CUSTOMER RELATIONSHIP MANAGEMENT AND CUSTOMER DEPOSIT MOBILIZATION AT LOWER PRA RURAL BANK IN GHANA

ABSTRACT

Effective and well implemented customer relationship management practices have assumed significant attention among scholars and practitionersin recent times. However, despite extensive literature on CRM, studies onhow CRM practices influence customer deposit culture is very limited in the banking industry, particularly in Ghana. Lower Pra Rural bank, over the years has introduced various deposit products such as Ebusua MfreYie, Kese Wokan and Gyedzi to improve deposit mobilisation which may have translated into increase in total deposit from GH¢56 million in 2015 to GH¢64 million in 2016 representing an increase of 14.3 percent. While management has also invested in CRM strategies, there is the need to empirically establish the degree of influence of CRM initiatives on deposit performance of the bank. This study formulates research objectives to examine the extent of influence of CRM practices on deposit mobilization of the Bank. This quantitative survey research sampled 273 customers of the bank using simple random sampling technique. Descriptive and regression analysis was done to arrive at the findings. First, the study found that customers of the bank perceive CRM practices as effective. The study further found that CRM practices improve deposit mobilization level of the banks. Effective employee-customer communication and proper complaint handling are the CRM practices that significantly improve deposit levels of the bank. The study therefore, concludes and recommends that management of the banks review their CRM practices to ensure that employee are able to deliver best quality banking at first instance.

CHAPTER ONE

INTRODUCTION

Introduction

The principal goal of every organisation is to meet the ever changing needs and demands of all stakeholders including customers and investors (Amoako, 2012; Kumudha & Bhunia, 2016). This goal will not only ensure the survival of the organisation but also allow it to flourish in the competitive business environment (Lo, Stalcup & Lee, 2010). Globally, the competitive nature of consumer market coupled with ever-changing consumer expectations mean that service organisations maintain strong customer relationship that is capable of providing maximum satisfaction and driving customers to continue business (Mohammed & Rashid, 2012).

The emphasis on what customers generally think and feel regarding the firm and its customer services is central to an organisation’s success, thus rendering traditional marketing mix not enough to propel business success (Anabila & Awunyo-Vitor, 2013). Due to new trend in service organisations, most managers and owners have resorted to a more customer-oriented approach to satisfy and encourage customers to continue and even improve their transaction with the organisation (Foss & Stone, 2001). A customer-oriented approach that is based on an intimate relation has become the modern practice that drives the success of organisations.

Background to the Study

Irrespective of the nature of the service run by the organisation, a good customer relationship are necessary since it helps to anticipate customer future needs, listen to their view, and respond to them (Xei, Li, Ngai & Ying 2009; Nguyen & Mutum, 2012). CRM has also been described as an activity or a process of collecting clients information such as past purchase records, and other records such as demographics, preferred media channel, to create tailored service offering that will build his/her loyalty and company’s performance (Niraj, Gupta

Narasimhan, 2001; Verhoef, 2003; Venkatesan & Kumar, 2004). CRM has become actual actions of an organisation to create maximum benefits for clients in order to encourage them to continue doing business with the organisation.

Over the years, one industry in the service sector that has received scholarly attention is the financial institutions. It is important to recorgnise that, the financial sector in most developed and developing countries such as Ghana have undergone major changes through the financial sector structural adjustment programme (Anabila & Awonyo-Vitor, 2013). The regulatory and legal amendments, mergers, acquisitions and technology revolution have further contributed dramatically to stiffer competition and pressures on banking institutions to improve their revenue mobilisation performance in order to satisfy stakeholders (Anabila, et al., 2013).

In a competitive banking environment, banks have the priority of attracting profitable customers, encouraging them to constantly deposit and transact business with them(Appiah, Nti, Mensah, Obeng & Ayeh-Fianko, 2012).This agenda has been occasioned by the pressure on managers of financial institutions to remain sustainable, profitable in order to constantly provide acceptable returns to shareholders (Agyapong, Agyapong & Darfor, 2011).

Banks and other service providers realize the importance of CRM and its potential to help them acquire new customers, retain existing ones and maximize the return of stakeholders (Boadu, Dwomo-Fakuo, Boakye & Kwaning, 2014). In view of this,Hunt and Morgan (2005) opined that CRM practices such as service commitment and service trust remain key antecedents for success of a customer-firm relationship strategy (Narteh, 2009). Ndubisi and Wah (2005) further identified six practices of CRM including trust, commitment, communication, conflict handling, competence, and social bonds. Indeed, organisations enjoy severally from effectively implementing CRM programmes (Buttle, 2009). When successfully implemented, CRM programmes lead to customer’s loyalty with the organisations and improve business transaction (Munir & Lodhi, 2015).

According to Shaon and Rahman (2015) and Nguye and Mutum (2012), effective implementation of CRM practices is important for any organisation to generate a more and detailed information such as customer personal records, frequency of service, changes in customer’s tastes, interest and preferences of the purchases. This information is essential for organisations to best tailor their services to sufficiently satisfy customers of the bank and encourage them to improve their culture transaction and not to switch to other banking institutions. Contrarily to the benefits of CRM practices, a level of dissatisfaction with CRM practices influence the relationship, thus, negatively affecting customer desire to transact business with the organisation (Al-Qeed, ALsadi & Al-Azzam, 2017).

Good relationship management in the financial institution can bring the dream customer to the institution which will boost its financial strength (Al-Qeed, et al., 2017). In such a competitive banking industry, banks can maintain and boost the banking performance of clients by providing comparatively better services. Once an organisation is able to keep these loyal customers, it becomes difficult for competitors to win their transactions (Foss & Stone, 2001). Therefore, this study is an attempt to empirical investigate show banks can deploy CRM strategy to improve deposit mobilsations. This research is important because, CRM is a sound business strategy to identify most profitable customers and prospects, devotes time and attention to expanding account relationships with those customers through customized service delivered through the various sales channels that the bank uses.

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Item Type: Ghanaian Topic  |  Size: 83 pages  |  Chapters: 1-5

Format: MS Word  |  Delivery: Within 30Mins.

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