CRM practices in Banking Industry:

Introduction of CRM played an important role in interaction of the banks with the customers and hence building the customer confidence which in turn improved the assets In the recent times, Customer Relationship Management (CRM) has become one of the most dynamic topics of Marketing. This popularity is indeed a result of the promising features offered by CRM. CRM in banking sector has now become an important topic for discussion because of competition between the local and multinational banks. The banking industry has long had a reputation of being slow to response to customer concerns. A common and apparent characteristic, which exists today among most Pakistani financial institutions. In Pakistan banks neglect customer concerns because traditionally banks have had no perceived need to be responsive to consumers (number of banks were greater than the and number of customer).The frustration and anger illustrated due to the lack of customer service by many consumers against the banking industry because of the many mergers and/or failures is undeniable. Many consumers do not like and do not trust their banking service provider because of the perceived lack of needs fulfillment. CRM is a growing trend in banks today and banks are spending a lot on CRM. According to Raffaella Molignani (2002), research analyst for the European IT opportunity financial services research progra00m, CRM is still at the top of banking priorities. Over the last five years Pakistan witnessed a phenomenal growth of consumer banking. This unprecedented development has followed privatization of nationalized banks, banking reforms brought about by the state bank of Pakistan and the main focus was to capture high potential customers by practicing CRM techniques.

Definition of CRM:
Customer Relationship management is the strongest and the most professional approach in maintaining and creating relationships with customers. Customer relationship management is not only pure business but also made well-built personal bonding within people. Development of this type of bonding drives the business to innovative levels of success.

Evolution in banking industry:

In one of his speech Ishrat Husain (2005) Pakistans banking sector reforms which were initiated in the early 1990 have transformed the sector as efficient and profit making business. A study was conducted by IMF and World Bank in 2004 appreciated the performance of banking system in Pakistan and the role of State bank as supervisory body. The major changes occurred in the banking sector was privatization, raising the capital requirements from Rs. 500 million to 6 Billion and removing the inefficiency, and corruption by improving the work force. The appointments were made on the basis of merit and highly qualified and intelligent work force was inducted in the system. Banking Technology that was almost non-existent in Pakistan until a few years ago is revolutionizing the customer services and access on-line banking, Internet banking, ATMs, mobile phone banking and other modes of delivery have made it possible to provide convenience to the customers while reducing the transaction

costs to the banks. Credit Cards, Debit Cards, Smart Cards etc. are a thriving and expanding business in Pakistan. Introduction of CRM played an important role in interaction of the banks with the customers and hence building the customer confidence which in turn improved the assets..

many trends which effects banks to attain sustainable and loyal customers, these trends reflects the way in which banks interact with the customers and with those to whom they want to interact. How can a retail bank drive growth? Previously banks had an strategy of attacking directly to the competitors and try to over come them by having more branches or by taking over their network but now a days strategy is changes, now banks try to have a healthy relations with their existing customers and also by acquiring as much information as possible about the customers which is also valuable in attracting the new customers because once the bank knows about their needs and wants they just have to design their products in that manner, thats why banks have now emphasis on marketing strategies in which CRM is on the top, having a direct sales team, meeting customers on regular basis, acquiring information about their various business. From retail point of view man managers try to maintain a great sum of amount at their branches for which top managements needs to involve them in strategic business decisions and product designing. Analyzing another research of Luis. H. Bibiano & Joan A. Pastor (2006) we found that CRM has its roots in Relationship Marketing, which is an over attempt of exchange Partners to build a long-term association, characterized by purposeful cooperation and mutual dependence on the development of social as well as structural bonds. Once the CRM project is initiated in an organization it can be divided in life cycles steps; In The adoption phase is the beginning of the whole project, the final go ahead is given by the top management where all senior managers remained on board. In Evaluation and selection of the CRM Choosing a product that best fits the requirements of the organization and social and cultural requirements of the area. The next is Customization. At this phase the consultants are hired to customize the softwares basis of exclusive requirements of the organization. The project is implemented after testing and training of the staff and monitored and finer tuned as the requirements or some problem is found. CRM practices in local & multinational banks; An
exploratory study in Karachi BRP Report/fall 2010 Hamdard Institute of Management & Sciences 17

Once the CRM system is already in use, the system should be upgraded to include and merge various other inputs for the benefit of productivity and ease of the work to staff Mean time the system needs continuous maintenance and upgrading. Acquiring new technologies which emerge in the market. At the retirement stage manager can decide if all together a more strong and advanced software is available. Then all the data is transferred to the system files. According to (Hussain et al., 2009) as the globalization brings more competition it is very important to differentiate yourself from your competitors. In the past customers have never being so important but nowadays customers are the king. It is very important to maintain good relationship with customers, satisfying their needs and retaining them as retaining customers is five times more profitable then making new ones. CRM is all about maintaining long lasting relationship with customers and beneficial for both organizations and customers. During the last few years banking industry have growing and become the need of every citizen, as the banks realized the importance of CRM but the true spirit of CRM is still needed. It has been noted that the term CRM is basically integration of two approaches: marketing approach and technological approach. CMAT model has been used which contains all essential elements of CRM.

Global CRM practices in bank:

According to (Francis Buttle2002) For an organization to have best CRM practices must invest organizations resources(i.e. people, time, money) in order to have life time relationship with customers but it should keeping in mind that the cost that you incurred must satisfy the return that you get from implementing best CRM practices. There are several steps for the development mutually beneficial relationship: collecting consumer information in a data warehouse, information for customer identification, behavior lifestyle, likes, dislikes, feedback etc, then build an understanding of customer behavior, developing CRM programs and implementing CRM strategies or system.

CRM play a very important role. CRM is all about retaining customers and building long lasting relationship in a mutually beneficial exchange. And customers can only be retain when customers are satisfied or delighted, because delighted customer talk favorably to others and he or she is used to be source of getting other toward them which increase the prodigality . Customer satisfaction highly affects the organization profitability. According to their research satisfied customer talk favorably to almost five to six people and share his or her good experience which attracts the other peoples and that increases their profitability and dissatisfied customer are more likely to tell ten to twelve people about their bad experience which creates a bad impact on the over all organization performance and creates a negative image. Their study comprises of two parts. The first part is the CRM best practices. The second part is the customer loyalty survey. The findings revealed that there is no perfect bank. There is no bank which has deployed all the CRM best practices to the fullest extent. Shortcomings do remain in each of the banks with respect to the deployment and implementation of the CRM best practices. Referring to the article of Semih Onut (2006) CRM is a business strategy to identify organizations customers which are profitable, and devotes time and attention to maintain relationships with those customers through different strategies such as customization, individualized marketing, low cost, high quality, discretionary decision making, and close relationship with customers, all these require a strong coordination between IT and marketing. [Ryals and Knox 2001] have found three main components for the development of Customer Relationship Management in the service sector; the organizational culture and communication, management tools and cross-functional integration between marketing and information technology. Organizational culture affects customer service worker behavior. Customer service worker behavior affects customer relationships with the organization and promotes good CRM practices. TECHNIQUES OF CRM

. Data Warehouse and Data Mining The Data warehouse is the core of any decision suppport system and hence of the CRM. In implementing its Data Warehouse Garanti Bank has selected an incremental approach, where the development of information systems is integrated with the business strategy. Instead of developing a complete design of a corporate Data Warehouse before implementing it, the bank has decided to develop a portion of the Data Warehouse to be used for customer relationship management and for the production of accurate and consistent management reports. Here we are not concerned with the latter goal, but are concentrating on the former. The Data Warehouse has been designed according to the IBM BDW (Banking Data Warehouse) model, that has been developed as a consequence of the collaboration between IBM and many banking customers. The model is currently being used by 400 banks worldwide. The Garanti Bank Data Warehouse is regularly populated both from operational systems and from intermediate sources obtained by partial

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4.3.Marketing Campaigns After analyzing strategic and analytical CRM we concentrate here on the equally important operational aspects. Marketing Campaigns is the first method that Garanti Bank has used to test the above described analyses and techniques. The overall campaign process is reported in Figure 3, that shows that propensity determination and targeting are the first step of the whole activity. A number of experimental campaigns have been designed and carried out to test the soundness of the approach before attempting a large scale roll-out. Experimental campaigns have addressed about 900 customers selected within six branch offices in Instanbul. An education process has been started by meeting sales forces in the branch offices, by distribution of an explanation booklet and by publishing on the Intranet a note explaining the whole process. System interfaces have been modified in order to track the customers under promotion, as well as to enable salespeople in the branch office to complete the sales on promoted customers as well as to record the fact that the sale was a consequence of the promotion. The bank has so far used for promotion two channels: the salespeople in the branches and the call center. Each channel was used in four different campaigns.

The Bank of Bahrain and Kuwait B.S.C. (BBK) was established in 1971 in both the Kingdom of Bahrain and the State of Kuwait. Its shareholders consist of the general public and government of Bahrain, and banks and investment companies in Kuwait. The bank now operates in preprocessing of the same raw data.four countries including India and the UAE.