1

Indian Banking Overview

Introduction Evolution Current Banking Structure Business Segment

Customer Relationship Management

CRM as a Business Strategy Phases in CRM

2 4

CRM in Banking Sector

Key Business Requirements in CRM Historical Evolution of CRM in Banking Sector CRM in Retail banking: Current Trends and Dynamics Final CRM Best Practices Scale

Illustration of CRM in Indian Retail Banks

Case Study: HDFC Bank Case Study: ICICI Bank

Presentation Flow

BANKING SECTOR OVERVIEW

Key Highlights

Backbone of the countrys economy

Between 2000 2010, Total Assets increased 5 times from US$250 billion to more than US$1.3 trillion General Bank of India, established in 1786, was the First Bank in India now defunct State Bank of India, established in 1806, is the oldest bank to be still in existence Today there are 26 Nationalized Bank and 17 private sector banks in India
1990-91

CAGR growth of 18%

2011-12

Bank of Bengal which later became the State Bank of India

Evolution of Indian Banking Industry

Initial banks in India were primarily traders banks engaged only in financing activities
Over the years, immense developments have been made in terms of the regulations, ownership structure, products and services offered and the technology deployed

Evolution of Indian Banking Industry

Current Indian Banking structure

Customer Relationship Management

What is Customer Relationship Management?

the needs of an organizations current and potential customers Understand Business Strategy To

Anticipate

Customer Relationship Management

& Manage

CRM entails all aspects of interaction that a company has with its customer, whether it is sales or service-related. CRM is often thought of as a business strategy that enables businesses to: Understand the customer Retain customers through better customer experience Attract new customer Win new clients and contracts Increase profitably Decrease customer management costs

It is a comprehensive approach which provides seamless integration of every area of business that touches the customer- namely marketing, sales, customer services and field support through the integration of people, process and technology

CRM - What the experts say?

PWC , Bain & Co. says Impact on Profit by CRM 2% increase in customer retention = 10% reduction in overheads 5% increase in customer retention = 25 % increase in Profit of Banks A study by Woodstock(2000) proved a correlation of 0.80 Customer Management = Business Performance

Simns (2003) - CRM reduces attrition by 25%, helps spend less on acquiring new customers Zeithaml et al (2006) CRM provides social benefit Customers develop a social relationship with their service providers

Components and Process of CRM

Components of a successful CRM strategy
Customer management orientation.

The CRM process model

Develop customer strategy

Integration and alignment of organizational processes

Set customer objectives

Information capture and alignment of technology

Assess organisational readiness

CRM strategy implementation

Align organisation behind goals Execute CRM programs and measure program effectiveness

Gartner-3 steps for successful CRM

Know Where You Are Going Audit Your Current Status Map Your Way

Customer Relationship Management in Banking Sector

CRM in Banking Sector

For more than 200 years, banks were using branch based operations Technology has now revolutionized the banking sector with the advent of ATM, online banking, debit/credit cards, Mobile Banking etc. In recent years, banks have moved towards marketing orientation and the adoption of Relationship Banking principles Customer service became the only major differentiator in many cases. Companies realized the need to focus on enterprise customers. The advent of e-CRM applications was the first big step toward providing better support to strategic business customers. Key motivators for embracing CRM principles in banking industry:

Intense Competition
Well Informed Customers Decline in Brand loyalty

CRM in Banking Sector Trends and Dynamics

As banks strive to create and manage customer relationships, several emerging trends affect the approach and tools banks employ to achieve sustainable growth. These trends reflect a fundamental change in the way banks interact with the customers they have and those they want to acquire.
Trend 1 : Focusing on organic growth Trend 2 : Creating deep business insight into customer preferences Trend 3 : Responding to intensifying competition through revitalized offerings Trend 4 : Improving distribution and channel management

Trend 5 : Safeguarding customer information

The above trends in Indian Banking industry have helped in shaping the CRM practices of our banks and these are continuously evolving based on the dynamic nature of these trends and competition

Research Findings CRM Best Practices in Indian Banking Industry

by European Journal of Social Sciences(2009

As per the research, following dimensions broadly define the Best Practices scale in Indian Banking Industry :
Key Customers
Bank Provides customized services and products to our key customers Strives to constantly surprise and delight our key customers Co-branding / Affinity partnering programs to provide increased value to our customers Knowledge Management

CRM Organization
Top mgt. accepts and provides leadership for building and maintaining customer relationships as a major goal of the bank. CRM responsibilities of frontline employees clearly defined, assigned and understood Delivers a consistent customer experience across all customer touch points / encounters Technology-based CRM Bank uses technology to automate marketing, sales, and service functions Information systems are designed to give comprehensive data about all aspects of customers, so as to increase responsiveness Our CRM software provides for integration of touch points to obtain a single view of the customer at every point of customer contact

Customer and employee feedback is taken using a variety of direct and indirect measures Bank has a well-developed privacy policy to ensure confidentiality of data collected from customers Does customer segmentation using Customer Lifetime Value (CLV)/ related metrics

Illustration of CRM in Indian Retail Banks

Case 1: CRM Implementation in HDFC Bank

HDFC Bank is a leading provider of loans, liability accounts and third party products with various over-the-counter products The bank also has personal banking, investment advisory and wealth management services It has 2544 branches and over 6000 ATMs in 1399 cities/ towns of India.

HDFC Bank uses CRM to achieve its One Bank vision, boosting profit and customer satisfaction

HDFC Bank has implemented a revolutionary CRM solutions package called CRMnext which helped it immensely in achieving seamless integration across multiple transaction points and achieve customer delight.

Case1: HDFC Bank - Before/After CRM implementation

Before: 1) There was no single 360 customer view for the employees 2) Low visibility and challenges in monitoring all the customers 3) Low visibility of information to create opportunities

After: 1) Customer insight by integration with data warehouse and other core banking applications. 2) Consolidation and streamlining of processes across functions and products. 3) Intelligent segmentation of customers.

Case1: HDFC Bank Benefits of CRM implementation

Customer base as on Dec'2012 has witnessed a whopping jump of 150%

Assets business grew by 100% over 2008 levels

Number of leads captured per month from Sept-2010 to March 2012 increased by 275%
Service Quality Rating improved from 65% in 2007-08 to 97% in 2011

Number of personalized offers surfaced on monthly basis increased significantly from Mar 2001- Nov 2011

Case 2: CRM Implementation in YES Bank

Private sector bank present across all major cities in India

Aims at providing quality, customer centric service to the Future Industries of India
Yes Bank was established in 2004 with financial support from Robobank Netherlands It provides knowledge banking services such as Corporate Finance, Business Banking, Retail Banking, Investment Banking, Financial Services, and Transaction Banking Awarded the Most Innovative Bank award in India

Case2: YES Bank - Before CRM implementation Challenges 1. It needed to cope with an increasing volume of multichannel interactions with the customers 2. It wanted to adopt business automation to improve sales turnaround time, reduce manual data entry and increase speed of the process 3. The customer care department required an efficient Help Desk Management System where the calls and complaints could be logged in and automatically assigned to relevant employee for resolution with automated escalations

Case2: YES Bank CRM implementation The CRM adopted by YES bank included following modules: 1. Sales and Leads Management 2. Personalized Dashboards with Activities Planner 3. Help Desk 4. Marketing Management 5. Document Management InfoAxon used its Agile and Iterative development methodologies to enhance the existing CRM

Case2: YES Bank Benefits of CRM implementation

1. Drastic Improvement in customer acquisition 2. Customer Service improved by 60% and turnaround time for its processes by almost 70%.

3. Helped achieve greater service excellence, capturing all customer queries, complaints and their feedback into the common system 4. It helped the Bank understand its customer better which resulted in better customer retention 5. Product sales substantially surged after the implementation.

Appendix

Appendix 1: Evolution of Indian Banking Industry

Appendix 2: Current Structure of Indian Banking Industry