As in any service-based industry such as marketing, logistics etc., CRM software is an essential management tool for the banking sector. An effective CRM requires a strong coordination between the IT and marketing departments and enhances the performance of the banking industry across different parameters such as customer acquisition, lead conversion and customer retention. Today, CRM is much more than a mere technological implementation. It is a business strategy that helps identify and target a bank’s most profitable customers and prospects through personalised marketing and customized service delivered across multiple channels and touchpoints.
An analytic CRM framework facilitates effective segmentation and profiling of a bank’s customers and thus enables the bank to design customized marketing strategies for each of the segments. It revolutionizes online banking by providing the banks a single overview of a particular customer by integrating the data related to the different interactions with the customer across multiple channels and touchpoints. Using this overview, a bank can target each customer in a most personalized manner in order to serve the customer better. Expanding upon this, crucial business decisions can be taken by having access to valid, actionable knowledge from vast databases of information. CRM applications provides information about customers’ buying history, preferences and other data and devotes the available resources to expand account relationships with the most valuable customers by identifying specific products and services that can benefit these customers. This in turn helps in instilling a greater degree of loyalty amongst the customers.
CRM has become the new competitive and differentiation strategy in today’s businesses. The efficiency of the traditional 4P’s of marketing has been steadily decreasing over the past several years. Especially in the financial sector, product differentiation has become very difficult thanks to the replication of a product’s features and functions. Pricing is also no longer a means of competitive differentiation. Thanks to the plethora of special offers and continuity of sales, promotional strategies are also no longer as effective as they were in the past. Finally, the emergence of Internet as a universal platform for businesses to compete has rendered the place of distribution less influential in the prospects of a business. A greater emphasis on customer relationship effectively trumps the benefits of the 4P’s. By relinquishing traditional product-centric models in favour of a customer-centric model can help the banks achieve higher returns on invested capital, lower capital costs due to long-term customer relationships and more profitable customers. CRM is being widely adopted due to a growing recognition of the fact that long-term customer relationships is one of the most important assets of an organization which will result in greater levels of customer retention and profitability for the company.
For banking CRM software to be truly effective, the financial firm needs to be clear regarding the kind of information it stores and what it plans to do with it. Financial institutions usually keep track of the customers’ life stages so that it can market appropriate financial products such as mutual funds, stocks and shares, loans etc. at the right time to meet their needs. CRM systems must be able to link various touchpoints of customer interaction including websites, emails, call centres, brick-and-mortar stores, and marketing and advertising processes. This helps in developing a holistic view of each customer interaction and in ascertaining the areas in need of better service. This kind of customer-centric banking where the customer is the nucleus of the business with a highly personalized and continuous engagement is the way forward for the growth of the financial sector as a whole. A hassle-free experience for customers by ensuring prompt approvals to customers’ applications and creating a single-window portal for faster execution helps in considerably speeding up the prospect to customer conversion. Moreover, CRM software also provides the bank agents with all the necessary information in real-time when interacting with a customer and helps in customer delight. A robust security system to maintain the customer confidentiality by SSL encryption and Payment Card Industry Data Security Standard (PCI DSS) standards that process and transmit credit card information in a secure environment is also an added feature of CRM systems.
Some of the latest e-CRM techniques being used by banks and their uses are as given below:
- Internet Banking: It provides many benefits such as convenience, reduced costs, vast reach, brand building and direct marketing, better cash management etc.
- Data Warehousing and Data Mining: Banks have started utilizing data mining techniques to enhance the customer relationship.Data mining is the process of sifting through huge amounts of data and picking out relevant information. It provides an analytical ability to organizations to allow them to better understand their customers, improve their marketing sales and customer support operations. Through data mining, CRM is involved in continuous learning and analysis of customer data, thereby helping in effectively developing customer profiles, analysing profitability etc.
- ATMs: The banks are also expanding their customer base by providing value added services such as bill payments on their ATMs.
- Mobile Banking: Mobile banking helps customers with an instant access to routine queries and transactions.
- Computerized Decision Support System: This is a practical tool which helps banks in functional areas such as optimizing investment decisions and portfolios.
- Computer Networking: Networking between the various hierarchical levels of banks helps in syncing of customer database at different controlling offices, from the level of divisional branch to the head office.
- Customer smart cards: This makes it easier for banks to keep a track of customers and their behavioural trends, besides providing customers with a recall value for repeat purchases etc.
In Insurance sector, CRM helps in maximizing agent relationships by tracking agent performance, developing strategic relationships and increasing loyalty. It transforms the quality of agent sales and service by ensuring consistency across all the agents. By giving the agents the tools and information they need to do their job effectively on any device of their choice, CRMs can win the loyalty of the agents to the firms. CRM helps identify suitable prospects, develop new accounts, selling the right policies and tracking the progress within a few clicks of the mouse. Real-time analysis and reporting of policies and coverage and marketing techniques such as mass mailers, press releases are also possible from the banking CRM platform. The ultimate aim of improving the closure rates by intelligently prioritizing leads based on factors such as agent expertise and tracking closure cases, monitoring agent performance and ensuring renewal is also possible using a CRM platform. In doing so, it helps set the gold standard for insurance service.
In the post 1991-liberalization era, banking sector in India has witnessed radical shifts in the way it functions, thanks to increased competition, consolidation, emergence of Information Technology (IT) and the necessity of a customer-centric approach. Technological advancements have complemented the customer service initiatives. However, the real challenge for CRM strategy in the future lies in forecasting the trends and providing viable solutions. A combination of operational and analytical CRM with predictive data mining models provides businesses with a cutting edge needed in order to survive the cutthroat competition.