CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES OF THE NEW PRIVATE BANKS IN NAGAPATTINAM DISTRICT

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1 CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES OF THE NEW PRIVATE BANKS IN NAGAPATTINAM DISTRICT Dr. K. KALIDOSS Assistant Professor and Research Advisor, Department of Commerce, A.V.C. College (Autonomous), Mannampandal, Mayiladuthurai, Tamil Nadu N. MANJULA Ph.D., Research Scholar and Assistant Professor, Department of Commerce, Poompuhar College (Autonomous), Melaiyur ,Tamil Nadu ABSTRACT As economic globalization intensifies competition and creates a climate of constant change, winning and keeping customers has never been more important. Nowadays, Banks have realized that customer relationships are a very important factor for their success. Customer relationship management (CRM) is a strategy that can help them to build long-lasting relationships with their customers and increase their revenues and profits. CRM in the banking sector is of greater importance. The aim of this study is to explore and analyze customer relationship management practices of the new private banks in Nagapattinam district. KEY WORDS: Customer relationship management (CRM), New Private Banks, AXIS, HDFC, ICICI, Kotak Mahendra and Indus Ind, Customers and Employees. INTRODUCTION The banking sector is a good barometer of the economy. It plays several roles, because of which it serves as a repository of accumulated financial information. Many have aptly defined banking as the art of risk management and participation in the game of asymmetries, as reflected in the increasing urge of banks to leverage capital. In the din over exotic derivatives instruments, differential cash flow from sub-prime portfolio and call for Page 113

2 increasing regulation, global banking is, perhaps, at an inflexion point. Given this, one of the questions to ask is should bank continue to transform them in to financial supermarket, or should they build on their core competencies. Banks have come a long way from the initial days of bill of exchange and acting as custodian of private money to enabling trade between cities and nations. Today, across the globe, banks are the backbone of all the transactions, the mechanism to deploy capital for industrial growth, and trustee of citizen s savings. By their very nature banks are capital hungry entities, with unique power to leverage deposits - that too, many times over - to create credit, if not managed properly, they could be exposed to, even participate, far-reaching systematic riskliquidity, settlement and transaction, among other. Therefore, they have to necessarily work with in tight regulations Banking system remains focal point in the financial set up of any developing country. Banks are regarded as special in view of their specialised functions in the financial inter mediation and payment system. Banking plays an increasingly important role in nation s economy Banking, in its crude form, is an age - old phenomenon. Banking is as old as authentic history and traceable in ancient times. NEW PRIVATE BANKS Privatization, globalization and liberalization are important contemporary forces. Only those enterprises can survive, which work economically and efficiently, providing consumer oriented services and using latest technology. Today government owned bodies, particularly in India, are not providing customers satisfactory services, though they have a very huge infrastructure and large base. The RBI has issued on 22 nd January 1993 specific guidelines for the establishment of new private banks in the country. This is recognition of the need to introduce greater competition which can lead to higher productivity and efficiency in the banking system. These banks came in to existence after March 1995 and are called new private banks (NPB) or popularly New Generation Banks (NGB). The seven new banks, formed after liberalization of the licensing policy by the RBI are referred to as the new generation private banks, IndusInd was the first private sector bank to start operation and presently there are seven new private banks working in India: these are IndusInd bank, ICICI bank, HDFC bank, Axis bank (UTI), ING Vysya bank, Kotak Mahindra bank, YES bank, but only three new private banks (ICICI bank, HDFC bank, Axis bank (UTI)) working in Nagapattinam district. CONCEPT OF CRM The concept CRM is now gaining wide acceptance and is recognised as a powerful tool for business development and to have an edge over the competitors on account of the universal traits of human behavior.crm is simple philosophy that places the customer at the heart of a business organization s processes, activities and culture to improve his satisfaction of service and in turn, maximise the profit for the organisation. CRM is a business strategy to acquire and retain the most valuable relationships. CRM requires a customer centric business philosophy and culture to support effective marketing, sale and service processes. CRM applications can enable effective customer relationship management, provided the enterprise has right leadership, strategy and culture. CRM is the business strategy that aims to understand, anticipate, manage personalise the need of an organisations current and potential customers.crm is an integrated approach in identifying, acquiring, and retaining customers. By enabling organisations to manage and coordinate customer interactions across multiple channels, departments, lines of business and geographies, CRM helps organisation maximise the value of every customer interaction and drive superior corporate performance. Page 114

3 NEED FOR THE STUDY The primary benefits of CRM are improved marketing methods, better customer retention, customer profitability analysis, and market share growth. CRM can improve marketing methods by targeting customers with value proposition that make sense. Customer retention improves, as service offering are better fit for a customer. Customer profitability analysis enables banks to utilize the cost and benefit of servicing customer in making decision about who they should do business with and in the future. If Banks to thinks properly customer service will be improved. All these benefits can be a source of sustainable competitive advantage. The technological innovation brings transparency more and customers are in a position to move from one bank to another where he gets preferential treatment and services. Hence it s pertinent to study the various measures not only to bring more customers but also to retain old customers by adopting customer retention management techniques in banks. STATEMENT OF THE PROBLEM The Reserve Bank of India has on 22 nd January 1993 issued specific guidelines for the establishment of new private banks in the country. This is in recognition of the need to introduce greater banking system. These banks come in existence after March 1995, and are called New Private Sector Banks (NPSB). It is that the productivity and profitability of the New Generation Banks are better compared to the traditional public sector banks. The question how far this can be attributed to the customer relationship management the two categories of banks regarding the Customers and Employees opinion towards New Private Sector Banks. CRM is emerging as an important tool and innovative way to add product and services so that banks are moving closer to their customer expanding more efforts in finding new way to create value for their customers relationship in to one of solution findings. CRM enhances the customer satisfaction and brings the performance oriented growth of private sector banks CRM helps in retention of the customers and employees of new private banks. CRM elements help the management to increase the efficiency of services to customers. The present study is an attempt to look in to these aspects for the purpose of gathering more information for improving the CRM practices in New Generation Private Banks. OBJECTIVES OF THE STUDY The following objectives are being developed for a better understanding about the CRM practices in New Generation Private Banks. 1. To study the CRM measures adopted by the new private banks in Nagapattinam district. 2. To analyse the customers satisfaction towards banking services of the new private banks in Nagapattinam district. 3. To evaluate employees perception towards CRM practices adopted by new private banks in Nagapattinam district. METHODOLOGY The study is based on both primary and second data. Primary data would be collected through Questionnaire to the customers and employees of new generation private banks. The secondary data were collected from books, journals, web portal, the well equipped libraries at IIM Bangalore, IIT Chennai, records from the banks in Nagapattinam district has been collected from the publications of the State Lead Bank, and District Lead Bank, Nagapattinam (Indian Bank), and RBI Bulletins, Page 115

4 SAMPLING DESIGN Total number of new generation private sector banks in Nagapattinam comprises five; namely AXIS, HDFC, ICICI, Kotak Mahendra and Indus Ind. Among the banks all the new private banks situated in Nagapattinam district, has been selected for the study. Convenient sampling technique has been used to select the sample 480 respondents for the study. The samples consists of two categories namely customers and employees. This study is descriptive in nature. The following table shows the sampling distribution. S. No. Name of the Bank Sampling Distribution of the Customers in New Private Sector Banks I Customers (Sample Size) Branches in Nagapattinam district. Sample Branches (100%) Savings account (15 per Branch) Current account (10 per Branch) Other Accounts ( 5 per Branch) Total Customers Sample 1. AXIS HDFC ICICI KOTAK MAHINDRA INDUSIND Total STATISTICAL TOOLS USED The data collected from various sources were analyzed by applying appropriate statistical techniques. The statistical tests used were rank correlation, chi- square, reliability testing, student s t test, F test, one sample test, analysis of variance (ANOVA), multivariate analysis of variance (MANOVA) and factor analysis CUSTOMERS PERCEPTION ANALYSIS (Demographic Variables) A study of the customers perception on CRM practices in banks has been made in the following tables taking in to account their demographic variables such as age, sex, marital status, resident are, customers perception in bank based and frequency of customers visit to the banks of the respondents. Table 1: Age wise of the Respondents Age No. of Customers Percentage Below 25 years to 35 years to 45 years to 55 years Above 55 years Page 116

5 Table-1, shows that the 34 per cent of the respondents are in the age group of 26 to 35 have high level perception about CRM, 28 per cent of the respondents who are in the age of 36 to 45 have moderate level of perception and 24 per cent of the respondents in the age group of 46 to 55 have perception about CRM practices in the banks. Table 2: Sex wise of the Respondents Sex No. of Customers Percentage Male Female It is evident from Table-2 that the 63 per cent of the male respondents has high level perception and 37 per cent of the female respondents have low level of perception about CRM practices in the banks. Table 3: Marital status of the Respondents Marital status No. of Customers Percentage Married Unmarried Table-3, shows that the 79 per cent of the married respondents have high level perception, while 21per cent of the respondents who are unmarried have low level perception about CRM practices in the bank Table 4: Resident area wise of the Respondents Area No. of Customers Percentage Rural Urban Semi urban Table-4, shows that the 53 per cent of the respondents are residing in the urban area have high level perception, while 25 per cent of the respondents living in the semi urban areas have moderate level perception, and 22 per cent of the respondents residing in the rural areas have low level perception about CRM practices in the banks. Table 5: Customers Perception in Bank based Banks No. of Customers Percentage AXIS HDFC ICICI KOTAK MAHINDRA INDUSIND Table-5, shows that the 50 per cent of the respondents are who have an account with the ICICI banks in first, while 18 per cent of the respondents having account with the HDFC banks are second, 13 per cent of the Page 117

6 respondents having account in the AXIS and Kotak Mahindra banks are third place and 6 per cent of the respondents having account in the Indus Ind bank are last in perception about CRM practices in banks. Table 6: Frequency of Customers Visit to the Banks Frequency No. of Customers Percentage Daily Weekly once or Twice Some days in 2 Weeks Some days in Month Rarely Table-6, shows that the 43 per cent of the respondents are visit in the banks some days in month, 25 per cent of the respondents who visit the banks weeks once or twice, 22 per cent of the respondents are visit in the banks some days in 2 weeks, 7 per cent of the respondents are visit in the banks daily and 3 per cent of the respondents who visit rarely level perception about CRM practices in banks. The study indicate that male customers and who are married respondents have high level perception, within the age group of years and below 25 years, residing in semi-urban areas and the 46 per cent of the respondents are who have an account with the ICICI banks in first, the 43 per cent of the respondents are visit in the banks some days in month, about CRM practices in the banks. SUGGESTIONS The following suggestions have been drawn: All the banks should have an enquiry counter either exclusively or combined with other duties located near the entry point of the banking hall. Employees should be empowered to take decisions at branch level for service related issues. Employees training programes must be periodically conducted to give effective responsibility to the bank employees. The concept of customer relationship management is to be introduces at each level in the bank. Bank should avoid malpractices such as unfair competition and concentration of credit and so on. Service with a smile and courtesy is to be practiced and streamlining of the age - old systems and procedures has to be taken up. Information search place a major role in consolidating optimistic relationship between customers and employees. So, meticulous care must be taken by the Banks to advertise their services and products. Provide online chatting with customers on banking transactions. Design a website and provide all necessary data for the use of customers. The CRM of these three major Banks successfully launched the strategies and also obtained excellent result. So they must concentrate on refining strategies to maximise the customers. CONCLUSION The present study conducted in the sector of banking, convenience of location, price, recommendations from others and advertising are not important selection criteria for banks. From customers point of view, important criteria are: account and transaction accuracy and carefulness, efficiency in correcting mistakes and friendliness and helpfulness of personnel. Thus, CRM, high-quality attributes of the product / service and differentiation proved to be the most important factors. These measures could help to promote an increased focus on customer outcomes and stimulate improvement in the CRM practices in banks. The banks which are developing better customer relationship will grow fast than their competitors. Page 118

7 REFERENCES 1. Bhaskara, T.V, Narasimha Rao, Service Quality Management in Indian banks - Opportunities and Challenges, Southern Economist, July -2000, pp Brahmanandam, G.N. & Narayana M.S. A Study on Customer Service in Commercial Banks, Indian Journal Marketing, 2005, pp Eapan Varghess, M. & Ganesh, C. Customer Service in Banks: An Empirical Study, NIBM, Vinimaya, Pune, Vol.24, No.2, pp Harmeen K. Soch 7 Sandhu H.S. Customer Perception of private banks, The Indian Journal of Commerce, 2002, January- June, pp Jayakumar, s. Complaint Management in Banks for Improving Customer Satisfaction NIBM, Vinimaya, Pune, Vol.31, No.3, pp Mousami Ghosh. Custome Service in Nationalized Banks, The Management Accountant, July 2000, pp Prasada Roa.P.S. Relationship Banking as a Competitive Strategies, SBI Monthly Review, July 2006, pp Ramachandra, S. Customer Relationship Management Emerging Strategies IBA Bulletin September 2002, pp Shanham. Liz. Customer Relationship Management: Market Trends and Opportunities, Stamford, Meta group CT Sinha, M.K. Banking Services Tomorrow- Some Suggestions on Customer Service, BBI Monthly Review, pp Page 119