7 Reasons CRM in Banking has Often Failed to Generate ROI in India

Almost every bank today boasts of a state-of-the art CRM solution. These advanced systems are no longer confined to the international and major private banks but Public Sector Banks (PSBs) have also joined the bandwagon. So, how much competitive edge a state-of-the-art CRM solution provides no longer drives the bank’s decision to adopt new technology, it is rather the judicial and optimum use of these technological resources that often makes the difference.

Since, CRM is no longer the differentiating factor between banks, it is important for any bank to recognize areas that can help it stay ahead of the curve. It is also important for the bank, especially with the growing retail banking market today to constantly assure customers that massive personal data that it has gathered is secure and in the safest possible hands. This may not always be an easy task as the rapidly knowledge-gaining customer knows a lot more about privacy now than ever before. Almost every tele-caller calling to sell a bank product or toothpaste is asked about the source of the contact and many push it as far as asking about the data base and its origin. Banks in India therefore need to be extra careful in ensuring the maximum possible security of their databases. At the same time they need to constantly update their databases with the help of their CRM software.

Avoid cold calling
It is wrong to say that cold calling is bad. Cold calling is one of the most tried and tested marketing and sales strategies and there is no company with a database that can be refrained from doing so. Banks are no exception and they cannot be blamed for doing it. However, since the bank inspires a feeling of trust for the customer, cold calling and all other cross selling tools with the help of the CRM is often a tricky and sometimes a sticky issue. Segregating and constantly updating the segregated data can often help and avoid cases where the customer is annoyed. With tablets becoming a way of life, emails can often be a more convenient and dependable marketing tool that calling or sending SMS. Thorough research and constantly updated data on the customers therefore plays a vital role.

Decrease use of IVRs
Bank customers often complain that they need to press a number of keys before they can hear a human voice. In India, the problem gets further aggravated when customers with low technical inclination make these calls. For any CRM implemented it is a must for the bank to ensure that human voice (customer care executives) can be reached quickly and efficiently.

Taking customer relations to the next level will include calling back customers with the issues (if unsolved) and following up. In India, however, it is still a distant dream in the banking sector.

Decentralized CRM solution
Having a centralized CRM software is definitely a way to streamline one’s business but for banks handling HNIs and other corporate a single point of contact can go a long way in ensuring customer satisfaction. With several players boasting of flexible and efficient private banking facilities, a single point of contact in areas such as corporate loans, home loans and fixed deposits can help develop a feeling of trust towards the organization.

For those designing these solutions, it is important to have a deep understanding of the bank and its customers before taking on the task of implementing a CRM. Making sure that the segregation of the data is at par with global standards and there is scope of flexibility and customization for the staff handling the software is therefore essential.

Implementing CRM in Banking: Reasons for failure
CRM implementations in banks have failed often in India. While it is difficult to pinpoint any particular cause for this, broadly some of the reasons can be identified as:
  • Ignorance of the banking staff - low user adoption because of poor training or lack of clarity on benefits of CRM leading to inconsistent customer information.
  • Lack of adaptability - system is not future proof. 
  • Low levels of customizations - user interface is unfriendly and alerts are not incorporated for sub par performance by users.
  • Lack of flexibility and upgrade options in the solutions - incorporating new strategies is complicated and upgrades are expensive with chances of downtime.
  • Mishandling of data - data cleansing is a complex task and records are not assigned correctly. Aslso, dead leads that resurface discourage sales teams from using the CRM software. 
  • Lack of IT infrastructure in semi-urban and rural India - poor or slow internet connectivity with varying levels of skilled IT staff. 
  • Low and slow ROI (this deters a number of private banks, NBFCs and MFIs) - ineffective CRM implementation with low user adoption.
The growth of the retail banking sector in India has provided the ultimate opportunity for the banks as well as CRM software to form mutually beneficial and long lasting partnerships. In spite of failures, these providers need not be disappointed too much, as the success of the banking CRM and the transformation in the sector that follow could well be replicated in the near future.



2 comments:

  1. well done.. explains CRM issues wrt banking. written in a way that laymen like me can easily understand. one suggestion- maybe use a few real world examples or insert a small case study.

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  2. Thank you for the feedback. Will include some examples to it. for case study you might like to check http://www.crmnext.com/us/hdfc-bank.aspx

    ReplyDelete