CAIIB RB Unit 13 - Customer Relationship Management in Retail Banking

CAIIB RB Unit 13 - Customer Relationship Management in Retail Banking (Year: 2019)

There are three elements in CRM viz.

(a) Customer
(b) Relationship
(c) Management

Bank has to manage the customer by offering the right product/s matching the needs of the customer.

Relationship with the customer means that the service quality of the bank should match the customer expectations in total and result in total satisfaction of the customer.

Customer Relationship Management (CRM) is basically having a 360 degree view of the customers and their profile, dynamically tracking their requirements, offering matching products and services, cross selling relevant products to his changing needs and keeping him happy for ever.

  1. The objectives of a good CRM are aimed at to build long term profitable relationships with specific customers.
  2. Offer optimal products and services on a dynamic basis and achieve life time value from customers.
  3. The purpose of CRM is to increase the share of wallet of the customer with the banks' services and increase the per customer profitability of banks.

Customer optimisation is the essence of CRM and can be addressed through three dimensions viz.

(a) Acquisition of New Customers who are immediately profitable to the bank.
(b) Retention of Existing Customers who are most profitable and valuable to the Bank for the longest duration.
(c) Expansion of the customer relationship with the bank encouraging more purchases and shifting the less profitable customers to lower - cost delivery channels.

CRM is not just an option for the banks but a compulsion to achieve business synergies and optimization of resources.

Needs for banks for implementation of a CRM program :

(i)   Need to increase operational efficiencies
(ii)  Need to derive more value from employees.
(iii) Increasing Competition in retail banking.
(iv)  Rising NPAs.
(v)   Increasing Importance of Fee Based Income.
(vi)  Delivery Channel Efficacy
(vii) Application of Technology


Different key issues in the implementation of CRM by banks are :

a. Business Processes
b. Information Processes
c. Information Systems
d. Internal Organisational Culture


There are four stages through which CRM is implemented

a. Identification of Customers
b. Classification of Customers
c. Interaction With the most Valued Customers
d. Customisation of Bank's Products and Services for Different Customer Segments