Customer relationship in banks


customer relationship in banks

Abstract. This study examined the effects of Customer Relationship Management (CRM) practices on commercial banks performance in. Therefore, banks are increasingly focused on identifying customer needs, pulling and storing them. Customer Relationship Management is a process that. Today, many businesses such as banks, insurance companies, and other service providers realize the importance of Customer Relationship Management.

Banking & Insurance

The competitive forces over the years are compelling the banks to concentrate more on increasing the number of customers and in providing better service quality. In other words CRM has become a major focus for the banks. The banks in the present era are facing stiff competition and they are struggling to find a place in the industry.

They have realized the fact that CRM is a powerful tool to achieve success in their business. CRM is an effective tool for the bankers to acquire new customers and to retain the existing ones. CRM in the banking sector is of strategic importance [ 5 ]. The banks are confronting numerous problems in attracting new customers and in maintain the existing customer base.

Implementation of CRM poses a greater challenge to the banks after acquiring the customers.


The various ways and means through which CRM is implemented by the banks determine the success or failure of the entire concept.

The banks should concentrate highly on the valid elements of their CRM strategy for generating customer satisfaction and customer loyalty. This will be possible only with the help of effective and efficient communication with the customers.

Effective interaction between the bankers and the customers will help the banks to implement CRM in the best possible manner [ 7 ]. Any concept which is implemented would yield better results only when the same is maintained over a period of time. CRM is not an exception to this rule. There exists a wide plays the role of boundary spanning that manages and distributes customer information.

But the space between marketing and Information Technology affects the effective implementation of CIS. The CIS must be modified in order to establish a better communication system between the customers and the business [ 8 ].

The banks cannot be assured of the fact that their customers would continue to transact with them once the relationship is established. With many financial institutions now offering multi-channel access, customer relationships are becoming more complex to handle.

CRM can be used as the best tool for information tracking about the previous interaction of the customers with the business.

Banker-Customer Relationship: Legal Provisions for Bouncing of Cheque

CRM can generate a comprehensive report about the total customer interaction. CRM can supply data to all the departments to deliver better service quality. The success of the entire concept of CRM depends on its ability to generate customer satisfaction. A highly satisfied customer will continue to find ways to strengthen the relationship with the banks. The banks should collect information relating to the present levels of customer satisfaction and their vital determinants.

This would help them to narrow down their efforts to work more towards customer satisfaction. The location of the branch, the courteous and friendly attitude of the bank employees are the key determinants of customer satisfaction in the banking industry [ 10 ]. The pinnacle of success of CRM applications would be reached if the bank is able to generate customer loyalty. Loyalty is considered to be the ultimatum as far as CRM is concerned. 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.

customer relationship in banks

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.

customer relationship in banks

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. While opening a dmat account bank becomes a custodian.

Banks give guarantee on behalf of their customers and enter in to their shoes. Guarantee is a contingent contract.

customer relationship in banks

CRM as a strategy offers companies banks the attributes to compete with them for a limited number of customers in order to absorb more and more of the market segment. In seeking the current trend of the globalizing economy, competition from substitutes and from entirely new off-the-shelf offers or packages is becoming increasingly harsh [ 3 ].

In today's developments, customers are the key assets for an organization, and customer relationship management is equally critical for organizations [ 4 ].

customer relationship in banks

Customer Relationship Management CRM from a financial institution perspective is a sound strategy to identify clients and the bank's most lucrative prospects and takes time and attention to expanding account relationships with those clients through individualized marketing, repricing, decision making - discretionary and customized service - all offered through various sales channels used by the bank.

The overall success of the organization depends on customer satisfaction and customer satisfaction cannot be achieved without being managed Relationships with clients [ 4 ]. CRM aims to coordinate all customer-related business processes and includes collecting, comparing, and interpreting customer data to determine purchasing behavior models that can be used to support effective marketing programs [ 5 ].

Being competitive and the products are easily copiable, many companies banks are trying to gain a foothold over the competition through customer relationship management policies. In this situation, consumer behavior is volatile as they have a wider choice of products that are often less distinct and they are much more informed. For many bids, the balance of power moves toward the customer that raises their expectations of how companies should look after them [ 3 ]. The tendency to develop a strong relationship between customers and a company can prove to be an important opportunity for competitive advantage.

CRM has focused on assessing critical dimensions of satisfaction and defining customer groups with preference and distinctive expectations in the private sector of banks [ 6 ].

CRM helps companies improve their profitability with their clients while at the same time making interactions seem friendly through individualization.