Relationship banking Essay Example | Topics and Well Written Essays - 1500 words

Relationship banking - Essay Example Sale of banking products has become extremely competitive. This paper will discuss how relationship marketing has penetrated the banking sector and what are its pitfalls or benefits. It will also discuss the type of relationship that banks have with customers and what marketing activities it performs to establish and maintain such relationships. Banks have adopted the concepts of marketing in the highly competitive market as the consumers have become highly literate and empowered. Customers are increasingly using technology for using banking services, and hence the bank-customer relationship have become of great importance. To stimulate the improvement in the quality of service from the banks, deregulation brought in a range of suppliers in the financial services (Durkin & Howcroft, 2003). Because of the pressure on the bank margins from new competitors, banks have had to reengineer their internal and external delivery process to make profits. Technology is used to increase market share and reduce costs. Banks have been forced to consider this because in the new and emerging delivery channels the bank-customer interactions do not involve face to face contact. Relationship marketing (RM) means to identify, establish, maintain and enhance, and when necessary even to terminate relationships with customers and other stakeholders. In doing do both parties gain and the objectives have been met (Durkin & Howcorft, 2003). This conforms to Gummesson’s concept of relationship marketing. Thus it involves mutual satisfaction, gains and attainment of objectives. In RM the customer is treated as a partner and their needs are identified, and loyalty developed through quality service (Fjà ¤llborg, Morin, Mannberg, Rosell & Heckscher, 2005). Relationship between the buyer and seller differs across industries and firms and customer service forms the core of RM. Effective customer service creates