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International Journal of Information Science and Management "Challenges in Trust and Security by Implementation of E-CRM Among Banks and Financial Institution: A Case Study of E-Banking in Iran” Dr. A. R. Miremadi S. Ghalamakri Assistant Professor& MBA Director MBA from Sharif University of Technology at Sharif University of Technology Member of ITM Research Group International Campus email: [email protected] email: [email protected] A. A. Ramezani MBA & Branch Manager from Sharif University of Technology Branch manager at Saman Bank. email: [email protected] Abstract The advancement in technology, information and communication has forced banks and financial institutions into hard competition. In this new era technology, people and customer are the elements which the banks are concentrating on them to manage customer relationship and success of banking in customer satisfaction. Electronic customer relationship management (e-CRM) is seen to arise from the consolidation of traditional CRM with the e-business applications marketplace and has created a flurry of activity among companies. The purpose of this study is to examine the competitive advantages on e-CRM in financial institutions and banks and obtain better understanding of the e-CRM benefits. A qualitative research approach was used for this study. Empirical data was collected through interviews were conducted with twenty six banks which just sixteen of them are participated. Our findings indicate Accessibility, Convenience, Services quality, Timeliness, and Trust are the most important benefits of E-CRM. We found that implementation of E-CRM bring about the following competitive advantages: Up to date of banks, Preparation of up to date technology, Proliferation of channels, Marketing and Strategic Factors and Fragmentation of customer segment. Keywords: E-CRM, Trust, Security, E-Banking, Banks, Financial institutions Relationship, Marketing, Iran 100 "Challenges in Trust and security by implementation of E-CRM … Intruduction Background RM (Relationship Marketing) Relationships are the foundation to the effective development and adaptation of new business philosophy, although businesses have taken care of relationships with their customers for many centuries (Gronross C., 1994) Relationship marketing got popular in 1990s but it has a long history under different names. In its beginning, one-to-one marketing appeared in the mid-1990s, which changed into CRM Customer Relationship Management) as the number one business buzzword at the turn of the millennium (Gronross C., 1994) During the last decade of the 20 th century, relationship marketing has been seen as the mainstream of though in planning a marketing strategy both in industrial marketing and Consumer marketing (Tseng, 2007). According to Morgan and Hunt relationship marketing was defined as all the marketing activities that are designed to establishing, developing, and maintaining successful relational relationship with customers. (Morgan, July 1994) CRM (customer relationship management) With a strengthened focus upon RM, the CRM linkage becomes clear: “CRM provides management with the opportunity to implement relationship marketing on a companywide basis” (Ryals & Knox, 2001, p. 535). At the end of 1999 many practitioners used the term RM to describe customer relationship management (CRM) (Egan, 2001). Customer relationship management (CRM) came into the spotlight when markets were getting more and more competitive. Today the marketing model is changing from product-centered approach to a more customer-centered approach (Gilbert, 2003). The focus of CRM helped financial institutions to understand the customers’ current needs, what they have done in the past, and what they plan to do in the future to meet their own goals (Xu, 2002). The overall goal of CRM is to create the maximum customer lifetime value, by creating trust, customer loyalty and long term relationships. Admittedly CRM has various definitions, for instance Gooding has defined CRM, as “interactive process for achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit. CRM involves: Measuring both inputs across all functions including marketing, sales and service costs and outputs in terms of customer revenue, profit and value, Acquiring and continuously updating knowledge about customer needs, motivation and behavior over the lifetime of the relationship, Applying customer knowledge to continuously improve performance through a process of learning from successes and failures, Integrating the activities of marketing, sales and service to achieve a common goal, The implementation of appropriate systems to IJISM, Special Issue (ECDC 2012) 9-10 May 2012 Dr. A. R. Miremadi / S. Ghalamakri / A. A. Ramezani 101 support customer knowledge acquisition, sharing and the measurement of CRM effectiveness, Constantly flexing the balance between marketing, sales and service inputs against changing customer needs to maximize profits.” (Gooding, 2003) E-CRM (Electronic Customer relationship management) Electronic customer relationship management (E-CRM) is seen to arise from the consolidation of traditional CRM with the e-business applications marketplace and has created a flurry of activity among companies. E-CRM is the proverbial double-edged sword, presenting both opportunities and challenges for companies considering its adoption and implementation . E-CRM refers to the set of activities that enable a firm to utilize the power of the Internet and the electronic medium to implement CRM. Banks all around the world have realized the potential of the Internet as a medium for CRM and have been actively pursuing e-CRM strategies. Vital and important key point is that e-CRM takes into different forms, relying on the objectives of the organizations. It is about arranging in a line business process with strategies of customers provided back up of software’s (Rigby, 2002). According to Rosen, e-CRM is about people, process and technology and these are key paramount to success (Rosen, 2001). Traditional definition of e-CRM according to Stanton is to include attitude for entire business. Like identifying and defining the prime goal to everyone in the organization and creating a sustainable competitive advantage. (Stanton, 1994) Organizations want to increase return on investment (ROI), customer loyalty, effective marketing, improved customer service & support and cost reduction, with the successful implementation of e-CRM (Scullin, 2002). An e-CRM system provides financial institutions with the opportunity to establish individual and need oriented customer relationships. E- CRM enables the financial institutions to provide the right financial product at the right time (Sascha, 2003). Literature review According to” Benefits of e-CRM for Banks and their Customers: Case studies of two Swedish banks” Bank customers form expectations derived from many sources Boulding proposed that customers form expectations of what will happen in their next encounters based on what they “deserve”. (Boulding, 1993). Zeithaml & Bitner identify two levels of expectations, desired service and adequate service. Desired service represents the “wished for” level of performance and adequate service reflects showing more basic service expectations.(Zeithaml, 2000). The model permits exploration of the perceived difference between expected service and the experienced service, particularly the zone of tolerance IJISM, Special Issue (ECDC 2012) 9-10 May 2012 102 "Challenges in Trust and security by implementation of E-CRM … developed by Parasuraman ,they’re by customer specific benefits are: Customer interaction and satisfaction, Convenience, Speed of processing the transaction through e-Response, Trust, Service quality.(Parasuraman, 1991) To justify their purpose, two research questions have been considered: How can the benefits of e-CRM for banks are described and how can the benefits of e-CRM for bank customers be described. They used a qualitative research approach Empirical data was collected through in-depth interviews were conducted with two Swedish banks and a group of their customers. Their findings indicate that Swedish banks are well aware of the benefits and applications of the e-CRM and use the system to maintain good relationships with their customers. Moreover, they found out with the implementation of e-CRM and the latest technologies. The Swedish banks seem to have same description about the benefits of e- CRM and have maintained good relationships with customers due to the usage of e-CRM. Furthermore their finding indicates that with the implementation of e-CRM and the latest technologies banks have ensured full security for the transactions of their customer’s. Consequently, E- CRM facilitates the organizations to provide one to one services and also maintain the transaction security of the customers. Benefits of E -CRM Scullin believes that increased customer loyalty, information accumulated by e- CRM system helps organizations to identify the actual input cost of wining and retaining long lasting relationships with customers (Scullin, 2002). The benefits of having an e-CRM solution implementation are many that we classify them into four classifications. General Benefits of E-CRM According to Jelassi and Ender, the aim of E-CRM is to: Create long-term relationship with customers with minimum cost, Reduce the customer defection rate, Increase the profitability from low-profit customers and

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