Banking: LESSON 10 BANK CUSTOMER RELATIONSHIP: CONCEPT AND CASES
Banks should identify right type products for the right type of customers. CRM is an effective tool for the bankers to acquire new customers and to retain the The present study concentrates on the various issues of CRM practices of the. BANKER CUSTOMER RELATIONSHIP. J R Mohandas, SVP & Head Financial Crime Management (Retd) at Axis Bank . SPECIAL TYPES OF CUSTOMERS LUNATICS- Under Indian . It binds all the members. It explains the different kinds of relationships between customers and . The deposit accounts are a source of banker and customer relationship. There are different kinds of . Banks, ICFAI Journal of. Banking Management, May , pp .
Many banks are still struggling to make proper use of this very useful mechanism.
CUSTOMER RELATIONSHIP MANAGEMENT MODEL FOR BANKS | Open Access Journals
However, the adoption and utilisation is dependent on a number of factors and impediments. Broadly the issues are pertaining to: People, Processes, Data and Technology. Also a major drawback is the general perception of CRM being a Technology imperative. There is a great need to understand that technology is only the enabler to CRM. In the real sense it is an organisation wide strategy. Most officers perceive technology as a limited to record of information and transaction.
The use of technology in further sophisticated information processing and dissemination is not done.
There are multiple channels and multiple technologies in use simultaneously in customer interface, service and sales. Empowerment to frontline staff: Frontline staffs have customer profile and data.
Most of them have no motivation to further process these and make full utilisation of these to provide better services and proactive selling effort. They are neither trained to use customer analytics nor to customise the Banks offering. Historical data collected from legacy systems tend not to have been collected in any standard form. This process has to be carried out across branches which in addition to their core tasks have this work.
Employees expected to organise and systematically manage data may not dot efficiently because of the lack of understanding of the strategic perspective of this activity. They also lack the necessary infrastructure and skill to complete this task.
Banking & Insurance
People issues Lack of knowledge and skills in converting data to customer knowledge Lack of motivation for utilising the potential of CRM solution Inadequate performance management parameters Less or insufficient decision making authority: In order to use CRM concept towards customer centricity, sufficient decision making power is required to provide customised, responsive and proactive services.
Staff lacks training in IT, its applications, the complete use of software and its applications as well as marketing skills, analytical skills, uses of customer information and service skills for implementation CRM. Process issues As CRM is an organisation wide strategy the entire processes need to be aligned appropriately.
Some important process issues are: This encompasses a fundamental change in the organisational practices and employee behaviour. CRM cannot succeed in Silo structure of departments. It demands integration and collaboration of all departments on a continuous basis.
So, Breaking of silos prevalent in traditional organisation structure is a challenge. Change in Structure and Systems: CRM success lies in ownership of CRM by all departments with Marketing in the strategic role of combining efforts in all these towards better customer service.
This happens when the customer hypothecates pledges certain movable or non-movable property or assets with the banker in order to get a loan. In this case, the customer became the Hypothecator, and the Banker became the Hypothecatee.
Relationship of Trustee and Beneficiary A trustee holds property for the beneficiary, and the profit earned from this property belongs to the beneficiary.
If the customer deposits securities or valuables with the banker for safe custody, banker becomes a trustee of his customer.
The customer is the beneficiary so the ownership remains with the customer. Relationship of Agent and Principal The banker acts as an agent of the customer principal by providing the following agency services: Buying and selling securities on his behalf, Collection of cheques, dividends, bills or promissory notes on his behalf, and Acting as a trustee, attorney, executor, correspondent or representative of a customer. Banker as an agent performs many other functions such as payment of insurance premium, electricity and gas bills, handling tax problems, etc.Using CRM to engage banking customers
Relationship of Advisor and Client When a customer invests in securities, the banker acts as an advisor. The advice can be given officially or unofficially. While giving advice the banker has to take maximum care and caution. Here, the banker is an Advisor, and the customer is a Client.
Other Relationships Other miscellaneous banker-customer relationships are as follows: Obligation to honour cheques: As long as there is sufficient balance in the account of the customer, the banker must honour all his cheques. The cheques must be complete and in proper order. They must be presented within six months from the date of issue.
Customer Relationship Management in Banking Sector
However, the banker can refuse to honour the cheques only in certain cases. The relationship in the first case when a person deposits money with the bank reverses when he borrows money from the bank. Borrower executes documents and offer security to the bank before utilizing the credit facility. Depending upon the type of services rendered and the nature of transaction, the banker acts as a bailee, trustee, principal, agent, lessor, custodian etc.
Bank as a Trustee: In case of trust banker customer relationship is a special contract. When a person entrusts valuable items with another person with an intention that such items would be returned on demand to the keeper the relationship becomes of a trustee and trustier.
Customers keep certain valuables or securities with the bank for safekeeping or deposits certain money for a specific purpose Escrow accounts the banker in such cases acts as a trustee. Banks charge fee for safekeeping valuables 2. A "bailment" is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them.
The person delivering the goods is called the "bailor".
The person to whom they are delivered is called, the "bailee". Banks secure their advances by obtaining tangible securities. In some cases physical possession of securities goods Pledgevaluables, bonds etc. While taking physical possession of securities the bank becomes bailee and the customer bailor.
Banks also keeps articles, valuables, securities etc. As a bailee the bank is required to take care of the goods bailed. The relationship between the bank and the customer is that of lessor and lessee. Banks lease hire lockers to their customers their immovable property to the customer and give them the right to enjoy such property during the specified period i.
Bank has the right to break-open the locker in case the locker holder defaults in payment of rent. Banks do not assume any liability or responsibility in case of any damage to the contents kept in the locker. Banks do not insure the contents kept in the lockers by customers. Banks collect cheques, bills, and makes payment to various authorities viz.
Banks also abides by the standing instructions given by its customers.
In all such cases bank acts as an agent of its customer, and charges for these services. As per Indian contract Act agent is entitled to charges.
No charges are levied in collection of local cheques through clearing house. Charges are levied in only when the cheque is returned in the clearinghouse. A custodian is a person who acts as a caretaker of something.