Customer Relationship Management in Banking Sector

Term Paper, 2005

19 Pages, Grade: 1,3



1 General survey of the German banks

2 Customer Relationship Management
2.1 Definition
2.2 Systematization of CRM
2.2.1 Analytical CRM
2.2.2 Operational CRM
2.2.3 Collaborative CRM

3 CRM in banking sector
3.1 Expectations from companies in the banking sector
3.2 Requirements of a successful implementation
3.3 Analytical CRM: Determination of the target group
3.4 Maesurement of the success of CRM in the banking sector
3.5 Example of Dresdner Bank
3.5.1 Departments where CRM was implemented
3.5.2 Goals of the CRM implementation
3.5.3 Realization of the CRM project
3.5.4 Benefits gained
3.5.5 What made this CRM project special?
3.6 Example of Deutsche Leasing
3.6.1 What was implemented?
3.6.2 Results of implementation

4 Problem of implementation

5 References



According to the changing of the general conditions the German banks are forced to break new ground in order to assert their position: The market became much more lucent for customer because of new media.

The consequences are an increasing pressure of competition and demanding customer. Therefore a binding and long-term customer relationship seems to be necessary for many banks to react to the changed conditions and to guarantee the continuity. A majority of German credit institutions tried to implement concepts of Customer Relationship Management (CRM). In some cases the afford - to turn the customer relationship into the road to success - were unsatisfying and unsuccessful.

In this paper I want to show, how CRM works, how CRM can be implemented in banks and what problems can result from the implementation.

In the first chapter I describe the current situation of German banks. After a brief overview about CRM in general we analyze the previous attempts of CRM implementation. Two examples – Dresdner Bank and Deutsche Leasing, a member of the “Sparkassen – Finanzgruppe” – follow. At the end I identify the problems of the implementation of CRM at the banks.

1 General survey of the German banks

In Germany the market of banks is fragmented compared to Europe. But in near future you can bargain for an initiation of consolidations according to the rising cost pressure. Moreover mergers would increase the competitiveness of German banks at the European and international stage.[1]

In the long run the demand behaviour has changed: Since the fifties according to increased financial assets the demand for investment opportunities has increased. Through the movement of the demand the refinancing of credit transactions became more expensive.

Moreover the European Basel guidelines dictate the banks an aggravated minimum capital for covering the credits and better credit investigations. The consequences for banks were higher labour costs and more equity costs for covering the credits.

Besides the price sensitivity and the interest sensitivity of the customers were obviously increased and the customers´ willingness for changing the bank became higher. As a result a trend towards a hard cutthroat competition is identifiable. This evolution is enforced by using of new and innovative concepts. The value chain of the classic banks, which so far includes product development, transaction banking, and retail banking, breaks increasingly open and so specialization is necessary. The majority of the banks will focus on the retail banking in the future.

At the field of corporate clients the traditional credit business has declined, because more and more quoted companies prefer obligations and foreign credits to the traditional bank credit. As well the declining cyclical trend has a negative effect on the on the credit business. So far the commission surplus could not absorb this decline.[2]

illustration not visible in this excerpt

Figure 1: Channels of Customer Contacts

According to this evolution new distribution channels become more important. The key word is Multi-Channel-Distribution. For instance the internet allows the banks to reach a bigger customer group with lower deployment by using Multi-Channel-Distribution. This concept helps to offer custom-tailored products by the suitable distribution channel. As the figure 1 shows the banks use multitude of different channels of customer contacts.

The traditional customer contact is still the counter (Point of Purchase), at which all businesses can be transacted. Such customer contacts could also take place by home visits (Direct Sales). The loosing of the direct contact was introduced by telephone banking, which gives the customers the possibility to transact the business via Call Centre or via Electronic Mail at home.

All these caused the structural changes at the bank market. Current information technologies like internet, multimedia, networking or digitalization afford new forms of corporation between vendor and customer. That creates new distribution outlets. On the other site the customer can use other und especially cheaper information channels and distribution channels, for instance direct banking via World Wide Web. Conventional and high-cost distribution structures force the banks to re-engineer their marketing policy.[3]

Not at least of this the banks are confronted with a considerably stress of competition. Therefore many banks use systems and concepts to improve and to handle the costumer contacts. In the following of this paper the Customer Relationship Management will be showed and analyzed.

2 Customer Relationship Management

2.1 Definition

illustration not visible in this excerpt

Figure 2: Areas of CRM [Kalakota/Robinson: "e-Business 2.0", New York, p. 153.]

There are probably five different answerers, when five different companies were asked about their views on Customer Relationship Management. CRM is not just a single application that will solve all customer related problems in an organization. Rather, CRM is almost a “state of mind” within an organization in which three key functional areas of the organization are integrated. These areas are sales, marketing and customer service.

Therefore you can define CRM as follows: "CRM is a business strategy to select and manage customers to optimise long-term value. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales and service processes."[4]

2.2 Systematization of CRM

CRM has to enable the companies to know and to identify the customers, so that a marketing campaign can be exactly aimed to the target group. At the same time the relationship to the customers has to be individual to arise customers’ benefit and on the other site to increase the profits. This means to identify the most valuable customers and to provide these with the best possible service. These points can only be reached, if the informational process and the operational process are directed to the customers. The CRM solution design is also typically split into three main areas:

- Analytical CRM
- Operational CRM
- Collaborative CRM

illustration not visible in this excerpt

Figure 3: Systematization of CRM []


[1] see Bundesverband deutscher Banken (2004), p. 18

[2] see Bundesverband deutscher Banken (2004), p. 10

[3] see Bundesverband deutscher Banken (2002), p. 40

[4] see

Excerpt out of 19 pages


Customer Relationship Management in Banking Sector
Dongbei University of Finance and Economics  (Dalian/China)
Sales Management
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ISBN (eBook)
ISBN (Book)
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519 KB
Customer, Relationship, Management, Banking, Sector, Sales, Management
Quote paper
Nils Merkel (Author), 2005, Customer Relationship Management in Banking Sector, Munich, GRIN Verlag,


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