“CRM in Banking Industry of Bangladesh A BASIC Bank Study”
Chapter 01
Let’s close our eyes and think about a government owned commercial bank. We will surely start to think of a very clumsy place filled up with a lot of old people working very slowly and the image will be accompanied with the image of a very dirty place. Actually that’s what we can see when we go to any bank like Sonali Bank in Motijheel or any other government bank in Bangladesh. BASIC is a bank with a lot of differences from this situation. In this report we will try to find out how it differs and what’s in common.
There are many sources of the information used all over this report. Due to the secrecy bond attached with the appointment letter from BASIC Bank Limited it is impossible to define all the sources and also all the experiences too. The following list contains only the sources that can be used without conflicting with the company’s terms and conditions.
· Face-to-face conversation with the respective officers and staffs of the branch and head office.
· Face-to-face conversation with clients visited the branch.
· Practical work experience in the different desk of the department of the branch covered.
· Annual report of BASIC Bank Limited.
· Website of the BASIC Bank Limited.
· Desk report of the related department.
· Different circulars sent by head office or BASIC Bank Limited and Bangladesh bank.
Every task has its respective goals or objectives without which the work is meaningless. Keeping the following objectives:
· To gain practical exposures in different banking activities
· To get familiar with the working environment in bank.
· Analyzing the performance of the bank through the uniform bank performance report.
· Finding out how the bank is exposed to different kinds of risks.
· To apply theoretical knowledge in the practical field.
· To observe and analyze the performance of the specific branch and the bank as a whole.
· To be acquainted with day to day functioning of service oriented banking business and its marketing
· To study existing banker customer relationship.
Pertinent data for this report has been collected primarily by direct investigations of different records, papers, documents, operation process and different personnel. The interviews were administered mostly in informal sessions due to the busy schedules of the key personals. They often feel uneasy due to the secrecy policies of the bank in case of answering some questions.
The information and data for this report have been collected from the primary and secondary sources.
Data was collected from the primary and secondary sources. The data was supplied by many publications forms etc.
1.2.4 Data analysis and interpretation:
Qualitative approach has been adopted for data analysis and interpretation taking the processed data as the base.
The report has some weak points also that have evolved due to the following causes:
· Secrecy policies of the bank.
· First time working experience in Bank of the report writer.
· Very Busy schedules of the bankers and the clients also.
· Lack of Printed Documents
Joined BASIC Bank Limited, Rajshahi Branch; as an Assistant Manager on the 15th of November and have been working there for all these four months as a credit officer. Due to being a credit officer I have always enjoyed the opportunity to meet the customer base directly and because of them being the primary customer of the bank it was easier for me to find out the real true bond that creates the Banker Customer Relation which works very importantly in the banking world for retaining the old customer.
| Job Place | BASIC Bank Limited, Rajshahi Branch |
| Job Designation | Assistant Manager, (Credit) |
| Experience | 15th November 2009 ~ up to date |
Chapter 02
2. Company Profile
This part of the report will try to explain the current financial condition of the BASIC Bank Limited as well as the corporate values too. It is a very important instrument for any bank because this is used to compare one with others.
The BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) was established as a banking company under the companies Act 1913 on the 2nd of August, 1988 & it launched its operations on 21st of January, 1989. It is governed by the Banking Companies Act 1913.The Bank was established as the policy makers of the country felt the urgency for a bank in the private sector for financing Small Scale Industries (SSIs). At the outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The BCC Foundation being non functional following the closure of the BCCI, the Government of Bangladesh took over 100 percent ownership of BASIC on 4th June 1992. BASIC Bank Limited is unique in its objective. It is a blend of development and commercial banks.
The bank has 30 branches across the country and a wide network of correspondents all over the world. The bank has plans to open more branches in the current fiscal year to expand the network.
Serving people for progress is the motto of BASIC Bank Limited. Whether in personal, corporate, treasury or trade transactions BASIC Bank Limited is committed to provide the best. Meeting the demand of their discerning customers is not their sole objectives. The bank ventures to deliver a quality that makes every transaction a pleasurable experience. The bank has already been in the process of implementing centralized On-line banking system. Customer is the core of everything that the bank does. The services are regularly upgraded and realigned to fulfill customer expectation. Delivery standards are constantly monitored and improved to assure the highest satisfaction.
2008 was one of the worst years for the bank but good for the Rajshahi branch of BASIC Bank Limited. The bank faced a severe drop in profit this year. The Rajshahi branch stood first in case of earning profit between all the branches situated in the North-Bengal. It earned 93 lacs of taka all alone. The following table shows the situation of the total organization:
| Amount in Lac | |
| Authorized Capital | 2000.00 |
| Paid-Up Capital | 1247.40 |
| Total Deposits | 31947.48 |
| Total Assets | 38773.91 |
| Loans & Advances | 2263.65 |
· Steady and sustainable growth through appropriate use of resources.
· Investment in a cautious way.
· Profit maximization.
· Establishing small industries.
· Develop a realistic deposit mobilization plan.
· Develop appropriate lending risk assessment system.
· Develop capital plan.
· Develop a system to make good advances.
· Develop e a recruitment, compensation, training and orientation plan.
· Develop a plan for offering better customer service.
· Develop appropriate management structure, systems, procedure and approaches.
· Develop scientific MIS to monitor bank’s activities.
During the year 2008, total assets of the bank increased by 31 .81 % to Taka 38773.91 million from taka 29417.09 million in 2006. As expected, loans and advances comprised the largest share in the assets portfolio of the Bank constituting 57.41 percent. Balances with other banks and financial institutions and Investment were the second and the third largest constituents being 17.89 percent and 13.67 percent of the assets portfolio respectively. Money at call and short notice came next in size with 3.40 percent of total assets.
Loans and advances consist of industrial loans, micro credit, commercial loans and bills increased by 17.18 percent to Taka 22,263.34 million compared to Taka 19,000.00 million in 2006.
The industrial loan reflected a significant growth of 13.54 percent over the previous year. Total outstanding industrial loans including term and working capital stood at Taka 13,901.40 million at the end of 2008 compared to Taka 12,243.56 million of 2006. Total outstanding term loan stood at Taka 5,055.58 million as on December 31, 2008 compared to Taka 3,897.12 million in 2006 reflecting a growth of 29.72 percent. The outstanding working capital finance extended to industrial units stood at Taka 9,525.98 million at the end of the reporting period compared to Taka 8,346.44 million in 2006. Growth
BASIC Bank also provides micro credit to the poor for generation of employment and income on a sustainable basis, particularly in urban and suburban areas. At the end of 2008, total amount of Taka 680.13 million remained outstanding as against Taka 359.24 million in 2006. Recovery rate during this period remained at a highly satisfactory level of 100.00 percent.
The Bank also supports development of trade, business and other commercial activities in the country. It covers the full range of services to the exporters and importers extending various facilities such as cash credit, export cash credit, packing credit, short term loans, local and foreign bills purchase facilities. As on December 31 2008, total outstanding commercial loans stood at Taka 7,681.74 million compared to Taka 6,391.21 million in 2006.
Classified (non-performing) loans and advances was 4.25 percent at the end of the year under review which was 3.70 percent in 2006. In absolute term classified loans and advances stood at Taka 723.23 million in 2008 from Taka 703.27 million in 2006. Additional
The bank achieved substantial growth in both import and export in 2008. The Bank handled total import business of Taka 21,266.53 million and export business of Taka 16,794.96 million in 2008. The import and export business grew by 19.45 percent and 8.61 percent respectively. Major items of exports were ready made knit & woven garments, sweater, jute & jute products, leather and leather goods, handicrafts etc. Items of import included mainly industrial raw materials, garments accessories, capital machinery, raw cotton, electronic consumer goods, chemicals, tyre and tubes, reconditioned vehicles, bicycle spare parts, food items such as rice, wheat, garlic, onion, sugar, chilly and other essential commodities.
2.5.8 Investment and Placements:
Investment at the end of 2008 was for Taka 5,303.39 million, compared to Taka 3,270.87 million in previous year. Investment was concentrated in approved securities such as Government treasury bills, Treasury bond, reverse repo and a few debentures and shares. During the year 2008 treasury bills, Treasury bond including reverse repo had the largest share (98.98%) in the investment portfolio. Debentures, shares in listed and unlisted companies and prize bond altogether constituted 1.02 percent. BASIC’s placement in different Banks in Bangladesh and outside Bangladesh was Taka 6,937.53 million in 2008 compared to Tk 4,191.37 million in 2006.
2.5.9 Fixed assets and other receivables:
At the end of 2008 the fixed assets increased by 26.90 percent to Taka 196.12 million from Taka 154.52 million in 2006 and other assets increased to Taka 579.14 million from Taka 498.75 million in the previous year. Fixed assets included vehicles, equipment and computer, furniture and fixtures and leased assets. On the other hand, other assets included advance income tax, stock of stationery, security deposits, sundry debtors, and suspense account.
2.6 Liabilities & Shareholder’s Equity:
Deposit constitutes the core of BASIC Bank’s fund mobilization. Total deposit of the Bank at the end of 2008 stood at Taka 31,947.98 million (82.40% of Total liabilities) compared to Taka 24,084.65 million (81.87% of Total liabilities) in 2006. The growth of deposit was 32.65 percent. During 2008, the fixed term deposit increased to Taka 27,903.72 million from Taka 20,467.17 million in 2006. Savings bank deposit decreased to Taka 886.30 million in 2008 compared to Taka 1007.79 million in 2006. Deposit in current and other accounts including bills payable increased to Taka 2,867.19 million in 2008 from Taka 2,370.45 million in 2006.
Borrowings were made from various sources for long term funding specially for financing development-banking activities. The Bank enjoys a credit line facility from KFW, a German development bank for financing micro-credit scheme and small-scale industries. It has also utilized an ADB credit line for financing small industries. Another loan of Tk 325.56 million was also received from ADB for financing Agro business development. Ministry of Finance (GOB) and Bangladesh Bank are the other sources of finance. Total outstanding borrowing against utilization of funds from the above sources in 2008 was Taka 1,385.81 million against Taka 830.06 million in 2006. An amount of Tk 600.00 million was allocated by the GOB and disbursed to BASIC Bank to finance Agro-based industry. BASIC Bank was included in this scheme for its outstanding performance.
The bank started its journey with paid-up capital of Tk. 80.00 million in 1989 and the same had increased to Taka 1,247.40 million in 2008. The bank has decided to issue 1 bonus share for every 20 shares and the paid-up capital of the bank would thus be raised to Taka 1,336.77 million if the proposed bonus share is approved. Cash dividend of Tk 62.37 million has also been proposed for the year 2008. With this cash dividend, total cumulative cash dividend of Tk 538.00 million would be paid to the government.
As per section 24 of the Bank Company Act1991, 20% of profit before tax needs to be transferred to statutory reserve until the total Statutory Reserve becomes equal to Paid-up Capital. Accordingly, the statutory reserve of the bank will stand at Taka 1045.08 million after transfer of an amount of Taka 161.62 million from the profit of 2008. Shareholders’ equity of the Bank would increase by Taka 357.59 million to Taka 2,596.58 million in 2008 from Taka 2,238.99 million in 2006 registering a sustainable growth rate of 15.97 percent.
The Bank’s total income was 23.66 percent higher than that of previous year. Interest income from loans and advances increased by 25.81 percent while other operating income increased by 38.18 percent over 2006. Commission income was higher by 34.85 percent.
The total expenditure was 47.52 percent higher than that of 2006 due to increase of interest expenses as a consequence of increase of deposit substantially. Salary and allowances to employees increased by13.57percent mainly due to annual increment, dearness allowance, promotion of existing employees and fresh recruitment. General and administrative expenses (excluding salary and allowances) increased by 14.72 percent. Hiring of additional space for Head Office mainly contributed to this increase.
2.7.3 Contribution to Government Exchequer:
From the very inception, BASIC Bank has been posting profit and paying income tax to the Government. The cumulative figure of contribution to the Government exchequer by way of corporate tax up to December 31, 2008 amounted to Taka 2,790.98 million, which is almost 35 times the amount of original paid-up capital of the Bank.
BASIC Bank has a well-diversified pool of human resource, which is composed of personnel with high academic background. Also, there is a positive demographic characteristic. Most employees are comparatively young in age yet mature in experience. As at end of 2008 the total employee strength was 820.
The Bank follows a strict recruitment policy in order to ensure that only the best people are recruited. The Bank, so far, has recruited five batches of entry-level management staff, all of whom have got excellent academic background.
Intensive training program, on a regular basis, is being imparted to employees of both management and non-management levels to meet the challenges in the banking industry and to help employees to adapt the changes and new working conditions. Human resource is the main driving force and quality human resources are the key sources for the success of today’s banking business. Keeping this view in mind and recognizing the importance of training for professional excellence BASIC Bank Ltd. established its own training cell in 2005 with modern facilities. In 2008 the cell arranged 22 training courses and provided training to as many as 360 employees of the bank. The bank also sends its employees to BIBM and other local and foreign institutions with a view to sharpening their knowledge base. During the year 2008 a total of 379 employees of the Bank were provided with training in various fields. Out of them 16 employees participated in training courses held abroad.
In 2008 total 122 employees of various stages were given promotion which is almost 17.00 percent of total employees of the bank.
The Bank has been providing off-line computerized banking service to all its customers since its inception. To accelerate the speedy and accurate account ledger maintained and to make available all potential international banking products, the bank has already been in the process of implementing centralized On-line Banking system. It is expected that within the end of 2008 the bank will be able to serve its customers through the new system including ATM and Internet banking facilities.
A great deal of investment for developing the physical resource base of the Bank has been made. BASIC Bank has its presence in all the major industrial and commercial centers of Bangladesh in order to cater to the need of industry and trade. At the end of 2009, there were thirty two conveniently located branches throughout Bangladesh; eleven branches in the capital city of Dhaka, seven in Chittagong and one each in Narayanganj, Narsingdi, Rahshahi, Saidpur, Bogra, Khulna, Jessore, Sylhet, Moulvibazar, Comilla, Barisal and Sirajganj. Besides these, the bank has three bill collection booths at Ramna, Sher-e-Bangla Nagar and Gulshan exchange Office of BTTB, Dhaka. A Foreign Exchange booth was opened at Osmani Int’l Airport, Sylhet in April ’05 for mobilizing foreign exchange. This is one of the areas where BASIC Bank is relatively lagging behind. The Bank has already signed an agreement with Placid NK Corporation, USA and MoneyGram International, Minneapolis, USA for obtaining foreign currency remittances. The bank is expected to sign agreement with Tele Money transfer, London, UK and some similar agreement with companies located in Saudi Arabia and UAE are going to be finalized shortly.
2.9 Functional division of BASIC Bank Limited:
The bank has 30 branches, 6 Zones spread throughout the country. At the head office level there are 12 divisions most of which have more than one functional department which are headed by DGM and Training institute by a director with the rank of CGM. The divisions are as follows:
· Human Resources Division
· Establishment & Common Service Division.
· Secretary’s Division (Aboard Division).
· Commercial Credit Division
. Industrial Credit Division
· Trade Finance Division
· Balance sheet & Back Office Division
· Audits an inspection division.
· R&D Division
· Computer system and procedures division. And
· Law division.
These are the different division of BASIC bank that are serving their services to the bank as well as to the country with great efforts according to their respective fields.
3. Basic Bank Rajshahi Branch:
It was the working place of mine for all these months from where I learned a lot about the banking functions. While preparing this report feel it’s necessary to tell a few words about it. There are almost 20 people working in this branch heart and soul to earn for the organization and to provide best possible services. There are two different departments in the branch. It is their cumulative hard work that makes it one of the biggest money spinners for BASIC Bank Limited in the North Bengal Zone. The very interior design even shows that how much control is there in the branch. The boss can go through surveillance from his very table on every employee either directly or through CC TV.
The departments that work in the branch are General banking & Loans & Advance Section. The general banking performs the very common task of creating; collecting; circulating; control the liquid money of the Bank. It also helps with Pay Orders and various sorts of Drafts too.
The Loans & Advance Department performs the function related to loan disbursement and collection of loans. It also issues Bank Guaranties. In the changing banking world it is becoming harder everyday to work in this section by following all the rules stated by Bangladesh Bank.
3.1
| D.G.M
Branch In-Charge |
| A.M
Branch Operation, 2nd Officer & In-Charge General Banking |
| A.M
In-Charge Loans & Advances and Foreign Exchange |
| A.M
Loans & Advances |
| A.M
Loans & Advances |
| A.M
General Banking |
| Assistant Officer
Cash |
| Officer
Cash |
| Officer
Cash |
| Assistant Officer
Cash |
| Armed Guard |
| Guard-Cum-Messenger |
| Guard-Cum-Messenger |
| Armed Guard |
| Driver |
| D.G.M – 1 GCM -2
A.M. -5 Officer -2 A.O -2 Armed Guard-2 |
3.2 List of Employee of Rajshahi Branch as on 31-01-2010:
| Sl. No | Name | Designation | Education qualification |
| 01 | A.K.M. Masudur Rahman | Deputy General Manager | B.A. (Hons), Economics, M.A, Economics |
| 02 | Md. Shamsuzzaman | Assistant Manager | M.A |
| 03 | A.T.G.M. Golam Faruque | Assistant Manager | MBA |
| 04 | Dinu Pramanik | Assistant Manager | MBA (Acc), BBA (Hon’s) |
| 05 | Md. Manirul Islam | Assistant Manager | MA |
| 06 | Md. Musarrat Hossain | Assistant Manager | BBA, DU |
| 07 | Md. Syed Ahmed | Officer (Cash) | M.A |
| 08 | Md. Moshiur Rahman | Officer (Cash) | B.A (Hons), M.A |
| 09 | Ms. Sanjeda Tamanna | Assistant Officer (Cash) | MSS, MBA |
3.3 Comparative Position of Deposit, Advance, Foreign Trade & Profit from 2007-2009:
(Amount in lac)
| Name of item | 2008 | 2009 | 2010
[up to 31-01-2010] |
||||||
| Target | Achievement | Target | Achievement | Target | Achievement | ||||
| Amt. | % | Amt. | % | Amt. | % | ||||
| Deposit | 4600.00 | 4675.70 | 101.65% | 5000.00 | 5442.41 | 108.85% | 5600.00 | 5506.37 | 98.32% |
| Advance | 4200.00 | 3370.26 | 80.24% | 4500.00 | 4008.99 | 89.09% | 4700.00 | 4167.92 | 88.68% |
| Foreign Trade (Import) | 300.00 | 56.49 | 18.83% | 200.00 | 69.79 | 34.90% | 200.00 | — | 00% |
| Profit | 80.00 | 47.37 | 59.21% | 100.00 | 91.57 | 91.57% | — | 5.51 | — |
3.4 List of Top 10(ten) Industrial Projects with their limits:
3.5 List of Top 10(ten) Trading concern with their limits:
| Sl. No | Name of the project | Proprietor/ Authorized person | Limit details |
| 01 | M/s. Usha Construction | Mr. Munzur Faruk Choudhury, B.SC.(Ag) in Agri. Engg | i. BG (Bid Bond)- Tk.250.00 lac
ii. BG (PG)- Tk.300.00 lac iii. STL – Tk.300.00 lac iv. SOD Tk.100.00 lac |
| 02 | M/s. J.K. Enterprise | Mr. Md. Shamsur Rahman | i. BG- Tk.200.00 lac
ii. STL – Tk.300.00 lac iii. SOD- Tk.20.00 lac |
| 03 | Md. Anisur Rahman | Md. Anisur Rahman | i. SOD- Tk.40.00 lac
ii. TL(HBL)- Tk.100.00 lac |
| 04 | M/S. Biscuit Biponi | Mr. Md. Ali Ashraf | i. SOD- Tk.15.00 lac
ii. CC(H)- Tk.15.00 lac |
| 05 | M/s. Rajshahi Stationery | Md. Moniruzzman Lucky | i. CC(H)- Tk.40.00 lac |
| 06 | M/s. Safa General Store | Mr. Md. Saidur Rahman | i. CC(H)- Tk.30.00 lac |
| 07 | M/S. Kamaluddin Khan & Sons | Mr. Md. Akram Khan | i. CC(H)- Tk.25.00 lac |
| 08 | M/s. Belal Hardware | Mr. Md. Belal | i. CC(H)- Tk.75.00 lac |
| 09 | M/s. New Modern Furniture. | Mr. Md. Robiul Alam | i. CC(H)- Tk.30.00 lac |
| 10 | M/s. Mukta Hardware | Mr. Md. Obaidul Wazid | i. CC(H)- Tk.30.00 lac
ii. TL (HBL)- Tk.20.00 lac |
Traditionally, few people changed their banks unless serious problems occurred. In the past there was, to certain extent, a committed, often inherited relationship between a customer and his/her bank. The philosophy, culture and organization of financial institutions were grounded in this assumption and reflected in their marketing policies, which were produced and transaction-oriented, reactionary, focused on discrete rather than continuous activities.
Today, financial institutions can no longer rely on these committed relationships or established marketing techniques to attract and retain customers. As markets break down into heterogeneous segments, a more precisely targeted marketing technique is required, which creates a dialogue with smaller groups of customers and identifies individual needs.
Also, before the Internet revolution, consumers largely selected their banks based on how convenient the location of bank’s branches was to their homes or offices. With the advent of new technologies in the business of bank, such as Internet banking and ATMs, now customers can freely chose any bank for their transactions. Thus, the customer base of banks has increased, and so has the choices of customers for selecting the banks. This situation coupled with the pressures of competitive and dynamic markets has contributed to the growth of CRM in the Financial Services Sector.
4.1 Customer Relationship Management: The Concept
Customer Relationship Management is the establishment, development, maintenance and optimization of long-term mutually valuable relationships between consumers and the organizations. Successful customer relationship management focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization’s strategy, people, technology and business processes.
At the heart of a perfect CRM strategy is the creation of mutual value for all the parties involved in the business process. It is about creating a sustainable competitive advantage by being the best at understanding, communicating, delivering and developing existing customer relationships in addition to creating and keeping new customers. So the concept of product life cycle is giving way to the concept of customer life cycle focusing on the development of products and services that anticipate the future need of the existing customers and creating additional services that extend existing customer relationships beyond transactions.
4.1.1 Need of CRM in the Banking Industry:
A relationship-based marketing approach has the following benefits:
Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. Long-term customers are more likely to become a referral source.
The longer a relationship continues, the better a bank can understand the customer and his/her needs & preferences and so greater the opportunity to tailor products & services and cross-sell the product / service range.
Customers in long-term relationships are more comfortable with the service, the organization, methods and procedures. This helps reduce operating costs and costs arising out of customer error.
With the increasing number of banks, products and services and practically null switching costs, customers are easily switching banks whenever they find better services and products. Banks are finding it tough to get new customers, and more importantly, retain existing customers.
According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore, banks are now stressing on retaining customers and increasing market share.
4.1.2 Private Banking and CRM:
Private Banks have traditionally viewed themselves as exceedingly ‘Customer Centric’ offering what they believe to be highly personalized services to the High Net Worth Customers. However, changes in the customer behavior and accumulation of wealth are resulting in the needs of HNW customers becoming more diverse and complex in terms of the sorts of products they want, the channels through which they want to access them and the associated range of advice. The wealthier the customers, the more demanding they are and the clients expect more and more from their banks. Competition for “Supremely elite” is increasing
| HNW Customers: |
| Advise & Expertise:
Give me independent advice specific to my needs. |
| Performances:
Provide me with best possible return on my assets. |
| High Quality Services:
Provide Consistent error free high quality services. |
| Personal Relationship:
Provide me with a single adviser to manage my affairs. |
The first step towards successfully winning, retaining and growing the profitability of private banking customers is to understand what their wants and needs are, so that the organization can be built around serving those needs. Only when an organization has done this and incorporated this into its strategy can it start to design its value proposition and a customer experience that will enable it to achieve a differentiated competitive position in the private banking market and more importantly, do so in an economically viable way.
There is a basic ‘generic’ customer experience that many private banking customers are seeking. To be a credible player in the market, a private bank must be able to deliver this ‘base’ experience. This represents a common set of needs that are shared by most HNW customers. Therefore, the private bank must have the capabilities required to meet these needs for the majority of its customer base.
All customers, regardless of wealth levels, have similar emotional needs, which drive their need for advice and their purchase of products. Different wealth levels impose different priorities on meeting these needs and open up new avenues for doing so.
| Figure 1
The Basic HNW Customer Experience: Rohit Perera & Tamsin Brew- CRM in F.S |
Take a simple example, HNW customers can afford on it to fund their retirement, so their priorities may be associated with growing wealth, rather than preserving it, allowing them to choose a product option with a higher risk/reward ratio.
If this is true, it means all HNW customers start with a basic, common set of what they want and need from a bank, which might include:
· Personal, long-term relationship
· Advice combining industry expertise and knowledge of personal circumstances
· High quality, consistent quality
· Security, privacy, confidentiality
At this basic level, grouping together these core wants and needs produces a set of generic characteristics that an HNW individual seeks from an organization before he or she will even consider placing any of his or her wealth with it.
Underlying these generic characteristics is a set of capabilities covering organization, process and technology, which the private bank must process to operate in the high net worth market.
4.1.4 The Segment-Specific Experience:
| HNW Customers: |
| Advise & Expertise:
Give me independent advice specific to my needs. |
| Performances:
Provide me with best possible return on my assets. |
| High Quality Services:
Provide Consistent error free high quality services. |
| Personal Relationship:
Provide me with a single adviser to manage my affairs. |
| Flexibility:
Cope with me. |
| Discretion:
Treat my affairs with utmost discretion. |
To build this ‘base’ experience, private banks also need to consider the segment-specific needs of their target customers. This in itself requires a capability to identify and justify target customers and understand their needs beyond banking, to ensure that their emotional needs are met. It is here that the customer is made to feel like an individual, but it is also at this point that costs and infrastructure spiral, as customers’ need start to diverge.
The segmentation process identifies groups of customers with similar wants and needs, who are seeking a similar experience from the provider. Importantly, from the organizations’ viewpoint, this means that they can also be served by similar sets of capabilities.
The channel preferences of each segment and associated channel experience – for example, a self-directed group of customers will use internet for transacting, information gathering and even for some advice, whereas advice seekers and less financially sophisticated segments require more access to an adviser / relationship manager and a more basic experience over the Internet.
The product and service preferences of that segment – for example, the more sophisticated customers are most likely to demand more complex products such as alternative investments, whilst others may prefer discretionary portfolio management.
The new components are added to the experience and the ‘base’ experiences elements become defined in more depth, according to the specific needs of the customer segment.
Once the segment experiences have been defined, the associated capabilities must again be identified. The hierarchical approach to defining customer experiences helps filter these capabilities as: –
· It is possible to identify experienced elements that are common to more than one segment – this will carry a higher priority for development as they will benefit more customers;
· The segmentation exercise will provide comparative sizing for the target segments.
· Capabilities required for the larger, more profitable segments take precedence over those needed for smaller segments.
4.1.5 The Organization-Specific Experience:
Having identified the base and segment specific elements of HNW customer experience, the final step is to identify how the experience that each organization offers its customers is distinct from other banks. Now this would mean that one has to distinctly identify the components of the experience that are not only associated with a particular bank but also be the key differentiator.
This process will define: –
· Elements of the organization style and culture.
· Products and Services to be provided.
In the same way, every brand is different, so is the experience.
their finances can be a complex matter. The challenges faced by banks and their customers are many but the trick lies in de-mystifying complex financial relationships.
| HNW Customers: |
| Advise & Expertise:
Give me independent advice specific to my needs. |
| Performances:
Provide me with best possible return on my assets. |
| High Quality Services:
Provide Consistent error free high quality services |
| Personal Relationship:
Provide me with a single adviser to manage my affairs. |
| Flexibility:
Cope with me. |
| Discretion:
Treat my affairs with utmost discretion. |
| Brand:
Modern innovative image that suits my image. |
| Global:
Global accessibility. |
Technical solutions deployed by banks today are flexible, user-friendly and meant to facilitate specific workflow and requirements in implementation processes. In order to simplify lives, banks have begun to implement end-to-end technologies through all departments with the intention of removing human error from processes. Previously existing manual environments could not have been adequate for future visions, growth plans and strategies.
In this day and age, customers enjoy complete luxury in terms of customized technical solutions and banks use the same to cement long-term, mutually-beneficial relationships.
4.2 CRM in Practice in BASIC Bank Limited:
In Bangladesh banking is not yet a very developed industry and that has happened due to various strict rules and regulation set by the central authority of banks, the central bank. Due to the weak infrastructural condition and economic vulnerability the central bank often has to play a very protective role and has to play it safe.
In my short experience in BASIC, I have found a very interesting thing and that is huge use of CRM tools. Although this methods are not formally used as CRM tools but the goal they pursue are similar to those of the CRM goals, building and maintaining profitable relationships. The CRM practice is mainly in customer experience level as the dealing customers are not of a very qualified level. Some of the tools used in bank’s CRM are as follows
A banker’s job is not only to develop his or her bank’s asset base or profit but to ensure sustainable development of all the parties he or she is going to serve. This is a huge dilemma for any banker that which one he should choose between the clients benefit or the bank’s one.
Bankers of BASIC Bank Limited have always given importance on ensuring their clients’ maximum benefit until it harms the rules and regulations of the bank. The organization believes that if a client is served with a good advice then sooner or later the thing is going to pay back and will create a long term relationship with the bank.
4.2.1.1 Advices:
The clients often expect good and logical advises from the bankers as they believe that the bankers know better than them about which of the loan scheme is going to give him maximum benefit or which one is going to ensure them maximum return on their asset in case of depositing.
There are several aspects where a client can be advised on:
1. Selection of appropriate loan packages:
There are various types of loans available in the bank which serves different purpose. It is often hard for the clients to find out which one is the best one for them. In such a case it very important for the banker to help the client to find out the most profitable loan package for him. Such as a client needs a certain amount for 4 months, in this circumstances the clients can achieve the fund by taking a CC(H) loan for one year on the other hand the banker can advice him to go for a STL limit for the short period of time which will save him money and will also save hassle.
2. Selection of appropriate investment packages:
There are a lot of people who have enough idle money but can’t invest due to their other problems, in this situation bank borrow that idle money from them and then lend them to others. The principle of banking is to transfer money from the surplus unit to deficit unit. An investor can invest in different ways; a banker helps him to select the most profitable investment opportunity available for him in the bank.
3. Selection of appropriate loan repayment method:
After disbursal of loan, it needs to be repaid. Generally the clients select the loan repayment method. A loan can be repaid through monthly installments or just through daily transactions. Even in some cases the loan can be repaid just by completing a work order and receiving a bill against it. The bankers will advice to select the best possible loan repayment method that suits the customers’ business type and loan size.
4. Tax redemption:
There are several ways to get tax redemption in the national Tax rule and the bankers help the client to take necessary action to ensure lesser tax.
5. Cost cutting:
There are several cost attached to the loan disbursal process which can often be reduced just because of the bankers good will. Ensuring the availability of all the services at a cheaper rate will easily cut the cost of the loan and thus the EIR and will ensure delighted customers.
4.2.1.2 Expertise:
A banker can lend his expertise in the following sections:
1. Preparing financial statements
2. Preparing stock reports
3. Preparing valuation reports
4. Planning financial plans
5. Preparing financial projections
6. Preparing L/C applications and other applications
Personal relationship is very important for any banker-customer relationship. There is always a sense of belonging in the clients mind because of the long term association with the bank.
In the banks it is always tried that the customers always face the same officer as it makes the process of relationship building easier. There are benefits of this sort of personal relationship because this saves both time and effort of both the parties. The person who deals with the same client comes to know nooks and corners of the clients taken benefits and his business criteria also. It becomes much easier for him to get hold of the problem that the client might face.
| Client |
| Banker |
| Faster Service |
| Better Service |
| Error Free Service |
| Long term bonding |
On the other hand, the client feels comfortable about the person who is dealing with all the problems as he knows that the person sitting in front of him knows a detail view of all his loans, advances or deposits.
The interpersonal bond helps the parties to discuss matters more freely and to reach a solution instead of just getting into a dead block which can become very fatal for both of them.
There is no alternative of high quality performance in bank as the organization is a strictly service based organization. This specific CRM tool is useful in case of the deposit making customers. They always demand a very high quality performance in investing their hard earned money. The customers expect performance in the following sectors.
1. Safe fund management
2. Profitable investment
3. Investment in sustainable development sectors
| Customer’s Assets |
| High Performance Banking |
| Higher return |
| Higher Satisfaction |
The bank just can’t collect deposit from the depositors but it also must ensure that the bank is going to invest the hard earned depositor’s money in sectors where it will earn most achievable value.
4.2.4 Quality Service: