Close-Relationship Management between Banks and Small Business: Exploring the interactions between policies

Abstract

Banks are the largest sources of finance for small business. Banks are known as have stable and long lasting relationship with their customers, which is why development of customer relations is a crucial strategic issue in banking. However, a basic problem in banking is that the customer base is heterogeneous, ranging from homogeneous segments of customers with the same preferences to customer with individual demands for customized services. A key issue in banking is that how bank managers view different strategies to develop their customer relations. This paper investigates how bank branch managers perceive the heterogeneity of their market and how the bank’s relationship strategy affects the development of customer relations. To this and 100 branch bank managers answered a questionnaire, which was processed by SPSS. Results suggest that how bank managers ma perceive customer relationship development strategy is determined by the heterogeneous market and bank’s relationship strategy. This suggests that banks relationship development need to focus more on customer orientation, and that realized strategies need to support this. Bank can be more customer-oriented in their lines of services to small business. It can be proofed that a bank should design a complete customer oriented relationship package with relationship characteristics like offering start-up incentive, monitoring during the period of loan and other efforts should continue to be made to improve the situation in particular to improve the exchange of information between banks and users of finance, which will help the loan users to run the business effectively and efficiently. The effort also continues to be made to improve the situation in Bangladesh between bank and small business relationship from existing and newly evolved ideas.