A STUDY WITH SPECIAL REFERENCE TO BANKING INDUSTRY IN INDIA

735
Dr. M. Marimuthu and K. Indumathi Velmurugan. “A Study with Special Reference to Banking
Industry in India”- (ICAM 2016)
International Journal of Management (IJM)
A STUDY WITH SPECIAL REFERENCE TO BANKING INDUSTRY IN
INDIA
Dr.M.Marimuthu
Research Supervisor &Assistant Professor of Commerce,
PG& Research Department of Commerce, Jamal Mohamed College (Autonomous)
Tiruchirappalli – 620020
K.Indumathi Velmurugan
Research scholar & Assistant Professor of Commerce,
Jamal Mohamed College (Autonomous), Tiruchirappalli – 620020
ABSTRACT
Customer Relationship Management (CRM) has emerged as a popular business strategy
in today’s competitive environment. It is a discipline which enables the business to identify
and target their most profitable customers. CRM involves new and advance marketing
strategies which not only retain the existing customers but also acquire new customers. It has
been invented as a unique technique capable of remarkable changes in total output of
companies. CRM in financial services industry is a cyclical process which starts with
definition of customer expectations which are difficult to manage but are often the cause of
dissonance which results in loss of existing customer base. So understanding of customer
expectations with regard to service delivery levels and product quality is essential for
establishing a long term symbolic value relationship. The challenge before the banks is not
only to obtain updated information for each customer, but also to use the information to
determine the best time to offer the most relevant products. The banking industry in India is
now running in a dynamic challenge concerning both customer base and performance. Today,
many banks are rushing to become more customer focused. A key component of many
initiatives is the implementation of Customer Relationship Management. This paper reports
on a research study of the adoption and use of CRM in banking sector and an attempt is made
in understanding the multidimensional construct of customer relationships and its
implications in competitive banking environment.
Key words: Customer Relationship Management, Banking Sector, Customer Interaction.
Cite this Article: Dr. M. Marimuthu and K. Indumathi Velmurugan. A Study with Special
Reference to Banking Industry in India. International Journal of Management, 7(2), 2016, pp.
735-742.http://www.iaeme.com/ijm/index.asp
1. INTRODUCTION
A greater focus on Customer Relationship Management (CRM) is the only way the banking industry
can protect its market share and boost growth. CRM would also make Indian bankers realize that the
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Volume 7, Issue 2, February (2016), pp. 735-742
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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 -
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736
purpose of their business is to “create and keep customer” and to “view the entire business process as
consisting of a tightly integrated effort to discover, create, and satisfy customer needs”.
Banking system can be regarded as the backbone of a country’s financial system. un doubtfully the
operations of commercial banks record the economic growth of the country. Commercial banks play a
significant role in directing economy development by financing the requirements of trade and industry.
Today, more than ever before, the ability to maximize customer loyalty through close and durable
relationship is critical to retails bank’ ability to grow their business. As banks strive to create and
manage customer relationships, several emerging trends reflect a fundamental change in the way banks
interact with the customer they have and those they want to acquire.
2. RESEARCH PROBLEM
Modern marketing philosophy advocates the concept of CRM that creates customer delight. This
applies to all sectors of sales and marketing includes the banking. In the banking field a unique
‘Relationship’ exists between the customers and the bank. But because of various reasons and
apprehensions like financial burdens, risk of failure , marketing inertia etc., many banks are still
following the traditional ways of marketing and only few banks are attempts to adapt CRM. It is with
this background, the researcher has made a modest attempt towards the idea that CRM can be adapted
uniformly in the banking industry for betterment of banking services. The role of CRM is quite
different and distinguishable to traditional type of marketing CRM participate not only in marketing
but also in implementing the business as a strategy to acquire, grow and retain profitable customers
with a goal of creating a sustainable competitive advantage. Particularly in banking sector, the role of
CRM is very vital in leading the banks towards high level and volume of profits. So there is a need to
study the role of CRM in development and promotion of banking sector through the sidelines of the
practices, problems and impact of the CRM on banking sector all the time.
3. CUSTOMERS RELATIONSHIP MANAGEMENT– A NEW MANTRA IN INDIAN
BANKING
Nowadays banks have to work keeping in mind the position of the financial market and anticipate
change in the market place and prepare themselves accordingly. They have to make new resolutions to
build further on their own strengths to explore new avenues of Customers Relationship Management.
This is the only strategic weapon to be pursued for excellence in the pursuit of performance and
achievement. Both the retention of old business as well as to search for new business, CRM is the only
choice. CRM, being the essence of modern banking, a sound understanding of the key principles, its
theories and practices should be revisited and redefined to provide a road map to new ideas and
techniques in the field. Over the years, banking institutions have been feeling the pressing need of
putting up greater thrust on this initiative for improving their operations and appearances.
4. WHY THE BANKING INDUSTRY IS SELECTED FOR CRM RESEARCH
The banking industry was selected for CRM research because, in general, banks are more advanced in
terms of technology adoption than many other organizations. One of the reasons is that other
organizations do not usually require the level of information from their customers which banks do;
banks keeps a lot of in-depth information about their customers. Therefore, the CRM system currently
used in banks needs to be more robust to be able to handle such sensitive information about different
types of customers. Secondly, in the current environment where technologies are rapidly improving,
banks have to be up-to-date in terms of technology, while keeping efficient employees which creates a
competitive advantage over rivals.
Similarly, the banking industry had an early lead in CRM adoption as its transactions are
essentially IT-based and contain valuable information about their customers (Karakostas, et al., 2005).
Moreover, in banks, CRM aims to co-ordinate all business processes that deal with customers and
involves the collection, collation, and interpretation of customers’ data in order to define patterns of
buying behaviour that can be used to support effective marketing programmes (Laudon and Laudon,
2000; Karakostas, et al., 2005).
On the other hand, customers these days are also looking for ease and a secure environment.
Having CRM properly operative in banks also allows customers to trust their respective banks in terms
of their financial matters. Moreover, CRM allows technological capabilities in banks that attract new

737
businesses as well as building relationships with the customers. If CRM were not used by banks,
people would hesitate to use the banks and would not manage their finances through the banking
industry as CRM is a useful strategy which allows banks to maintain a strong relationship with their
customers. Therefore, the banking industry has been selected to conduct the CRM research.
5. REVIEW OF LITERATURE
Customer Relationship Management (CRM) is defined in many ways by many researchers. For
instance, Dyche’ (2002, p.4) in his book defines CRM as:
 Brown (2000) CRM is a process of acquiring new customers, retaining the existence
customers, and at the same time understand, anticipates and manages the needs of
organizations current and potential customers.
 Mylonakis (2009) described CRM as an innovative process to create a long term relationship
and gaining trust.
 Girdhar (2009) observed that by satisfying the internal customers and building good
relationship with them, the relationship with the external customers can also be retained and
satisfied by the bank.
 Kumar & Rajesh (2009) reveals that any bank that wishes to either grow in size of its banking
operation or improve its profitability must consider the challenges affecting its customer
relationship.
Customer relationship management (CRM) is a co-ordinate approach in business to maintain the
relationship between the firm and its customers to satisfy and retain the firm’s customer, in turn helps
the firm to exist in business and to attract more customers by giving promotions and more comfort in
doing business with the firm (This Little Piggy, 2012).
 Saravanakumar (2009) reveals that CRM is all about maintaining a sustainable competitive
advantage by serving existing customers and attracting new customers.
6. RESEARCH METHODOLOGY
6.1. Objective of this Study
This study was conducted with following Objectives
 To provide better customer service.
 To discover new customers and retain existing customers.
6.2. Sample Design and Sample Size
For the present research work, qualitative approach was undertaken by the researcher. The selection of
respondents was ultimately made on convenient method of sampling and sample size is 50 customers
of banking sector in Trichirappalli.
6.3. Tools of Data Collection
A Questionnaire has been used as a research tool collecting data for the present study on CRM in
banking sector. Secondary data were also collected from library, books, Magazines, internet and
journals.
7. ANALYSIS OF DATA
Statistical tools like Chi-Square Test, Weighted Average Analysis and T-test is applied by using SPSS-
Package.

738
7.1. Discussion and findings
Table 1 Demographic Frequency Table
Variables Description Frequency Percentage
Age 21-30 25 50
31-40 20 40
41-50 04 08
Above 50 01 02
Total 50 100
Gender Male 17 34
Female 33 66
Total 50 100
Education Student 8 16
UG 17 34
PG 19 38
. Professional 06 12
Total 50 100
Occupation Govt. employee 20 40
Private employee 19 38
Students 04 08
Others 07 14
Total 50 100
Income Less than Rs. 10000 18 36
Rs.10001-Rs. 20000 24 48
Rs. 20001-Rs.40000 06 12
Rs. 40001-Rs.50000 02 04
Total 50 100
The above table reveals that among 50 respondents, 50 percent are in the age group of 20-30, 40
percent in the age group of 31-40, 8 percent in the age group of 41-50 and balance of 2 percent in the
age group of above 50. A maximum of 66 percent of the respondents are female and 34 percent are
male. The educational qualification shows that 38 percent were studied PG level,34 percent were
studied UG level,16 percent were student.40 percent of the respondents have stated their occupation as
the employees of the Government concern,38 percent of the respondents were private employee and 8
percent were students. 48 percent of the respondents come under the income group of Rs.10001-
Rs.20000, 36 percent are in the group of less than Rs.10000 and 12 percent are in the group getting the
income Rs.20001-Rs.40000.
7.2. Chi-Square Test
Chi-square test is non-parametric test used to test the goodness of fit to verify the significance of
association between two attributes.
7.3. Hypothesis of the Study
7.3.1. Relationship between Occupation and overall Satisfaction level of CRM in Banking Sector.
HO: There is no association between occupation and overall satisfaction level of CRM in banking
sector.
H1: There is association between occupation and overall satisfaction level of CRM in banking
sector.

739
Table 2
Occupation
Over all CRM Total
Low Hotel
Government Employee
Private Employee
Student
Others
Total
16
5
0
0
21
4
14
4
7
29
20
19
4
7
50
Table 2.1 Chi-Square Test
Value Df Asymp. Sig.
Pearson Chi-Square
N of valid cases
21.740
50
3
.000
The above table reveals that association between occupation and overall satisfaction level of CRM
is significant (X2 = 21.740, df =3, p<0.05) and if may concluded that the occupation of the respondents
may influence overall satisfaction level of CRM.
7.4. Weighted Average Analysis
Weighted average analysis has been applied to the factors determining customer relationship
management in the following Table.
The following weights are applied:
(+)2 for strongly agree, (+)1 for agree,0 for neutral,(-)1 for disagree, (-)2 for strongly disagree.
Table 3 Weighted Average Analysis
Factors
Opinion
score
Strongly
Agreed +2
Agreed
+1
No
Opinion
Disagree
-1
Strongly
Disagree
-2
Average Score
Response of the services and complaints
Bank treat
Frequency
10
20
32
32
6
0
-2
-2
0
0 50
Total
Timely service
Frequency
8
16
33
33
5
0
4
-4
0
0 45
Total
ATM service
Frequency 13
26
27
27
8
0
2
-2
0
0 51Total
Reply Complaints
Frequency 4
16
36
36
6
0
4
-4
0
0 48Total
Reliability
Access website
Frequency 9
18
29
29
8
0
4
-4
0
0 43Total
Misuse of Personal
data
Frequency
14
28
32
32
2
0
2
-2
0
0 58
Total
Transaction safe
Frequency 15
30
28
28
6
0
1
-1
0
0 57Total
Fast transaction
Frequency
8
16
33
33
8
0
1
-1
0
0
48
Total

740
It could clear that, from the weighted average analysis, ATM services is the most influencing
variable on the factor services and the complaints, and misuse of personal data is the most influencing
variable on the factor reliability.
Table 3.1 Weighted Average Analysis
Factors
Opinion
score
Strongly
Agreed
+2
Agreed
+1
No
Opinion
Disagree
-1
Strongly
Disagree
-2
Average Score
Convenience
Easy to use
Frequency
8
16
34
34
8
0
0
0
0
0 50
Total
Mini
statement
Frequency
17
34
23
23
7
0
3
-3
0
0 54
Total
Easy access
Frequency 7
14
37
37
4
0
2
-2
0
0 49Total
Easy to
learn
Frequency 10
20
31
31
8
0
1
-1
0
0 50Total
Problems Encountered
Difficult in
operation
Frequency 7
14
37
37
3
0
2
-2
1
-1 48Total
Grievance
handling
Frequency
6
12
30
30
9
0
4
-4
1
-1 37
Total
Solving
problem
Frequency 9
18
27
27
6
0
8
-8
0
0 37Total
Overall
transaction
Frequency
10
20
34
34
6
0
0
0
0
0 54
Total
It could clear that, from the weighted average analysis, mini statement provided by the bank is the
most influencing variable on the factor services convenience, and overall satisfaction of CRM is the
most influencing variable on the problems encountered.
7.5. T-Test
Table 4. One-Sample Statistics
N Mean Std.Deviation Std.ErrorMean
OVERALL SATISFACTION 50 4.08 .566 .080
Table 4.1 One Sample Test
Test Value = 0
T df
Sig(2-
tailed)
Mean
difference
95% confidence interval of
the difference
Lower Upper
Overall
satisfaction
51.000 49 .000 4.08 3.92 4.24
The corresponding 2-tailed p value is 0.000. Hence the overall satisfaction levels of CRM in
banking sectors are significant.

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8. FINDINGS
8.1. The demographics frequency of the respondents taken up for the study.
 Majority of the respondents are in the age group of 20-30 years
 Maximum of the respondent have opined their education qualification as post graduate
 Most of the respondents have stated their occupation as the salaried people in different
concern
 Majority of the respondents have opined their annual income as Rs.10001 – Rs.20000
8.2. The opinion of the respondents with respect to the services and complaints.
 64 percent of the respondents are satisfied with the bank treats as a customer.
 Majority of the respondents 54 percent are satisfied with the ATM services provided by the
banks.
 72 percent of the respondents are agreed that they got appropriate reply from banks.
 Majority of the respondents are agreed that the bank never misuse their personal information.
 80 percent of the respondents are strongly agreed that the reports like mini statements
provided by the bank are in a proper manner.
 Majority of the respondents are agreed that the services provided by the bank.
8.3. Chi – Square analysis
 The chi-square analysis, reveals that the factor overall satisfaction level of CRM is significant
at 5% level dependent with occupation.
8.4. T – Test
 The overall satisfaction levels of CRM of the respondents are significant.
9. SUGGESTIONS
 The bank should educate their customers on the importance or relevance of the customer
service unit.
 The bank has to make adjustment about the time they spend in delivering services at the
counter.
 The bank has to take the customers complaints serious and rectify the corrections for effective
efficient delivery of services.
10. CONCLUSION
Customer Relationship Management is concerned with attracting, maintaining and enhancing customer
relationship in multi service organizations. CRM goes beyond the transactional exchange and enables
the marketer to estimate the customer's sentiments and buying intentions so that the customer can be
provided with products and services before the starts demanding. Customers are the backbone of any
kind of business activities, maintaining relationship with them yield better result. From the research
study CRM must be implemented in the banking sector. This study further reveals that Demographic
variables, Service and complaints, Reliability of the customer, customer satisfaction, and problems
encountered by the banks are the important aspects that impact CRM. The further of banking lies with
the CRM strategies adopted by the banks. To conclude, the researcher would like to maintain the
relationship building with customers is now accepted. The results in this study show the respondents
either agree or strongly agree on majority of the statements in the dimension used. This study is more
reliable to banks as they get information on what are items that are important to customers so as to
maintain the relationship.

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REFERENCES
[1] Brown, S.A. (2000). Customer Relationship management: A strategic Imperative in the
world of business. Canada: John Wiley & Sons.
[2] Mylonakis, John. (2009). Bank satisfaction factors and loyalty: a survey of the Greek
bank customers, innovative Marketing, 5(1), 16-25.
[3] Kumar M.Ashok and Rajesh. R. (2009). Whether Today’s Customers satisfied? – A study
with banks. Indian journal of Marketing, New Delhi, XXXIX (9), 45-53.
[4] Versa metha,Alka Sharma M.S (1999), “ Electronic banking – impact on customer
service” Indian journal of marketing, vol xxi No; 1-3 , Jan – Mar ,pp23-27.
[5] Jeyakumar A, Sathya N (2010), “Customer relationship management: Customer
retention”, Indian economic manorma, VOL. 20, NO. 2, July 28-30.

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