Over the years, the banking industry has evolved to adapt to changes brought about by technological advances. The internet provided one such opportunity for the banking industry to develop e-commerce. Customers are increasingly demanding for managed relationships. E-commerce has driven the need for virtual banking that is dynamic, allowing customers to carry out transactions anywhere, anytime. There is so much competition that banks can no longer rely on inertia to retain customer loyalty.
This prompted the banking industry to come up with a customer-oriented strategy to retain and gain more customers. Customer relationship management (CRM) is the model that was adopted to manage the bank’s interaction with its customers. It makes use of technology to organize, automate and synchronize sales, marketing, customer service, and technical support (Afsar, Rehman & Bengar, 2010).
Generally, the banking industry in the Middle East lags behind its contemporaries worldwide in the adoption of CRM. However, the banking industry in the United Arab Emirates does fairly well in CRM compared to other Middle East countries but poorly in comparison to other international banking firms. The banking industry in the UAE has realized the importance of customer relationship management even though it is yet to experience the long-term benefits of investing in the strategy.
This is brought about because the relevance of CRM is not fully understood and appreciated. Several factors impede the adoption of CRM in the banking industry but the major reasons are the lack of professionals to implement the strategy and the insufficiency of applications to compete with international banking institutions. To attain international standards, the UAE banking sector has realized the need for greater customer satisfaction. Implementing CRM requires the use of technology yet the major problem with the UAE banking sector is that their e-commerce platforms are not up to standard. This necessitates the provision of a framework with which customer relationship management can be implemented (Sin, Tse & Yim, 2005).
According to studies carried out to find out about customer relationship management, there is a general agreement that banks in the UAE are yet to link information/data management and better customer experiences. The major players in the banking industry must understand how they can take full advantage of the interactions with their clients and their inquiries. The products and services offered by the banks need to reflect these needs as well as exploit their information technology systems fully.
Customer relationship management helps to increase customer satisfaction and boost revenues by streamlining processes on a powerful technology platform that enables these banking institutions to shift their focus from product-oriented to customer-oriented institutions. CRM is the driving force that enables delineation of customers and increases the value attached to customers. Proper implantation of CRM has the potential to change a customer’s relationship with an institution, thereby gaining customer loyalty (Afsar, Rehman & Bengal).
CRM is one of the most important applications of e-commerce and is behind the success of institutions that implement it. Developing a framework for its implementation in UAE banks would have to borrow from best practice examples from firms in the international scene that have a successful CRM program. CRM involves an enterprise-wide marketing strategy, technology platform, and relationship management. Great emphasis is placed on the importance of the integration of contact channels, processes, IT management, customer data management, and enterprise-wide management.
The starting point of CRM is contacting customers through various media to provide services. An enterprise-wide database will then collects and integrate the customer data from the office system. The enterprise uses the data from the database to make an analysis that translates into meaningful information for improving customer relationships. All these are made possible via IT management which enables the activities in the above contents to function efficiently (Kundi & Shah, 2009). Developing a CRM framework therefore entails:
Contact channel management every time a customer approaches a bank, the bank should use this contact as a chance to learn more about the customer. It is an opportunity for the bank to increase its service outcomes. The bank will contact the customer to sell and provide its services and these activities are recorded as customer data in the office system, awaiting integration. If UAE banks were to adopt CRM, then contact channel management would provide a decision support system to select the best market access on suitability, distribution structure, and integration of contact channels.
Bank contact channels can take the form of ATM services, internet banking, a 24-hour call center or global banking services, and distributed bank branches to connect to their customers.there is a need for banks to improve the security and convenience of contact channels. Banks should find a friendly way for customers to connect with their business by creating channels that reflect the customer’s preferences (Shibu, 2011). The UAE banks can consider setting up or upgrading already existing channels through value–added services. Keeping these channels restricted will help boost customer confidence in keeping their particulars safe.
The most successful international firms have developed restricted access contact channels. This helps in reflecting the time and place that the customer would wish to connect with the bank from a streamlined process perspective. Contact channels should be integrated from a customer’s point of view. They should be built using standard operating procedures to promote consistency in processing customer data and all other channels. The more the consistency, the more the information that can be shared amongst various channels creates more business resources to be used in customer service delivery. an example of a contact channel is the call Centre, which reduces operating expenses for the bank while providing services to the bank customers (Kundi & Shah, 2009).
Enterprise-wide management this concept refers to the involvement of all stakeholders in a CRM initiative. A successful and profitable CRM initiative always begins with a business strategy that serves to drive change, especially a customer-oriented culture within the company. All the bank employees can contribute to the improvement of customer behavior, satisfaction, and profitability. The bank office systems should be integrated from the customer’s point of view.
The bank can start by identifying its end customers, redesigning the process from the customer’s point of view, and making continuous improvements based on customer feedback. This approach helps move the bank from a product-oriented to a customer-oriented institution. A successful CRM strategy in terms of enterprise-wide management puts the benefits of the customer first. It highly values customer intimacy. From the enterprise-wide management, banks can set up business processes from the customer’s perspective as well as integrate the bank’s systems and contact channels (Kumar & Kanchu, 2012).
Integrating its contact channels means that the bank has to merge its organizational goals, rules, and objectives into being customer-oriented. Enterprise-wide management is based on customer intimacy, integration of bank systems, and redesigning the business processes. Banks in the UAE need to shift from mere operational excellence or product orientation. Instead, customer data management should be used for the benefit of every bank employee to use the integrated data and consistent information. Initially, banks and other businesses designed processes that focused on the bank rather than the customers.
This approach did improve efficiency but did not increase profitability. The competition that is rife in the banking industry puts forth the situation that for UAE banks to reap from profitability, they need to design business processes based on the view of customers.
This will cause an increase in transactions, thus increasing profitability. The bank system is divided into the front office and back-office systems. The customers connect with the bank at the front office. The functions of the front office can be divided into sales force automation, marketing automation, and customer services. Customer data is captured at the front office and integrated at the back office. Banks need to integrate the activities of the two office systems, lack of which may cause problems of mismatch or inconsistency that will ultimately lead to losses from the failure of the bank to retain its customers.
Customer data management
To understand and manage customer relationships then proper integration of customer data is a must. After the bank has gathered customer data, it has to decide on what it wants to do with that data to enable them to project on future customer needs. The data management platform comes across as the bank’s most valuable asset. It will enable the bank to access data that will help them know more about the customer and to gain new insight into the customer through a variety of analytical methods (Lambert, 2010). Customer data management helps in supporting business operations, business intelligence, and business management.
For banks to improve the quality of relationships they have with their customers, the banks must recognize the preferences and behaviors of different customers and strive to satisfy the needs of each individual. This is possible by integrating the interactive data from the database in such a way as to support customer analysis and decision making. A proactive database allows customer data to be upgraded automatically. The banks should then establish criteria and systems to categorize customers, interpret differences among them, and then offer personalized services.
Banks need to set up a system of collecting and integrating customer data that assists enterprise-wide management by analyzing the situation precisely and making the best decision as regards the customer. Analysis of the customer data includes evaluating the actual and potential value of customers. It helps in evaluating customer loyalty by estimating the degree of customer satisfaction with their services (Shibu, 2011). From the analysis, the bank can identify their target customers and calculate the contribution of each customer.
The internet has made it possible for all services in the banking industry to be managed by IT applications. A proper CRM strategy requires that the bank invests in the most updated versions of IT infrastructure and software to enable the recording, tracking, and analysis of customer interactions (Liu, 2007). IT management is central in the implementation of contact channels, enterprise, and customer data management. e-commerce has taken advantage of the internet to deliver services to customers.
IT helps in the provision of enterprise-wide view and customer value-focused information systems. CRM puts IT at the center of its operational, analytical and collaborative support systems. IT complements all the processes involved in customer interactions. The entire CRM strategy is founded on effective IT management, customer data management, and enterprise-wide management. The Application of IT in the bank processes increases asset efficiency. IT software is used to integrate all processes and application systems in the bank.
Contact channel management requires IT applications. Examples of IT-related contact channels include call centers, interactive voice response (IVR), computer telephony integration (CTI) which all help to connect computers, telephones, fax lines, and websites. IT is related to customer data management in that the collection, integration, and analysis of customer data are founded upon database technology (Lambert, 2010). Enterprise-wide management is possible via IT by integrating messages between the front and back-office systems by running appropriate programs.
Bank operations consist of processes that determine the nature of the bank’s capabilities towards service delivery to its customers. These processes are usually a combination of software that provides all customer interactions over the internet, linking people and providing exceptional handling of the situations that make or break customer relationships with the bank (Liu, 2007). Several institutions have developed unique processes that have come to be synonymous with their service delivery. The banks in the UAE, therefore, need to come up with processes aimed at unique service delivery to their customers and ensure that they generate value apart from being cost-effective.
The UAE banking industry has the opportunity to develop a customer relationship management strategy that is at par with international standards. The excellence of its institutions alone will not drive forward the profitability of the banking industry. There needs to be a deeper understanding of the changing dynamics and the necessary steps taken to counter them. The world today is moving towards a global village and it is more common for institutions to enter the virtual world.
As a result of the growing competition, institutions in all sectors are shifting from product to service delivery with a focus on customer service. Banks in the UAE do not have a comprehensive implementation of customer relationship management programs. This has been mainly attributed to a lack of professionals to implement CRM in the institutions, insufficient applications, and outdated e-commerce platforms that cannot be supported by current technology. The UAE banking industry has realized the value of customer relationships and as such has strived to implement customer relationship management.
The five main concepts through which a CRM framework can be developed include contact channels, enterprise-wide management, customer data management, IT management, and processes. This framework borrows from the banking industry best practices so that there can be relevant in their application to the banking industry in UAE. To embrace CRM, the banking industry has to shift its focus from a product-oriented to a customer-oriented view. Implementing CRM in the banking industry in the UAE will require that banks maximize their contact with customers to gather adequate information. This information is relevant in getting to know more about the customer.
Customer management will increase the bank’s profitability by eliminating inconsistencies in customer data. The banking industry has to create a culture of customer service. A successful CRM strategy will lead to attracting and retaining loyal customers. At the end of the day, the UAE banks will be able to compete with other international firms that have gained a good reputation in offering efficient and unique customer service.
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