Enhancement of Efficiency and Effectiveness in Banking through CRM Systems: A Case of Indian Banking Industry

Enhancement of Efficiency and Effectiveness in Banking through CRM Systems: A Case of Indian Banking Industry

Priya Gupta (Shaheed Sukhdev College of Business Studies, University of Delhi, New Delhi, Delhi, India), Kanhaiya Singh (Department of Finance, Fore School of Management, New Delhi, Delhi, India) and Jyoti Kainth (Department of Marketing, Institute of Management Technology, Ghaziabad, Uttar Pradesh, India)
DOI: 10.4018/jcrmm.2013040104
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Abstract

Financial Services Industry in India is experiencing robust growth and intensity of competition unlimited by geographical operations and multiple methods of service delivery, witnessed by the ever dynamic and increasing role of Information Technology (IT). Relationship Marketing has replaced traditional Transactional Marketing and in this direction, the concept and tools of customer relationship management (CRM) have become significantly important. This research paper examines the multi-fold impact of CRM systems on the growth and efficiency of plethora of banking operations. This empirical study is based on descriptive research design using questionnaire as the key research instrument. Descriptive statistics, Pearson correlation and Stepwise regression and chi-square were used to test the research hypotheses. Cross selling helps to retaining the customer and give more than one platform to engage with the client. It also gives employees an opportunity to learn various non-related products for their skill development for career progression. Banks can improve their efficiency by structured and scientific approach towards cross selling through implementation of CRM tools. Desired results can be obtained by training staff on various products and close tracking on sales process.
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The Context

Companies operating in Banking Services Industry experience much more complex market situations and interactions. Customers are becoming all the more sophisticated, knowledgeable and aware. Additionally, the competition is ever increasing. The bank organizations are continuously striving hard to bring the state-of-the-art IT innovations to make banking a convenient and pleasurable experience, thereby increasing the banks’ profits. In order to survive, companies must necessarily understand the concept, constituents and the phenomena of ‘Relationship Marketing’ and CRM systems in the context of banking industry and optimization of resources.

Relationship Marketing

The concept of ‘Relationship Marketing’ has emerged within the field of Services Marketing and Industrial Marketing in the last years of the twentieth century. One of the most important contributions was Hunt’s (1993) proposal, which established that the fundamental element in marketing is the management of interactions, although a decade earlier Berry (1983) had already proposed a formal definition of Relationship Marketing as a strategy to attract, maintain and enhance customer relationships (Beatty et al., 1996). Gronroos (1994) defines Relationship Marketing (RM) as ‘’Marketing is to establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders, at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises”, (Egan, 2004), within the network of relationship (Gummeson, 2002) and acknowledging a stable customer base (Rowley, 2004). Nevertheless, there are few empirical works which have explored the motivations and benefits consumers get from keeping a long-term relationship with a specific bank (Sheth & Parvatiyar, 1995; Bendapudi & Berry, 1997; Gwinner et al., 1998; Reynolds & Beatty, 1999; Henning-Thurau et al., 2002), even though it is obvious that, in practice, such benefits are interpreted as advantages by consumers in terms of their satisfaction and their analysis may render more efficient competitive strategies (Gwinner et al., 1998).

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