marketing approach rather
than the mass marketing approach.
CRM solution has given the bank a higher degree of effectiveness and
performance, an increased level of service, and reduced the response time.
In addition to the above-mentioned benefits, CRM has helped to raise the capital
value of the bank by means of better coordination between the departments of
marketing and operations and has helped the bank to project service level as
a differentiator from competitors, and the emphasis has shifted from sales to the
customers. In the words of a marketing manager, the integration of different
distribution channels has shifted the emphasis to customers before the
implementation of CRM emphasis was on mass marketing for different products
and services. After the implementation of CRM, the marketing campaign of the
bank has changedit has become more focused and influential.
Conclusion
The implementation of CRM has yielded a number of benefits to the bank.
One of the important benefits was cost reduction. Roh et al. (2005) cite that CRM
implementation reduces cost. Secondly, the integrated view of the customer has
provided the bank an opportunity to understand its customers well and
accordingly cater to their needs with individualized offerings. The response time
of the bank has reduced. The need for integration has also been highlighted
by Bull (2003). The effectiveness and performance of the bank as well as the
level of service of the bank have also improved. The implementation of CRM has
helped the bank to come closer to its customers and the emphasis has shifted
from sales to customers. The bank could provide services from 8 a.m. to 8 p.m.
The Icfaian Journal of Management Research, Vol. VII, No. 7, 2008 70
six days a week. The implementation of CRM has also resulted in a considerable
increase in the banks revenues. Effective project management, realistic time
scheduling, perfect programming, and not exceeding the budget are the critical
success factors for CRM implementation. Another factor is good collaboration
between the project team and the external consultants. The bank used an
experienced consultancy firm for CRM implementation. The bank did not consider
CRM as a technology initiative. It considered CRM as a strategy which integrates
the important activities in an organization. At ICICI Bank, CRM involved
marketing, sales, service and technology as well as the other inner-workings
of the bank. Thus, CRM was described and used as an enterprise-wide strategy
in the bank. It involved all the areas of the bank to work in synchronization
towards a common goal of stronger and long-term customer relationships.
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