Introduction
This research aims at developing a framework for customer relationship management (CRM) in the UAE banking industry. It will utilize best practice examples from successful foreign institutions together with local conditions within the UAE. The study will lead to greater CRM outcomes hence higher profitability.
Statement of the problem
CRM adoption in the Middle Eastern banking industry lags behind other global players. Although the UAE is ahead of its counterparts with regard to this parameter, banking institutions still compare poorly to other international banking firms. Currently, some companies have realized the relevance of customer relationship management, but they are yet to experience the benefits of its adoption fully. Additionally, companies are still looking at CRM as a short term strategy. Few banks are yet to embrace the long terms benefits of investing in CRM. They do not understand the relevance of this investment, so only a fraction of them is tapping its full potential. Some technical hitches are also standing in the way of CRM progress in the UAE banking industry. Some of them lack support from professionals, or they just do not have sufficient applications to compete with international banking institutions (Lambert, 2010).
A need for great customer satisfaction in the banking industry necessitates more research into the area. Furthermore, more banks in the UAE have realized that their e-business platforms are not up to standard. It is for these reasons that the research will attempt to provide a framework for CRM. At the end of the research, banking institutions that want to improve customer satisfaction and increase their commitment to e-business will have mechanisms that they can use to achieve those goals.
Banks in the UAE are yet to make a link between knowledge management or data warehousing and better customer experiences. They need to understand how they can leverage on their interactions with clients as well their inquiries. The products and services offered by the institutions need to reflect these needs, as well. Banks have not exploited their Information Technology (IT) systems fully, as well. Customer relationship management is the means with which they can deal with all these issues proactively (Sin et. al., 2005).
Study questions and hypothesis
The key research hypothesis in the study is “Best practice examples from firms in developed nations can provide UAE banks with a framework for CRM”. The main aim of the research is to develop a framework for CRM in the UAE banking industry. To achieve this aim, one must look at best practice from key institutions in the industry. However, because such examples are few and far between in the UAE, it will be more effective to use foreign banks to draw lessons from them. Not all the best practices will be suitable to the UAE; consequently, the researcher will also incorporate local situations in the framework so as to make it practical. This study will, therefore, rely on information that is available on leading banking institutions in the world.
The following are the research questions:
- Can UAE banks effectively utilize contact channel management in CRM?
- What is the relevance of enterprise wide management in CRM initiatives, in UAE banking institutions?
- Can banks in the UAE leverage on customer data management to make CRM initiatives profitable?
- How do banks manage their IT systems in order to enhance CRM in the UAE?
- Can banks use their business processes to generate value for the client?
Contact channel management is the process by which institutions control their interactions with customers through different contact channels. Every contact is an opportunity to increase their service outcomes. Consequently, it will be essential to link contact channel management to database management and decision support in CRM. The second research question talks about enterprise wide management. This concept refers to involvement of all stakeholders in a customer relationship management initiative. If a company wants to reap full benefits from CRM, then it must include all stakeholders in the process. Their activities should be customer-centric such that an organizational culture of customer focus develops. Every single process or job function would be viewed as a step towards meeting customers’ needs. Customer data management is a key component of the third research question. The term refers to the integration, analysis and application of various data sources about the customer to meet their needs. A firm that manages its customer data effectively will notice missing knowledge gaps about customers and thus work towards filling those gaps. It will gain a lot of insight about its buyers and thus establish a more intimate relationship with them. IT is a critical part of the banking sector, and any institutions that want to implement CRM needs to do IT management well. Information technology provides institutions with a unique tool that they can use in order to analyze and track interactions with their clients. Companies have several business processes that they rely on in order to deliver their services. It is essential to treat each process as an asset so as to reap maximum rewards. Because of this, research question five will unravel how organizations can bring out the best in their processes (Liu, 2007).
Significance of the study
In the UAE, research on CRM is still underdeveloped; people need to learn about the different platforms available to them in CRM. Most research tends to focus on case studies in different companies or success stories. Many know little about how the banking industry can best apply customer relationship management. This research will assist banks in the UAE to implement customer relationship management effectively by preparing a framework for the strategy. It will be a compilation of best practice among institutions that have succeeded at the concept. Consequently, others that are yet to report the same results will follow suit.
Upon completion of the research, UAE banking firms will know how to use customer data whenever they get in contact with their clients in order to increase customer satisfaction. The research will help several organizations to develop customer focus. They will know how to create a culture that revolves around the consumer in every stage of their business processes. It is likely that organizations will become highly profitable if they place the customer at the centre of everything they do. The study will also assist banks to know how they can manage their customers’ data in order to learn extra information about them. They will have a clear path concerning how to use business intelligence or management to achieve effective CRM. It will be insightful for many companies to learn how they can use IT to manage customer relationships as this study will focus on IT management in CRM, substantially. At the end of this study, banks in the UAE will learn about how to prioritize processes that relate to clients. They will also know how to increase cost efficiency as well as get the most value from their activities.
Several banking institutions in the UAE still perceive customer relationship management as an interruption in their daily endeavors. They merely collect data about past transactions, some common service preferences and birthdays. Many banks may send unwanted emails to clients and only personalize their services to a minimal extent. As a result, they rarely see any improvements in revenue or profitability. Such approaches illustrate that UAE players misunderstand CRM; it is essential to change this perception. The study will achieve this goal by demonstrating that other institutions from different parts of the world have reaped maximum benefits from CRM. It will guide financial institutions in the UAE on how they can also report similar outcomes.
The study will provide certain deliverable outcomes to the concerned firms. First, they will benefit from an improved customer service. It is likely that if they use the framework they will have efficient call centers. Additionally, they will do cross selling of their services more effectively than before. An effective CRM framework will assist banks in the UAE to secure sales deals at a faster rate. It will assist the institutions to discover new clientele. The study will also simplify marketing processes in these firms. Finally, the research will increase revenues from customers. However, these outcomes may only be possible if firms follow the framework and combine it with their personal situations (Kumar & Kanchu, 2012).
Definition of terms
Perhaps the most critical definition in this research is CRM. Customer relationship management is a philosophy in which the customer is the epicenter of a firm’s culture, processes and activities. The main goal of CRM is to meet customer needs to as to facilitate greater profitability. Unlike what some small organizations have assumed, CRM is not a software product and neither is it a fancy way of increasing sales. CRM requires a paradigm shift in an organization away from its local processes or leaders to its clients. Such firms must continuously discover new ways of satisfying client needs.
Front office CRM is also another term that one will encounter in the field of CRM; operational CRM is another way of describing the term. These are the areas where a bank makes contact with its clients directly. Front office CRM may encompass emails, websites and branch transactions in the banking industry. Not all banks use their contacts to enhance CRM, but it is a unique opportunity to do so. Typical front office operations include call centers, emails, direct sales, web access or use of the banking services.
Back office CRM is the analytical dimension of CRM. It entails making sense of front office operations by integrating customer information and establishing new ways of satisfying the consumer. This can be done through the use of business intelligence tools. IT is a critical part of this process because it is the means with which firms integrate and analyze information about the customer. The aim of back office CRM is to ensure that a company creates a full picture of its clients. The less the gaps it has about its clients, the more far-reaching its strategic CRM (Afsaret. al., 2010).
CRM vendors are those organizations that offer software packages to institutions in order to facilitate customer relationship management. Key players include Sichel and SAP. The latter is a firm that offers CRM solutions for large and small organizations. Additionally Sichel is a software company managed by Oracle. It specializes in on-demand software services.
Limitations of the study
This research will not be a case study analysis of current UAE banking practices. As mentioned earlier, insufficient information exists concerning CRM in UAE banking; therefore, the study will focus on best practices from successful foreign banks. It will not evaluate local situations as these are not sufficient to offer a comprehensive CRM framework.
The study will not be a magic bullet in CRM; it will only provide structures that must be combined with the values and goals in a bank. Furthermore, the capabilities and resources available to an institution will determine how successful outcomes will be. Therefore, financial bodies cannot implement the recommendations without reflecting on external and internal weaknesses (Kundi. and Shah, 2009).
Most of the material in the industry will not come from primary data collected from selected institutions. This paper will depend on publically – available information about CRM practices in these foreign banks. Therefore, banks in UAE will need to exercise caution when considering this approach as the problems of relying on secondary research will affect outcomes. Weaknesses and assumptions in their analyses will also change reports in the analysis.
The research will only select best practices from institutions; it will not focus on trends in the CRM industry. If too much emphasis goes to emerging trends, then banks in the UAE will not learn about the fundamentals of the practice that got those firms to their successful positions in the first place. Furthermore, most trends come and go, yet the point of this study is to dwell on a framework that will work for UAE banks regardless of the time they choose to implement it. Trends also depend on the external environment in which a firm operates. For instance, some banks in the US may need to notify clients if their personal information goes through a security breach because of the California Information Practice Act. Such a measure would not make sense for UAE firms. Therefore, only general experiences will apply in this analysis.
This research will also not set measurable outcomes that organizations can hope to achieve if they use the framework. For instance, firms can state that customer retention rates will increase by 10% or operating costs will reduce by 15%. Customer relationship management is a long term process that requires continual improvement and commitment to the strategy. As a result, the study will not promise organizations certain percentages after a time range (Shibu. 2011).
Sometimes some institutions may choose to outsource their CRM processes to third party vendors. This study will not focus on such institutions as they may have their own approach to CRM. It will only deal with those individuals that take a personal approach to the plan.
The suggestions in this research will only be applicable to firms in the United Arab Emirates. As mentioned earlier, local factors in the UAE will be in this framework. The Middle Eastern region has unique needs with regard to its level of CRM. Therefore, other non-UAE countries may have to incorporate their respective local situations into the framework before applying it to their issues.
References
Afsar, B., Rehman, A. & Bangash, R. (2010). Customer relationship management in banks: Strategies and model for banking CRM. NY: LAMBERT Academic Publishing.
Kumar, M. & Kanchu, T. (2012). Customer relationship management with reference to banking industry in Kaimnagar and Warangal. Asian Journal of Multidimensional Research, 1(6), 32-41.
Kundi, G.M. and Shah, B. (2009). IT in Pakistan: Threats and opportunities for eBusiness. The Electronic Journal on Information Systems in Developing Countries, 36(8), 1-31.
Lambert, D. (2010). Customer relationship management as a business process. The Journal of Business & Industrial Marketing, 25(1), 4.
Liu, H. (2007). Development of a framework for customer relationship management (CRM) in the banking industry. International Journal of Management, 24(1), 15-33
Shibu. N. (2011). Customer relationship management and banking industry. Journal of Social Sciences, 36(17), 72-79.
Sin, L., Tse, A. & Yim, K. (2005). CRM conceptualization and scale development. European Journal Market, 39 (11/12), 1264-1290.