Competition has changed the focus of companies from selling concept to marketing concept with customer satisfaction as the core. Customer Relationship building, and management hasnow become the focal point of success for every organisation. In this age of liberalisation, globalisation and cut-throat competition, the challenge lies in retention of customers and not j ust acquisition of customers. Earlier the customers being passive and ignorant the producers were able to sell them everything. But today’s customers are highly educated and individualistic in their approach. They have their own choice preferences with quality and value for money taking the top most position in the pyramid. It has become imperative for organisations to build trust and relationship with customer so as to win the customers for lifetime. Jason Jennings and Laurence Houghton have said, “The purpose of business is to find, keep and grow the right customers."

The importance of leveraging consumer insight and data is more important than ever in financial services. New tools and technologies make advanced data analytics available for all sized organizations, while digital channels and the desire for personalized offers make the investment in data analytics mandatory for success.

Unfortunately, while the use of advanced analytics for insight-driven marketing is one of the most important trends in marketing, it still ranks low on the list of priorities according to the 2017 State of Financial Marketing study published by the Digital Banking Report.It’s not that the banking industry doesn’t recognize the importance of knowing their customers. According to the report, “The Power of Personalization in Banking,” all institution types and asset ranges agreed on the importance of knowing their customers’ and members’ personal financial situation and financial behaviour. In fact, more than 80% of organizations surveyed thought it was either ‘very’ or ‘extremely’ important to know their customers’ financial situation.

Two decades ago banking products and services have been distributed mostly via networks of branches and offices populated with staff, attending personally to their customers. Banks have started to use mainly their own direct sales forces going to customers’ offices but lately they have tried as well to distribute their business solutions via brokers, partner companies and other financial intermediaries. By the time internet-based channels have evolved and spread to mass customers, more and more banks havediversified their distribution channels via mobile and online applications (internet banking, social media and social network pages). Because of increasing products sophistication and increasing number of distribution channels, the number of direct contacts “personto person” relationships has decreased. In order to reduce operational costs, banks have focused their resources towards redesigning the global banking infrastructure. They have developed global data processing centres, regional IT support centres, nurturing the accessibility of banking solutions via online technologies. Internet based banking channels and the sharp increase in using intermediaries (others than originators) have made banks to lose direct contact with customers and cease to know everything they should know about them, triggering important systemic risks and exacerbating most the consequences of the latest global financial crisis.

Resilience is even more important nowadays since many initial isolated risks have affected other banks and financial markets in a much higher way than in the past. Resilience helps banks to thrive amidst any threat and disorder helping them to emerge stronger than before. Banks should enhance resilience because this is precisely the one that allows banks to target and pocket the right opportunities and concentrate on customer engagement. Building robust bank models and systems may help banks operate under a variety of challenging conditions, bouncing back from any eventual disruptions. Robust models allow banks to deploy resources and reshape business models, in order to reach customer confidence and loyalty. Banks must change and adapt accordingly, otherwise they don’t evolve and put the crisis behind.

The financial crisis has led to significant loss of trust among customersbeing probably the most profound effect of the latest crisis. The collapse of ethical behaviour among bankers and moral hazard implied because of multibillions of bailouts supported by taxpayers, have made customers to change their perceptions and attitudes related to the institutions they bank with. Banks need to invest in restoring their reputation and reshaping their brand perceptions. The decline of confidence and changing behaviour, have made the markets to be hardly recognizable. One ofthe major challenges that lie for banks ahead represents the tendency to increase the number of banks customers bank with, spreading the financial solutions accessed over different financial institutions as a perceived efficient manner to reduce exposure risks. Reducing the risks desire comes from the reduced level of trust. Although it’s a question of trust, crisis effects could be reshaped into a genuine learning experience and opportunity to redesign a robust and ethical banking image as some of the main actions to prevent attrition and address loyalty.

The crisis has exacerbated the disparities among customers (both households and companies). The crisis shall be a genuine opportunity to reinvent. Reinventing would allow them to improve their products, services, operations and nevertheless to foresee the shaping of industry’s future. Reinventing represents a complex and time-consuming process because it comprises all aspects related to governance and operating model: board composition and qualifications, remuneration and regulatory compliance, risk management, control and financial reporting, capital allocation efficiency, people, technology and legal structure. Banks shall reconsider employee engagement (staff incentive programs) in order to deliver robust and simple superior customer service. Investigating, understanding the trends shaping financial industry and the factors driving customers to bank elsewhere may be some consistent initial steps in strengthening customer retention, engagement and growing the customer base as Banking relationship management - A new paradigm?

Some of the main reasons for those who have changed their banks seem to bethe lack of trust, inappropriate access (proximity of branches), misleading advisors, and service failure or misprice related offerings. Back to basics & Personal relationship management Banks need to have a back-to basics approach in terms of employees, customers and funding suppliers. They need to reanalyse the design of banking segmentation and focus on their traditional role - raising funds, providing loans instead of developing and selling more and more sophisticated solutions especially when customers are unaware of the risk associated with many banking products and reinstall a unitary customer approach inboth branches and alternative channels (call centres, online and mobile banking solutions). It makes sense to encourage customers to use cutting edge technology based alternative banking channels (internet and mobile channels) whenever needed but optimizing personal interactions in order to prevent customer base attrition, dormancy and loyalty.

Human-channel distribution remains the best way to tailor banking solutions and reward customer affinity and advocacy. Competitive pricing structures and improved service levels are not enough. Banks need to focus more on brand integrity perceptions, trying to involve customers in product and service development as key differentiator and competitive advantage.

Human-channel distribution has proved to be the most effective way to retain customers and improve banking experience. It’s all about rethinking strategy, honing approaches and focusing on long term impact and sustainable growth through realignment of business model to the new realities related to markets, products and services, channels, tax and regulatory reforms. In the context of realignment, the business model to the perceived realities, technology can be a key catalyst towards competitive advantage through productivity increase and reducing operating costs. The ongoing pressure for reducing costs makes financial institutions to become more creative and innovative. Banking business models as any other models are prone to be replaced with new models and ideas frequently in order to keep up with competition. That is the reason the banks have to understand all the customer drivers and educate them towards acting in their own (customers’) interest. Understanding the right usage of financial solutions helps customers to be more resilient against short term financial challenges.

Restoring brand confidence and perceptions may be realized through dedicated brand awareness programs, tailored and cohesive solutions helping to improve brand perception and ensure customer advocacy/brand ambassadors in both online and offline environment. Increasing brand awareness and fidelity may help minimize customer attrition but that needs a deeply refocus on the product mix, by engaging employees to offer more value for money, identify and increase advocacy and loyalty among customers. “Word of mouth” approach becomes rapidly a gaining useful influential power for banks. Financial comparison websites and dedicated “best deal” forums compete with conventional financial advisors. The increasing importance of online media, comparison sites, reports, online advertising, online communities and social networks as well magnify satisfied customers’ abilities to act as influential advocates for banking solutions. More and more banks have joined social networks and cyber-branches since many people are more likely to use social media and networks for seeking information, offering feedback (comment and offer reviews) for banking solutions and other means of interactions with their banks. Some banks consider even tailoring specific rewards programs towards enriching banking experience and nurturing advocacy through affinity groups. Although more and more customers consider more appealing (in terms of accessibility and cost) to bank via online channels, tailored solutions rely on human based customer relationships. Rewarding loyalty is more likely to boost retention and customer acquisition and cover the financial costs especially among wealthy customers.

Banks need to restore confidence over the role they play in the society in order to look beyond, maintaining close and mutually benefice relationship with their customers. Taking into consideration the latest systemic failures, close relationships have never been more necessary. Slow adjusting or reactive to change banks are less likely to thrive in the years ahead, that is the reason why financial institutions need to invest both time and financial resources to become more innovative and customer oriented. Cutting edge banking technology is not everything. Some of the most important aspects considered by customers when choosing a bank represent the service quality, the personal relationship with theirliaison. The role of banks, governments and regulators are significant in rebuilding confidence in financial markets. Shareholders require banks to deliver sustainable capital return and a better image among customers, things that may not be achieved without changing values, principles and business models, guarding trust and reputation. Rebuilding trust means clear actions and new employee value propositions, understanding the dynamics of governance framework.

Banks shall study the ways that emotions influence the way people make decisions and behave. It is important to understand the roleof emotions in customer decision process in order to enhance trust among them and change their behaviour. Developing new strategies and focus on long run loyalty programs enhances customer relationships. Satisfaction varies much across markets, cultures and demographics that is the reason why banks should be mindful of the important differences whendeveloping their products and customer services, having to address their offers in tailored ways across different markets and beneficiaries. Banks shall redesign the customer relationship management having in mind behaviouraleconomics and finance. Studying the customers’ preferences, banks may find ways tomake banking more enjoyable.

Engaging employees not only to sell new services and products butalso to retain key customers is possible by finding and nurturing talent. It is essential to create a culture that continues to invest in itspeople sharing a common set of values, cultivating innovation and excellence, aligning staff with the overall business objectives and recognizing personal relationship management customers as a key pillar for a sustainable industry future. Banks need to engage human capital with the required skills to seize opportunities, adapt and overcome challenges. By far the most important stakeholders are customers because without them banks would be out of business. Over the last decade, banks have continually changed their approach and business models, relying more and more on a behavioural science way, rather than in a conventional way. Although crisis has forcedbanks to reduce drastically costs, especially payrolls, cutting back costs on employees proves to be only a short-term solution. Fewer people on the payroll, lower operating costs, may fit only when revenues are declining which is not necessarily the case since revenues could be raised in a different approach. Cutting off employees may not be a long-term solution since one of the most powerful drivers of customer loyalty nowadays remains the customer relationship management based on branch visits and interactions with real persons.

Employee commitment is very important today, more than any time since the Great Depression. Customer retention reaches potential when some of the following emotional needs are met: pride and passion for the brand they bank with, they share the bank’s values and integrity and they are confident they will be most of the times treated well and fairly. Disengaged customers are much more likely to switch banks. Equally important is the need for greater consideration on the role of financial education of companies and households. Technology alone cannot be the solution since they are notdesigned to work alone. Banks should rely more applying behavioural science in their business models. By the time globalmacroeconomic stabilization will be back banks shall quickly focus on growth.

Analysing vast amounts of customer datain real time and automatically manner may be realized through complex Customer Relationship Management solutions. CRMs solutions may be categorized as analytical and behavioural. The first category helps financial institutions in collecting and analysing information regarding customer interactions with to the bank. Banks exploit such information by designing strategies uniquely targeted to consumer needs, enhancing loyalty as well as information on consumer preferences affords an enduring competitiveadvantage. Integrating various data (e.g. across purchases, operations, service logs, etc.), marketing analysts may obtain a more accurate view of customer behaviour. In contrast, behavioural CRM uses experiments and surveys to focus upon the psychological underpinning of the service interaction. CRMs solutions help banks analyse customer behaviour real-time and monitor sales increases / decreases globally and / or individually, enabling banks to maximize customer profitability and improve customer retention, reaching the right customer, at the right time, through dedicated channel and appropriate manner. Complex solutionsmay help also banks asses both the potential profit and risk before offering a product / service to customers, focusing more on appropriate products, distributing channels and relationships. Customers’ preferences may be reached based on various observations and diaries over evidence, in-depth conversations combined with quantitative research on how people spend money. Bankers recognize that although relationshipswith customers have changed, they are confident that information provided by complex CRM solutions may be the ingredient that could help them thrive. With their help, banks may cut off costs without being necessary to cut value or leaving banks exposed. Analysing and diagnosing customer behaviour (mixing knowledge from economics, finance, psychology and sociology) may help banks to understand the dynamics of customer needs, and identify incentives, biases, frames and the bestselling opportunities. CRM systems create the necessary connections between customer segments, geographies and channels, allowing banks to predict the like hood of existing and potential preferences. With their help banks may deliver solutions and providean up-to-minutetracking and trend analysis of product and services usage including the channel preferences. Basically, they offer a robust and comprehensive understanding over both present and future customer intimacy and insights helping banks to respond to market challenges, enrich customer experiences, improve brand perceptions and pocket market opportunities. CRM systems represent one of the most efficient steps that a bank may take to enhance customer.

Although there are many pitfalls for being biased, customers need to be educated and helped to act in their own interest. Making the right decision may reduce long term market failures and significantly reduce systemic risks. Over the last few decades, neuroscientists, marketers and bankers have joined their focus to study the brain’s electrochemistry of bank customers, attempting to understand customer’s behaviour by examining the physiological processes in the human brain when people are exposed to financial decisions. Neuromarketing applied in banking uses the latest neuroscientific technologies and methods for understanding what stands behind the bank customer choices and behaviour. Although people differ very much with respect to concepts such as risk aversion, time preference and tastes, looking “inside the brain” with special imagistic technologies, banks may have an explanation for the wide range of individual economic behaviours and their effects translated to specific banking market segments. Tools available to neuromarketing allow banks to understand customers. The implications for understanding how bank customers’ brains work are huge for the potential growth of banking industry. Although could be seen a natural progress due to the medical and computerinnovation era, there are voices that consider neuromarketing a privacy invasion over the customers intimacy and insights.

The latest global crisis has seriously damaged trust among customers, their perceptions and behaviour related to the banks they work with. Competitive pricing structures and cutting- edgetechnology based financial solutions are not enough to restore customers’ confidence, prevent attrition and cultivate their loyalty. Human-based distribution channel remain the best manner to offer tailored banking and reward customer affinity. In order to be more efficient banks shall study the manners in which emotions influence customers’ decisions and behaviours via dedicated customer relationship management electronic solutions (CRMs). Behavioural and neurosciences knowledge may help banks to reposition their products, features and prices in order to be more attractive and effective for the most customer base, providing a competitive edge. Much of the market inefficiency is due to the many behaviouralbiases. A better understanding of what stand beside anchoring, loss aversion, framing, anchoring, overconfidence, mental accounting, herding and many other customers’ biases may help both customers and banks to reduce market inefficiency, seize opportunities and manage much better risks.