ICICI Credit Cards- Improving Customer Service

ICICI Bank, the second largest private commercial bank in India with about 4000 branches and 10000 ATMs.
It provides a multitude of banking and financial services, namely banking, credit cards, loans, investments,
NRI services and so on. In the same period, its credit card division was ranked second, having about 5 million
customers. The bank offered various categories of credit cards such as Premium (Solid Gold, Amex Gold),
Classic (Sterling Silver, American Express Green, Mini, Easy Deposit-Gold and Silver). They also introduced
value for money cards, affinity cards and co-branded cards as part of their customer relationship strategy.

ICICI bank realised that though it held a substantial share in the credit card business, in the race for
increasing numbers, it had not concentrated on quality of customer service. This resulted in an
unprecedented increase in customer grievances and customer care help lines had long queues. The bank’s
profitability was affected by high customer attrition rates in the credit card division. ICICI felt that in its efforts
to improve customer service, the first measure was to look internally – the time taken to retrieve documents.
The solution was implementing the 5S1 concept in its offices. Subsequently, all records were numbered and
placed date- wise and alphabetically in a row so that it did not take more than two to three minutes to find a
record, resulting in quick transactions.

Once the retrieval system was put in order, the bank turned to retention agents to negotiate with customers
who requested cancellation of their cards. However, the success rate of this program was low and only a
small percentage of customers who were contacted agreed to continue using their credit cards. It was then
that ICICI realised that a predictive model was needed to identify potential customers, who were likely to
cancel their credit cards. The bank hired Fractal, an analytics firm, which drew up a proactive retention
program based on analysis of past data of existing as well as lost customers. Therefore, each customer’s
propensity to leave or stay was defined. This measure was used in conjunction with the index of expected
lifetime value of the customer. Retention agents were then assigned on a priority basis and valued customers
were retained. This exercise resulted in 50% reduction in customer attrition rate for the bank, as well as
cutting the cost of retention per account.

There were a lot of other players in the credit card market. Multinational banks like Citibank and Standard
Chartered, Indian private banks like HDFC bank were among them. In this competitive scenario, ICICI felt the
need to differentiate its service so that customer loyalty was maintained. The bank tied up with Microsoft
(Biztalk) to implement enterprise middleware. This was instrumental in linking multi- channel operations of the
bank to back end processes, generating automated reports that reduced transaction time and effort. Other
technological measures to retain customers included mobile banking. ICICI Bank tied up with Air2Web that
provided its customers with wireless access to their banking and credit card accounts. The bank was one of
the first to use CRM technology to provide better customer service. ICICI Bank was the first bank that offered
credit card transactions online to net savvy customers. Merchant establishments also benefited by net-based
services like payment gateways for business-to-business and business-to- consumer transactions. This
served the dual objective of expanding the customer base as well as increasing the use of existing customers
in an under-penetrated market.

ICICI felt that in the credit card market, the only way to retain customers was to give them many avenues to
swipe the card. It also paid special attention to high net-worth credit card users and offered rewards in
various forms to retain them. These offers renewed the customer’s interest and prevented them from shifting
to a competitor’s credit card. To satisfy the social need of customers, Concern India Affinity cards were
introduced by the bank, which again served a dual purpose. On one hand, they fulfilled the moral obligation
of customers to do something for society and on the other; the bank was able to gain loyal customers. For
example, part of the reward points and spending on the Affinity card was donated to the Concern India
Foundation.

Another means to capture customer interest was co-branding of cards in which ICICI Bank tied up with six
companies -- HPCL, Amway, Big Bazaar, AirTel, Trinethra and Prudential Life Insurance. The bank entered
into a relationship with both HPCL and Airtel by launching its international silver co-branding card. This
enabled post-paid customers of Airtel to earn multiple reward points on their airtime usage, petrol expenses
and other card spending. Each of these co-brands targeted the need of particular groups of people.

As a result of these efforts, the Outlook survey ranked ICICI Bank as the most customer friendly. The main
factor was the quick grievance redress by the bank, which reflected its relationship management orientation.
However, it fared 12th in service quality - ease in opening accounts, promptness in giving information to
customers etc. Overall, the bank’s focus on the credit cards section was on customer relationship
management.
Questions for Discussion:
1. Highlight the various measures taken by the bank to retain its customers. What role has technology played
in improving customer service?
2. By concentrating on the numbers game, ICICI lost out on quality of customer service. Is gaining market
share more important than customer satisfaction?