Feature Article of Tuesday, 6 November 2007
Columnist: Dzato, Robert Kwame
Why Ghanaian Banks must compete on Customer Relationship Management A view from Afar
The banking industry in Ghana has seen phenomenal growth over the last 5years with industry net profit increased by about 100%! However net profit after tax margin fell by 1.7%, return on capital employed fell by 7.8% and return on assets slept by 0.8% over the same period (Pricewaterhousecopers, 2007). With five new entrants on the banking scene since 2002( averaging 1 entrant per year); increasing demands on banks to adopt International Financial Reporting Standards (by 31st December, 2007); and the Bank of Ghana removal of 15% secondary reserve requirement, things can only get tougher, aggressive and competitive! This article introduces the concept of Customer Relationship Management (CRM) and the urgent need for Ghanaian banks to pursue this strategic, differentiating and competitive tool if they are to survive.
Managing the art of creating value for the customer by organisations is customer relationship (hereafter, CRM).CRM strategy of any financial services organisation should focus on integrating people, processes and technology to maximise the value exchange.
At the heart of this value creation process is the customer and customer service. Banks, like any other business have no business without customers. We exist because our customers exist. Customers pay our salaries, deliver shareholders return and define our market share. Treating the customer as king and fairly so is basic duty of Ghanaian banks as the competition in the industry gets tougher. While it is all good to see most banks in Ghana aggressively expanding their branch networks, introducing market-disruptive products and services and, focusing on brand presence, these strategies can easily be copied by competitors. Provision of world class service is the only factor financial services organisations have effective control over, and can set them apart from the competition and peers.
So where should Ghanaian banks start from?
First, understand why customers bank with you. Possible reasons why they are already doing business with you may include: Word of mouth referral, you provide unrivalled products and/or service, you have competitive pricing or you are just lucky to be the only bank located in that locality. As mentioned before these factors cannot be sustained in a competitive financial services industry. Remember there is nothing more changing like change and the banking industry is not a static one. In fact, what one bank can do today, another can do much better; and today’s best performance is but tomorrow’s average effort. Whereas you are the lucky one located in that village today, the universal banking licence has surely opened the floodgates. Just watch your back!
Second, evaluate the customer experience. Customer experience is simply what happens when the customer interface with your bank when considering buying decision. If you know what your customer experiences, you can review what you deliver and align how this is delivered to their needs. Customers don’t want products nor do they want to be sold to. They need and buy solutions to their problems. Thus you need to establish what is important to customer? What are their priorities? What is price impact? What is their preferred delivery channel and what is their level of awareness? For example, whereas very busy professional or business customer will be put off your branch because of your queues and thus needs targeted with telephone or internet access, another customer will need to see someone in the branch no matter how long it takes to wait in the queue. Find the right balance!
Next, maximise technology. The point is not how sophisticated your technology is but the ability of staff to make use of this at the time of customer interfaces with your bank. The recognition of customer information as valuable business asset and the proactive use of this for relationship marketing are important. As the market gets aggressive, tools such as computer-telephony integration (CTI) - integration of all customer contact channels (voice, email, web, fax, etc.) with computer systems; Interactive Voice Response (IVR) -an invaluable asset in providing automated customer service 24/7 in any language providing answering machine; and Caller Line identifications (CLI)- facility which allows customers to see who is calling them before they answer the phone, will be the future of the industry. These technologies will come with the attendance dilution of traditional customer facing roles through call centre operations.
Last and the most important is treating your staff as customers. If you want to create value in the market place, first create value in the work place! The importance your staff accord customers is a direct reflection of how they feel valued by management. Customer service must be a bank-wide issue, not just a challenge for the counter manager or the customer service desk, nor the headache of just the customer care team. Top management must approach this from strategic point of view and consider CRM as an amalgam of business and customer strategy. It is a must that every colleague, whether customer –facing or not receives appropriate training in customer service. Customer service must be at the centre of your bank’s culture and philosophy. Failure to do this will see demoralised staff and higher staff turnover as the banking industry gets competitive, aggressive and customers become more aware of their rights.
In conclusion, the days when the provision of financial services was preserve of certain banks are long gone. The era when the most important person in branch was the bank manager and the customer was at the receiving end will never come back! The Ghanaian banking industry is set for more robust competition. Traditional banks, unless they wake up to address the real needs of customers and provide solution to their problems through relationship management, excellent customer service and appropriate CRM strategies, will continue to loose market share; net profit after tax will be forced down and you either change or die. Here comes the customer age! Customer is king, and customer is always is always right!
Robert Kwame Dzato: BMS (Hon), MSc Int. Fin. Reporting & Consultancy Student Member, Chartered Bankers Institute, Scotland Relationship Business Bank Manager, HBOS Plc, UK
Personal email: [email protected]