Factors Influencing Towards Successful Implementation of CRM Systems in Local Commercial Banks in...

A Study of Factors Affecting Towards the Implementation of

Customer Relationship Management Systems in Local

Commercial Banks of Sri Lanka

Module Code and Title

BLB00096 – 3 Investigations

Submitted By:

Archchana Vekneswaran

Intake Code:

GF11 B1BA

Submitted to the Business School

In partial fulfillment of the requirements for the degree of

Bachelors of Arts (Hons) in Business Administration

Supervised By:

Prof. Kennedy Gunawardena

Staffordshire University

25th June 2012, Colombo

CRM Implementation in Local Commercial Banks CB 003654

ABSTRACT

This study analyses the factors which contributes towards the successful CRM system

implementation in locally established commercial banks of Sri Lanka. Maintaining

effective relationships with the customers is of great importance in today’s context for

commercial banks due to intensified competition from the external forces such as

dynamic nature of the environment and evolvement of technology. Bankers have to

consider various factors when it comes to CRM in the context of technological systems

such as internet banking, ATM, mobile banking etc.

The major objectives of this report are to identify the extent computerized operations in

banking, to identify the current barriers to CRM implementation in banks, to identify

factors affecting towards the implementation of successful CRM, to figure out the

relationship between factors and successful CRM implementation, and to provide

possible recommendations to overcome issues. The main factors identified for analysis

are technological orientation, customer centricity, external competitive pressures, top

management support and leadership, employee behaviour and financial aspects. Under

literature review the above factors were elaborated in the context of financial sector

institutes like commercial banks.

Under methodology conceptual framework was developed based on the review of

literature. Stratified random sampling method was adopted to select the sample from the

local commercial banks which has implemented CRM technology in their current

operations. Proposed statistical methods of the previous researches are also included for

investigation.

Key words: Customer Relationship Management, Technology

Asia Pacific Institute of Information Technology 2


ACKNOWLEDGEMENT

Author would like to thank her “Research Methods” lecturer Prof. Kennedy Gunawardane

for his continuous support and guidance in the preparation the research proposal. Also the

author is thankful to Dr. Mahesha Samarathunga, for directing them in the correct path

regarding citation and references.

Author also wishes to extend her gratitude to Dr. Vellnambi and M.Karunanithy for their

help and support to identify topic related articles from Sri Lankan context. The author is

also wishes to thank the librarian. Author also wishes to thank all the branch managers for

spending their time to fill in the questionnaires. Author is also grateful to fellow batch

mates and friends for their encouragement and support when facing difficulties.

Author owes quite a lot to her family who provided the chances to fulfill her career

objectives and great support throughout the studies. Author would like to dedicate this

study to them as an indication of their significance in this study as well as in her life.

Lastly, the author offers her regards to all those who supported her during the completion

of this report.

The author is responsible for any errors that remain in this report.



TABLE OF CONTENTS

ABSTRACT....................................................................................................................................2

ACKNOWLEDGEMENT..............................................................................................................3

TABLE OF CONTENTS................................................................................................................4

LIST OF TABLES..........................................................................................................................5

LIST OF FIGURES........................................................................................................................6

LIST OF ABBREVIATIONS.........................................................................................................7

CHAPTER 1: INTRODUCTION TO THE STUDY.......................................................................8

1.1 Introduction...........................................................................................................................8

1.2 Problem Statement................................................................................................................9

1.3 Problem Justification.............................................................................................................9

1.4 Objectives of the study..........................................................................................................9

1.5 Significance of the study.....................................................................................................10

1.6 Scope and Limitations of the study.....................................................................................10

CHAPTER 2: LITERATURE REVIEW.......................................................................................11

2.1 CRM and Banking Sector – A Technological Stance..........................................................11

2.2 Applications of CRM..........................................................................................................11

2.3 Electronic Banking in Sri Lanka: Prospects and Constraints...............................................12

2.4 Challenges ahead for Sri Lankan commercial banks which could impact CRM technology adoption....................................................................................................................................13

2.4.1 ICT revolution and impact on banking.........................................................................13

2.4.2 Challenges posed by globalization...............................................................................14

2.4.3 Race for adopting new technologies.............................................................................14

2.5 CRM Implementation..........................................................................................................15

2.6 Literature on Hypothesis Variables.....................................................................................16

CHAPTER 3: RESEARCH METHODOLOGY...........................................................................25

3.1 Conceptual Framework.......................................................................................................25

3.2 Hypothesis Development....................................................................................................26

3.3 Population and Sampling.....................................................................................................28

3.4 Proposed Statistical Methods..............................................................................................30



4. DATA ANALYSIS...................................................................................................................32

4.1 Data Collection Methodologies...........................................................................................32

4.1.1 Primary Data................................................................................................................32

4.1.2 Secondary Data............................................................................................................33

4.2 Data Analysis.......................................................................................................................34

4.2.1 Objective 1...................................................................................................................34

4.2.2 Objective 2...................................................................................................................48

4.2.3 Objective 3....................................................................................................................54

4.2.4 Objective 4....................................................................................................................64

4.2.5 Objective 5....................................................................................................................67

CONCLUSION.............................................................................................................................69

APPENDICES..............................................................................................................................70

REFERENCES.............................................................................................................................80

LIST OF TABLES

Table 1: List of Hypothesis...........................................................................................................27Table 2: Proposed Statistical Models............................................................................................31Table 3: Reliability of the statistics................................................................................................33Table 4: Growth of LCB Branches in Sri Lanka...............................................................................35Table 5: Growth of Domestic LCB branches in Colombo...............................................................36Table 6: Telecommunication Services Trend in Sri Lanka 2001 - 2009..........................................38Table 7: Features of Different Forms of E-Banking........................................................................40Table 8: Trend of ATMs in SL.........................................................................................................41Table 9: Credit Card Transaction Trends.......................................................................................42Table 10: Trend of Value per Transaction - Credit Cards...............................................................42Table 11: Debit Card Transactions of LCBs in SL............................................................................43Table 12: EFPOS Trends of LCBs in SL............................................................................................44Table 13: Online Banking Trends in SL...........................................................................................45Table 14: Mobile/Tele Banking Trends of LCBs in SL.....................................................................45Table 15: Composition of Electronic Payments.............................................................................46Table 16 - Awareness and Use of Electronic Banking Solutions....................................................48Table 17: Legislations governing E-Banking Transactions..............................................................50Table 18: Operational Risks of E-Banking Solutions......................................................................51Table 19: Barriers in E-CRM Implementation in LCBs of Sri Lanka - Primary Data.........................53Table 20: Mean and Standard Deviation Statistics of Variables....................................................54



Table 21: Frequency Table for Technology Orientation................................................................54Table 22: Frequency Distribution Table for Customer Centricity..................................................56Table 23 : Frequency table for External Competitive Pressures....................................................57Table 24: Frequency table for Top Management Commitment and Leadership...........................58Table 25: Frequency Table for Employee Behaviour.....................................................................60Table 26: Frequency Table for Financial Aspects...........................................................................61Table 27: Frequency table for Successful CRM Implementation...................................................62Table 28: Correlation of Technological Orientation and CRM Implementation............................64Table 29: Correlation of Customer Centricity and CRM Implementation......................................64Table 30: Correlation between External Competitive Pressures and CRM Implementation.........65Table 31: Correlation between Top Management Commitment and CRM Implementation........65Table 32: Correlation between Employee Behaviour and CRM Implementation..........................66Table 33: Correlation between Financial Aspects and CRM Implementation...............................66

LIST OF FIGURES

Figure 1: Conceptual Framework..................................................................................................25Figure 2: Sample Selection............................................................................................................28Figure 3: Population and Sampling...............................................................................................28Figure 4: Response Level for Distribution of Questionnaires........................................................32Figure 5: Banking Density of All the Banks by District - 2011........................................................34Figure 6: Growth of LCB Branches in Sri Lanka..............................................................................35Figure 7: Expansion of Commercial Banks and No of Commercial Bank Branch Density per 100000 for SL.............................................................................................................................................36Figure 8: Growth of Domestic LCB's in Colombo District...............................................................37Figure 9: Total Number of Domestic LCB branches in Colombo in 2011 (Population of the Study)......................................................................................................................................................37Figure 10: Telecommunication Trends in Sri Lanka (2001-2009)...................................................39Figure 11: Evolution of E-CRM Solutions of Sri Lanka....................................................................40Figure 12: Trend of Value per Transaction - ATM..........................................................................41Figure 13: LCB ATMs per 100,000 people......................................................................................41Figure 14: Credit Card Operations per 100,000 people.................................................................42Figure 15: Trends of Debit Cards Issued and Transactions............................................................43Figure 16: Trend of value per transaction via EFTPOS...................................................................44Figure 17: Trend in transaction via online banking sites of LCBs...................................................45Figure 18: Trend in Mobile/Tele banking Transactions.................................................................46Figure 19: Composition of Non Cash Transactions........................................................................46Figure 20: Transaction cost for bank Vs E-CRM Solutions.............................................................47Figure 21: Risks involved in Internet Banking................................................................................49Figure 22: Histogram for Technology Orientation.........................................................................55



Figure 23: Histogram for Customer Centricity...............................................................................56Figure 24 : Histogram of External Competitive Pressures.............................................................57Figure 25: Histogram for Top Management Commitment and Leadership...................................59Figure 26: Histogram for Employee Behaviour..............................................................................60Figure 27: Histogram for Financial Aspects...................................................................................61Figure 28: Histogram for Successful CRM Implementation...........................................................63Figure 29: Solution Model for Successful CRM Implementation...................................................68Figure 30: Sample Representation of LCBs....................................................................................75Figure 31: Location Representation in the sample........................................................................75Figure 32: Private Vs Government Banks Representation in the sample......................................76Figure 33: Gender of the respondents..........................................................................................76Figure 34: Age Composition of the Sample...................................................................................77Figure 35: Educational Qualifications of the Sample.....................................................................77Figure 36: Customer Base of the Samples.....................................................................................78Figure 37: Annual Revenue of the Sample Branches.....................................................................79

LIST OF ABBREVIATIONS



CHAPTER 1: INTRODUCTION TO THE STUDY

1.1 Introduction

In today’s context customers are becoming increasingly sophisticated and demanding for

better product or service which is often referred by the phrase “Customer is the King”.

For any industry customers have become their main focal point. This emerging trend has

lead to the concept of Customer Relationship Management (CRM). Technology plays a

vital role in such context to manage customer profiles and to maintain long term stable

banking relationship. Banking operations has increasingly become customer centric now

days. Competition has intensified among the retail banks to create customer loyalty by

escalating usage of customer details and offering customized services. Banks started to

use CRM technologies such as internet banking, mobile banking, e-mails, call centers etc

to provide an enhanced service experience to their customers.

In global context, 83% of customers are satisfied with internet banking, and 79% prefer

ATMs (E & Y, 2011). Call centers are not that preferred and 42% of the customers never

used mobile banking (E & Y, 2011). Customers demanding for more personalized

services from call centers and require more availability of ATMs and user friendly

internet banking sites (E & Y, 2011). Even though most of the matured markets have

sophisticated technological infrastructure, customers’ reliability drop questions on

rebuilding trust soon after the credit crunch in 2008.

In Sri Lankan context, Commercial banks heavily started following international trends in

adopting CRM technologies in banking. Banks offer similar CRM solutions as in the

global scenario to provide services anywhere and at anytime. Sri Lanka experienced a

phenomenal growth in ICT over last two decades which is evident through the large

penetration of 68 mobile phones per 100 people (Economic Review, 2011). Even though

the internet usage rate stays at 8.3% (Internet world stats, 2011) these developments

shows a strong potential for the providing of CRM solutions via e-banking, m-banking etc

(Economic Review, 2011). These facilities were mostly used by commercial customers



where as ATM has been the most popular CRM solution (Economic Review, 2011).

Customer awareness on above facilities are very minimal as they were not publicized

(Economic Review, 2011). It is evident that CRM related technologies are new

phenomenon in Sri Lanka.

1.2 Problem Statement

What are the factors affecting towards the implementation of CRM in local commercial

banks and how to overcome those barriers?

1.3 Problem Justification

It’s the foremost challenges for commercial banks to acquire capacity to serve its clientele

efficiently. Efficiency refers to offering requested service on time, at superior quality and

in competitive prices. To improve the reach for their customers, one possibility is banks

should increase their market presence by opening various branches. Even though this

serves the issue, administration cost and having skilled staff in all branches is really

expensive and ROI will be very low. This would erode the viability of having branches.

Limiting only to physical location would place barriers in future expansions for a bank.

So multi channel integration has become tremendously important feature of a bank to

meet customer expectations. Due to this CRM systems have been an important feature of

commercial banks in Sri Lanka.

Even though emergence of technical CRM tools has bought tremendous customer insights

there seems to be issues in successfully adapting to fully fledged CRM services due to

various reasons. These issues are low in the context of foreign commercial banks

operating in Sri Lanka due to the significant difference in the customer segment to which

they serve and also due to the sophisticated systems they have. So the locally established

commercial banks has to combat by determining and overcoming factors influencing

towards successful CRM implementation to sustain their customer focused market

presence.

1.4 Objectives of the study

1. To identify the extent of computerized operations in local commercial banking

sector.



2. To identify the existing CRM implementation barriers in local commercial banks.

3. To identify factors affecting to the successful CRM implementation to the local

commercial banks.

4. To find out the relationship between factors affecting to the successful CRM

implementation to the local commercial banks.

5. To make suitable recommendation to overcome the CRM implementation barriers.

1.5 Significance of the study

The beneficiaries of the report would be the local commercial banking institutions in Sri

Lanka. The barriers and possible recommendations would help the bankers to develop

strategies to overcome current barriers in future. More focus on these technological CRM

would improve their performance in as it would give more insight to customers’ contact

to develop customized services in future. This research could act as a guiding tool to

avoid failures in CRM implementations.

Shareholders of the local commercial banks could also be benefited as successful CRM

implementation would increase the reach of the bank and thereby increases level of

transaction which would lead to better revenue stream. As this could improve the

shareholder wealth the study would be useful from investors’ perspective.

There would be an insight to the ICT sector firms as CRM solution were developed and

installed by them. This research could give indication as to what a bank should

necessarily include in its CRM solution in the case of internet banking, mobile banking

etc. Employees of local commercial banks would be benefited through increased

efficiency in customer interactions. Customers would be benefited at the end as well due

to improved reach in financial solutions from local commercial banks.

1.6 Scope and Limitations of the study

The study will only look into the 40 branches of locally established commercial banks

which use CRM application and do not focus on foreign commercial banks. The area of

study will be limited to Colombo district only. The study will limit the identification of

factors on CRM only related to technology aspect or software applications and not the



traditional face to face customer relationship. Only limited factors appropriate to Sri

Lankan context would be considered for analysis.

CHAPTER 2: LITERATURE REVIEW

2.1 CRM and Banking Sector – A Technological Stance

CRM as concept has been a topic which has been looked at by the researchers globally. It

is one of the fastest growing business trends in the world (Raman et al, 2006). Haq et al

(2010) states “Customer Relationship Management (CRM) is extensively accepted as an

effective tool to collect, analyzes, and translates precious customer information into

managerial action”. Another point of view of CRM as Silva (2006) says, “CRM is a

combination of business processes and technology that seeks to understand a company’s

customers from multiple perspectives to competitively differentiate a company’s products

and services”. CRM could be seen as a method to indentify, convert, acquire and retain

customers (Silva, 2006).

Traditional customer relationship would be only limited to front office face to face

contact but this situation has changed to greater extent over time with emergence of

technologies. With the deployment of ICT tools financial sector firms such as commercial

banks faced a paradigm shift to technology driven CRM practices. One main factor

influenced towards this was banks once faced “data rich and information poor” situation.

Analytical tools were required to analyze customer profiles to improve their cross selling

and up selling opportunities to improve growth and profitability (Campbell, 2003).

Financial firms have been able leverage maximum knowledge out of IT - CRM solutions

to customize their service offering to match the exact needs of customers through tracking

of information (Campbell, 2003).

2.2 Applications of CRM

Perspectives of CRM soft ware technologies could exist in the following three ways:

1. Operational CRM:

The business processes and technologies that help improving the efficiency of day-to-day

customers operations and this include sales and service automation. This service is



provided through many channels such as phone, e-mail, fax etc (O’Brien and Marakas,

2006). It provides a uniform view of the customers to deliver better services (O’Brien and

Marakas, 2006).

2. Collaborative CRM:

It provides easy collaborations between the firm and its customers and improves

efficiency towards service delivery. This would provide greater responsiveness

throughout the value delivery chain (O’Brien and Marakas, 2006).

3. Analytical CRM:

This concerns customer data analysis to improve business decisions. It includes data

warehouse systems, customer profiling, reporting, analysis and data mining. These

analatytical techniques help to improve customizations for a customer’s required needs

(O’Brien and Marakas, 2006).

2.3 Electronic Banking in Sri Lanka: Prospects and Constraints

Together with unprecedented innovations in ICT coupled with finance sector

liberalization electronic applications are emerging in Sri Lanka (Colombage, 2011).

Electronic banking is offered in different platforms such as internet banking, telephone

banking, mobile banking, mobile money etc (Colombage, 2011). The use of electronic

banking such as online banking and phone banking has shown emerging trend in Sri

Lanka (Colombage, 2011).

Commercial banks and other specialized banks started offering virtual banking which

includes the services such as balance enquiry, check status, stop payments, bill payments,

inward remittance and fund transfers (Colombage, 2011). Due to growth of

telecommunication facilities offered most of the population has mobile phone and this has

created the potential for m-banking which has been offered by most of the financial sector

firms (Colombage, 2011). Even though the computer literacy level shows exception 40%

compared to other developing countries still the adoption or knowledge on internet/

mobile banking is very limited (Colombage, 2011). 70% of the population has some

knowledge on ATM usage and most of ultra poor migrant workers have knowledge on

electronic remittance facilities (Colombage, 2011).



A larger proportion of the population states that they have very low savings in the banks

which lead to low mobile banking transactions (Colombage, 2011). Even though

technical infrastructure and literacy rate shows potential for technological CRM aspect,

still the adoption rate from customers’ perspective especially from rural population is

really low and has to be improved through initiatives from the financial sector firms.

2.4 Challenges ahead for Sri Lankan commercial banks which could

impact CRM technology adoption

In a developed millennium era there are various challenges impacting the entire banking

system. In the past with manual human driven systems bankers didn’t had to worry on

developing an entire system. One banker’s failure did not matter for the rest of the banks

(Wijewardana, 2011). But today’s perspective banks are interrelated by electronic mean

and one banks failure may lead to shocks to the entire financial system (Wijewardane,

2011). With fierce competition from global financial market and new technology

introductions, banks have to be vigilant enough to avoid competition from smart

operators who are flexible enough to combat challenges (Wijewardane, 2011). Deputy

Governor of CBSL, identifies 4 main challenges that could impact the current banking

models. They are,

1. ICT revolution

2. Challenges posed by globalization

3. The race for adoption of new technologies

(Wijewardane, 2011)

2.4.1 ICT revolution and impact on banking

Looking back at the last 50 years of banking sector, it could be said banks are the mostly

benefited institutions which gained most of the benefits of ICT revolution with the

deployment of high end modern computers with enormous processing capacity and

advanced communication platforms to interact with customers to fulfill their needs

(Wijewardane, 2011). The applications of high end ICT software and technology had

benefited banks to a greater extent to cut costs and also to surpass location barriers and



helped them to improve their outreach capability. Universal banking services were able to

be provided under one roof (Wijewardane, 2011)

The emerging challenges in this arena require banks to focus more on ICT applications

than on other inputs for service offering. This is mainly because the types of services

demanded by customers and the speed at which it has to be offered cannot be done with

effectiveness without the application of ICT systems (Wijewardane, 2011).

2.4.2 Challenges posed by globalization

According to Wijewardane (2011), “Benefiting from the advancements in ICT and the

opening of economies to free trade, the globalization process has now encompassed the

whole world in an unprecedented manner”. With the application of ICT, human

intelligence and competence could be acquired from any part of the world without any

barriers what so ever. This is popularly named as outsourcing or off shoring

(Wijewardena, 2011). These techniques were majorly used by banking firms.

The challenge from this perspective is that competition would intensify between local and

foreign banks operating in Sri Lanka and quality improvements and lower pricing would

become a mandate requirement (Wijewardane, 2011). This would also require banks to

look deeper and deeper into their R & D to come up with modern solutions to sustain the

competition (Wijewardane, 20111).

The major challenge could be an active partner in the globally competitive financial

services providers (Wijewardane, 2011). If the services offered is only limited to

domestic arena the banks would lose to global competition from international giants of

banking (Wijewardane, 2011).

2.4.3 Race for adopting new technologies

The salient feature of ICT is it would become obsolete within very few months since its

inception. Bankers continuously needs to deploy sophisticated yet user friendly systems

to meet customer’s acceptance but this is not that easy (Wijewardane, 2011). Bankers

who implemented sophisticated systems would sooner find that their system has been

outdone by their competitor. When profit margins are reducing due to competitions it



would be that easy to small scale banks to invest another lot of money into a system

(Wijewardane, 2011). This would raise a question on the bank’s survival in the fight for

supremacy. This has become a serious issue to current banking sector firms

(Wijewardane, 2011).

Tennakon (2011) foresees the commercial banks which understand the market dynamics,

perceive threats, anticipate volatility, and perceive threats, shows high degree of

professionalism and dynamism amidst the competition would only survive in the future.

State banks have to restructure themselves by benchmarking their service standards to

improve competitive position (Tennakon, 2011). Bankers has to publicize their alternative

banking services to the branch banking to the general public so that the there would be a

potential for more adoption rate than now. Trust building has to be offered to build trust.

2.5 CRM Implementation

As stated by Piscar and Faganel (2009), CRM begins with strategic decision to change or

improve business process in the organization and to invest into an improved information

system. Top management commitment and introduction of project manager are of

significantly important features (Piscar and Faganel, 2009). CRM should not be seen as

just a solution but it should be carved as strategy to capture the customers’ mind.

Successful CRM strategy would involve a series of steps.

Various academicians researched on how to develop a successful CRM strategy into the

company. Crocket and Reed (2003) proposes the following.

1. Strategic context: The organization should be able to understand how CRM fits

into the context of the company’s overall business strategy.

2. Capabilities assessment: The assessment is to be done to confirm the company’s

current CRM capabilities.

3. Business case development: Company needs a good reason to implement CRM

other than new technology fever.

4. Implementation plan creation: Create and execute a plan, which clearly indicates

how to reach the goal and execute it.



Wijewansa (2011) says that most of the CRM initiatives face failures dues to taking

CRM as just a technology. Losing focus on customers, poor integration between

departments, employee buy-in, low quality of data etc also contributes towards the

failures of CRM (Wijewansa, 2011).

2.6 Literature on Hypothesis Variables

Factors influencing towards successful CRM implementation in local commercial banks of Sri Lanka

Various contributing factors which would influence towards CRM systems

implementation has been analyzed by many researchers. Out of which following factors

are been selected for the analysis of Sri Lankan position.

2.6.1 Relationship between Technological Orientation and Successful CRM

Implementation

In a banking context, as said by Day (1994 cited Rapp et al 2009) the coordination of

activities is considered as one of the mastering capability, process and skill to develop

customer linking ability to enhance the performance of the firm As per Rapp et al (2009),

“CRM technology orientation is viewed as an activity-coordinating mechanism that

enables a firm to better understand its customers, collaborate with them and develop

timely responses to their needs”. Technological capability of a firm can be defined as

information technology applications that are mostly designed to support customer

relationships (Rapp et al, 2009). Many CRM facilities have emerged over time which

helps the firms to provide enhanced services, marketing and sales etc through ways such

as sales force automation, data warehouses, campaign management, content management,

contact centre management, telesales, and data analysis (Peelen et al, 2009) data

integration and collaboration with external parties (Jayachandran et al, 2005 cited Rapp et

al 2009) etc.

Depending on the banking requirements, functionality, and desired outcome CRM could

be tailored and adopted to meet banking needs (Raman et al, 2006). For a technology to

be successful user’s ability to use it has significant impact on its success (Raman et al,

2006). There has to be a customization option and training for the better adoption of CRM



systems (Raman et al, 2006). Technology and task fit is an essential feature of CRM’s

success (Speier and Venkatesh, 2002). Payne and Frow (2006) emphasizes on the fact

that multi channel integration is an important element in the success of CRM. This

involves the decisions about how to ensure that the customers reached the maximum

benefit out of the CRM systems. This revolves around developing single view customer

interaction points such as m-banking, internet banking, call centers etc (Payne and Frow,

2006).

By figuring out the fact that various resources have to be combined to develop an

idiosyncratic ability (Rapp et al, 2009) scholars say that technological orientation towards

CRM would establish multi dimensional construct which not only comprises the

technology but also the complementary resources (Rapp et al, 2009). Bharadwaj (2000)

suggests that IT infrastructure combined with human resources and IT enabled intangibles

would provide improved performance of the organization. Most of the firms rely on ICT

for the realization of CRM benefits (Peelen et al, 2009). Even though integrated CRM

application would increase the ability to manage customer encounters (Bitner et al, 2000)

the adoption rate of these solutions still remain at low rate (Peelen et al, 2009).

Considering the above facts a relationship could be formulated between technological

orientation of local commercial bank in Sri Lanka and successful CRM implementation.

Hypothesis 1: Technological orientation of the commercial bank positively influences

successful CRM implementation.



2.6.2 Relationship between Customer Centricity and Successful CRM

Implementation

According to Deshapandé et al (1993 cite Rapp et al 2009), Kohli and Jaworski (1990

cited Rapp et al 2009), “Customer centricity is the organization-wide gathering, sharing,

and use of intelligence about customers, and coordinated actions based on that

intelligence”. In order to deliver value to the customers, value creation process should be

able to transform into strategy development process into programs which deliver the exact

expected value to the customer (Payne and Frow, 2005). As the transactions now become

more customers centric instead of only transactions, the overall life cycle experience has

to be from services, communications, price rates offered. These elements should create

positive impact on customer to make them loyal and referrals for future prospects (Peelen

et al, 2005). Given the fact that CRM’s treats customers as its main focal point it is

essential to consider customer centricity as the bank’s distinctive firm level resource

(Rapp et al, 2009) while analyzing the conceptual model.

Banks as one of the service oriented firms should have a customer centric organizational

culture embedded in each of its activities. According to Deshapandé et al (1993 cited

Rapp et al 2009), “Organizational culture is the deeply embedded beliefs and values that

affect a firm’s choice of outcomes and guides the norms and behaviors towards reaching

the outcomes”. So customer centric culture guides the firm’s attitude towards achieving

both strong customer relationships and the development of core capabilities leading

towards the target (Rapp et al, 2009). Day (1994 cited Rapp et al 2009) says that “firms

which are customer oriented posses the cultural characteristics that enable them to

diagnose their current capabilities, anticipate future capabilities and redesign processes to

support new ones”.



Rapp et al (2009) recognizes customer orientation as a specific instance of market sensing

which allows firms to accurately anticipate changes in their markets and respond through

development of new customer focused capabilities. Taking in to consideration the fact

that service providers provide their services as per the requirements made by their

customers. Therefore, it is almost possible to interact or integrate the customers in this

process. Actually in this field almost the entire parts of the service making process are

done or designed by the service providers. More than that, customers make a permanent

control of the process and consequently involve indirectly in it by insisting their specific

requirements. This system would be institutionalized by the presence of a technician in

the factories of the service providers. When working new and difficult procedures, these

technicians take the role of a consultant by finding common solutions and by giving

advices to the workers. All these procedures are sustained by a permanent interaction

between the service providers and the customers. In the view point of Narver and Slater

(1990 cited Rapp et al 2009) it could also be concluded the fact that customer centricity

allows a firm in managing durable relationship with customers which is also influenced

by the customer oriented culture.

Hypothesis 2: Customer centricity of the commercial bank positively influences




2.6.3 Relationship between External Competitive Pressures and Successful CRM

Implementation

As mentioned above in section 2.4, evolvement new technology has created intense

competition in the banking industry has created many challenges to make CRM software

an essential feature to have in the business operations. As per Wijewardane’s (2011)

comments a banking institute would lose its market position if it hasn’t reacted to the

competing factors regarding technology adoption.

Past research papers suggest that higher the uncertainty in a firm’s environment higher

the influence on firm’s adoption rate of IT (Rapp et al, 2009). Eisenhart and Martin (2000

cited Rapp et al 2009) say that firms would require more assets and capabilities while

operating in turbulent environment than in a stable environment. That is when the firm’s

environment is more dynamic and fast changing the management would just focus on

existing assets and would try to build competitive advantage but only when an

environment becomes more competitive and when there is an essential need emerges to

adhere to the market trends and quickly respond to the changing market firms would try

to adopt essential features such as CRM systems (Rapp et al, 2009).

Day (1994 cited Rapp et al 2009) suggests that firms with capabilities to afford resources

that could help in communications, activity coordination, and collaboration with

customers are well equipped to respond to the changes in the market. Rapp et al (2009)

says that “given that customer linking capability represents a critical capability that

connects a firm to its customers, we argue that the value of establishing durable

relationships with customers will be greater in dynamic environments than in more stable

environments”.



Hypothesis 3: External competition for commercial bank positively influences successful

CRM implementation.

2.6.4 Relationship between Top Management Support and Leadership and Successful

CRM Implementation

According to Campbell (2003), “senior management involvement refers to the processes

by which top management signals its support for the generation and integration of

customer knowledge within the firm”. Campbell (2003) stress the point that the

management has to develop its own strategic vision to implement CRM successfully. A

research of Campbell (2003) gives the following conclusions regarding senior

management involvement in implementing CRM systems.

Managers stressed that support and guidance of senior management is very essential for

gaining knowledge competence of customers via CRM adoption where senior

management has articulated a vision around CRM adoption and it has been clearly

disseminated (Campbell, 2003).

In order to maintain a strong customer relationship requires strong strategic vision which

could create a focus on what is required to be maintain strong CRM practices (Peelan et

al, 2009). These would explain the customer oriented values of the firm which could be

transferred to the employees to make it a reality (Peelan et al, 2009). Having a prominent

vision only doesn’t give sustainability for a firm but this CRM vision has to be integrated

to IT and marketing strategy (Glazer, 1997 cited Peelan et al 2009).

CRM strategy refers to ways in which the firm translates its vision a reality. A CRM

strategy would help to translate CRM vision into operational result often referred to as

customer centricity (Peelen et al, 2009). This gives direction to all parts of an

organization to work towards its vision (Peelen et al, 2009).



Hung et al (2009) states that people at the highest levels of an organization would have an

impact towards the resource allocation and adoption of new innovation. He further

elaborates that senior executives in the organizations are critical persons to determine

organization’s attitude towards innovation (Hung et al, 2009) as they are major policy

makers of the company. This characteristic of the top management would be really

important for implementing CRM as they are the leaders of the overall vision of CRM.

An interesting research carried out by Ko et al (2007) implies that CEO’s characteristics

influences the implementation stage of the CRM system. CEO’s age and education level

would impact the adoption process. Younger the CEO and higher the likelihood the he

would accept and implement the CRM system and vice versa (Ko et al, 2007).

Hypothesis 4: Top management support and leadership for commercial bank positively

influences successful CRM implementation.



2.6.5 Relationship between Employee Behaviour and Successful CRM

Implementation

Employees are an effective part in CRM implementation. Possible training has to be

given to make them act in line with CRM strategy of the overall organization. Employee

resistance should be handled in such a way to avoid misinterpretations and to avoid any

interruptions. Sufficient staff empowerment has to be given to delight customers and

essential rewards and motivations have to be given to build up positive attitude in

employees’ mind set (Wijewansa, 2011). Human factors are critical in the process of

implementing CRM to a firm as even though well defined the technology and best the

processes are, still human relativity plays a dominant place (Mendoza et al, 2007 cited

Morena et al 2011). Morena et al (2011) says “This is why factors such as employee

training and motivation and the establishment of appropriate reward systems will be

determinant in employees’ involvement in implementing this type of strategy”. Hung et al

(2009) gives a similar argument saying that lack of skill and technical knowledge would

often delay the innovation options. Staff should have a positive attitude towards

technicality in the opinion of Ettlie (1990 cited Hung et al, 2009).

According to Campbell (2003) says that it is increasingly being acknowledged that the

challenge of realigning employee behaviour closely parallels the challenge of realigning

customer behaviour. Behaviour specific shown a significant positive motivation on

employees and could be listed as one of the effective CRM implementation’s indication

(Campbell (2003). But managers increasingly showed difficulties in improving their

customer focused rewards schemes (Campbell, 2003). When proper reward incentives



were not provided, systems started to show adequate or outdated information due to

changed mindset of the employees (Campbell, 2003).

Employees showed a negative attitude/reluctant towards when they had to learn

something new and complicated (Campbell, 2003). Many firms facing to find out the

ways in which they could cross train their employees to make them conveniently work

with CRM systems (Campbell, 2003).

Hypothesis 5: Employee Behaviour for commercial bank positively influences successful

CRM implementation.

2.6.6 Relationship between Financial Aspects and Successful CRM Implementation

Wijewansa (2011) found out that cost and the financial capability were the first factors to

be found as the influencing factors of CRM implementation in Sri Lanka. A sophisticated

CRM system would require substantial financial investment. So as per Wijewansa (2011),

it could be said as one of the factors to influence CRM implementation of CRM.

Return on investment (ROI) is another financial aspect which has to be considered when

considered a huge investment. This might provide a justification of the viability of CRM

system implementation (Wijewansa, 2011). ROI calculations would enable organization

to identify the areas of highest return which can be implemented first in order to show

benefits at the beginning of the project (Wijewansa, 2011). The ROI should include

measurable and observable metrics in order to show clearly the results that can be

achieved by CRM (Wijewansa, 2011).

A set budget target has to be monitored throughout the project period to control adverse

expences (Wijewansa, 2011). According to Rahimi and Berman (2009), budget over run

is one of the critical failure factors from the system’s dimension. Any deviation from the

pre determined price would lead to additional management discussion and decisions,

which makes this budget element more rigid compared to scope and time table (Rahimi

and Berman, 2009).



Hypothesis 6: Financial Aspects for commercial bank positively influences successful

CRM implementation.

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Conceptual Framework


Independent Variables

Technological Orientation

Customer Centricity

External Competitive Pressures

Top Management Support & Leadership

Employee Behaviour

Financial Aspect

Successful

CRM Implementation

Dependent Variable


Source: Author’s Work

3.2 Hypothesis Development

H1

H01 There is no relationship between the technological orientation and the successful

CRM implementation.

Ha1

There is a relationship between the technological orientation and the successful

CRM implementation.

H2

H02 There is no relationship between the customer centricity and the successful CRM

implementation.

H a2 There is a relationship between the customer centricity and the successful CRM

implementation.

H3 H03

There is no relationship between the external competitive pressures and the



Figure 1: Conceptual Framework


H a3

There is a relationship between the external competitive pressures and the


H4

H04

There is no relationship between the top management support and leadership and

the successful CRM implementation.

H a4

There is a relationship between the top management support and leadership and

the successful CRM implementation.

H5 H05

There is no relationship between the employee behaviour and the successful CRM

implementation.

H a5

There is a relationship between the employee behaviour and the successful CRM

implementation.

H6 H06 There is no relationship between the financial aspects and the successful CRM

implementation.

H a6 There is a relationship between the financial aspects and the successful CRM

implementation.

Table 1: List of Hypothesis

Source: Author’s work



3.3 Population and Sampling

Source: Author’s Work1

1 HNB – Hatton National Bank, NDB – National Development Bank, NTB – Nations Trust Bank, PAB – Pan Asia Banking Corporation.


Main Local Commercial Banks with CRM Applications - 11

Government Commercial Banks – 2Private Commercial Banks – 9

Branches in Colombo - 306 Branches in Colombo - 208

Commercial Bank 65

DFCC Vardhana 21

HNB 61

NDB 23

NTB 25

PAB 23

Sampath Bank 47

Seylan Bank 33

Union Bank 8

Commercial Bank 5 People’s Bank 7

DFCC Vardhana 2 Bank of Ceylon 6

HNB 5

NDB 2

NTB 2

PAB 2

Sampath Bank 4

Seylan Bank 3

Union Bank 2

People’s Bank 119

Bank of Ceylon 89

Sample – 40 Branch Managers

Figure 2: Sample Selection


There are 24 commercial banks registered under Central Bank of Sri Lanka (CBSL,

2012). Out of them 14 banks are locally established banks and 10 banks are foreign

commercial banks (CBSL, 2012). As the research is only based on local commercial

banks 10 foreign banks were ignored. Out of 14 local banks, 3 banks did not focus on

CRM applications as their corporate website did not indicate any such technology usage.

The population is therefore the 11 local main banks. They are Commercial Bank, DFCC

Vardhana Bank, Hatton National Bank (HNB), Nations Development Bank (NDB),

Nations Trust Bank (NTB), Pan Asia Bank (PAB), Sampath Bank, Seylan Bank, Union

Bank, People’s Bank and Bank of Ceylon. The CRM usage was figured out by browsing

the corporate website (for internet banking function and indications of ATM locations) of

the banks. This is the sampling frame work.

Due to time constraints the research would only be conducted in Colombo. The number

of branches was gathered from CBSL report (2011). So, through stratified random

sampling technique branches in Colombo district was listed. Then to arrive at a sample

size of 40, branches of each bank was chosen based on a ratio basis. The formula used for

sampling is as follows:


No of Branches chosen for a bank = No of Colombo district branches of “X” bank

Total no of branches in Colombo (514)X 40


3.4 Proposed Statistical Methods

Author’s Name Title Statistical Methods

Rapp, A.

Trainor, J.K.

Agnihotri, R.

Performance implications of

customer – linking

capabilities: Examining the

complementary role of

customer orientation and

CRM technology

Partial Least Squares

Linear effects model

Cronbach's Alpha

Composite Reliability

Average Variance Extract

Two-step score construction

Harman's one-factor Test

Chi square

Moreno, A.G.

Melendez, A.P.

Analyzing the impact of

knowledge management on

CRM success: The mediating

effects of organizational

factors

Extrapolation method

Mann–Whitney U-test

Correlation matrix

Cronbach’s Alpha

Principal components

exploratory factor analysis

Confirmatory factor analysis

structural equation methodology

Chi-square statistic

Ko, E.

Kim, S.H.

Kim, M.

Woo, J.Y.

Organizational characteristics

and the CRM adoption

process

Mean

Standard Deviation

Correlation Coefficient

Discriminant analysis

Bi- Variate regression analysis

Ordinary least squares

regression

Multiple regression analysis

Hung, S.H. Critical factors of hospital Cronbach's alpha



Hung W.H.

Tsai, C.A.

Jiang S.C.

adoption on CRM system:

Organizational and

information system

perspectives

Discriminant analysis

Multicollinearity

Equality of covariance matrices

Pearson correlation matrix

t-test

Peelen,E.

Montfort K.V.

Beltman R.

Klerkx A.

An empirical study into

the foundations of CRM

success

Correlation

Multiple Regression

Confirmatory Factor Analysis

Wijewansa S M Customer Relationship

Management Systems in the

Sri Lankan hospitality

industry for sustained growth

and development.

Quantitative Research based on case

studies

Table 2: Proposed Statistical Models

Source: Compiled by Author



4. DATA ANALYSIS

4.1 Data Collection Methodologies

4.1.1 Primary Data

The primary data required to add value to the aforementioned objectives of the report are

gathered from 40 bank mangers of local commercial banks that uses CRM technologies

such as ATMs, M-banking solution, online banking, and phone banking solutions etc.

Questionnaires were used as the main tool used to gather information. Questions for the

survey on 7 major variables were carefully written without any technical jargon and

ambiguity. A pilot study among 6 branch managers was done to ensure the quality of the

questions and necessary amendments were made at the end. Few interviews were also

conducted by the author with general managers for background knowledge and to propose

possible recommendations at the end of the study.

52 questionnaires were distributed among Western Province commercial banks for the

primary data analysis. Out of 52, 40 fully completed questionnaires were obtained back

from relevant branch managers in order to satisfy the sample size stated in Chapter 3. The

following image would represent the response rate for the primary data collection.



Figure 4: Response Level for Distribution of Questionnaires


Data gathered through questionnaires were fed into SPSS software for analysis. Based on

the data received a reliability test was conducted to ensure the reliability of responses to

conclude the objectives of the report. Cronbach's Alpha was calculated to exhibit

reliability of Likhert scale questions raised on variables. The results are shown below.

Source: SPSS (2012)

As the reliability score is 0.768 it is evident that the Likhert scale questions are highly

reliable.

4.1.2 Secondary Data

Secondary research data was gathered from various reliable sources such as annual

reports of central bank, LCB websites, journal articles and newspaper publications.


Table 3: Reliability of the statistics


4.2 Data Analysis

4.2.1 Objective 1: To identify the extent of computerized operations in local

commercial banking sector.

Secondary Data Analysis

The initial objective of the study is to look into the level of technological

adoptions/computerization used in the operations of the local commercial banks. Before

getting to the technological aspects of operations a brief outlook on the importance and

growth pattern of the commercial banking sector is essential as it has raised the

importance for this report.

4.2.1.1 Highlights of Commercial Banking Sector – Sri Lanka

As per Tennakoon (2011), “The banking sector, which is the most dominant and

systematically important sector in the financial system of Sri Lanka, has shown a

significant expansion during the last two decades, reflecting the increase in financial

transactions to facilitate the growing economy”. At the end of year 2011, total number of

licensed commercial banks was 24 out of which there are 14 domestic banks (Economic

Review, 2011). Total number of commercial bank branches stood at 1432 out of which

there are 1386 domestic bank branches (Economic Review, 2011). Out of total extension

offices of 898, 728 are local commercial banks (Economic Review, 2011).



Source: Economic Review (2011)

As per the graph above it is evident that the banking sector density in Colombo district is

really high with 25 banks per 100,000 individuals which increases the banking density of

Western Province which proves the highest customer bases in the Western Province

comparing to other Provinces.

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

BOC 346 354 361 370 390 399 408 455 496 520

People's Bank 344 389 396 408 602 632 640 653 679 679

Commercial Bank 100 109 116 125 140 157 169 177 179 190

HNB 124 138 139 143 150 153 169 177 182 192

Sampath Bank 47 55 64 72 84 97 106 115 137 149

Seylan Bank 90 96 106 110 114 116 116 114 114 114

Other Banks 33 53 67 85 105 121 150 166 213 283Table 4: Growth of LCB Branches in Sri Lanka

Source: CBSL (2011)


Figure 5: Banking Density of All the Banks by District - 2011


2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

100

200

300

400

500

600

700

800

BOC People's Bank Commercial Bank HNBSampath Bank Seylan Bank Other

Figure 6: Growth of LCB Branches in Sri Lanka

Source: CBSL (2011)

Table 3 and Figure 6 explains that the branch banking network has shown tremendous

improvements last 10 years times where the state banks such as People’s bank and BOC

has been growing with their network at a much faster phase than other local commercial

banks. The banking density index of domestic commercial banks is explained below.




Sri Lanka now has more than 11.3 commercial bank branches per 100,000 individuals

which are higher than the global median of 8.4 branches per 100,000 individuals which

proves the prominence of commercial banks in Sri Lanka (CBSL, 2011 cited in

Tennakon, 2011). The sample selected for the report represents the domestic commercial

banks which are successfully operating with the launch of CRM technologies which has

become an emerging trend in Sri Lanka. The growth of these 11 private and public sector

banks in Colombo District are represented below in the graph.

Domestic LCB Branches in ColomboYear 2008 2009 2010 2011

Number of Branches 394 405 419 424

Table 5: Growth of Domestic LCB branches in Colombo

Source: CBSL (2011)


Figure 7: Expansion of Commercial Banks and No of Commercial Bank Branch Density per 100000 for SL


2008 2009 2010 2011370

380

390

400

410

420

430

394

405

419424

Branches

Figure 8: Growth of Domestic LCB's in Colombo District

Source: CBSL (2011)

Source: Compiled by Author based on CBSL (2011)

The above figures display the banking density of Colombo District which is the area of

study of the report. The total banking population in Colombo is 2,553,000 individuals and

the total numbers of domestic LCB branches available are 424 which represents that

each branch would serve 6021 people (Author’s work, 2012) on average for commercial

banking needs. The banking density of domestic commercial banks is 17 branches per

100,000 people (424/ [2553, 000/100,000]) which represents the high potential for

alternative banking solutions (CRM technologies) as the banking density is low.


Figure 9: Total Number of Domestic LCB branches in Colombo in 2011 (Population of the Study)


The above analysis on the branch wise growth over the last decade indicates that Sri

Lanka is majorly based on branch banking. But the potential for alternative solutions

seem to exist in the Colombo District where the density of the commercial banks is low.

Overall the commercial banking sector of Sri Lanka experienced a continuous growth

maintaining its stability and profitability with the services offered amidst the challenges

from local and global macro-economic conditions (Tennakon, 2012).

4.2.1.2 The Expansion of Technological/Communication Infrastructure in Sri Lanka

Having analyzed the banking density in Sri Lanka it is also essential to look into the

infrastructure availability which would help to enhance the technological banking.

Compared to most of the developing countries around the world Sri Lanka has

experienced a phenomenal growth in telecommunications services and usage during the

last decade (Colombage, 2011). The following table exhibits the development of technical

infrastructure in Sri Lanka.

2001 2002 2003 2004 2005 2006 2007 2008 2009

Fixed Access Services

Subscriber Base (‘000) 829 883 934 991 1244 1884 2742 3446 3431

Fixed Access Services (‘000) 708 769 818 860 919 910 932 934 871

Wireless Access Services (‘000) 121 114 116 131 325 974 1810 2513 2560

Telephone per 1000 people 4.4 4.7 4.9 5.1 6.3 9.5 13.7 17.1 16.8

Other Services

Mobile Phone (‘000) 668 932 1393 2211 3362 5412 7983 11083 13950

Mobile Phones per 100 people 5 7 12 15 17 27 40 55 68

Public pay phone booths 7281 6681 6440 6095 6285 7561 8526 7417 7936

E-mail and internet users 61532 70082 85500 93300 115000 130000 202348 234000 240000

Table 6: Telecommunication Services Trend in Sri Lanka 2001 - 2009

Source: Adopted from Colombage (2011)

It is evident from the data above that mobile phones have shown a phenomenal growth

amidst all other telecommunication services available in the country. This is mainly due

to the entry of globally competitive telecommunication service providers. 68 out of 100

people own a mobile phone which gives an indication that the country has a huge

potential for the developments of mobile phone banking services further. Since 2000

mobile phone penetration has increased by 32 times in 2009 and reached 14 Million.



Overall 13% of the households have desktop computers where 6% of have laptops as well

(Colombage, 2011). As per Colombage (2011) access to e-mail and internet facilities are

largely confined to the low income level households. E-mail and internet subscriber base

has improved by 5 times than in 2000s but slower than the mobile phone penetration

level. The figure below would exhibit the phenomenal growth patterns of discussed above

in the table where the mobile phone usage shows an exceptional steep in growth in

comparison to other telecommunication indicators.

2001 2002 2003 2004 2005 2006 2007 2008 20090.00

2000.004000.006000.008000.00

10000.0012000.0014000.0016000.00

Telecommunication Trends in Sri Lanka (2001 - 2009)

Subscriber Base (‘000) Fixed Access Services (‘000)Wireless Access Services (‘000) Mobile Phone (‘000)

Figure 10: Telecommunication Trends in Sri Lanka (2001-2009)


4.2.1.3 Operations of Local Commercial Banks with Information and

Communication Technology (E-Banking)

ICT plays a vital role in the modern economy of Sri Lanka which has significantly had an

impact on banking transactions. E-Banking solutions enhances the banking operations

through electronic medium which were heavily backed by the technology and internet

where the costs are minimal and these facilities are no longer limited by time or

geographical boundaries (Maldeni and Jayasena, 2009).



Source: Source: FCCISL (2012)


Figure 11: Evolution of E-CRM Solutions of Sri Lanka


Source: Adopted from Bankable Frontiers Associates (2008)

1. Automated Teller Machines

In 1986, Sampath Bank introduced ATMs to Sri Lankan banking arena (Wijerathna,

2011) where now all the 11 local LCBs have successfully installed it for the purpose of

withdrawals, fund transfers etc without going to a bank branch.


Table 7: Features of Different Forms of E-Banking


Source: CBSL (2005 – 2011)

Source: Done by Author


ATMs show an upward slope over time where the value per transaction and ATM

locations per 100,000 people has shown improvements. But that growth is not a

continuous upward slope where there was a downfall in 2009-2010 periods indicating that

the introduction of debit cards has impacted this where before the introduction of separate

debit cards ATM cards were used as debit cards as well.

2. Credit Card Transactions


Table 8: Trend of ATMs in SL

Figure 12: Trend of Value per Transaction - ATM

Figure 13: LCB ATMs per 100,000 people


Table 9: Credit Card Transaction Trends

Source: Compiled by Author based on CBSL (2005-2011)

Source: Done by Author (2012)

Source: Economic Review

(2011)

The average transaction value is showing increase but the cumulative credit card

transaction has shown tremendous drop after 2008. The possible reasons could be as

follows:

Banks restricted credit card issues due to global recession during 2008 - 2009.

People lost confidence in the credit card usage aftermath of the Golden key fraud

on credit cards.

People opted for debit cards instead of going for credit cards.

Minimum savings level in banks for credit card have been reached and the

maximum level of credit cards are been already issued in SL.


Table 10: Trend of Value per Transaction - Credit Cards

Figure 14: Credit Card Operations per 100,000 people


3. Debit Card Transactions

Source: Done by Author based on CBSL (2008-2011)

Source: Done by Author (2012)

Debit cards are recent development in Sri Lanka where it has been launched as a

substitute to teller machine cards to be used in transactions with a third party where the

payments will be settled through the bank savings. The cards issued show a upward

sloping trend and could be said that this is heavily welcomed in SL because within 4

years since launch it has reached a tremendous growth.

4. Electronic Funds Transfer – Point of Sales transactions (EFTPOS)


Table 11: Debit Card Transactions of LCBs in SL

Figure 15: Trends of Debit Cards Issued and Transactions


EFTPOS were introduced to SL in 1994 (Wijerathne, 2012). As per Wijerathna (2011),

“payment card holders were able to use their cards at EFPOS machines installed at

merchant outlets which enables the merchant to obtain authorization electronically doing

away with the manual authorization process in the past”.

Source: Compiled by Author based on CBSL (2004-2011)

Source: Compiled by Author based on CBSL (2004 – 2011)

EFTPOS transaction shows a growth over the period of 2004 – 2011 which indicates the

customers’ increased usage of electronic payments mediums than using cash.

5. Online Banking Transactions

Source: Compiled by Author based on CBSL (2008 – 2011)


Table 12: EFPOS Trends of LCBs in SL

Figure 16: Trend of value per transaction via EFTPOS

Table 13: Online Banking Trends in SL



Even though the value per transaction is showing fluctuations overall the number of

transactions through virtual banking have shows commendable increase over the last four

year period. The cumulative value of transactions has also shown improvements but the

growth is slowing down in the later period.

6. Mobile/Tele Banking

Source: Done by Author based on CBSL (2008 – 2011)

The above table indicates that the mobile banking has been showing decreasing trends

even though the total value of transactions show an increasing trend which resulted in

increase of value per transactions. This is not a good sign because there is a high potential

but commercial banks haven’t utilized this viable opportunity to gain benefits.


Figure 17: Trend in transaction via online banking sites of LCBs

Table 14: Mobile/Tele Banking Trends of LCBs in SL

Figure 18: Trend in Mobile/Tele banking Transactions


Source: Done by Author

If all the non cash transactions of LCBs of SL is taken into account as 100% the

composition of all the electronic banking and branch banking will be as follows.



Table 15: Composition of Electronic Payments

Figure 19: Composition of Non Cash Transactions


The electronic stance in transactions would reduce the cost per transaction of banks than branch

banking operational costs as explained by the diagram below:

Source: Kumara (2012)

As explained by Kumara (2012), “the adaptation of technology has not been fast as predicted and

the cost of a transaction has not come down to $0.01 as predicted .Internet banking is still not a

reality and people are still to be convinced with regard to security and privacy”. He further

elaborates the fact that communication systems makes the physical banking solutions irrelevant

but the touch of human is very essential in any service sector and especially for banking sector

(Kumar, 2012).


Figure 20: Transaction cost for bank Vs E-CRM Solutions


4.2.2 Objective 2: To identify the existing CRM implementation barriers in local

commercial banks.

Secondary Data

While technological solution brings in enormous benefits to operations of commercial banks,

there are certain issues prevailing in CRM stance which holds back banks from totally depending

on technology or restricted certain emerging banks opting for alternative banking solutions.

Following are the major barriers and risks prevailing in that respect:

1. Lack of Customer Awareness and Willingness to go for E-Banking solutions

Table 16 - Awareness and Use of Electronic Banking Solutions

Source: Adapted from Colombage (2011)

Approximately 70% of people have knowledge about ATMs and 37% of people have knowledge

about internet banking. 22% people know about E-Remittance services which are mostly

contributed by the ultra poor community where most of them are migrant workers (Colombage,

2011). Non poor segment does not have that extent of knowledge in this manner. It is very

evident that there are limitations in awareness and willingness towards these E-banking

solutions. The household survey on E-Money illustrated that 8% think it is costly, 2.3% think it

is less secured, 9.4% faces difficulties in using them and 80.4% think it is not necessary and

never heard of any instead of ATMs (Colombage, 2011). Suraweera et al (2012) indicate that



most of the banking customer has closest proximity to banks and they prefer to go for branches

than logging in to the virtual banking site. This is a major barrier and commercial banks should

carry out great deal of awareness campaigns to persuade customers to go for e-banking solutions.

2. Requirement of Proper Internal Controls for E-CRM Solutions

Source: World Bank (2012)

The above diagram displays issues faced by banks when operating with CRM solutions through

internet. Breaches into internet sites and theft of information from those sites requires more

attention from the banks to have superior internal control present which comes with a huge cost

(World Bank, 2012). If the control were not present along with CRM the bank would have to

face tremendous reputational issues and would lose the promise of integrity towards their

customers which would hammer the confidence on e-banking solutions. If viruses were

penetrated which could even bring in liquidity and legal liabilities as the bank site act as a

“Slave” to the hacker which is also due to weak internal controls (World Bank, 2012).


Figure 21: Risks involved in Internet Banking


As internal control required for proper operations via internet or any other medium it is essential

to invest in human resources and software to avoid reputational risk which is extremely costly

and an added responsibility for the management.

3. Compliance requirements to Legislations/Authorities on ICT Transactions

There are various laws that govern the transactions over internet and mobile mediums. They are:

Source: Ratnayaka (2012)

The local commercial banks have to accompany the e-banking solutions along with the

consideration to the above legislations. Otherwise breaching of any of the above would lead to

compliance risk and could hinder the reputation of the bank. Along with that banks have to

consider the guidelines of the Central bank of SL on electronic transactions and banking

services. For example CBSL has issued a set of guidelines for mobile payments to avoid security

concerns of the public (Sunday Times, 2012). There are disclosure requirements in their

respective annual reports (World Bank, 2012). So CRM requires compliance requirement and

additional requirement in annual reports which creates additional work and responsibility.

4. Issues in managing operational risks


Table 17: Legislations governing E-Banking Transactions


While operating with wide range of technological elements in CRM there would be emerging

range of operational risks that has to be addressed by the commercial banks. Such risks impose

too much of barriers in the implementation process or after the implementation. Bankable

frontier associates (2012) illustrated these risks as in the table.

Source: Adopted from Bankable Frontier (2008)2

Each and every local commercial bank has to report its risk elements in their annuals reports

where they give the value each of the operational risks stated above. This is an additional

responsibility and commercial banks have to continuously monitor these elements to avoid

negative consequences soon after the system’s implementation.

5. Race for adopting new technologies

2 Highlighted factors are important in technological systems


Table 18: Operational Risks of E-Banking Solutions


The salient feature of ICT is it would become obsolete within very few months since its

inception. Bankers continuously needs to deploy sophisticated yet user friendly systems to meet

customer’s acceptance but this is not that easy (Wijewardane, 2011). Bankers who implemented

sophisticated systems would sooner find that their system has been outdone by their competitor.

When profit margins are reducing due to competitions it would be that easy to small scale banks

to invest another lot of money into a system (Wijewardane, 2011). This would raise a question

on the bank’s survival in the fight for supremacy. This has become a serious issue to current

banking sector firms (Wijewardane, 2011).

6. Limitations in Resources

Smaller commercial banks faces issues with limited resources such as human resources finance

and infrastructure required to run the proper CRM systems. This would create barriers in the

operations. Banks should be accompanied with proper up-to date storage solutions if not that

could lead to loss of information assets of the banks (Intel, 2012). Competent employees are

required to be recruited and trained for the job with systems and it is a CBSL requirement too.

They are supposed to be given proper machines to work with to increase the satisfaction and also

to improve the ROI (Intel, 2012). All the above requires sufficient financial backup which is

another barrier for CRM implementations.

Primary Data

An open ended question was raised in order to get the viewpoint of bank managers regarding the

barriers of CRM implementation in their respective branches.

The qualitative analysis below in table 19 gives an important indication that most of the

responses are more oriented towards demographics of their customer bases. Security is the

mostly mentioned barrier and next highest is for the customer’s perception to deal with staff in

money dealings. E-CRM acceptance is high among youngsters but very limited/low among

senior citizens. System failures and downtimes also pose issues for implementation of such

systems.

In highly business areas such as Pettah, business men who still follow manual recording of

accounts definitely require staff assistance when banking their incomes and banks prepare



records the details for them. In such conditions E-CRM is of very limited usage. Same limitation

applies for banks with higher fixed accounts customers where routine transactions are very

limited and erodes the usage of such CRM solutions.



Source: Compiled by Author based on Primary Survey (2012)

To avoid the lack of knowledge of the customers the awareness building should be enhanced. Down times and changes in technology

could be resolved by proper internal controls and business intelligence where these poses further limitations for small scale emerging

commercial banks.


Table 19: Barriers in E-CRM Implementation in LCBs of Sri Lanka - Primary Data


4.2.3 Objective 3: To identify factors affecting to the successful CRM implementation to the

local commercial banks.

7 variables were taken into consideration to analyze the factors influencing towards

successful CRM implementation as per the conceptual framework. 5 pointer Likhert scale

questions gave the average results as following:

Table 20: Mean and Standard Deviation Statistics of Variables

Source: Done by Author based on SPSS (2012)

The detailed analysis on each factor is given below.

1. Technology Orientation

Table 21: Frequency Table for Technology Orientation


58



Table shows that the 92.5% of the sample accepts the fact that their bank is technologically

oriented. This may be due to well established integrated databases which could be accessed

through all contact points to provide customized services. Whereas 5% of them are neutral

and 2.5% shows disagreement with the technological orientation of their banks. This could be

due to low database integration, poor technical knowledge of staff and the low level of

awareness created on the CRM solutions.

Mean, median and mode values of 4.28, 4.4 and 4.4 respectively indicates that on average the

sample “Agree” their commitment to technology in operations. The overall negative

skewness of -2.281 explains that sample displays more agreement on the technology oriented

attributes of their bank. SD of 0.461 shows the moderate variation of the results deviating

from mean which explains the moderately flat bell curve distribution.

It could be concluded that local commercial banks are more technology oriented in their

operations which is one of positive factors that could impact CRM solution implementations.

2. Customer Centricity

59

Figure 22: Histogram for Technology Orientation


Table 22: Frequency Distribution Table for Customer Centricity



Table shows that the 77.5% of the sample accepts the fact that their bank is highly customer

centric. This may be due to better understanding towards customer needs, customer driven

strategies, personalized service offerings and rewarded loyalty. However 22.5% of them are

neutral on the opinion. This could be due to limited customer oriented culture prevailing in

the banking operations. Mean, median and mode values of 4.26, 4.2 and 4.2 respectively

indicates that on average the sample “Agree” their commitment to customers in operations.

The overall marginal positive skewness of 0.042 explains that sample displays just agreement

on the customer centric attributes of their bank. SD of 0.404 shows the moderate variation of

the results deviating from mean which explains the flat bell curve distribution.

It could be concluded that local commercial banks are between neutral – agreement range in

customer centric in their operations which is one of positive factors that could impact CRM

solution implementations.

3. External Competitive

Pressures

60

Figure 23: Histogram for Customer Centricity

Table 23 : Frequency table for External Competitive Pressures




Table shows that the 82.5% of the sample accepts the fact that their bank is highly responsive

to external competitive pressures. This may be due to high response rate to changing

customer preferences on products and they respond to technological enhancements. These

sample respondents are on the opinion that they deal with business intelligence units to detect

changes in rivals’ moves regarding the way of serving customers. However 15% of them are

neutral on the opinion and 2.5% disagree. This could be due to limited business intelligence

in responding to external competitive environment.


sample “Agree” their commitment to customers in operations. The overall negative skewness

of -0.950 explains that sample displays greater agreement on the flexibility to external

environment changes of their bank. SD of 0.385 shows the moderate variation of the results

deviating from mean which explains the steep bell curve distribution.

It could be concluded that local commercial banks are between an agreements in being

flexible to competitive pressures in their operations which is one of positive factors that could

impact CRM solution implementations.

4. Top Management Commitment and Leadership

61

Figure 24 : Histogram of External Competitive Pressures


Source: Done by Author based on SPSS

(2012)


Table shows that the 70% of the sample accepts the fact that their bank has top management’s

commitment and leadership in CRM. This may be due to declared commitment in vision,

innovative ability of the management, high involvement in any customer related initiatives

etc. Whereas 27.5% of them are neutral and 2.5% shows disagreement with management

commitment. This could be due to poor leadership of the management, lack of customer

friendly bank environment created etc.

62

Table 24: Frequency table for Top Management Commitment and Leadership

Figure 25: Histogram for Top Management Commitment and Leadership



sample “Agree” their commitment of management. The overall negative skewness of -0.816

explains that sample displays more agreement on this variable. SD of 0.468 shows the

moderate variation of the results deviating from mean which explains the moderately flat bell

curve distribution.

It could be concluded that local commercial banks has reasonable management commitment

and leadership in their operations which is one of positive factors that could impact CRM


5. Employee Behaviour

Source: Compiled by Author based on SPSS (2012)


63

Table 25: Frequency Table for Employee Behaviour

Figure 26: Histogram for Employee Behaviour


Table shows that the 60% of the sample accepts the fact that their positive employee

attributes in CRM. Having employees with technical expertise, customer satisfaction related

pay schemes, and environment for knowledge sharing has been major factors contributed for

the agreement. However 40% of them are neutral towards their opinions maybe due to lack of

training, lack of expertise in technical aspects, very few motivational schemes etc. Mean,

median and mode values of 4, 4 and 4.2 respectively indicates that on average the sample

“Agree” their view on attributes of employee behaviour. The overall negative skewness of -

0.238 explains that sample displays agreement on this variable. SD of 0.465 shows the

moderate variation of the results deviating from mean which explains the moderately flat bell

curve distribution.

It could be concluded that local commercial banks has reasonable positive employee

behaviour on their operations but could be improved as it is a vital factor that could impact

CRM solution implementations.

6. Financial Aspects



64

Table 26: Frequency Table for Financial AspectsFigure 27: Histogram for Financial Aspects


Table shows that the 62.5% of the sample accepts the fact that their bank is financial

attributes when it comes to technology. This is mainly because of their major consideration

on initial finance for a system, their reliance on ROI, and their cost per customer contacts has

reduced with alternative banking solutions. However 37.5% of respondents are neutral on the

opinion because their financial capability is not sound enough and budgetary control are very

limited and also their market position has shown very limited improvement after CRM

systems.


sample “Agree” their concern on attributes of financial viability of technological solutions.

The overall negative skewness of -0.745 explains that sample displays moderate agreement

on the financial aspects. SD of 0.367 shows the moderate variation of the results deviating

from mean which explains the steep bell curve distribution.

It could be concluded that local commercial banks are in agreements in there consideration

towards financial aspects in their operations which is one of factors that could impact CRM


7. Successful CRM Implementation


65

Table 27: Frequency table for Successful CRM Implementation


Source: Compiled by Author based on SPSS (2012)

Table shows that the 62.5% of the sample accepts the fact that their bank has successfully

implemented CRM solutions. This is mainly because of increase in perceived customer

satisfaction, trust and loyalty along with reduction in customer complaints on services.

However 32.5% of respondents are neutral on the opinion and 5% disagree with this variable

because customer trust related issues were prevailing and customers mostly prefer branch

banking and there are complaints on system’s malfunctions which has bough expected

benefits to the banks.

Mean, median and mode values of 3.95, 4 and 4.2 respectively indicates that on average the

sample “Agree” their concern on attributes of successful CRM installation in branches. The

overall negative skewness of -0.708 explains that sample displays moderate agreement on the

financial aspects. SD of 0.455 shows the variation of the results deviating from mean which

explains the relatively flat bell curve distribution.

It could be concluded that local commercial banks are in agreements to a moderate extent

where their CRM implementation has shown successful results in banking operations and

performance. It could be said that for this the aforementioned independent variables

collectively contributed in a way.

66

Figure 28: Histogram for Successful CRM Implementation


4.2.4 Objective 4: To find out the relationship between factors affecting to the

successful CRM implementation to the local commercial banks.

The 6 independent variables are compared against dependent variable “successful CRM

implementation” using Pearson’s correlation analysis to identify the relationships to satisfy

the objective above.

1. Technological orientation and Successful CRM Implementation


The correlation indicates a weak positive relationship and it is not significant in 2 tail

analysis.

2. Customer centricity and Successful CRM Implementation



analysis.

67

Table 28: Correlation of Technological Orientation and CRM Implementation

Table 29: Correlation of Customer Centricity and CRM Implementation


3. External Competitive Pressures and Successful CRM Implementation


There is a positive and strong relationship between these two variables and it is significant

even at 0.01 level in 2 tail test.

4. Top Management Commitment and Leadership and Successful CRM

Implementation



analysis.

68

Table 30: Correlation between External Competitive Pressures and CRM Implementation

Table 31: Correlation between Top Management Commitment and CRM Implementation


5. Employee Behaviour and Successful CRM Implementation


There is a strong positive relationship between these two variables and the relationship is

significant even at 0.01 level in 2 tail test.

6. Financial Aspects and Successful CRM Implementation


There is a strong positive relationship between these two variables and the relationship is

significant even at 0.01 level in 2 tail test.

In conclusion, external competitive pressures pose an emergence for rapid innovation to

sustain in the market which leads to a positive relationship. Employees are the people who

would deal with the systems and it is necessary to train and motivate them. This has been

represented by the strong positive relationship. Financial aspects are the major force which

drives the capability of the firm to afford for systems which is also represented by strong and

significant relationship.

69

Table 32: Correlation between Employee Behaviour and CRM Implementation

Table 33: Correlation between Financial Aspects and CRM Implementation


4.2.5 Objective 5: To make suitable recommendations to overcome the CRM

implementation barriers

The initial barrier identified was the lack of knowledge and willingness of the customers to

go for alternative banking solutions. In order to build trust and to motivate the customer base

there should be efficient promotions and awareness campaigns. Currently LCBs do

advertising, seminars, rewards schemes for online transactions, door to door delivery of new

product launches and asking employees to direct customers towards alternative solutions. But

in order to be efficient banks could eliminate the transaction fee costs for online and mobile

transactions which would be an added advantage than normal branch banking. Schemes like

relationship pricing/marketing such as issuing free ATM cards issued for the supersavers and

senior citizens to trigger them towards these solutions.

LCBs face another problem on minimal internal controls regards the systems. In order to

avoid fraud and theft certain individual authentication password to operate by the bank

employee and customers from home should be issued with high confidentiality. Like as for

the vaults 3 or 4 officials should be present to initiate the core banking solution to avoid fraud

by individuals with high autonomy over systems. Employee should be having limited access

to any system to avoid manipulations. On a regular basis integrity checks should be done to

ensure any abnormal inputs being processed by solutions. If needed forensic checks and

controls could be done to avoid mathematical errors.

Proper legal issues should be considered and monitored to avoid legal proceedings. For this

proper knowledge on the legality of the operations via electronic mediums should be ensured

by the lawyer of the banks. Corporate governance should be maintained in the technological

solutions too.

To avoid operational risks of the technology, each and every components in the network

should be examined and risks that could rise should be given priorities in relevant to the

impact on continuity of the operations. Relevant points of entry, accessibility and bank

networks should be monitored and security setups should be installed. If any external

contractors are involved with the systems linkages and operations the terms of service

relationships should be continuously checked for any abnormalities to avoid data theft.

If the banks are lacking behind in their technological resources and finance possible

outsourcing options could be checked and they could establish a contracts for a period of time

70


since banks establish their own expertise. Insurance should be made available in that option

to avoid external threats from vendors. In house and off the job training should be conducted

in addition to CBSL requirement to improve the technical capabilities of the employees to

deal with systems. If possible customer related performance appraisal systems should be

introduced and enhanced.

Efficient business intelligence systems should be improved to detect any strategic moves by

the competitors to avoid losses. Currently very few banks analysis through information

gathered but only considers these solutions as just customer contact points. In order to

improve the bank’s competitive position in the market gathered information on databases

such as the detailed history of transactions, customer’s relationship with bank (years),

suspicious transactions, lifestyles (through credit card transactions), living conditions etc

would give valuable indications that could be analyzed to provide cross selling opportunities

like a insurance scheme or loan scheme.

The recommendation model for the barriers and influencing factors are given below.

Source: Author’s Work

71

Figure 29: Solution Model for Successful CRM Implementation


CONCLUSION

The main significance of the study is that it would help the local commercial banks of Sri

Lanka to analyze the factors impacting towards the successful CRM implementation in the

technological context. The major objectives of this report are to identify the extent

computerized operations in banking, to identify the current barriers to CRM implementation

in banks, to identify factors affecting towards the implementation of successful CRM, to

figure out the relationship between factors and successful CRM implementation, and to

provide possible recommendations to overcome issues.

The main factors identified for analysis are technological orientation, customer centricity,

external competitive pressures, top management support and leadership, employee behaviour

and financial aspects. Literature review on the above variables may be subjective as only one

research was been able to be found on a Sri Lankan perspective and rest of them were based

on a few foreign countries where the commercial banks’ operating conditions and customer

preferences may significantly differ.

As CRM from a technological perspective is still in its infancy the research would give more

indication as to the positions of the current CRM conditions in a local scenario. In that

respect through primary and secondary data was analyzed and possible recommendations

were given for the stakeholder groups who would be benefiting from a successful change in

the future banking performances.

72


APPENDICESAPPENDIX A: Questionnaire

PART - A

Branch Details:

1. Name of the Bank: …………………………………………………….

2. Branch Location: …………………………………………………….

3. Category of the Bank: Government Bank Private Bank

4. Please state the customer base of the branch (Number of account holders):

a. Current Account holders: …………………………

b. Savings Account holders: ………………………….

c. Fixed Account holders: ……………………………

5. How many employees are currently working in the branch:

……………………………………

6. Can you roughly state the annual turnover of this branch?

……………………………………..

Respondent’s (Branch Manager) Details:

7. Gender: Male Female

8. Age: ………………………………………………………

9. Educational Qualifications: Bachelors Degree

Masters Degree

Professionally Qualified [Ex: CIMA, CIM, ACCA etc]

Professionally Qualified Banker

Other …………………………………

Technology Details:

10. When the bank did start using alternative solution to branch banking [Ex: ATMs,

online banking, mobile banking etc]?

11. What type of customer details are gathered from the above solutions?

73


PART - B

Please choose the most suitable answer with a “X” sign in the given box.

[SA – Strongly Agree, A – Agree, N – Neutral, D – Disagree, SD – Strongly Disagree]

Questions SA A N D SD

Tech

nolo

gy O

rient

ation

12 Bank’s information systems are integrated across the different functional areas [Savings division, loan division, pawning division etc]

13 Individualized information about each customer is available at all contact points

14 Bank has right technical staff to provide technical support for use of technology in building customer relationships

15 Bank is able to consolidate all information acquired about customers in comprehensive up-to-date database

16 Bank has promoted their alternative banking solutions such as ATMs, online banking, mobile banking etc promptly for the creation of awareness among their banking customers

Cust

omer

Cen

tric

ity

17 Bank’s market excellence is based on understanding customer needs

18 Bank’s business strategies are driven by objective of increasing value for customers

19 Bank offers personalized services for key customers

20 Anybody in the organization is convinced of the importance of customers for the organization (Customer centric organizational culture)

21 Loyal customers are rewarded

74


Exte

rnal

Com

petiti

ve P

ress

ures

22 Competitive pressures are the main reason for the usage of customer interaction technologies in the banking operations to out beat the rivals

23 Banking customer's preferences change frequently

24 The technology in our industry is changing rapidly

25 Technological changes provide big opportunities in banking industry in terms of technology to serve customers better

26 Business intelligence units are there to continuously monitor changes in customer service technologies adopted by competitors

Top

Man

agem

ent C

omm

itmen

t an

d Le

ader

ship

27 In the bank's vision you declare the commitment to customers

28 Top management is strongly involved in implementation of customer relationship targets to retain the customers

29 Senior Executives would sooner create something new to improve the market presence

30 The bank management has provided a very friendly customer focused environment

31 Top management shows leadership when initiating a customer oriented technological program

Empl

oyee

Beh

avio

ur

32 Bank has qualified (expert) employees needed to succeed in customer relationship technology usage.

33 Training programs are designed to help employees develop skills neededto manage customer relationships appropriately

34 Employee performance is measured for rewards on basis of detection of customer satisfaction with service provided

75


35 Bank has provided an environment where the employees are freely allowed to share the knowledge about serving customers

36 Bank's employees are motivated in various ways towards the commitment of customer related initiatives of the bank

Fina

ncia

l Asp

ects

37 Bank's financial capability is the most influential factor when considering new technology adoption for better contact management

38 Viability of the project is measured through the return per investment for better financial evaluation of the investment

39 Budgetary targets for each investment is set for control purposes of adverse budget over run

40 Efficiency of the banking operations in terms of cost per customer contacts has shown improvements after implementing customer contact technologies over time

41 Bank's market share has improved with effective technological solutions

Succ

essf

ul C

RM Im

plem

enta

tion 42 Customer trust in our technological banking solutions without any human interactions have

improved43 Perceived customer satisfaction has improved with customer related technological solutions

44 Customer loyalty has shown improvements after the technological initiatives

45 Bank's competitive position has improved with innovative technological solutions

46 Customer complaints on banking services have significantly reduced after alternative technological solutions to branch banking

76


PART - C

48. What are the barriers existing in your branch and area you serve the customers through a technological banking solution? Are those services heavily welcomed by your customer base?

49. In your opinion, what are the major considerations when introducing and implementing a new customer related technological solutions in local commercial banks?

APPENDIX B – Interview Questions

1. Can you give an insight to the initial investment of implementing a sophisticated CRM

solution?

2. What are the main strategic information that are been gathered via a CRM solution like

ATMs, online transactions, mobile banking solutions etc?

3. How are you managing the employee resistance for IT solutions? What type of training

facilities do you provide the employees to work with IT solutions? How often do they get

trained?

4. Is there any customer oriented performance related pay schemes for the employees?

5. What are the initiatives taken by the top level management to make the customers aware

of the solutions and also to persuade them towards using them?

6. In your opinion, do you think that branch banking would still be viable in few years time

with emerging technological advancements in the context of banking in Sri Lanka?

77


APPENDIX C: Demographics of Primary Survey

a. Local LCBs’ representation in the sample

b. Branch Location representation in the sample

78

Figure 30: Sample Representation of LCBsSource: Compiled by Author

Figure 31: Location Representation in the sample



c. Type of banks in the sample (Government Banks Vs Private Banks)

Figure 32: Private Vs Government Banks Representation in the sample

d. Respondents Gender

Figure 33: Gender of the respondents

79




e. Respondents Age

Figure 34: Age Composition of the Sample

f. Educational Qualifications of the Respondents

Figure 35: Educational Qualifications of the Sample

80




g. Customer Base of Respondents

81

Figure 36: Customer Base of the Samples Source: Compiled by Author


h. Annual Revenue of the sample branches

82

Figure 37: Annual Revenue of the Sample Branches Source: Compiled by Author


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http://www.cbsl.gov.lk/htm/english/02_prs/prs.html

http://www.unionb.com/contactUs.jsp

http://www.kln.ac.lk/uokr/ICBI2011/ICT%20203.pdf

Factors Influencing Towards Successful Implementation of CRM Systems in Local Commercial Banks in...

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