CRM can be defined as a technology-based strategy that focuses on identifying customer data then accurately developing amicable relationships with the customers. It is a strategy that is applied by organizations in the bid to satisfy the customers and increase loyalty levels. CRM came into action in the banking sector when competition was getting more and more stiff. Focusing on CRM aids the banks with comprehending the current needs of the customers regarding what has been done in the past and what is planned to be attained in the future.
Islamic banks in Kuwait are vibrant and even though they have exercised CRM in their operations, there are a number of CRM goals that have not attained the required results. And even worse, CRM problems faced by Kuwait banks have in some case damaged the customer relationships (Akhavunnasab et al., 2018). In the past, numerous studies have been conducted in Kuwait investigating relationship between the CRM strategies and retention of customer loyalty, effects of CRM on performance of Kuwait banks, determination of customer profile using CRM and many more. However, none has been conducted in identifying the problems Kuwait banks face in regards to CRM.
Technology is on the rise and ever evolving which has brought the interest of Kuwait banks in developing fruitful customer relationships. Kuwaiti banks are using social media in making strategic decisions (nure, 2018). According to a 2019 social media report by StatCounter, 71.25% of Kuwaiti use Facebook, 11.15% Twitter, 10.94% YouTube, 4% Pintrest, 1.01% Instagram and less than 1% reddit (Al-Wugayan, 2019). Hence this has made the Kuwaiti banks integrate CRM via social media in their operations termed as social customer relationship management (SCRM). The challenge has been on how to properly employ SCRM in establishing effective service delivery while at the same time maintaining customer loyalty. In fact, SCRM is an extension of CRM and with the technological advancements, CRM alone cannot work and has to be backed up with SCRM which has been a challenge in effecting owing to difficulty in definition of clear customer wants and how to tailor them in line with SCRM in Kuwait (Khan et al., 2017).
Another challenge that has faced Kuwaiti banks in CRM is adoption of an effective holistic approach. A holistic approach is recommended as CRM attains many parts of the business which is lacking in Kuwaiti banks. This kind of approach places the CRM needs at the heart of the organization with business processes that are customer oriented. In others CRM comprises of three pillars; operational, analytical and collaborative. Under this approach, the major challenge of Kuwait banks has been how to effectively coordinate CRM with maintaining growth of disparate customer channels of communication (Tamilmani et al., 2018).
According to a study conducted in 2018 by Faraj Mazyed and Aldaihani that focused on effects of SCRM on Islamic banks in Kuwait, it was revealed that SCRM was a fundamental predictor in customer satisfaction and is therefore conceptualized in enhancing ultimate customer satisfaction but hard to implement (Hanuou and Yuan, 2018). Kuwaiti banks are no exception. Adopting a holistic approach in integrating SCRM in customer satisfaction has proved a challenge to the Kuwaiti banks. To realize success in their operations, it is critical that the Kuwaiti banks effectively coordinate social media and CRM and work towards maintaining high degrees of customers satisfaction and loyalty.
Kuwaiti Banks’ Problems with their Customers’ Satisfaction
Islamic Banks (IBs) globally have witnessed rapid growth both in terms of volume and customer base (Paliouras and Siakas, 2017). The economy of Kuwait is relatively open even though it doesn’t attract significant levels of foreign investment as noted by Dr. Mohammad Y. Al-Hashel, the Governor of the Central Bank of Kuwait in the 46th Economic Report for the year 2017. IBs in Kuwait try to comprehend the attitude of customers towards their products and services so that they can tailor them to meet customer loyalty. However, even with all that effort, the Kuwaiti banks are unable to fully meet the customer requirements and that leaves the customers unsatisfied.
A 2017 report by International Monetary fund (IMF) noted that IBs weren’t fully meeting the expectations of prospective customers and that the religion motive was put by Kuwaiti banks as one among the core factors in attracting customers (Alolayyan et al., 2018). The worrying thing is that instead of focusing on the digital transformation and putting a higher emphasis on the nation’s strongest non-oil economic sector in improving overall customer satisfaction, the IBs are putting wayward trends in selecting the customer preferences and interests. A matter of fact is that religious motives have less influence in deciding IBs’ selection. The bankers ought to realize the choices of the Kuwaiti customers and act accordingly in improving the criteria used in considering the prospective customer preferences in the competitive Kuwaiti banking industry.
The complex business environment evident in Kuwait needs patience, persistence and flexibility. According to the 46th Economic Report prepared by the Central Bank of Kuwait, the Kuwaiti banks are facing numerous obstacles that are likely to influence their growth abilities and operations within the competitive environment (Khan et al., 2017). The economy of Kuwait relies on oil as the primary source of financing. Oil in Kuwait represents more than 90% of the earnings from exports and 80% of the budget revenue. The private sector’s performance is connected to government intervention in terms of input prices and subsidized loans, bailouts, and input prices.
Therefore, due to over-reliance on oil it is hard in developing a larger portfolio of more profitable investment opportunities beyond the short hand real estate, stock market activities and trade as supported by the 2017 report by Euromoney presented by Olivier Holmey (Nure, 2018). This then has resulted in concentration of banks in lending to real estate, consumer loans and trade finance ignoring the industrial sector. To add onto this, some of these lending services are restricted owing to large share of expatriate population with limited access by virtue of lots of regulations inclusive of those related to corporate ownership and real estate. This limits the level of access the customers have on the bank financing which is a visible challenge facing customers even though the interest rates are quite favorable; at 3%.
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