Abstract:
This study investigates effect of Customer Relationship Management on bank performance in
Oromia Bank, Ambo town. To gain a comprehensive understanding, this research employs
descriptive and explanatory research design to examine the effect of customer relationship
management on Oromia bank performance in Ambo town. The regression analysis reveals that
factors such as customer satisfaction, complaint resolution, accessibility of service, customer
feedback, communication effectiveness, personalization of services, and customer engagement
have a statistically significant and positive effect on bank performance. These findings indicate
that enhancing customer relationship management practices can lead to substantial
improvements in bank performance. Additionally, insights from Focus Group Discussions
highlight several internal and external challenges faced by Oromia Bank in Ambo, including
poor capital allocation, difficulties in customer retention, high operating costs, regulatory
compliance burdens, and challenges with non-performing loans. These issues are exacerbated by
external factors such as rising inflation, deteriorating infrastructure, and security concerns,
which further impact the bank’s operations by reducing transaction volumes, deposit inflows,
and increasing loan defaults. Based on these findings, the study recommends improving capital
allocation, optimizing resource utilization, reducing operational costs, and addressing
regulatory compliance challenges. Additionally, strengthening risk management, enhancing
customer retention strategies, and security are essential for improving bank performance in a
challenging environment. These measures are critical for ensuring the long-term sustainability
and growth of Oromia Bank in Ambo town
