Customer Relationship Management (CRM) is the core business strategy that integrates internal process and functions and external networks to identify, cultivate and maintain long-term profitable relationships so as to provide those very customers with services quality exceeding their expectations. Thus, the present paper focuses on the gap between customers’ expectation and customers’ perception regarding selected CRM practices in public and private sector banks. The paper identifies four major dimensions, viz., pre-transaction services, during-transaction services, post-transaction services and behavioral factors, constituting overall CRM practices in banks. The paper also lays emphasis on comparing the customers’ expectation and perception levels in public and private sector banks.

The world economy is witnessing tremendous changes with the prevailing winds of globalization, offering loads of opportunities for industries and business houses—especially banking services. The banking industry today is recognized as a global industry offering different sets of services under one roof.

The banking industry is highly competitive, as it is a diverse composite of ownership patterns and varying structures which offer a variety of services. The intense competition in the industry can be visualized from the effort the banks put in not only to compete among each other but also with non-banks and other financial institutions. Thus, in this competition, banks face dynamic challenges of both customer base and performance. Herein comes the concept of Customer Relationship Management (CRM).

“Successful CRM focuses on understanding the needs and desires of the consumer and is achieved by placing these needs at the heart of the business by integrating them with the organization’s strategy, people, technology and business processes” (Heygate, 1999). Customers being more educated and aware about the latest market developments, demand the best complete range of financial products under one roof to maximize their satisfaction. Therefore, if a bank wants to satisfy its customers, it needs to know what it is that satisfies customers, and equally importantly, what it is that makes customers dissatisfied with the bank, its products and services.