CRM Initiatives in Banking Sector

Submitted to Mr. Sandeep Puri

Submitted By: Archana Ashok (10 DM-185) Nikunj Agarwal (10 DM-193) Prabhjot Singh (10 DM-099) Saikat Roy (10 DM-197) Suvarghya Kar (10 IT-027) Ujjwal Garg (10 IB-061) Vinu Jose (10 DM-174)
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Index Contents: Page:

1. Introduction.3 2. CRM in Foreign Banking Industry...............................................................................3 3. CRM Best Practices in the Banking Industry5 4. CRM Best Practices in the Indian Banking Industry...7 4.1 ICICI Bank...7 4.2 HDFC Bank.10 4.3 SBI14 4.4 Punjab National Bank.....19 5. Conclusion..25

Introduction
Private Banks have traditionally viewed themselves as exceedingly what they believe to be highly personalized services to the 'Customer Centric' offering

High Net Worth Customers.

However, changes in the customer behaviour 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. So to cater this CRM comes into picture. Need of CRM in the Banking Industry A Relationship-based Marketing approach has the following benefits: 1. Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available 2. Long-term customers are more likely to become a referral source.

3. 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 and services and cross-sell the product / service range. 4. Customers in long-term relationships are more comfortable with service, the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error With increased number of banks, products and services and practically nil 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 theconsumer credit card market. Therefore, banks are now stressing onretaining customers and increasing market share

CRM in Foreign Banking Industry

Customer relationship management (CRM) is not only one of the most important IT applications, but is also the key strategy to electronic commerce (EC) success. CRM is the issue that banking sector abroad care about the most, but initially are short of knowledge and professional support. But as the time passes they make CRM their biggest strength to achieve high level of customer satisfaction by delivering quality services to its customers. The banking industry is one of biggest beneficiaries of the CRM explosion in all sectors. Practices of CRM in leading banks to puzzle out the CRM architecture, including y Contact Channel Management: Electronic Commerce represents a new business channel for reaching and serving customers. Every contact between a bank and its customer is a chance for the business to learn more about the customer and to deepen the relationship between the two. Banks contact customer with the activities of selling and providing services and all of these activities are recorded as customer data from the front-office system. These data are transferred into the database of the back-office system for further integration. This management can thus provide a decision support system to select the best market access on suitability, distribution structure, and integration of contact channels y Enterprise-wide management on integrating and streamlining front-office and back-office systems: A successful, useful, and profitable CRM initiative always starts with a business strategy that can serve to drive change, including customer-centric culture, within the company. CRM is essential as a key strategic thrust of a business is customer intimacy. A customers needs and preferences are available to anyone in the business working at the customer interface, and a customer is treated consistently regardless of which channel. Everyone in the company can improve the behavior, satisfaction, and profitability of the customer. Banks should integrate their front-office and back-office systems from the customers point of view and redesign business processes from the outside in. They should start by identifying the end customers, streamline the process from the end customers viewpoint and for key stakeholders, continuously improve the process based on customer feedback, and give everyone involved a clear view y Customer data management on implementing database and customer analysis: Key to CRM success is translating the raw data from the customer-end into the analytical information in order to increase customer loyalty and business profits. Understanding and managing customer relationships depend on the proper integration of a wide variety of data sources. An approach to 3

define data requirements starts with what a company knows, defines what it wants to do with the gathered information, and then defines what it does not know. Enterprise-wide business data are collected from customer data in the front-office, the internal operational data works inside the back-office, and the external data from collaboration goes with others. This data management platform, as an enterprises most valuable asset, enables firms to access the data to fill in the gaps in the customer knowledge and to gain new insight into their customers through a variety of analysis methods. y Information technology management: IT management is critical when putting the aforementioned management strategies into practices, including contact channels, management, enterprise-wide management by integrating front-office and back-office systems, customer data management by implementing database and customer analysis. For instance, CRM uses sophisticated voice and online media routing hardware/software to direct customers to staff or to an IVR (interactive voice response) system or web-based self-service information to get answer to questions, fulfill orders etc. Redesigning an underlying technical infrastructure into place helps provide an enterprise-wide view and customer value-focused information systems.

CRM: Best Practices in the Banking Industry

1) Bank One Bank One is part of the new JPMorgan Chase created on July 1, 2004 upon completion of the holding companys merger between JPMorgan Chase & Co. and Bank One Corporation. Bank One, before it merged with First Chicago NBD Corp in 1998,has built itself into the fifth-largest bank in the U.S. by making more than a hundred acquisitions over the years. It is famous for its Service Quality.The bank is renowned for its CRM strategy. It takes its value discipline as the financial institution which provides omni-bearing services, and adjusts its strategy to develop CRM and the Internet from mergers and acquisitions. Furthermore, it has built up its virtual organization with strategic alliances and collaborative relationships (Intel, Metro Group, Merchants Group, etc.) to find out and satisfy the customers needs quickly and directly. It has expanded its services with the promise of no satisfaction, no charge and multiple brands (First USA, Wingspan Bank). 2) Royal Bank of Canada The RBC began collecting customer data in 1978 and by the early 1990s had implemented client segmentation in its data warehouse, dividing its customers into distinct profitability segments and hundreds of micro-segments. It had developed a CRM system and media interactive technology to integrate the transactions to offer their services more quickly and conveniently. The bank uses five criteria to analyze customer information, including net interest revenue (income, expenses, and risk), other revenue (fees, commissions), direct expenses (variable costs), indirect expense (overheads), and risk provision. The customer data also allow it to move from assessing current customer value to potential value, by taking into accountant such factors as lifestyle change. RBC has moved towards its objective of one-to-one marketing to establish what works and what does not, and it tests refinements on an ongoing basis. One of the immediate gains was discovering from recalculating customer profitability that its previous measurement metrics had been inaccurate for as many as 75% of its customers. The customer response rate has improved by about 40% and the profits of the company have grown by more than 10% every year.

3) Wells Fargo In 1852 Henry Wells and William Fargo founded Wells, Fargo & Co. to serve the American West. Almost 140 years later it brought in on-line services in 1989, banks services via the Internet in 1995, and it has become the prime exploiter of Internet services and the largest Internet banking (iBanking) entity in the world. Now Wells Fargo is the most extensive banking franchise in the U.S. and has 16.4 million customers with 3,076 banking stores in 23 states. Wells Fargo prides itself on leading the pack in customer service and convenience. It has halved its cost per transaction and reduced customer defections by 50% for its online customers business. It also enjoys higher average balances per customer. Focusing first on serving its high net-worth customers better, Wells Fargo pulls together all customer information and applications so that customer sales and service representatives can provide one-stop shopping for any banking service or transaction. It can quickly leverage that infrastructure to provide one-stop shopping via the Internet for all its customers 4) Taiwan Banking Industry The performance of Taiwans banking industry changed a lot after the introduction of CRM . Instead of treating customers as exploitable sources of income, businesses are now viewing them as long-term assets to be nurtured through CRM. CRM is both a business and information technology (IT) discipline that uses information systems to integrate all of the business processes surrounding a firms interactions with its customers in sales, marketing, and service. In Taiwan a lot of stress is over Electronic Commerce and with the advent of IT it is customary to increase the transaction efficiency so as to satisfy the customers. Anticipating this change in the attitude of the customers Taiwan Banking Industry decided to adopt CRM-related IT with its operational, analytical, and collaborative support systems complements the processes involved in all aspects of customer-facing interactions. It integrates marketing, customer services, and diverse contact channels and provides customized products or services by modeling a customers behavior so as to maximize the value of the enterprise.

CRM Best Practices in the Indian Banking Industry ICICI Bank

It is the leading private bank in India in terms of CRM initiatives. ICICI Bank has to manage more than 13 million customers. The bank has over 2,533 branches and 6,800 ATMs in India, has a presence in 19 countries, multiple call centres, Internet banking and mobile banking. Its customers often use multiple channels, and they are increasingly turning to electronic banking options. Business from the Internet, ATMs and other electronic channels now comprises more than 50 per cent of all transactions. CRM Initiatives In the process of making its business grow to this level, ICICI Bank has distinguished itself from other banks through its relationship with customers. The Terradata solution focuses on a Customer Relationship Management (CRM) platform. Information from various legacy and transaction systems is fed into a single enterprise called wide data warehouse. This allows the bank to generate a single view of its customers. The warehouse has the capability to integrate data from multiple sources comprising Oracle and flat files. The Behaviour Explorer enables profiling of customers and querying on various parameters. These enable the bank staff create suitable campaigns for targeting individual customers on the basis of their requirements. The logistics in the system have also led to other benefits like interactive reports, unearthing cross-selling opportunities as well as finding out about the channel usage undertaken by a segment. The data access was facilitated through the use of Cognos Power Cubes. Benefits of CRM
y

Customers usage pattern: ICICIs CRM data warehouse integrates data from multiple sources and enables users to find out about the customers various transactions pertaining to savings accounts, credit cards, fixed deposits, etc. The warehouse also gives indications regarding the customers channel usage.

New product development: Analysis at ICICI guide product development and marketing campaigns through Behaviour Explorer, whereby customer profiling can be undertaken by using ad hoc queries. The products thus created take into account the customers needs and desires,

enabling the bank to satisfy customers through better personalization and customization of services.
y

Central data management: The initial implementation of CRM allowed ICICI to analyse its customer database, which includes information from eight separate operations systems including retail banking, bonds, fixed deposits, retail consumer loans, credit cards, custodial services, online share trading and ATM.

Some Noteworthy CRM Initiatives of ICICI Bank Mobile ATMs: Customers of ICICI Bank can access their bank accounts through mobile ATMs. These ATMs are kept in vans and parked at locations that have a high traffic of bank customers such as the commercial areas in a city or upmarket residential areas ICICI Bank now provides standard ATM facilities through ATM vans. This facility has been tried at Mumbai, Chandigarh and various places in Kerala during specified timings. Bulk Deposits: The ICICI Banks Bulk Deposit ATMs enable customers to deposit large amounts at one time. Unlike conventional ATMs, which are able to accept only 30 notes at a time, these ATMs allow the deposit of huge amounts. The Bulk Deposit ATM is available in Mumbais Vashi sector branch office of ICICI. The bulk deposit facility can be availed of by select customers who need to deposit huge amounts of cash. ICICI Bank issues a special card called the `Deposit Only Card to facilitate this service. This card allows for deposit transactions only. The service is further facilitated by the provision of special bags at ATMs in which a customer can put his money. After the deposit slip is filled, the bag can be inserted in the ATM. The transaction slip is then generated by the ATM as an acknowledgement of the deposit. ICICI Bank also has cash pick-up service for business customers under the business banking segment. ATMs for the visually challenged: ICICI Bank has launched ATMs with special voice-guided systems, which guide a visually challenged person to access ATMs without any help. The jack on the terminal enables headphones to be connected to it and voice commands enable the customer to transact business. Customers may choose a suitable language to get voice commands. After the language selection is done, the customer is guided to ensure that the ATM card is inserted in the right slot and thereafter, guidance is provided for entering the PIN by using the keypad. A raised button is provided on number 5 to enable users to identify the numbers easily through touch. The slot for cash collection has such raised `pips that enable easy identification through touch. 8

Other Services through ATMs: Apart from the usual transactions involving the bank, some other services can also be availed of by ICICI Bank customers. These include:
y y

Prepaid mobile recharge Buying and renewing Internet packs (such as those of TATA Indicom Internet service provider and Sify).

Making donations for Tirupati Tirumala Devasthanams, Nathdwara temple and Shri Mata Vaishnodevi shrine.

y y

Mutual fund transactions, and Bill payments

Mobile phone as a Virtual Wallet: The mobile phone has been transformed into a virtual wallet a new innovation in mobile commerce. On September 19, 2005, Airtel, ICICI Bank and VISA announced the launch of mChq a revolutionary new service which is a credit card using the mobile phone. This is the first mobile-to-mobile payment option which enables Airtel customers and ICICI Bank Visa cardholders to pay for their purchases with their Airtel Mobile phones. The service has eliminated the need for carrying physical cash for making a purchase and also the problems associated with the point of sale (POS) terminal since the mobile phone services as a secure POS and a payment mechanism. Social Events: ICICI Bank organized the largest domestic invitational amateur golf event for HN1 (highnet-worth individuals) customers. This nation-wide golf tournament had over one lakh high-net-worth clients of ICICI Banks private banking division participating in the event. Mobile Banking Benefits: Mobile banking enables the customer to avail of many facilities by just sending an SMS. These facilities, which are currently offered free of cost, are as follows:
y y y y y

Locating ATM Locating branch Locating drop box Alert facilities like salary credit, account debit/credit, cheque bounce, etc., and Queries on banking, cards and demat account

HDFC
HDFC is one of the Top 5 banks in India. It is a leading provider of loans, liability accounts and third party products with various over-the-counter products. The bank also has personal banking, investment advisory and wealth management services. Its main products are in Retail banking, Wholesale Banking and Treasury. HDFC has a customer base of more than 25 million people with deposits of more than 50 million USD. The asset of HDFC amount to USD 38 million with product holdings in excess of 65 million dollars. It was founded in India in 1994 and has 1780 branches, 5231 ATMs in 833 cities of India. HDFC has a database of size of 1.2 Terabytes (2008-2011.)

The problem areas: With HDFC Banks success and rapid growth, it needed an effective way to market its growing product and service lines while: leveraging its customer base to optimize returns and bottom-line revenue, increase customer its profitability through deeper, stronger customer relationships. It also needed a way to detect meaningful or important events in a customers life so that targeted communications could be sent at the right time to build relationships and increase profit. To achieve these goals, HDFC Bank needed a way to market to its existing customers and acquire new customers. Main Challenge: Customer data resided in multiple systems and communication strategies and market analysis existed in numerous Excel spreadsheets making it nearly impossible to design and manage targeted marketing efforts. Thus a central, automated process was required to access data across systems as well as plan, design, test, optimize and execute marketing efforts across channels including direct mail, email, SMS and call centres. By focusing on and implementing marketing technology and processes for improved ROI and customer-centric marketing, HDFC Bank expected to increase share of wallet, acquire profitable customers, and boost customer loyalty, while reducing operating costs and measuring marketing performance across all channels

CRM Initiatives of HDFC: After evaluating several vendors, HDFC Bank selected Unicas Affinium solution for enter-prise marketing management. It helped HDFC in quick implementation as well as its robust modeling, customer analysis, and right-time interaction management capabilities. Today, HDFC uses it to design, test, optimize, execute, and analyze all marketing programs including event-based and multi-stage communication strategies.

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1) Credit card activation: In order to boost credit card activation by a goal of seven to 16 percent, a targeted multi-channel, multi-wave campaign has been designed. As early as ten days after a new cardholder is approved, inactive members are identified. These members are then segmented into distinct groups and are sent targeted offers via their preferred channel email, SMS or direct mail which vary from product to consumer offers based on their propensity to pay. For cardholders who dont respond to the offer in the first wave, a second communication with a different offer is sent. This campaign automatically runs every ten days, in order to make sure new inactive card members are identified and communicated with on a timely basis. Advantage of Affinium With Affinium, HDFC Bank has boosted customer retention by four percent, and executed focused acquisition campaigns, which resulted in reduction of acquisition cost by 60 percent due to effective targeting and channel optimization. Following the implementation of Affinium, the campaign volume increased by over 200 percent. Real-time automate analysis has significantly reduced post-campaign reporting time and enabled peformance to be monitored throughout tge campaign. Lastly, the credit card activation campaign has achieved an incremental activation rate of 30 percent compared to activation effect without predictive modelling. Debit card activation program resulted in increment response of five percent over the normal activation rates 2) Verified by Visa facility for its customers To provide safer online shopping experience to customers, Indias HDFC Bank had introduced Verified by Visa (VbV) facility for all its credit and debit cardholders in 2006. It was an attempt by the bank to encourage online shopping by inducing a sense of security when customers do transactions on the net. VbV secure technology allowed cardholders to create a secret password, which they require to authenticate the payment and complete the transaction when shopping online. HDFC ensured that necessary hardware and databases were in place so as to improve customers online shopping experience and at the same time protected cardholders personal details. The bank had employed Triple DES encryption (ECB) technique, which encrypts the customer data and stores it in the database. The access to the stored information in the database is provisioned according to access control rights given to the bank employees. HDFC uses the data to create a database and then formulates offers keeping in mind the needs and usages of the customers. 3) RAP Computer telephony integration The bank made a customer data model that covers over 6,000 fields, which allowed it to have one comprehensive and intelligent view of its customers.

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With regard to operational CRM, HDFC Bank implemented RAP Computer Telephony Integration (CTI) initiative for the bank's 14 contact centres, which service as many as 650,000 actual calls per month. y The system gives the bank's contact centre agents a view of data most often needed in standard customer interactions. y The RAP CTI system pulls the select data from various screens in the host and makes it available as the agent picks up the call. y With RAP CTI system the agent does not need to toggle between data sources and hence reduces response time and enhance customer experience. y The agent is also able to see offers available for the qualified customers and hence it will help him to serve the customer better. In a nutshell the CRM practices at HDFC can be summarized as: Challenges: y Lack of Single 360 customer view o Fragmented customer information in various line of business and multiple systems o Fragmented process for each product line and disparate systems o Fragmented ownership y Low visibility and challenges in monitoring o Cumbersome process for monitoring of TAT o Time consuming processes for reconciliation and generation of reports. o Non-availability of status of fulfilment of customer forms and requests. y Inefficiencies in cross-sell and up-sell o Highly demanding and sensitive managed customer segment o Low visibility of information to create opportunities o Large customer base and associated data management challenges Solution: y Single 360 customer view o Customer insight by integration with data warehouse and other core banking applications. o Scalable and fault tolerant technology for hosting more than 25 million customers and 400 million related records. y Enhance productivity by providing o Product/function specific workflows for end-to-end tracking of the fulfilment processes. o Consolidation and streamlining of processes across functions and product. o Online accessibility to customer data to more than 15000 users. y Cross-sell and up-sell capability at customer touch points o Intelligent segmentation of customers. o Empower customer service and sales teams with automated cross selling and up selling opportunities.

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Benefits y Significant increase reported in customers of managed portfolio. y Highly effective branch, customer relationship management and cross-sales capabilities. y More effective channel sales management. y Established ownership, TAT and its adherence, leading to significant improvement in lead conversion rates. y Unlocked the value of existing IT investments and provided directional IT investments.

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SBI
State Bank of India (SBI) is government-owned and is the largest bank in India. If one measures by the number of branch offices, SBI is the second largest bank in the world. It traces its ancestry back to the Bank of Calcutta, which was established in1806; this makes SBI the oldest commercial bank in the Indian subcontinent. SBI provides various domestic, international and NRI products and services, through its vast network in India and overseas. With an asset base of $126 billion and its reach, it is a regional banking behemoth. In recent years the bank has focused on three priorities, first, reducing its huge staff through Golden handshake schemes known as the Voluntary Retirement Scheme, which saw many of its best and brightest defect to the private sector, second, computerizing its operations and third, trying to change the attitude of its largely rude staff through a programme aptly named 'Parivartan' or 'change'. On the whole, the Bank has been successful in the first two initiatives but has failed in the third. Following its arch-rival ICICI Bank, State Bank of India has electronically networked most of its metropolitan, urban and semi-urban branches under its Core Banking System (CBS), with over 4500 branches being incorporated so far. The bank has the largest ATM network in the country having more than 5600 ATMs. The State Bank of India has had steady growth over its history, though the Harshad Mehta scam in 1992marred its image In recent years, the bank has sought to expand its overseas operations by buying foreign banks. It is the only Indian bank to feature in the top 100world banks in the Fortune Global 500 rating and various other rankings. According to the Forbes 2000 listing it tops all Indian companies. The bank is providing all the competitive products and services to the customers to suit to their particular requirements. It has different types of Saving accounts, Current accounts, Loans, and Investment proposals etc. which are highly technical products to compete with other banks. People who are using the services of other banks are generally attracted with the highly efficient staff and services like Insta-Alert etc. Majority of the people prefer to open their accounts in SBI Bank because of their wide network and tie up with other banks branches and companies. SBI is the largest bank in India. It has got many banking subsidiaries such as :y y State Bank of Bikaner and Jaipur(SBBJ) State Bank of Hyderabad (SBH)

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y y y

State Bank of Mysore (SBM) State Bank of Patiala(SBP) State Bank of Travancore (SBT)

The various non- banking subsidiaries are : y y y y y SBI Capital Markets Ltd (SBICAP) SBI Funds Management Pvt Ltd (SBI FUNDS) SBI DFHI Ltd (SBI DFHI) SBI Factors and Commercial Services Pvt Ltd (SBI FACTORS) SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

It has also got a joint ventures y SBI Life Insurance Company Ltd (SBI LIFE).

SBI offers services in following domains y y y y y y y Personal Banking NRI Banking Agriculture International Corporate SME Domestic Treasurer

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CUSTOMER CARE INITIATIVES y 75 PBB Personalized Banking Branches all over the country with same ambience and more focus on retail banking y Separate Relationship Managers (RM) in PBB for managing top 200 accounts. The RMs are allotted as one per 7-10 accounts y At every branch, there are :o Customer Relationship committee comprising of both representatives of major account groups like pensioners, HNI, commercial customers etc o y y Customer Service Committee comprising of staff to discuss further plans for CRM

Customer Relation Cell at corporate office for planning future CRM initiatives Quarterly Meeting of pensioners ( large group) for understanding needs and finding solutions to their problems

y y y y y y

Seasonal Greetings to HNI customers Separate helpline at all Zonal Offices for customer queries Community service banking in schools/colleges for competitions and scholarships Opportunity to meet senior exec.s on 15th of every month for complaints Introduced Code of fair banking practicesTowards Excellence (1997) for the first time in India Adopted Fair Practice code by BCBSF

OFFER CUSTOMIZATION The following offer customizations are done by the bank : For identifying HNI & profitable customers and giving them better service, they issued different colour passbook/cheque books

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SBI Plus Schemes : Teacher Plus, Doctor Plus, Police Plus etc for reducing various barricades for loan approval for the fixed salary group

SBI Credit Khazana: Cross selling loans for regular servicing loan customers SBI Cash Plus: International Debit card scheme for enhancing usage across the retail merchants

PROBLEMS: y Complacency of employees, being a govt. company No performance incentives and salary is fixed regardless of performance y Being a govt. company, it has a social responsibility to cater all kinds of customer at all places, regardless of their profitability y Wide and large network of banks makes it impossible to integrate all branches effectively using core banking solutions in rural areas. y People are unaware of various products and schemes of the bank

INVESTMENTS IN TECHNOLOGY The bank had to invest a lot in modernization of the bank and its operation in order to be competitive to the various services offered in the internet era. Few of them are :y y Plans of 500 crore investment in technology over 3 years Integrate delivery centres with product channels i.e. ATM, branches, call centres with deposits, mutual funds & insurance y One third of branches account for 80% business. So modernization can be effective and efficient if done in those branches first. y y 150 crore core banking solution by TCS is being implemented across the branches 80% of the branches are already computerized

Expected Benefits from the investments in CRM y y y Better Management of banks funds by monitoring it centrally Monitor & Control NPAs (Non-Performing Assets) Profitability Analysis of various schemes in various regions 17

y y y y

Cash Management Services for customers Increase staff productivity by monitoring their efficiency Holistic view of customers so as to cross-sell products and services Ease of inter-branch reconciliation and reduced frauds are another outcome of the technology investments

y y

A step towards US GAAP requirement is completed by proper implementation of these palns Cost reduction per transaction from 76p in branches to 30p in ATM

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Punjab National Bank

Introduction Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) was the first Indian bank to have been started solely with Indian capital. The bank was nationalised in July 1969 along with 13 other banks. From its modest beginning, the bank has grown in size and stature to become a front-line banking institution in India at present. PNB has the largest branch network in India - 4525 offices including 432 extension counters spread throughout the country. It has been ranked as 248th biggest bank in the world by Bankers Almanac, London. It had correspondent banking relationships with more than 217 international banks of the world. The vision of PNB is to be a Leading Global Bank with Pan India footprints and become a household brand in the Indo-Gangetic Plains providing entire range of financial products and services under one roof. With this vision in mind they work as the "Banking for the unbanked" Products and Services Apart from offering banking products, the bank has also entered the credit card & debit card business; bullion business; life and non-life insurance business; Gold coins & asset management business, etc. Different products and services of the bank is as follows: y Savings Fund Account - Total Freedom Salary Account, PNB Prudent Sweep, PNB Vidyarthi SF Account, PNB Mitra SF. Current Account - PNB Vaibhav, PNB Gaurav, PNB Smart Roamer. Fixed Deposit Schemes - Spectrum Fixed Deposit Scheme, Anupam Account, Mahabachat Schemes, Multi Benefit Deposit. Scheme Credit Schemes - Flexible Housing Loan, Car Finanace, Personal Loan, Credit Cards. Social Banking - Mahila Udyam Nidhi Scheme, Krishi Card, PNB Farmers Welfare Trust. Corporate Banking - Gold Card scheme for exporters, EXIM finance. Business Sector - PNB Karigar credit card, PNB Kushal Udhami, PNB Pragati Udhami, PNB Vikas Udhami

y y

y y y y

Financial Performance Punjab National Bank continues to maintain its frontline position in the Indian banking industry. In particular, the bank has retained its NUMBER ONE position among the nationalized banks in terms of 19

number of branches, Deposit, Advances, total Business, operating and net profit in the year 2008-09. The impressive operational and financial performance has been brought about by Banks focus on customer based business with thrust on SME, Agriculture, more inclusive approach to banking; better asset liability management; improved margin management, thrust on recovery and increased efficiency in core operations of the Bank. The performance highlights of the bank in terms of business and profit are shown below: Parameters Operating Profit* Net Profit* Deposit Advance Total Business (Rs.Crores) * Respective figure for the corresponding financial year Source: pnbindia.in Mar'07 Mar'08 3617 1540 4006 2049 Mar'09 5744 3091 209760 154703 364463 CAGR 26.02 41.67 22.47 26.55 24.15

139860 166457 96597 119502

236456 285959

Why CRM? Banking is something about transition of money. In todays scenario each bank offers similar services, only thing which differentiates one bank from other is customer experience which creates customer preference about bank and thus decides the bankers business. In order to enriching the customer experience with firms profitability, ones approach should be customer centric and in doing so CRM plays a vital role. PNB: Before implementation of CRM Punjab National Bank used a two-pronged strategy to IT-enable itself and support present and future business needs. And along the way it picked up valuable information and experience. In March 2000, IT systems were deployed only at 500-odd branches, and were very dissimilar. Precisely, only 35 percent of the bank's business was computerized and a number of small software packages ran on standalone PCs. By 2003, PNB had 101 branches on a WAN, deployed a core banking infrastructure, and runs 175 networked ATMs. It had also deployed a reliable security infrastructure that helps it conduct transactions

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within its branches without worry. The journey doesn't end here, but along the way the bank's picked up valuable knowledge and experience.

The beginning In March 2000, the penetration and use of IT was not very high at PNB. The bank used seven different software which ran on 13 different flavours of UNIX, on standalone PCs. The 500-odd branches were not networked and only 35 percent of the bank's business was computerized. The overall expertise in IT among users was low. The Central Vigilance Commission (CVC) issued a directive to the bank to computerize at least 70 percent of its business by December 2000. This prompted the bank to work out a strategy to tackle the daunting task in the short period of time. The bank realized that there was a lot of opportunity to create a stable IT infrastructure which would fuel future growth. But there was also the need to honor the CVC deadline to computerize at least 70 percent of its business within December 2000. The bank now has around 4,000 branches.

Action PNB hired a consultant and devised a two-pronged plan of action. The plan comprised: y y A short term goal - To meet the CVC deadline of 70 percent computerization. A long term goal - To create a dependable core banking infrastructure and build a nationwide network to connect different branches to the core infrastructure.

Meeting the CVC deadline In order to meet the CVC deadline the bank decided to deploy simple IT infrastructure so that it could computerize 70 percent of its business within the deadline. The IT team decided to implement an application, which could run on standalone PCs across its nationwide branches. The application vendor would have to provide nationwide support since the in-house IT team could not provide support at all branches. PNB chose a product from a company called Nelito. It was a DOS-based, 'Partial Branch Automation' application. Standalone versions were chosen since there weren't LANs in place, and deployment of LANs at branches would take so long that the CVC deadline couldn't be met. The interface was simple in design, and thus easy for the bank personnel to use.

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Hardware and Training The bank selected two hardware vendors and the application software was embedded into the hardware to make them 'plug-and-play' capable. Nelito's package was deployed at one branch at a time. And after each successful implementation at a branch, it was replicated at a newer branch. Internal training sessions for the bank personnel were conducted with the help of 14 training institutes. The source code of the product was tweaked to facilitate deployment. The IT team was specially trained to re-architect the source code, and make any modifications, improvements, value additions, and enhancements. Deployment at the selected branches was over by December 2000. The bank requested CVC for an extension of the deadline and was granted time till March 2001. By March 2001, 70.60 percent of the bank's business was computerized. Long-term strategy In the long-term, PNB wanted a technology that would consolidate all its business resources and sustain the bank's future growth. It also wanted to create its own network, which would play a vital role in its success. Three consultants were appointed to review technology options for long-term adoption. The verdict of the consultants was to deploy a centralized core banking architecture. Core banking architecture On 30 March 2001, the bank used the services of Infosys for the deployment of Finnacle. A core team was selected, which would be the heart of the project. Infosys trained 200-odd personnel from a core team over six months. The core team modified and customized the package according to its specific needs. It was then time to procure hardware. K.S. Bajwa, Deputy General Manager, Information Technology Division, PNB, said, "It's a standard international practice to procure hardware based on the type of software applications that an enterprise has selected. This helps to match the specific computing needs required by the software." PNB purchased servers, security infrastructure, and storage equipment and decided to house it in its own central data centre in New Delhi. A lot of infrastructure from Cisco has been used to build the data centre. In April 2002 the bank rolled-out Finnacle in seven branches as a pilot venture. This was done because the bank had seven different application packages, and it wanted to ensure smooth migration of the data into Finnacle. By mid May 2002, all data from other software was successfully migrated into Finnacle. Culture and technology issues Issues were mostly cultural. Most staffers were used to working in a manual environment, and some had worked in standalone environments. In the new networked environment, personnel at the node/counter didn't actually 'see' the transactions updating in the various account books. This gave rise to a number of queries and suggestions from personnel. The bank consulted IDRBT and RBI to verify the implementation success and it was reported that the deployment was absolutely correct.

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Around six months later, the personnel felt that the environment 'change' had done them good, and was used to working on the systems. Systems Before deploying the core banking architecture, PNB used servers which were NT-based, from IBM, and from other vendors. The bank conducted benchmarking tests for Finnacle on various server platforms. And it was satisfied with the performance of Sun's hardware on Solaris. Sun's Fire servers, Solaris OS, and Oracle's RDBMS are now in use. Network design Cisco has tied up with PNB to evolve the network design and implement a nationwide Network backbone to connect all its offices. Cisco will assist the bank in understanding and implementing the various technologies associated with the project. The converged network infrastructure will allow PNB to standardize the applications and software needed to provide the banking services. The network infrastructure will have three-tier architecture. The network hub will be in its data centre. The various branches would be connected to the data centre using new-world routing and switching technologies. Moving to Internet banking PNB got a license from RBI to offer Internet banking services. Some of the RBI preconditions were that the systems should be audited by an independent auditor, and an independent and authentic agency must carry out penetration testing. The bank has already had its systems audited by an external agency, and the penetration testing process is still going on. In the process, PNB has developed the skills of its own personnel to take charge of security on their own at a later stage. The bank will also recruit technically trained staff to provide the necessary knowledge pool. With the Internet banking launch, the bank will also strengthen its security policy. Storage systems The bank has followed RBI's storage requirement guidelines. Provisions have been made to store transaction data for around 10 years. In some cases, data is stored permanently. Around 164 Sun enterprise class servers are used in a DAS architecture. The total capacity is of multiple TBs. The Sun hardware uses an in-built storage management tool. Bajwa feels that the bank doesn't need a third-party storage management tool right now since the database is not too large. However the bank is considering a storage management application from Veritas. WAN and connectivity 101 branches of the bank are on a WAN. The bank plans to put 500-odd branches on the WAN this year, and in three years the WAN will have 2000-odd branches. The bank tried a number of connectivity options. 802.11b wireless connectivity was installed in five branches to begin with.

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The bank then explored the option of leased lines and used connectivity from MTNL and BSNL. It also used Bharti's leased line between Mumbai and Delhi. The bank now uses Reliance Infocomm's fiber optic backbone along with the leased lines in locations where the optic fiber does not reach. However, the use of Reliance Infocomm's infrastructure may be temporary. Network management PNB has appointed HCL Com-net to carry out 24x7 monitoring of the countrywide network. There's a live link between HCL Comnet's NOC and PNB's IT head office. The network is monitored remotely and can also be viewed at the bank's IT facility, where a separate monitoring system is used for the Base24 Switch. Reliance has set up a NOC at PNB's premise to monitor its optic fiber network. Security Security was especially important because the bank could afford no compromise. The security architecture had to be robust, reliable, and scalable to meet current and future needs. Cisco was chosen as the service provider who could meet these stringent requirements. The bank uses a range of security products like Firewalls and IDSs from Cisco for its security needs in its LANs and WAN. All data transactions between its routers and switches are encrypted. It has appointed Ramco Systems as the security integrator. The security integrator is responsible for the complete security infrastructure and is answerable for any security breach or lapse. The bank will also appoint a security administrator. Verisign will provide the necessary Public Key Infrastructure (PKI) to the bank for secure transactions.

Customer First CRM 47% leads converted to Rs. 2k+ Cr of business and 1 Cr+ customers added in last fiscal after deploying this CRM solution. The Problem: PNB was finding it difficult to monitor measure and follow up on business interactions being done with its prospective customers. The bank has had a core banking system in place for years, but that can only capture and capitalize on customer data after opening an account. As a result, the bank was losing lots of business opportunities. The Solution: PNB deployed CRM software in 1650 branches, aptly naming it Customer First. The solution comprises of modules for business prospect management, lead management, activity management, product management, campaign management, and business intelligence reporting. The Result: Customer first has helped PNB create a non-customers database, thereby allowing speedy identification of valued customers. PNB is able to cross sell its products, automate sales and marketing, and optimize its sales pipeline, thereby increasing the sales team's effectiveness and productivity. So much so that it has helped increase PNB's customer base from 5.81Cr. (As on March 2010) to 6.5Cr. In the 2009-2010 fiscal, the bank generated 61243 leads, out of which 35,250 leads were converted amounting to around Rs 788 Cr. of business.

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Conclusion The entire service industry is now metamorphosed to become customer- specific. In this context, the management of customer relationship in financial services industry demands special focus. Gone are the days when customers at a bank did not mind the long serpentine queues and waited patiently for their turn with a token in their hand. In todays Internet era, no one has the leisure to wait. In this context, online banking is assuming a great significance. Today, banking is more customer-centric, unlike the yester when it was transaction-centric. Banks are increasingly focusing on the premise that customers choose on the service provider who differentiates through quick and efficient service. However, there is more to Customer Relationship Management (CRM) than just managing customers and analysing their behaviours. Banks are well aware that their success is predominantly dependent on the CRM strategies adopted by them. Service providers have recognised that good CRM bonds customers with the organisation for a longer term, resulting in increased revenues.c

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