Can superior CRM capabilities improve performance in banking
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Tim Coltman is Director, Centre for Business Services Science, University of Wollongong, Australia. He has published in journals such as California Management Review, Journal of Information Technology, Advances in Strategy and Communications of the ACM. He currently holds an Australian Research Council Fellowship where he is engaged in pioneer supply chain management research for DHL and BlueScope Steel. Previously, he has completed research projects in customer relationship management for organisations such as the SAS Institute, SAP, Fairfax Business Research and MIS magazine.
Abstract The market enthusiasm generated around investment in customer relationship management (CRM) technology is in stark contrast to the nay-saying by many academic and business commentators. This raises an important research question concerning the extent to which banks should continue to invest in CRM technology. Drawing on field interviews and a survey of senior bank executives the results reveal that a superior CRM capability can deliver improved performance. The paper then demonstrates that in order to be most successful, CRM programs require a combination of technical, human and business capabilities. Journal of Financial Services Marketing (2007) 12, 102–114. doi:10.1057/palgrave.fsm.4760065 Keywords CRM, capabilities, performance
INTRODUCTION The ability to identify profitable customers and then customise marketing on the basis of customer value has enabled many banks to punch above their weight in today’s competitive environment. A number of stellar examples come to mind: National Australia Bank in Australia, Bank of Montreal in Canada and Capital One in the US. In each case, these banks have chosen to compete through superior customer relating capabilities based largely on the customer relationship management (CRM) programs deployed.1,2 It will come as no surprise that vendors are quick to point out that by allocating resources to CRM technologies all Correspondence: Centre for Business Services Science, School of Information Systems and Technology, University of Wollongong, Northfields Rd, Wollongong, NSW 2522, Australia. Tel: + 61 (2) 4221 3912; Fax: + 61 (2) 4221 4170; e-mail: [email protected]
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Journal of Financial Services Marketing
firms in the financial services sector can generate new forms of competitive advantage. However, the enthusiasm generated around CRM and a select concentration of ‘relationship winners’ is in stark contrast to the nay-saying by many business commentators. According to a recent study,3 personal and retail banking in the United Kingdom is a comic story as banks continue to offer sub-standard service despite the huge investment in CRM technology. Over a quarter of these banks (28 per cent) failed to respond to simple customer queries and more than 60 per cent of respondents felt that banks could do much more to improve customer service standards. Far from improving profits and cementing relationships, many firms across a wide range of industry sectors (that includes banks) have found th
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