Customer Relationship Management in the Banking Sector - Research Proposal Example

RELATIONSHIP MANAGEMENT IN BANKING SECTOR Table of Contents Rationale of the Study3 Research Objective 3 Research Questions 4 Literature Review 4 Methodology 7 Conclusion 9 Table 1: Gannt’s Chart 10 References 11 Rationale of the Study The concept of customer relationship in the United Kingdom banking sector is essential because of the liberalisation of the sector and the increased competition from local and international banks. Adoption of the practices in United Kingdom has enhanced service provision in various aspects of banking in the country (Buttle, 2009). The perceptions of the customers regarding the adoption of the practice in the banking sectors vary which calls for an elaborative research in the field. In addition, the adoption of customer relationship management varies based on the criteria of operation of the banks. Private Banks in United Kingdom engages in different aspects of customer relationship in a different approach to that of the public banks. Evaluation of different perspectives about the adoption of CRM in the United Kingdoms banking sector is essential because it provides an avenue for future research in the field. It also avails adequate information regarding the perceptions of the customers on the use of CRM in the banking sector. Research Objective 1. To analyse the customer perception on CRM as a banking sector tool in general retention of both existing and potential customers and service quality. 2. To study and review the literature on the rate of implementation, concept and application of CRM in UK based banks. 3. The research aims to study the adoption of CRM in both private and public Banks in United Kingdom. Research Questions 1. What is the current perception of the customers on CRM application and practices in the banking sector? 2. What is the main difference in the application of CRM as a tool for customer retention between private and public sector banks in UK? Literature Review Globalisation and competition of the banking sector are compelling various banks in the United Kingdom to enhance profitability and productivity. The banks are currently using various aspects of the customer relationship approach to retain valuable customers (Durkin and Howcroft, 2003). In addition, the banks are using the technique to attract new clients in order to promote profitability and market share (Consoli, 2008). Unique and effective software alongside innovative strategies for customer relationship management is essential to enhancing profitability and productivity in the banking sector. The current service industry in the United Kingdom is metamorphosed to uphold customer specific approaches in their operations. The CRM concept in the banking sector is essential for enhancing the quality of services and customer satisfaction (Cunningham, 2002). The current banking sector in the country focuses on customer satisfaction rather than enhancement of transaction rates in the bank halls. In addition, the banking sector has adapted various technological approaches in their operations, which minimises congestions and physical interaction of the banks and the customers (Eid, 2013). The private banking sector in the country is more independent which enhances its competitiveness in the market. The private banks promote the quality of their services using CRM in order to compete effectively with the public banks (Eid, 2007). On the other hand, the public banks in the country are using various aspects of customer relationship management to retain their current customers and acquire additional clients from the private sector. The use of CRM in banking sector is costly because it entails various initiatives of integrating the operations of the banks in the information systems in order to monitor the activities of the customers (Fjermestad and Romano, 2006). Most of the studies regarding the concept of CRM in the banking industry focus on its wide application in the provision of all financial services to the customer (Ibrahim, Joseph and Ibeh, 2006). The literature highlights the aspects of customer relationship management and relationship banking in various countries worldwide (Foss and Stone, 2003). According to a study in United States, the concept of CRM in developed countries benefits the customers in the end. In this case, the initial costs of acquisition exceed supersedes the gross margin but the subsequent costs of retention decrease which facilitate the bank’s profitability (Goddard, Molyneux and Wilson, 2001). According to research, most of the customers in private banks do not complain because of the bank’s adoption of CRM approaches. However, the customers appreciate the services and provide the competition with an opportunity in order to experience the quality of the services (Jones and Ranchhod, 2007). In addition, a customer who is not satisfied with the CRM services informs a larger number of people about the failures of the system as compared to a satisfied customer (Joshi, 2013). According to the study, majority of the customers in the public banking sector appreciate the initiatives of CRM in the service provision because it enhances the quality of services in the banks (Karakostas, Kardaras and Papathanassiou, 2005). Customer relationship management is a business criterion that leads to optimisation of profits and revenue while enhancing the satisfaction of the customers (Liu and Louvieris, 2006). In addition, CRM refers to the business process that is assisted by information technology, which facilitates the evaluation of the behaviour and response of the customers regarding a particular service or product in the market. The CRM practices in the financial sector are essential for enhancing the quality of services in order to promote customer satisfaction (Merkel, 2010). The study further highlights that CRM is effective in both private and public banks in various developed economies in the world. It also indicates that customers in developed economies appreciate the use of CRM in various operations of the banks (Merkel, 2010). The United Kingdoms banking sector is highly competitive because of the entrance of additional private banks in the market. The private banks in the country have introduced new banking services in the market in order to compete effectively with the established public banks in the country (Payne and Frow, 2006). The banks in the country are also enhancing their service provision criteria in order to attract and retain the dynamic young customers in the market (Payne and Frow, 2005). The banking sector trends are presently moving towards the use of technology in the provision of services that facilitates the adoption of CRM in both private and public banks in the country. Adoption of the technology in the United Kingdom’s banking sector promotes their competition on an international platform (Payne, 2001). The adoption of CRM techniques in private and public banks in the United Kingdom varies with the level of competition in a particular aspect of banking. Most private banks in the country adopt the technology in order to attract and retain customers from the dominance public banking sector (Peelen, 2005). On the other, public banks adopt various customer relationship approaches to promote the quality of their services and retain their existing customers. The concept of CRM in United Kingdom’s banking sector is prevalent because all the banks in the country utilise specific aspects of the technology depending on their profitable services. In this case, the mortgage and loan departments of the private and public banks account for the vast use of CRM strategies (Pokharel, 2011). The banking sector in the country promotes a liberal approach system, which enhances competition between the private and public sector. In this case, both public and private banking avenues in the country compete fairly, which facilitates the adoption of CRM techniques (Raab, 2008). According to research, the perception of customers regarding the concept of CRM in the banking sector depends on the quality. Most of the customers perceive the approach positive in terms of enhancing the quality of services in the banking sector (Taherikia and Rezaei, 2015). On the other hand, various customers in United Kingdom appreciate the use of the technology in the mortgage departments in the banks because it promotes the efficiency of processing the relevant documents (Roberts-Phelps, 2004). The study indicates that, the older generation in United Kingdom prefer a conservative approach to banking which limits the use of CRM. Contrarily, the young generation of bank customers appreciate the adoption of technology in the banking sector. Most of the public banks in U.K. are characterised by the conservative customers, which prevents the adoption of CRM strategies in public banking sector (Ryals and Knox, 2001). Methodology The current research uses a mixed research design in order to establish its objectives. A qualitative approach is utilised to identify the perception of the customers regarding customer relationship management in the banking sector in United Kingdom. In this case, primary data will be obtained through adequately structured questionnaires from the chosen banks. A questionnaire comprising 21 statements will be adapted from various literatures with minimal modifications to adhere to the banking sector setting. The customers’ perceptions on the adoption of CRM practices in the banking sector will be measured using three-point Likert metric, which includes 1, 2, 3 to represent disagreement, neutral and agree. A sample of 100 customers of the chosen private and public banks will be engaged in the research. 50 customers from the private sector and 50 clients from the public banking sector will engage in the study in order to enhance the accuracy of data regarding the perceptions of the customers. In addition, the ages of the customer of the will range from 20 years to 60 years to obtain reliable information regarding the overall perceptions of the customers across different ages. Five customers from each group of banking sector customers will entail the conservative generation, which is 50 to 60 years old. On the other hand, the information regarding the adoption of the CRM practices in private and banking sectors will be obtained through a qualitative approach. The study involves four banks operating in United Kingdom. The banks spread equally for private and public sectors in order to facilitate the acquisition of accurate and reliable data for analysis. The criteria for selecting the banks include the following. The banks should operate in the United Kingdom market and offer a wide range of banking services. Additionally, the banks should have different branches in different parts of the country, and they should target a wide age bracket customers. The banks managers will be provided with questionnaires in order to establish their adoption of customer relationship practices in their operations. The questionnaires will comprise 15 statements regarding various aspects of CRM in the banking sector. The managers will also be given adequate time to analyse different aspects of CRM practices in the banks in order to provide reliable information for the research. The customers and bank managers will have the freedom of selecting an appropriate location to fill the questionnaires to adhere to the ethical requirements of the study. The participants will also be assured of the confidentiality of their information, which is an essential element of the researchs ethics. Furthermore, the data provided by the customers and bank managers will be highly secured to enhance the privacy of the respective banks practices. The personal information of the customers and bank managers will be confidentially represented during and after the study to enhance their privacy. The criteria for chosen the samples of the study will provide the individuals with the freedom of joining and abandoning the research at their convenience. The results of the study will be processed and analysed using different statistical tools. The correlation of the customer retention and the adoption of CRM practices will be evaluated using an appropriate statistical analytical tool. Conclusion CRM is an essential tool for enhancing the profitability of a business through customer retention and attraction. Similarly, various practices of customer relationship management are used in the banking sector to facilitate the quality of services and competition in the market. The adoption of CRM practices in the United Kingdoms banking sector is important in enhancing competition and service provision in the industry. The CRM tools also enable the banks to attract and retain customers in order to increase their profits and market share. The research will focus on identifying the perceptions of the customers regarding different aspects of CRM in the banking industry. Moreover, the concept of CRM in private and public banks will be analysed through mixed research design in order to facilitate comparative analysis. The current research will attempt to identify the effectiveness of CRM practices in retaining customers in different banks in United Kingdom. CRM practices are crucial marketing strategies because they enable organisations to compete effectively by satisfying the needs of their customers. The practices are also important in promoting relationship approach to marketing strategies in the banking sector. Table 1: Gannt’s Chart February March Objectives 3rd 15th 21st 26th 1st 7th 17th 28th 31st Development and Approval of the Proposal Search for Literature Analysis of the Literature Establish the Research Methodology Initiate Drafting of the Proposal Finalize the Proposal Review and Submit the Proposal References Andries, A. (2011). The Determinants of Bank Efficiency and Productivity Growth in the Central and Eastern European Banking Systems. Eastern European Economics, 49(6), pp.38-59. Buttle, F. (2009). Customer relationship management. Amsterdam: Butterworth-Heinemann. Consoli, D. (2008). Systems of Innovation and Industry Evolution: The Case of Retail Banking in the UK. Industry & Innovation, 15(6), pp.579-600. Cunningham, M. (2002). Customer relationship management. Oxford, England: Capstone Pub. Durkin, M. and Howcroft, B. (2003). Relationship marketing in the banking sector: the impact of new technologies. Marketing Intelligence & Plan, 21(1), pp.61-71. Eid, R. (2007). 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