Report Of BASIC Bank Banking Industry CRM in of Bangladesh

IntroductionLet’s close our eyes and think about a government owned commercial bank. We will surely start to think of a very clumsy place filled up with a lot f old people working very slowly and the image will be accompanied with the image of a very dirty place. Actually that’s what we can see when we go to any bank like Sonali Bank in Motijheel or any other government bank in Bangladesh. BASIC is a bank with a lot of differences from this situation. In this report we will try to find out how it differs and what’s in common.

Origin of the Report

As a mandatory part of the MBA program in Department of Marketing, University of Dhaka

every student must attend an internship program and submit a report accordingly. This

report was generated to meet up the requirement of the program.

Origin of the Study

There are many sources of the information used all over this report. Due to the secrecy

Bond attached with the appointment letter from BASIC Bank Limited it is impossible to

define all the sources and also all the experiences too. The following list contains only the

sources that can be used without conflicting with the company terms and conditions.

Primary Sources Face-to-face conversation with the respective officers and staffs of the branch and

head office. Face-to-face conversation with clients visited the branch. Practical work experience in the different desk of the department of the branch

covered.

Secondary Sources Annual report of BASIC Bank Limited. Website of the BASIC Bank Limited. Desk report of the related department. Different circulars sent by head office or BASIC Bank Limited and Bangladesh bank.

Data collection methodPertinent data for this report has been collected primarily by direct investigations of

different records, papers, documents, operation process and different personnel. The

interviews were administered mostly in informal sessions due to the busy schedules of the

key personals. They often feel uneasy due to the secrecy policies of the bank in case of

answering some questions.

Data sourcesThe information and data for this report have been collected from the primary and

secondary sources.

Data CollectionData was collected from the primary and secondary sources. The data was supplied by many

publications forms etc.

Data analysis and interpretationQualitative approach has been adopted for data analysis and interpretation taking the

processed data as the base.

Limitations

The report has some weak points also that have evolved due to the following causes

Secrecy policies of the bank.

First time working experience in Bank of the report writer.

Very Busy schedules of the bankers and the clients also.

Lack of Printed Documents

Company ProfileThis part of the report will try to explain the current financial condition of the BASIC Bank

Limited as well as the corporate values too. It is a very important instrument for any bank

because this is used to compare one with others.

History of the Bank

The BASIC Bank Limited (Bangladesh Small Industries and Commerce Bank Limited) was

established as a banking company under the companies Act 1913 on the 2nd of August, 1988

& it launched its operations on 21st of January, 1989. It is governed by the Banking

Companies Act 1913.The Bank was established as the policy makers of the country felt the

urgency for a bank in the private sector for financing Small Scale Industries (SSIs). At the

outset, the Bank started as a joint venture enterprise of the BCC Foundation with 70 percent

shares and the Government of Bangladesh (GOB) with the remaining 30 percent shares. The

BCC Foundation being non functional following the closure of the BCCI, the Government of

Bangladesh took over 100 percent ownership of BASIC on 4th June 1992. BASIC Bank Limited

is unique in its objective. It is a blend of development and commercial banks.

The bank has 30 branches across the country and a wide network of correspondents all over

the world. The bank has plans to open more branches in the current fiscal year to expand

the network.

Serving people for progress is the motto of BASIC Bank Limited. Whether in personal,

corporate, treasury or trade transactions BASIC Bank Limited is committed to provide the

best. Meeting the demand of their discerning customers is not their sole objectives. The

bank venture to deliver a quality that makes every transaction a pleasurable experience. The

bank has already been in the process of implementing centralized On-line banking system.

Customer is the core of everything that the bank does. The services are regularly upgraded

and realigned to fulfill customer expectation. Delivery standards are constantly monitored

and improved to assure the highest satisfaction.

2008 at Glance

2008 was one of the worst years for the bank but good for the Rajshahi branch of BASIC

Bank Limited. The bank faced a severe drop in profit this year. The Rajshahi branch stood

first in case of earning profit between all the branches situated in the north Bengal. It

earned 93 lacs of taka all alone. The following table shows the situation of the total

organization.

Amount in Lac

Authorized Capital 2000.00

Paid-Up Capital 1247.40

Total Deposits 31947.48

Total Assets 38773.91

Loans & Advances 2263.65

Corporate Strategy

Steady and sustainable growth through appropriate use of resources.

Investment in a cautious way.

Profit maximization.

Establishing small industries.

Organizational Goals

Develop a realistic deposit mobilization plan. Develop appropriate lending risk assessment system. Develop capital plan. Develop a system to make good advances. Develop e a recruitment, compensation, training and orientation

plan. Develop a plan for offering better customer service. Develop appropriate management structure, systems, procedure

and approaches. Develop scientific MIS to monitor bank’s activities.

Financial Resources

Property and Assets

During the year 2008, total assets of the bank increased by 31 .81 % to Taka 38773.91

million from taka 29417.09 million in 2006. As expected, loans and advances comprised

the largest share in the assets portfolio of the Bank constituting 57.41 percent. Balances

with other banks and financial institutions and

Investment were the second and the third largest constituents being 17.89 percent and

13.67 percent of the assets portfolio respectively. Money at call and short notice came next

in size with 3.40 percent of total assets.

Loans and AdvancesLoans and advances consist of industrial loans, micro credit, commercial loans and bills

increased by 17.18 percent to Taka 22,263.34 million compared to Taka 19,000.00 million

in 2006.

Industrial LoansThe industrial loan reflected a significant growth of 13.54 percent over the previous year.

Total outstanding industrial loans including term and working capital stood at Taka

13,901.40 million at the end of 2008 compared to Taka 12,243.56 million of 2006. Total

outstanding term loan stood at Taka 5,055.58 million as on December 31, 2008 compared

to Taka 3,897.12 million in 2006 reflecting a growth of 29.72 percent. The outstanding

working capital finance extended to industrial units stood at Taka 9,525.98 million at the

end of the reporting period compared to Taka 8,346.44 million in 2006. Growth

Micro creditBASIC Bank also provides micro credit to the poor for generation of employment and

income on a sustainable basis, particularly in urban and suburban areas. At the end of 2008,

total amount of Taka 680.13 million remained outstanding as against Taka 359.24 million in

2006. Recovery rate during this period remained at a highly satisfactory level of 100.00

percent.

Commercial Credit

The Bank also supports development of trade, business and other commercial activities in

the country. It covers the full range of services to the exporters and importers extending

various facilities such as cash credit, export cash credit, packing credit, short term loans,

local and foreign bills

Purchase facilities. As on December 31 2008, total outstanding commercial loans stood at

Taka 7,681.74 million compared to Taka 6,391.21 million in 2006.

Non-performing loanClassified (non-performing) loans and advances was 4.25 percent at the end of the year

under review which was 3.70 percent in 2006. In absolute term classified loans and advances

stood at Taka 723.23 million in 2008 from Taka 703.27 million in 2006. Additional

Export/ImportThe bank achieved substantial growth in both import and export in 2008. The Bank

handled total import business of Taka 21,266.53 million and export business of Taka

16,794.96 million in 2008. The import and export business grew by 19.45 percent and

8.61 percent respectively. Major items of exports were ready made knit & woven

garments, sweater, jute & jute products, leather and leather goods, handicrafts etc.

Items of import included mainly industrial raw materials, garments accessories, capital

machinery, raw cotton, electronic consumer goods, chemicals, tyre and tubes, reconditioned

vehicles, bicycle spare parts, food items such as rice, wheat, garlic, onion, sugar, chilly and

other essential commodities.

Investment and PlacementsInvestment at the end of 2008 was for Taka 5,303.39 million, compared to Taka

3,270.87 million in previous year. Investment was concentrated in approved securities such

as Government treasury bills, Treasury bond, reverse repo and a few debentures and shares.

During the year 2008 treasury bills, Treasury bond including reverse repo had the largest

share (98.98%) in the investment portfolio. Debentures, shares in listed and

unlisted companies and prize bond altogether constituted 1.02 percent. BASIC's placement

in different Banks in Bangladesh and outside Bangladesh was Taka 6,937.53 million in 2008

compared to Taka 4,191.37 million in 2006.

Fixed assets and other receivablesAt the end of 2008 the fixed assets increased by 26.90 percent to Taka 196.12 million

from Taka 154.52 million in 2006 and other assets increased to Taka 579.14 million

from Taka 498.75 million in the previous year. Fixed assets included vehicles, equipment

and computer, furniture and fixtures and leased assets. On the other hand, other assets

included advance income tax, stock of stationery, security deposits, sundry debtors, and

suspense account.

Liabilities & Shareholder’s Equity

DepositDeposit constitutes the core of BASIC Bank's fund mobilization. Total deposit of the Bank at

the end of 2008 stood at Taka 31,947.98 million (82.40% of Total liabilities) compared to

Taka 24,084.65 million (81.87% of Total liabilities) in 2006. The growth of deposit was 32.65

percent. During 2008, the fixed term deposit increased to Taka 27,903.72 million from Taka

20,467.17 million in 2006. Savings bank deposit decreased to Taka 886.30 million in 2008

compared to Taka 1007.79 million in 2006. Deposit in current and other accounts including

bills payable increased to Taka 2,867.19 million in 2008 from Taka 2,370.45 million in 2006.

Borrowings

Borrowings were made from various sources for long term funding specially for financing

development-banking activities. The Bank enjoys a credit line facility from KFW, a German

development bank for financing micro-credit scheme and small-scale industries. It has also

utilized an ADB credit line for financing small industries.

Another loan of Taka 325.56 million was also received from ADB for financing Agro business

development. Ministry of Finance (GOB) and Bangladesh Bank are the other sources of

finance. Total outstanding borrowing against utilization of funds from the above sources in

2008 was Taka 1,385.81 million against Taka 830.06 million in 2006. An amount of Taka

600.00 million was allocated by the GOB and disbursed to BASIC Bank to finance Agro-based

industry. BASIC was included in this scheme for its outstanding performance.

Equity

The bank started its journey with paid-up capital of Taka. 80.00 million in 1989 and the same

had increased to Taka 1,247.40 million in 2008. The bank has decided to issue 1 bonus share

for every 20 shares and the paid-up capital of the bank would thus be raised to Taka

1,336.77 million if the proposed bonus share is approved. Cash dividend of Taka 62.37

million has also been proposed for the year 2008. With this cash dividend, total cumulative

cash dividend of Taka 538.00 million would be paid to the government.

Statutory ReserveAs per section 24 of the Bank Company Act1991, 20% of profit before tax needs to be

transferred to statutory reserve until the total Statutory Reserve becomes equal to Paid-up

Capital. Accordingly, the statutory reserve of the bank will stand at Taka 1045.08 million

after transfer of an amount of Taka 161.62 million from the profit of 2008. Shareholders'

equity of the Bank would increase by Taka 357.59 million to Taka 2,596.58 million in 2008

from Taka 2,238.99 million in 2006 registering a sustainable growth rate of 15.97 percent.

Operating Results

IncomeThe Bank's total income was 23.66 percent

higher than that of previous year. Interest

income from loans and advances increased by 25.81 percent while other operating income

increased by 38.18 percent over 2006. Commission income was higher by 34.85

percent.

Expenses

The total expenditure was 47.52 percent higher than that of 2006 due to increase of

interest expenses as a consequence of increase of deposit substantially. Salary and

allowances to employees increased by13.57percent mainly due to annual increment,

dearness allowance, promotion of existing employees and fresh recruitment. General and

administrative expenses (excluding salary and allowances) increased by 14.72 percent. Hiring

of additional space for Head Office mainly contributed to this increase.

Contribution to Government ExchequerFrom the very inception, BASIC Bank has been posting profit and paying income tax to the

Government. The cumulative figure of contribution to the Government exchequer by way

of corporate tax up to December 31, 2008 amounted to Taka 2,790.98 million, which is

almost 35 times the amount of original paid-up capital of the Bank.

Other Activities

Human resourcesBASIC has a well-diversified pool of human resource, which is composed of personnel with

high academic background. Also, there is a positive demographic characteristic. Most

employees are comparatively young in age yet mature in experience. As at end of 2008 the

total employee strength was 820.

The Bank follows a strict recruitment policy in order to ensure that only the best people

are recruited. The Bank, so far, has recruited five batches of entry-level management staff,

all of whom have got excellent academic background.

Intensive training program, on a regular basis, is being imparted to employees of both

management and non-management levels to meet the challenges in the banking industry

and to help employees to adapt the changes and new working conditions. Human resource

is the main driving force and quality human resources are the key sources for the success

of today's banking business. Keeping this view in mind and recognizing the importance of

training for professional excellence BASIC Bank Ltd. established its own training cell in 2005

with modern facilities. In 2008 the cell arranged 22 training courses and provided training to

as many as 360 employees of the bank. The bank also sends its employees to BIBM and

other local and foreign institutions with a view to sharpening their knowledge base. During

the year 2008 a total of 379 employees of the Bank were provided with training in various

fields. Out of them 16 employees participated in training courses held abroad.

In 2008 total 122 employees of various stages were given promotion which is almost 17.00

percent of total employees of the bank.

AutomationThe Bank has been providing off-line computerized banking service to all its customers since

its inception. To accelerate the speedy and accurate account ledger maintained and to make

available all potential international banking products, the bank has already been in the

process of implementing centralized On-line Banking system. It is expected that within the

end of 2008 the bank will be able to serve its customers through the new system including

ATM and Internet banking facilities.

Branch NetworkA great deal of investment for developing the physical resource base of the Bank has been

made. BASIC Bank has its presence in all the major industrial and commercial centers of

Bangladesh in order to cater to the need of industry and trade. At the end of 2009,

there were thirty two conveniently located branches throughout Bangladesh; eleven

branches in the capital city of Dhaka, seven in Chittagong and one each in Narayanganj,

Narsingdi, Rajshahi, Sayedpur, Bogra, Khulna, Jessore, Sylhet, Moulvibazar, Comilla, Barisal

and Sirajganj. Besides these, the bank has three bill collection booths at Ramna, Sher-e-

Bangla Nagar and Gulshan

exchange Office of BTTB,

Dhaka. A Foreign Exchange

booth was opened at

Osmani Int'l Airport, Sylhet

in April '05 for mobilizing

foreign exchange. This is one

of the areas where BASIC

Bank is relatively lagging

behind. The Bank has already

signed an agreement with

Placid NK Corporation, USA

and MoneyGram

International, Minneapolis,

USA for obtaining foreign

currency remittances. The

bank is expected to sign

agreement with Tele Money

transfer, London, UK and

some similar agreement with companies located in Saudi Arabia and UAE are going to be

finalized shortly.

Functional division of BASIC Bank Limited:

The bank has 30 branches, 6 Zones spread throughout the country. At the head office level

there are 12 divisions most of which have more than one functional department which are

headed by DGM and Training institute by a director with the rank of CGM. The divisions are

as follows

Human Resources Division

Establishment & Common Service Division.

Secretary’s Division (Aboard Division).

Commercial Credit Division

Industrial Credit Division

Trade Finance Division

Balance sheet & Back Office Division

Audits an inspection division.

R&D Division

Computer system and procedures division. And

Law division.

These are the different division of BASIC bank that are serving their services to the bank as

well as to the country with great efforts according to their respective fields.

Basic Bank Rajshahi BranchIt was the working place of mine for all these months from where I learned a lot about the

banking functions. While preparing this report I

feel it’s necessary to tell a few words about

it. There are almost 20 people working in

this branch heart and soul to earn for the

organization and to provide

best possible services. There are two different departments in the branch. It is their

cumulative hard work that makes it one of the biggest money spinners for

BASIC Bank Limited in the North Bengal Zone. The very interior design even shows that

how much control is there in the branch. The boss can go through surveillance from his very

table on every employee either directly or through CC TV. I think it is really rare to find out

such a clean office that is owned by government of Bangladesh.

The departments that work in the branch are General banking & Loans & Advance Section.

The general banking performs the very common task of creating; collecting; circulating;

control the liquid money of the Bank. It also helps with Pay Orders and various sorts of

Drafts too.

The Loans & Advance Department performs the function related to loan disbursement and

collection of loans. It also issues Bank Guaranties. In the changing banking world it is

becoming harder everyday to work in this section by following all the rules stated by

Bangladesh Bank.

Organizational Chart

D.G.M

Branch In-Charge

A.MBranch Operation, 2nd Officer & In-Charge

General Banking

A.MIn-Charge

Loans & Advances and Foreign Exchange

A.M

Loans & Advances

A.M

Loans & Advances

A.M

General Banking

Assistant Officer

Cash

Officer

Cash

Officer

Cash

Assistant Officer

Cash

Armed Guard Guard-Cum-

Messenger

Guard-Cum-

MessengerArmed GuardDriver

D.G.M - 1 GCM -2A.M. -5 Officer -2 A.O -2 Armed Guard-2

List of Employee of Rajshahi Branch as on 31-01-2010

Sl.

NoName Designation Education qualification

01A.K.M. Masudur

Rahman

Deputy General

Manager

B.A. (Hons), Economics, M.A,

Economics

02 Md. Shamsuzzaman Assistant Manager M.A

03A.T.G.M. Golam

FaruqueAssistant Manager MBA

04 Dinu Pramanik Assistant Manager MBA (Acc), BBA (Hon’s)

05 Md. Manirul Islam Assistant Manager MA

06 Md. Musarrat Hossain Assistant Manager BBA, DU

07 Md. Syed Ahmed Officer (Cash) M.A

08 Md. Moshiur Rahman Officer (Cash) B.A (Hons), M.A

09 Ms. Sanjeda Tamanna Assistant Officer (Cash) MSS, MBA

Comparative Position of Deposit, Advance, Foreign Trade & Profit from 2007-2009

(Amount in lac)

Name of

item

2008 20092010

[up to 31-01-2010]

TargetAchievement

TargetAchievement

TargetAchievement

Amt. % Amt. % Amt. %

Deposit 4600.00 4675.70 101.65% 5000.00 5442.41 108.85% 5600.00 5506.37 98.32%

Advance 4200.00 3370.26 80.24% 4500.00 4008.99 89.09% 4700.00 4167.92 88.68%

Foreign

Trade

(Import)

300.00 56.49 18.83% 200.00 69.79 34.90% 200.00 -- 00%

Profit 80.00 47.37 59.21% 100.00 91.57 91.57% -- 5.51 --

List of Top 10(ten) Industrial Projects with their limits

Sl. No

Name of the project Proprietor/ Authorized person

Limit details

01 M/S. Natore Jute Mills

Mr. Shyam Sunder Agarwala (B.Com)

CC(H) Limit- Taka.150.00 lacTL Limit - Taka.150.00 lacTL Limit - Taka.130.00 lacSTL Limit- Taka.100.00 lacBG Limit- Taka.27.50 lac

02M/S. Uttoran Offset PS Plate Industries Ltd.

Mr. S.M. Ayub, M.DMost. Shamsun Nahar, DirectorSadia Afroza, DirectorS.M. Ahsan Habib, Director.

CC(H) Limit- Taka.65.00 lacTL Limit - Taka.335.00 lacPAD- Taka.5.00 lac

03 M/S. Xylia MedicareDr. Md. Rabiul Islam Khan [MBBS, DTM&H, M.Sc. (Paed.)]

CC(H) Limit- Taka.14.00 lacTL Limit - Taka.80.00 lacTL Limit - Taka.30.00 lacTL (HBL)- Taka.70.00 lac

04 M/S. Rajshahi Silk Fashion

Mr. Md. Abdul Kader Munna

CC(H) Limit- Taka.15.00 lacAdhoc CC(H)- Taka.5.00 lac

05 M/S. M.N.I & Co. Mr. Md. Nazrul Islam

CC(H) Limit- Taka.25.00 lacSTL Limit- Taka.15.00 lacSOD (M) Limit- Taka.24.00 lac

06 M/S. Khan Rice Mills Mr. Md. Mozemmal Haque Khan

CC(H) Limit- Taka.20.00 lacSTL Limit- Taka.5.00 lac

07 M/S. Mukta Farms Mr. Md. Obaidul Muktadir


08 The Bengal Board Mills

Mr. Md. Mosfiqur Rahman


09 Laser Diagnostic Center

Mr. Md. Rashed Hossain

TL Limit - Taka.10.00 lacTL Limit - Taka.15.00 lacTL Limit- Taka.150.00 lac

10 M/S. Alimuddin & Co. Md. AlimuddinSOD Limit- Taka.25.00 lacTL (HBL)- Taka.20.00 lac

List of Top 10(ten) Trading concern with their limits

Sl.

No

Name of the

project

Proprietor/ Authorized

personLimit details

01M/s. Usha

Construction

Mr. Munzur Faruk

Choudhury, B.SC.(Ag) in

Agri. Engg

i. BG (Bid Bond)- Taka.250.00 lacii. BG (PG)- Taka.300.00 laciii. STL - Taka.300.00 laciv. SOD Taka.100.00 lac

02 M/s. J.K. EnterpriseMr. Md. Shamsur

Rahman

i. BG- Taka.200.00 lacii. STL - Taka.300.00 laciii. SOD- Taka.20.00 lac

03 Md. Anisur Rahman Md. Anisur Rahman i. SOD- Taka.40.00 lacii. TL(HBL)- Taka.100.00 lac

04 M/S. Biscuit Biponi Mr. Md. Ali Ashraf i. SOD- Taka.15.00 lacii. CC(H)- Taka.15.00 lac

05M/s. Rajshahi

StationeryMd. Moniruzzman Lucky i. CC(H)- Taka.40.00 lac

06 M/s. Safa General Store

Mr. Md. Saidur Rahman i. CC(H)- Taka.30.00 lac

07 M/S. Kamaluddin Khan & Sons

Mr. Md. Akram Khan i. CC(H)- Taka.25.00 lac

08 M/s. Belal Hardware

Mr. Md. Belal i. CC(H)- Taka.75.00 lac

09 M/s. New Modern Furniture.

Mr. Md. Robiul Alam i. CC(H)- Taka.30.00 lac

10 M/s. Mukta Hardware Mr. Md. Obaidul Wazidi. CC(H)- Taka.30.00 lac

ii. TL (HBL)- Taka.20.00 lac

CRM in BASIC Bank LimitedTraditionally, few people changed their banks unless serious problems occurred. In the

past there was, to certain extent, a committed, often inherited relationship between a

customer and his/her bank. The philosophy, culture and organization of financial

institutions were grounded in this assumption and reflected in their marketing policies,

which were product and transaction-oriented, reactionary, focused on discrete rather

than continuous activities.

Today, financial institutions can no longer rely on these committed relationships or

established marketing techniques to attract and retain customers. As markets break

down into heterogeneous segments, a more precisely targeted marketing technique is

required, which creates a dialogue with smaller groups of customers and identifies

individual needs.

Also, before the Internet revolution, consumers largely selected their banks based on

how convenient the location of bank's branches was to their homes or offices. With the

advent of new technologies in the business of bank, such as Internet banking and ATMs,

now customers can freely chose any bank for their transactions. Thus, the customer base

of banks has increased, and so has the choices of customers for selecting the banks. This

situation coupled with the pressures of competitive and dynamic markets has

contributed to the growth of CRM in the Financial Services Sector.

Customer Relationship Management: The Concept

Customer Relationship Management is the establishment, development, maintenance

and optimization of long-term mutually valuable relationships between consumers and

the organizations. Successful customer relationship management focuses on

understanding the needs and desires of the customers and is achieved by placing these

needs at the heart of the business by integrating them with the organization's strategy,

people, technology and business processes.

At the heart of a perfect CRM strategy is the creation of mutual value for all the parties

involved in the business process. It is about creating a sustainable competitive advantage

by being the best at understanding, communicating, and delivering, and developing

existing customer relationships in addition to creating and keeping new customers. So

the concept of product life cycle is giving way to the concept of customer life cycle

focusing on the development of products and services that anticipate the future need of

the existing customers and creating additional services that extend existing customer

relationships beyond transactions.

Need of CRM in the Banking IndustryA Relationship-based Marketing approach has the following benefits: -Over time, retail

bank customers tend to increase their holding of the other products from across the

range of financial products / services available. Long-term customers are more likely to

become a referral source.

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.

Customers in long-term relationships are more comfortable with the 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 Reich held 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 the consumer credit card market. Therefore,

banks are now stressing on retaining customers and increasing market share.

Private Banking and CRMPrivate Banks have traditionally viewed themselves as exceedingly 'Customer Centric'

offering what they believe to be highly personalized services to the High Net Worth

Customers. However, changes in the customer behavior 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

Customer ExperiencesThe first step towards successfully winning, retaining and growing the profitability of

private banking customers is to understand what their wants and needs are, so that the

organization can be built around serving those needs. Only when an organization has

done this and incorporated this into its strategy can it start to design its value proposition

and a customer experience that will enable it to achieve a differentiated competitive

Position in the private banking market, and more importantly, do so in an economically

viable way

There is a basic 'generic' customer experience that many private banking customers are

seeking. To be a credible player in the market, a private bank must be able to deliver this

'base' experience. This represents a common set of needs that are shared by most HNW

customers. Therefore, the private bank must have the capabilities required to meet these

needs for the majority of its customer base.

HNW Customers

Advise & ExpertiseGive me independent

advice specific to my needs

PerformancesProvide me with best possible return on my

assets

High Quality ServicesProvide

Consistent error free high quality

services

Personal Relationship

Provide me with a single adviser to manage my

affairs

All customers, regardless of wealth levels, have similar emotional needs, which drive

their need for advice and their purchase of products. Different wealth levels impose

different priorities on meeting these needs and open up new avenues for doing so.

Take a simple example, HNW customers can afford on it to fund their retirement, so their

priorities may be associated with growing wealth, rather than preserving it, allowing

them to choose a product option with a higher risk/reward ratio.

If this is true, it means all HNW customers start with a basic, common set of what they

want and need from a bank, which might include: -

Personal, long-term relationship

Advice combining industry expertise and knowledge of personal circumstances

High quality, consistent quality

Security, privacy, confidentiality

At this basic level, grouping together these core wants and needs produces a set of

generic characteristics that an HNW individual seeks from an organization before he or

she will even consider placing any of his or her wealth with it.

Underlying these generic characteristics is a set of capabilities covering organization,

process and technology, which the private bank must process to operate in the high net

worth market.

HNW Customers




assets


Consistent error free high quality services


Provide me with a single adviser to

manage my affairs

FlexibilityCope with

me

DiscretionTreat my affairs

with utmost discretion

The Segment-Specific ExperienceTo build this 'base' experience, private banks also need to consider the segment-specific

needs of their target customers. This in itself requires a capability to identify and justify

target customers and understand their needs beyond banking, to ensure that their

emotional needs are met. It is here that the customer is made to feel like an individual,

but it is also at this point that costs and infrastructure spiral, as customers' needs start to

diverge.

The segmentation process identifies groups of customers with similar wants and needs,

who are seeking a similar experience from the provider. Importantly, from the

organizations' viewpoint, this means that they can also be served by similar sets of

capabilities.

The channel preferences of each segment and associated channel experience - for

example, a self-directed group of customers will use internet for transacting, information

gathering and even some advice, whereas advice seekers and less financially

sophisticated segments require more access to an adviser / relationship manager and a

more basic experience over the Internet.

The product and service preferences of that segment - for example, the more

sophisticated customers are more likely to demand more complex products such as

alternative investments, whilst others may prefer discretionary portfolio management.

The new components are added to the experience and the 'base' experiences elements

become defined in more depth, according to the specific needs of the customer segment.

Once the segment experiences have been defined, the associated capabilities must again

be identified. The hierarchical approach to defining customer experiences helps filter

these capabilities as: -

It is possible to identify experience elements that are common to more than one

segment - this will carry a higher priority for development as they will benefit

more customers;

The segmentation exercise will provide comparative sizing for the target

segments.

Capabilities required for the larger, more profitable segments take precedence

over those needed for smaller segments.

The Organization-Specific ExperienceHaving identified the base and segment specific elements of HNW customer experience,

the final step is to identify how the experience that each organization offers its

customers is distinct from other banks. Now this would mean that one has to distinctly

identify the components of the experience that are not only associated with a particular

bank but also be the key differentiator.

This process will define: -

Elements of the organization style and culture.

Products and Services to be provided.

In the same way, every brand is different, so is the experience. Finances can be a complex

matter. The challenges faced by banks and their customers are many but the trick lies in

de-mystifying complex financial relationships.

Technical solutions deployed by banks today are flexible, user-friendly and meant to

facilitate specific workflow and requirements in implementation processes. In order to

simplify lives, banks have begun to implement end-to-end technologies through all

departments with the intention of removing human error from processes. Previously

existing manual environments could not have been adequate for future visions, growth

plans and strategies.

HNW Customers




assets


Consistent error free high quality

services


Provide me with a single adviser to

manage my affairs

FlexibilityCope with

me

DiscretionTreat my affairs

with utmost discretion

BrandModern

innovative image that suits

my image

GlobalGlobal

accessibility

In this day and age, customers enjoy complete luxury in terms of customized technical

solutions and banks use the same to cement long-term, mutually-beneficial relationships.

CRM in Practice in BASIC Bank Limited

In Bangladesh banking is not yet a very developed industry and that has happened due to

various strict rules and regulation set by the central authority of banks, the central bank.

Due to the weak infrastructural condition and economic vulnerability the central bank

often has to play a very protective role and has to play it safe.

In my short experience in BASIC, I have found a very interesting thing and that is huge

use of CRM tools. Although this methods are not formally used as CRM tools but the goal

they pursue are similar to those of the CRM goals, building and maintaining profitable

relationships. The CRM practice is mainly in customer experience level as the dealing

customers are not of a very qualified level. Some of the tools used in bank’s CRM are as

follows

Advice & ExpertiseA banker’s job is not only to develop his or her banks asset base or profit but to ensure

sustainable development of all the parties he or she is going to serve. This is a huge

dilemma for any banker that which one he should choose between the clients benefit or

the bank’s one.

Bankers of BASIC Bank Limited have always given importance on ensuring their clients’

maximum benefit until it harms the rules and regulation of the bank. The organization

believes that if a client is served with a good advice than sooner or later the thing is going

to pay back and will create a long term relationship with the bank.

Advices

The clients often expect good and logical advises from the bankers as they believe that

the bankers know better than them about which of the loan scheme is going to give him

maximum benefit or which one is going to ensure them maximum return on their asset in

case of depositing.

There are several aspects where a client can be advised on

Selection of appropriate loan packages

a. There are various types of loans available in the bank which serves

different purpose. It is often hard for the clients to find out which one is

the best one for them. In such a case it very important for the banker to

help the client to find out the most profitable loan package for him. Such

as a client needs a certain amount for 4 months, in this circumstances the

clients can achieve the fund by taking a CC(H) loan for one year on the

other hand the banker can advice him to go for a STL limit for the short

period of time which will save him money and will also save hassle.

Selection of appropriate investment packages

b. There are a lot of people who have enough idle money but can’t invest

due to their other problems, in this situation bank borrow that idle money

from them and then lend them to others. The principle of banking is to

transfer money from the surplus unit to deficit unit. An investor can invest

in different ways; a banker helps him to select the most profitable

investment opportunity available for him in the bank.

Selection of appropriate loan repayment method

c. After disbursal of loan, it needs to be repaid. Generally the clients select

the loan repayment method. A loan can be repaid through monthly

installments or just through daily transactions. Even in some cases the

loan can be repaid just by completing a work order and receiving a bill

against it. The bankers will advice to select the best possible loan

repayment method that suits the customers’ business type and loan size.

Tax redemption

d. There are several ways to get tax redemption in the national Tax rule and

the bankers help the client to take necessary action to ensure lesser tax.

Cost cutting

e. There are several cost attached to the loan disbursal process which can

often be reduced just because of the bankers good will. Ensuring the

availability of all the services at a cheaper rate will easily cut the cost of

the loan and thus the EIR and will ensure delighted customers.

Expertise

A banker can lend his expertise in the following sections

1. Preparing financial statements

2. Preparing stock reports

3. Preparing valuation reports

4. Planning financial plans

5. Preparing financial projections

6. Preparing L/C applications and other applications

Personal RelationshipPersonal relationship is very important for any banker customer relationship. There is

always a sense of belonging in the clients mind because of the long term association with

the bank.

In the banks it is always tried that the customers always face the same officer as it makes

the process of relationship building easier. There are benefits of this sort of personal

relationship because this saves both time and effort of both the parties. The person who

deals with the same client comes to know nooks and corners of the clients taken benefits

and his business criteria also. It becomes much easier for him to get hold of the problem

that the client might face.

On the other hand, the client feels comfortable about the person who is dealing with all

the problems as he knows that the person sitting in front of him know a detail view of all

his loans, advances or deposits.

The interpersonal bond helps the parties to discuss matters more freely and to reach a

solution instead of just getting into a dead block which can become very fatal for both of

them.

PerformanceThere is no alternative of high quality performance in banks as the organization is a

strictly service based organization. This specific CRM tool is useful in case of the deposit

making customers. They always demand a very high quality performance in investing

their hard earned money. The customers expect performance in the following sectors.

1. Safe fund management

2. Profitable investment

3. Investment in sustainable development sectors

Client Banker

Faster ServiceBetter Service

Error Free Service Long term bonding

The bank just can’t collect deposit from the depositors but it also must ensure that the

bank is going to invest the hard earned depositor’s money is sectors where it will earn

most achievable value.

Quality ServiceThe clients dealing with the banks need high quality error free service as their business

depends a lot on the banks. There hard earned reputation and capital are glued together

with the bank’s performance. If the bank fails to perform in a fast & error free manner,

than there is a good possibility that the client will face severe difficulties in running

his/her business.

There many parties and points where a bank needs to take faster decision and error free

performance because of attachment of money with time. A simple mistake in L/C can

cause a customer to lose a huge business, thus face a severe damage in his business and

finally not being able to pay back the facilities he is enjoying from the bank. That would

Customer’s Assets

High Performance Banking

Higher return

Higher Satisfaction

be fatal for both the parties and can cause serious damage to the partnering attitude

prevailing between the parties.

Flexibility Flexibility is one of the advanced tools of banking CRM which is generally used only in

case of the older trusted clients. In Rajshahi branch only two parties are enjoying this

type of facilities regularly. They are two of the oldest and biggest parties of the branch

who have a very good track record. These parties generally enjoys flexibility in case of

banking hour, banker’s duty, extra services, extra facilities exceeding the limit to meet

urgent need of funds.

The bank shows this sort of flexibilities with two different goals. One of them is just to

ensure financial soundness of the party on the other hand the second goal is to create a

sense of partnering in the customers mind.

Skills required for the Customer Managers

There are several skills generally used by the managers of the bank to deal with the

customers. They are as follows

1. An understanding of how business works

2. An ability to counsel

3. An ability to identify key result areas

4. An ability to plan human and other economic resources to ensure maximum

output

5. An ability to orchestrate banker customer contact over various functionalities

6. An ability to balance company and client interest

7. An understanding of cultures.

Generic strategies of CRM

There are four generic strategies of CRM used in BASIC Bank Limited in case of

maintaining relationship with the customer. They are

1. Target for development

2. Defend against competition

3. Maintain with minimum resources

4. Withdraw

The developer strategy is used for selected customers who have a high attractiveness

factor with a good prospect for greater penetration. The defend strategy is designed to

safeguard existing customers from competitive inroads, particularly where potential

growth will be limited. Both these strategies will absorb resources but the potential

customers are likely to be crucial to the achievement of the company objective.

Relationship status with suppliers

Cust

omer

att

racti

vene

ss

weak average Strong

High

Maintain selectively Develop Develop Defend

Med

ium

Maintain Minimally Defend Maintain Develop

low

Withdraw Maintain Minimally Defend Selectively

Maintenance with minimum resource is a strategy for customers with whom good

business is enjoyed despite the fact that they may not really fit BASIC Bank Limited’s

competitive advantage.

The policy will be to ensure limited resource allocation. Use of resources is generally

trimmed by substituting personal care taking with offsite supervision.

Withdrawing is an appropriate strategy where the customer is patently using more

valuable resources than is likely to be justified. Customers failing in these two strategic

classifications are unlikely to become important customers. Although there are certain

initiatives taken to try to convert them to key customers, but these initiatives rarely does

work as these sort of organization slowly becomes very expensive for the bank to service

and thus very soon the bank tries to dump them.

Use of two ‘P’ Dynamics in CRM

In the service marketing there are seven P’s which causes all the dynamics in the

marketing of any certain organization which are

1. Product

2. Price

3. place

4. promotion

5. people

6. process

7. physical evidence

in case of CRM two of them are most important and they are people and process. CRM is

nothing but a tool that diminishes the gap between the customers and the bank as a

result it causes long term relationship with the customer.

People

People are the delivery point of the services provided by the bank. The people servicing

the customers generally become the face of the organization and their performance is

closely tied with the bank’s performance. As a result maintain the peoples’ performance

becomes very important for the organization to maintain long ter relationship. If the

service providers are not properly trained then there are chances that they are not going

to meet the customer’s expectation and going to deliver erroneous services which will

cause damages to both the bank’s goodwill and also to the client’s business. As a result

the bank always tries to create a very good employee base who are well trained and

motivated. This ensures better and faster delivery of services which in turn ensures long

term customers association with the bank.

Process

Process is the way the service is delivered. Process is also very important for any bank

because the process of service delivery can also play a vital role in making customers

satisfied or dissatisfied. If the process is long and complex then there is a rare chance that

the customer is going to be happy about it as it is costing him more time than he is used

to spend on the matter as a result the process are needed to be monitored extremely

well and time gaps are needed to be cut down. Making the process easier to understand

also helps a lot. In BASIC Bank Limited the process of service delivery has been made

easier in the customer’s end because of the customers’ demand for it but has not been

possible to do so in the whole process because of the rules and regulation attached to

the service delivery of the banks by the central authority of the banks, the central bank.

Problems of CRM efforts of BASIC Bank Limited

There are several problems of the CRM efforts of the bank as the bank has not yet

developed a clear cut guideline for its CRM effort but it is used only as a marketing tool in

the bank.

1. Need of properly specified guidelines

2. Need of proper planning

3. Need of more customer centric decision making process

4. Need to deliver more discretionary power to the customer services managers

5. Motivational steps to be taken to motivate all the employees to focus on CRM

6. Need of authorizing more resources to development and maintaining relationship

7. Need of using a CRM computer system that will help the bankers to

communicate, monitor and keep contact with all the customers of the bank.

What Customers like about BASIC BankDuring the long time I worked in BASIC Bank Limited, I had met a lot of businessmen

from different level of the society and commercials of different organizations. Whenever

we discussed about service and other aspects of the bank they gave importance on some

aspects of the branch. So, I decided to make a simple list of questions to ask them during

conversations. It was very hard to ask them directly as they were very busy, so most of

the questions were asked during the break time or lunch time. While talking to them I

had to feel up the questionnaire by myself as they themselves were not interested to feel

up them. It wouldn’t be ok to tell it a research but it surely can define the perception of

the customer of the Rajshahi branch because these are the people who help Rajshahi

branch most of its profit. They also have got the biggest amount of loan from the branch.

I was able to interview 26 people during the internship period but I had to exclude 4 of

them and that’s why all the results are shown in terms of 22 people.

In the following sections I will try to show the answer pattern about different aspects of

the branch.

PRODUCT RANGE

This question was made to find out whether the customers are happy with the product

range the bank is providing or not.

From the graph it is evident that 41% of the respondents were very satisfied with the

product range offered. 23% respondents answer was satisfied and another 23% were

neither satisfied nor dissatisfied about the product range. Although it’s very important to

inform that most of the unsatisfied customers own a personal account and their

dissatisfaction is caused by the lack of deposit skim, and personal loans.

ACCESS TO SERVICE

The physical approachability of service location, including the ease of finding one’s way

around the service environment and the clarity of route. Regarding access to services,

the answers obtained from customers and the answers obtained are as follows

Q 1 x f % fxVery Satisfied -2 9 41% -18Satisfied -1 5 23% -5Neutral 0 8 23% 0Dissatisfied 1 2 9% 2Very Dissatisfied

2 1 5% 2

22 100% -19Mean -0.86

Q 2 x f % fxVery Satisfied -2 13 59% -26Satisfied -1 5 23% -5Neutral 0 2 9% 0Dissatisfied 1 1 5% 1Very Dissatisfied 2 1 5% 2 22 100% -28Mean -1.27

From the above graph it is evident that consumers are overall satisfied with access to

services. 23% respondents are satisfied while 59% respondents are very satisfied with

access to services.

ACCURACY OF SERVICES

Regarding accuracy of services, the answers obtained from customers are as follows


2 1 5% 2

22 100% -15Average -0.68

From the graph it is evident that consumers are a bit satisfied with the accuracy of

services. However there is room for improvement. 27% of the respondents rated

accuracy of services as neutral.

SPEED OF SERVICES

Regarding speed of service, the answers obtained from customers are as follows:


2 2 9% 4

22 100% 2Average 0.09

9% of the respondents are very dissatisfied with the speed of service while 45% respondents are neither satisfied nor dissatisfied with the service. The bank seriously needs some improvement in this sector. CHARGES CHARGED

Regarding financial charges of services, the answers obtained from customers are as

follows


2 0 0% 0

22 100% -24Average -1.09

From the above graph it is evident that respondents are very satisfied with the financial

charges for services. The reason being low amount of charges charged for account

maintenance & other services.

PUBLISHED MATERIAL ABOUT SERVICES

Regarding published material about services, the answers obtained from customers are

as follows

Q 6 x f % fxVery Satisfied -2 0 0% 0Satisfied -1 1 5% -1Neutral 0 1 5% 0Dissatisfied 1 4 18% 4Very Dissatisfied 2 16 73% 32 22 100% 35Average 1.59

73% of the respondents are very dissatisfied with the published material about services. 5% respondents were neither satisfied nor dissatisfied with the published material about services. It’s a disaster for this bank and that is created because there not a single publication about services is available in the branch.BRANCHES LOCATION

Regarding banks location, the answers obtained from customers are as follows:

Q 7 x f % fxVery Satisfied -2 6 27% -12

Satisfied -1 6 27% -6Neutral 0 5 23% 0Dissatisfied 1 4 18% 4Very Dissatisfied 2 1 5% 2 22 100% -12Average -0.55

27% of the customers’ were very satisfied and other 27% is satisfied about the location of

the branch. This happened due to the location being around a huge 50 feet road and in a

place with no traffic congestion.

INTERIOR DESIGN & AREA MANAGEMENT

About this aspect the clients showed the following feeling

Q 8 x f % fxVery Satisfied -2 6 27% -12Satisfied -1 10 45% -10Neutral 0 3 14% 0Dissatisfied 1 2 9% 2Very Dissatisfied 2 1 5% 2 22 100% -18Average -0.82

Overall statistics shows client feelings range from Neutral to Satisfied. 45%of them are

satisfied about the interior designing of the bank.

NUMBER OF SERVICE EMPLOYEES

Regarding number of service employees, the answers obtained from customers are as

follows


Customer answers range from Neutral to Satisfied and there is a need of improvement in

this sector.

EMPLOYEE ATTITUDE

Regarding attitude of employees, the answers obtained from customers are as follows


50% of the respondents are happy with the employee attitude and 27%of them are

Neutral and they expect better employee attitude.

KNOWLEDGE OF EMPLOYEES

Regarding knowledge of employees, the answers obtained from customers are as follows


36% OF THE CUSTOMER FEELS CONFUSED ABOUT THE EMPLOYEE KNOWLEDGE LEVEL AND THIS CAN

OCCUR DUE TO THE VARYING KNOWLEDGE LEVEL OF THE EMPLOYEES IN DIFFERENT MATTERS.

EASE OF THE PROCESS & PROCEDURES

Regarding processes and procedures, the answers obtained from customers are as

follows

Q 12 x f % fxVery Easy -2 2 9% -4Easy -1 2 9% -2Neutral 0 5 23% 0Hard 1 6 27% 6Very Hard 2 7 32% 14 22 100% 14Average 0.64

32% of the respondents feel that the procedures are hard to follow. This might occur

due to the strict Bangladesh Bank rule that is totally followed by BASIC Bank Limited

PROBLEM RESOLUTION

Regarding problem resolution, the answers obtained from customers are as follows


32% respondents are satisfied with problem resolution. However 14% respondents are dissatisfied with problem resolution. Measures must be taken to minimize problems and problem occurs it has to be resolved in an effective manner. SECURITY ARRANGEMENT IN BASIC BANK LIMITED

Regarding security arrangements at BASIC Bank Limited, the answers obtained from

customers are as follows


36% OF THE RESPONDENTS HAVE MIXED REVIEW. 27% IS VERY SATISFIED AND 9% IS DISSATISFIED.

Bibliography

1. Several annual report of the bank

2. Rose, S. Peter; Commercial Bank Management

3. Debnath; Business of Banking

4. Jim Eckenrode, TowerGroup; Improving customer relationship management in

banking with integrated delivery channels

5. Rohit Perera & Tamsin Brew ; The Basic HNW Customer Experience

6. Luther S.; How banks manage CRM

7. Sympson’s; Making it simple for FIs

8. Gupta & Gupta; CRM in Indian Banks.

9. CRM in ICICI Bank

10. Other web based sources that helped by providing various types of help.

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