Electronic customer care: The innovative path to e-loyalty

In this paper, the authors argue that the use of an electronic customer relationship management system (eCRM system) enables traditional ‘physical’ customer proximity to be substituted by ‘digital’ proximity, within the scope of a multi-channel approach. This method of substitution presents enormous potential for cost reduction, profit maximisation and customer loyalty. The main intention of the paper is to illustrate how electronic customer care tools can be used to create customer e-loyalty in the field of private internet banking. The knowledge is supported by findings of a questionnaire survey based on a sample of 45 bank experts involved in eCRM and private internet banking in Germany, Austria, Switzerland and the USA. This empirical study of the capability of electronic customer care technologies to enable individual customer banking relationships in the private internet banking field demonstrates the potential for customer loyalty specifically for the internet channel of distribution.     

Trust in cross-cultural b2b financial service relationships: The role of shared values

Trust in business-to-business supplier–customer relationships in financial services is an area of considerable research interest. The bulk of prior empirical research in this field has concentrated on trust in business relationships within a Western cultural context. However, shared values are acknowledged to be an important antecedent to trust. The premise of this study is that in circumstances where there are substantial cultural differences between parties to a supplier–customer relationship, these differences will be reflected in shared values, which will in turn be reflected in differences in the nature of trust. A qualitative study was conducted among business bankers and their corporate clients in the context of the United Arab Emirates. In all 170 respondents were interviewed; of these, 160 were paired respondents, that is, where a client and banker from the same business relationship were interviewed (yielding 80 interview dyads). Substantial differences with respect to trust were found between relationships that involved only Emiratis, those that involved Emiratis and non-Emiratis, and those that involved only non-Emiratis. For Emiratis mutual trust is substantially based on family and clan ties and exhibits strongly affective characteristics. For non-Emiratis trust is largely based on business considerations, and exhibits strongly cognitive characteristics.     

Reflections on bank–customer interactions in the new millennium

Having relatively recently embraced the concept of marketing, banks approach the new millennium operating in an increasingly competitive and fragmented marketplace with financially literate consumers. This competition combined with the prevailing low interest rate environment means that traditional banks with extensive branch networks are having their profitability margins squeezed. New technology presents opportunities for banks to become both more efficient (in terms of cost reduction) and more effective (in terms of customer profiling and informed targeted selling). As many groups of customers become more content with interacting with their bank through remote technological channels (eg phone, Internet) the implications for bank–customer relationships are important. Recent research shows that new ‘electronic banking’ channels, while being keenly embraced throughout the industry, are being pursued more for their cost-based advantages than for their business development or relationship management capabilities. Given that the key power of the Internet arguably rests in its interactive capabilities, and that relationships are predicated upon interactively, it seems appropriate to conclude with some key issues for future electronic banking strategy with particular emphasis on staff–customer relationships.     

E-banking comes to town: Exploring how traditional UK high street banks are meeting the challenge of technology and virtual relationships

UK high street banks are continuing to extend the choice of channel through which customers can manage their moneycolon; an obvious example is e-banking. They have been keen to exploit technological advances and changing customer attitudes to alternative channels. Additionally, competition from leaner new market entrants has provided an added incentive to adopt new approaches. In the light of such developments, it is worth reflecting on the changing nature of the bank–customer relationship. This paper suggests that banks are finding it difficult to manage relationships effectively due, in large measure, to the sheer volume of customer data generated by new interactive, technology-based channels. Paradoxically, it seems that the more data banks have about customers the less likely they are to know them on a personal level. It is further suggested that channels such as e-banking potentially reduce the level of personal contact between bank and customer to the extent that a ‘virtual’ relationship develops. This paper concludes that, given the tendency towards ‘virtualisation’, it is inconceivable that bank–customer relationships will become any more intimate in the future. Indeed, a greater degree of personalisation in customer communication may be the very best that banks are able to offer.     

The value of the banker–customer relationship: Experience of individual voluntary arrangements

Over the last 10–15 years, and in response to the huge growth in demand for unsecured consumer credit, UK banks have reviewed, automated, de-skilled and streamlined traditional credit assessment techniques. In pursuit of margin and market share, today's due diligence relies increasingly on centralised data and statistical ‘certainty’. During this same period the nature of the banks' ‘safety net’, the sanction of bankruptcy and court action, has changed too. The effect of this is not only to increase the potential for recovery, in respect of bad debts, but also to increase the moral hazard problem. However, increased risk is masked by creditor power in recovery situations. This paper draws on theoretical and empirical research from legal, ethical and economic viewpoints and suggests that a reappraisal of this aspect of the banker–customer relationship is essential to restore trust, prudence and long-term profitability.     

E-business opportunities in financial services

Over many years, technological developments have enabled financial services products to be sold and administered via remote distribution channels. E-business is the latest channel whose potential is being explored by both traditional financial services players and new entrants alike. But, in their haste to ‘go online’, are organisations, new and old, falling into the ‘technology trap’ and ignoring the fundamentals underpinning financial services retailing and, perhaps, undermining some of their ‘segment-of-one’ strategies? This paper concludes that the key to successful e-financial services retailing is to take the nuances, attributes, techniques and skills that have accompanied financial services products in the physical world and reinvent them in an e-environment. Only by following this approach will e-business avoid being labelled as a solution looking for a problem. UK high street banks are continuing to extend the choice of channel through which customers can manage their money, eg e-banking. But it is suggested that channels such as e-banking potentially reduce the level of personal contact between bank and customer to the extent that a ‘virtual’ relationship develops. This paper concludes that, given the tendency towards ‘virtualisation’, it is inconceivable that bank–customer relationships will become any more intimate in the future. Indeed, a greater degree of personalisation in customer communication may be the very best that banks are able to offer.     

Brand positioning in financial services: A longitudinal test to find the best brand position

Brand positioning is a core activity of most marketing departments. In this paper, the relationship between six different positions and customer vulnerability is tested over time in the business financial services market. Two particular attributes relating to fees and charges and relationship/service were found to have strong relationships with customer vulnerability, both across brands and over time. This research suggests that the ’better‘ brand positions, as defined here, can be common across brands. Therefore, marketing managers of financial services should perhaps not be striving for a unique position for the brand, but aim for distinctiveness in the way the position is communicated. Research techniques to identify ’better‘ positions should also not assume that these ’better‘ positions will be those that differentiate between brands.     

Establishing bank–corporate relationships and building competitive advantages

This article investigates how banks build competitive advantage through relationship banking. Using a grounded theory approach, 29 interviews were conducted with relationship managers and corporate banking directors in 21 case banks from 2004 to 2008. Grounded theory models were developed to illustrate the value creation process in relationship banking. It was found that long-term bank–corporate relationships were established through trust-based personal communications. In the case, banks customer information and knowledge advantages were created. Risk-adjusted returns on assets were used to measure customer relationship performance, and relationship managers were rewarded accordingly. The interviewees thought that bank performance could be improved by managing customer credit risk and identifying cross-selling opportunities. This study starts to open up the ‘black box’ of how banks create shareholder value through relationship banking, provides a picture of relationship banking as a social phenomenon, and supplies some theoretical and managerial implications. The article also links the literature relevant to relationship banking from different disciplines. This is a new way of looking at the relationship banking phenomenon and relevant literature in an integrated manner.     

Relationship disconnect in retail banking

It has been established that increasing the role of technology in a service organisation can serve to reduce costs and improve service reliability. It is argued, however, that there remains an important role for personalised relationships in the delivery of any service proposition. Throughout this paper both of these perspectives will be discussed and an attempt is made to reconcile these apparently opposing views in the emerging age of technology-enabled remote relationships. Findings from a longitudinal research study with a large UK case bank that focused on the area of remote relationships are revisited and reinterpreted with management from the case bank in question. Through this reflective lens the bank's recent strategic decision to no longer proactively relationship manage its personal customer base is examined. In light of this deliberate relationship disconnection strategy key marketing implications are discussed.     

Book Reviews

References to ‘customers’ have become commonplace in the policy discourses within UK government and other public sector bodies. It is a working assumption of UK public sector management that the concept of the ‘customer’ can be applied to any public sector service agency or department; and this paper analyses how the UK government's revenue department, formerly titled the Inland Revenue (IR), re-characterised firstly taxpayers and latterly tax claimants as ‘customers’, rather than ‘users’, of IR services. This paper identifies some problems, dilemmas and ambiguities associated with this reconceptualisation in the context of an organisation that is predominantly a regulating department. Far from being merely a reclassification of the taxpayer as customer, the emerging discourse and associated practices of the IR were in part embedded in organisational change, including the merger with HM Customs and Excise to form the present-day HMRC. Thus this case analysis illustrates the limits of consumerism as a strategic tool of a government revenue department and raises wider questions for public management.     

Online relationship marketing and affective customer commitment – The mediating role of trust

The pervasive use of information technology has implications for consumer relationship management among financial services organisations. There is a need for increased understanding of how digital channels might influence the development and maintenance of firm–customer relationships and in particular the role of the Internet upon commitment and trust outcomes. Thus, this research aims to determine the relationship between online relationship marketing practices and affective customer commitment, and how this relationship is mediated by online channel trust. Data were collected from 200 online retail bank customers and Structural Equation Modelling was used to test the impact of five key online relationship marketing practices on affective commitment, and how trust mediates these relationships. We found that advocacy and collaboration have a direct relationship with affective commitment, while trust mediates the influence of engagement and personalisation on affective commitment. The article highlights the significance of trust in technology when using online channels to build customer relationships.     

An exploration of call centre agents' CRM software use,customer orientation and job performance in the customer relationship maintenance phase

Exploratory research techniques are used to examine the relationships between call centre agents' customer relationship management (CRM) software use, agents' customer orientation, and agents' job performance in the maintenance phase of customer relationships. Maintenance activities, which focus on customer retention and cross- and up-selling, are important to study because prior research suggests they have the strongest effect on company performance. In the financial services industry, CRM software applications supporting retention and cross-/up-selling activities benefit firms by raising revenues and reducing costs. The context for this exploratory research is that of in-bound customer service and sales call centres at three different financial institutions. Based on the analysis of data from key informants across these different contexts, this research suggests that CRM software use is a separate antecedent of call centre agent job performance and has a minimal relationship with customer orientation. Given the suggestive nature of exploratory research results, further research is warranted.     

Share of wallet's role in customer profitability

Understanding the financial contribution customers make to their organisations is an initial step in customer relationship management. Set in the banking industry, this paper examines the strength of ‘share of wallet’ as a proxy variable for measuring customer profitability. Data from a study of 1,100 personal retail banking customers of a New Zealand regional bank were used in combination with the bank's own customer contribution data for each of those respondents. Results indicate that although share of wallet might be used as a proxy for customer contribution at a macro level of customer classification, details of specific financial relationships customers have with their main bank are still necessary. Nevertheless, share of wallet ought to become a standard entry in a bank's customer database.     

Towards understanding attitudes of consumers who use internet banking services

Increasingly technology is being employed to replace or substantially diminish personal interaction in service provision. Research is beginning to shed light on the impact of this phenomenon on service provision and the behavioural response of customers. More, however, remains to be done by way of investigating and establishing the extent to which this means of service provision is effective in maintaining mutually beneficial customer-service provider relationships. This paper explains and discusses findings of a study undertaken for the purpose of illuminating reasons for using internet banking services, and establishing whether or not regular use of these services necessarily implies loyal patronage and that the customer has a sense of relationship with the service provider. Significantly, it was found that regular use does not necessarily imply willing or satisfied use, or that the customer has a sense of relationship with the service provider. Managerial implications of the findings are also considered.     

The customer knowledge journey

Customer relationship management (CRM) is the hot topic for many organisations at the moment. this could produce significant returns on investment and deliver the objective of a one-to-one relationship with customers, but it also puts a greater onus on companies to actually deliver their ‘brand promise’. For CRM to be sustainable it has to embed the learning from its relationships with customers within a clearly defined customer strategy and deliver tactics that fulfil that common goal of true CRM.     

A LONGITUDINAL CASE STUDY OF PROFITABILITY REPORTING IN A BANK

This project involved a seven-year longitudinal case study of a Bank monitoring over time the changes in profit measurement and overhead allocation, product group profitability, benchmarking, customer profitability, budgeting and profitability/performance measures such as return on risk adjusted capital. The overall finding is that the Bank’s profitability reporting (particularly its product group and customer profitability) changed considerably during this seven-year period. The main factors that accountants and managers identified as influencing such changes were four external factors and two internal factors. The four external factors were changes in technology (computers and telecommunications), regulatory change, increasingly competitive global markets and a greater difficulty in attracting customers. The two internal factors were the development of new products leading to a wider product range and a changing management accounting culture. The historical and organizational context of the Bank was also critical in this process of change, and a dynamic contingency model is proposed. This longitudinal case study indicates that more changes are occurring in management accounting practices (such as profitability reporting) than the current evidence from questionnaire surveys and ‘snapshot’ case studies reveals. An area for future research that this study highlights is that although accountants and managers talk in terms of long-term planning and control, the norm is short-term management accounting solutions and managerial reaction to new external developments.     

Online customer relationships in the European financial services sector: A cross-country investigation

Reportedly, over the past 30 years there has been a general sense of willingness, on behalf of suppliers and customers alike, to develop increasingly close ‘emotional’ relationships based on trust. While buyers reward suppliers with brand loyalty, suppliers in turn develop strategies continually to energise this ‘connective’ relationship. As customers and suppliers increasingly become physically connected to one another via computer networks an important emergent issue is whether the nature of their relationship is changing as a result of transactions taking place across these networks. This paper discusses part of an exploratory research project designed to question the extent to which computer-based technologies that previously enabled the building of emotionally connective relationships through the analysis of customer data are instead facilitating anonymous transactional relationships. The project focuses on organisations in three European countriescolon; France, Germany and the United Kingdom. The broad aims are to explore whether consumer segments are emerging, that actually prefer the minimal personal interaction afforded by sophisticated new computer technology, and to examine the extent to which financial service organisations are responding to the demands of such segments. The paper includes an outline of the contextual background, followed by the research methodology and a discussion of the findings. Conclusions are drawn about the implications of these findings for both industry practitioners and academic researchers.     

Segmenting retail banking customers

The desire to treat all customers equally, irrespective of their value to the organisation reflects the laudable but uneconomic service mantras of the past. New Zealand banks, using modern database management tools in conjunction with individual customer information, are migrating customers to cheaper delivery systems and adjusting their customer service levels (customer support, privileges, fee waivers, discounts, etc) according to customer profitability. The essence of this database management is still customer segmentation. Using a retail bank's proprietary customer contribution data in combination with survey-based customer data, this paper presents a quantitative eight segment ‘extension’ of Reinartz and Kumar's (2002) behavioural segmentation solution. Potential profitability in the customer-bank relationship is drawn from incorporation of share of wallet into the segmentation solution, providing insight into the management of each segment's customers, especially the ‘barnacles’ (loyal, loss-making customers) and the ‘butterflies’ (short-term, profitable customers).     

Auditor–client management relationships and roles in negotiating financial reporting

We carry out an interview based field study of chief financial officer (CFO)–audit partner dyads to examine the assumption that the roles played by each side and the nature of the relationships are similar across negotiations. These dyads freely discussed with us their relationship, a specific issue negotiated and it’s resolution process. Employing the lens of social positioning negotiation research, we find these negotiations are ‘fluid’, with continual redefinition not only of the substantive issues under negotiation, but also of the negotiation roles and relationships (i.e. ‘shadow’ negotiations). The CFO’s actions and expectations in these ‘shadow’ negotiations appear to define the auditor’s role and the relationship’s parameters, but both can evolve over time. The audit partners express a desire to be in the “ideal” relationship where they assume the role of the ‘expert advisor’ (as opposed to a ‘police officer’) but they seemingly have no explicit strategy to move the relationship toward a ‘proactive’ (rather than ‘reactive’) state. Furthermore, the audit partner is always the ‘relationship manager’ whose job it is to see that client management remains “happy”. These roles and relationships negotiated in the ‘shadows’ also affect how the negotiation process unfolds, including the set of alternative accounting treatments considered during negotiations. Finally, audit firms appear to manage the assignment of partners to engagements based on CFO preferences and remove those partners who are in “poor” relationships, irrespective of why the relationship is considered by the CFO to be “poor”. Implications for the broader research program on auditor–client management negotiations are discussed.     

Price satisfaction and personnel efficiency as antecedents of overall satisfaction from consumer credit products and positive word of mouth

The paper aims to explore the potential impact of ‘bank personnel efficiency’ and ‘price satisfaction’ on overall customer satisfaction of consumer credit products and positive word of mouth (WOM). Furthermore it aims to provide bank managers with useful insights into the development of high quality relationships with customers. ‘Personnel efficiency’, is related to the human factor of service quality, while ‘price satisfaction’ refers to the customers’ subjective view of the bank's pricing policy. The research involved a review of the available literature on service quality dimensions and their effect on satisfaction and WOM. For the collection of data, a survey was designed and conducted in the greater area of Athens, Greece. The research questionnaire was administered by means of personal interviews to 750 bank customers. Data analysis, using structural equation modelling, suggests that ‘personnel efficiency’ and ‘price satisfaction’ are antecedents of overall ‘customer satisfaction’, which is a prerequisite for positive ‘word of mouth’.