CRM Index Development and Validation in Indian Banking Sector

CRM Index Development and Validation in Indian Banking Sector

Arun Kumar Agariya (ABV-Indian Institute of Information Technology and Management Gwalior, India) and Deepali Singh (ABV-Indian Institute of Information Technology and Management Gwalior, India)
DOI: 10.4018/jcrmm.2012040102
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Abstract

This study caters to developing a reliable and valid CRM (customer relationship management) index specifically catering to Indian banking sector. An exhaustive review of literature on CRM was followed by depth interview and questionnaire survey of customers of different banking organizations all across India. Exploratory factor analysis was followed by confirmatory factor analysis which was presented in three forms: the single factor model, covariance model, and the structural model. The covariance model shows CRM in Indian banking sector as a multidimensional construct comprising of factors, namely, organizational structure and customer support, service quality, trust, technology, personalization, and market orientation. The structural model validates the previously extracted factors along with their indicators. The validation of CRM scale is done through a case based method for development of CRM Index along with the customer and service provider weights with the help of questionnaire design and survey conducted. The proposed index can serve as a strategic tool in enhancing the customer responsiveness and overall performance of the banking organizations.
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Literature Review

Indian Banking Structure

A fairly developed Indian commercial banking system is in existence since the time of independence in 1947. Indian banking sector has traditionally been one of the most stringently regulated sectors in the country. Since the beginning of deregulation of the financial sector in the late 1980s banks have started operating in the six segments namely retail banking, corporate banking, investment banking, asset management, life insurance and general insurance (Deol, 2009). Indian banking system comprises of commercial and cooperative banks, out of which the commercial banks account for more than 90% of the assets of the banking system. There are two types of categories within the commercial banks. These are schedule commercial banks (which are listed in RBI Act, 1934 under schedule II) and non-scheduled commercial banks. Schedule commercial banks have been further categorized into public sector banks, private sector and foreign banks and rural and local banks. Figure 1 shows the composition of Indian banking system.

Figure 1.

Composition of Indian banking system (adapted from Kamath, 2007)

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