Does ethnic focus change how banks should implement customer relationship management?
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Premala Shanmuganthan is a researcher and writer specialising in banking, especially ethnic banking.
Spinder Dhaliwal is a lecturer in Entrepreneurship in the School of Management, University of Surrey.
Merlin Stone is Business Research Leader, IBM UK and IBM Professor of Business Transformation, University of Surrey. He is also a Director of the The Database Group Ltd and QCi Ltd.
Bryan Foss is Worldwide Solution Marketing Executive, Financial Services Sector, IBM.
Abstract This paper describes the development of the ethnic banking market in the UK. It describes the main ethnic groups involved and how they manage their relationships with banks, whether as individuals, families or small businesses. It analyses the problems ethnic customers have in dealing with banks and the gaps that emerge between them and their banking providers. In addition the paper analyses what banks have done to bridge the gap, with a brief comparison with the situation in the United States. The paper then suggests which areas banks need to focus on in order to improve management of their ethnic customers, and concludes by suggesting that given the rapidly growing size and value of the ethnic segments, banks would do well to undertake an ethnic banking audit. Keywords Ethnic, banking, Afro-Caribbean, Pakistani, Indian, immigration, customer relationship management
INTRODUCTION
Merlin Stone Business Consulting Services, IBM UK Ltd, 76 Upper Ground, South Bank, London SE1 9PZ, UK Tel: +44 (0)20 7202 3000; e-mail: [email protected]
The UK financial services industry has gone through a period of consolidation through mergers and acquisition. It has also been subject to a variety of other pressures, including broader and tougher regulation and the need to deal with risk. In an industry in which product and brand differentiation seems hard to achieve, slow growth and slim margins have led banks
# Henry Stewart Publications 1479–1846 (2003)
Vol. 8, 1 49–62
to reappraise the effectiveness of how they manage their customers. This reappraisal is visible in companies’ strong focus on the cost-effectiveness of distribution channels and customer relationship management (CRM) initiatives.1,2 At the heart of most of the debates about financial services marketing lies a series of age-old questions, such as ‘Who are my customers?’, ‘How do they behave?’, ‘How can I attract them, keep them and develop more business
Journal of Financial Services Marketing
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Shanmuganthan, Dhaliwal, Stone and Foss
with them, cost effectively?’ Behind the many success stories in financial services CRM lie sustained efforts by teams of managers to answer these questions and apply the answers in branches and call centres, via direct mail and on the Web. One of the obvious ways in which customers differ from each other is their demography: age, marital-partnershiphousehold status, gender and ethnicity. Most companies’ understanding of the importance of these factors has been much advanced through their efforts to consolidate their customer databases and build a more com
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