PERFORMANCE ANALYSIS OFCUSTOMER RELATIONSHIP MANAGEMENT SYSTEM HSBC BANK by Sanjay Gupta

SUMMER TRAINING PROJECT REPORT ON PERFORMANCE ANALYSIS OFCUSTOMER RELATIONSHIP MANAGEMENT SYSTEM HSBC BANK CONNAUGHT PLACE BRANCH DELHI

DECLARATION

I hereby certify that the work which is being presented in the project report “Performance Analysis of Customer Relationship Management System ” of HSBC Bank, Connaught Place Delhi for partial fulfillment of the requirements for the degree of “Master of Business Administration” submitted to XYZ Management Studies,is record of my own work and was carried out under the guidance of Miss. XYZ XYZ

ACKNOWLEDGEMENT

My project bears the imprint of many people. I am highly indebted to Mr. who provided me all the guidance, support and cooperation that was required for the successful completion of this project. I express own deep sense of indebtedness to him for his keen interest in the subject and encouragement. My thanks also go to the faculty member Mr. ( ) for his sincere exhortations, constant encouragement and constructive criticism throughout the preparation of the report. My overriding debt continues to my parents and my friends who provided me with the time, support and inspiration needed to complete the project.

XYZ

Table of Contents

Industry Overview-Wealth Management Company Overview- HSBC HSBC India Wealth Management at HSBC Customer Relation Management System CRMS at HSBC Segmentation based on CRMS at HSBC Customer Net Present Value Using CLV to create customer clusters Analysis of CRMS (Survey) Recommendations Constraints Feasibility Learning Bibliography

OBJECTIVE

The primary objective of this research was to explore the information requirements of front-end sales by surveying representatives of the bank. Surveys were designed to generate a list of information used by them and gather an importance rating for each piece of information. The results showed that while a majority of the information required or considered important by sales agents is available to them through the system, some important information such as customer profitability are not available. The challenge for HSBC is to develop and manage a proactive customer contact plan incorporating both a data capture procedure and an information sharing mechanism to deliver the knowledge to sales agents across all channels. This study found that there are differences in information requirements between relationship managers and customers and the same need to be addressed by the bank.

RESEARCH METHODOLOGY Research methodology is a systematic way which consists of series of section or steps necessary to carry out research effectively and the desired sequencing of the marketing research is a process which involves a number of inter related activities which overlap and rigidly follow a particular sequence. It consists of the following steps: 1. Formulating the objective of the study. 2. Designing the method of data collection. 3. Selecting the sample plan. 4. Collecting the data. 5. Processing and analyzing the data. 6. Reporting the findings.

MEANING OF RESEARCH Research in common parlance refers to a search for knowledge. One can also define research as a scientific and systematic search for pertinent information as a specific topic. In fact, research is an era of scientific investigation. The advanced learner’s dictionary of current English lays down the meaning of research as a “careful investigation or enquiry especially through search for new facts in any branch of knowledge”. Redman and Mory define research as a “systematized effort to gain new knowledge”. Some people consider research as movement, a movement from the known to unknown. It is actually a voyage of discovery. We all possess the vital instinct of inquisitiveness makes us probe and attain full understanding of the unknown. This inquisitiveness is the mother of all knowledge and the method, which man employs for obtaining the knowledge of whatever the unknown, can be termed as research.

RESEARCH APPROACH The research approach for the purpose was secondary to collect the information on the subject.

RESEARCH INSRUMENT I used direct observation, customer data and survey as research instrument.

RESEARCH DESIGN In this project, I used exploratory research design and for data collectionfill up the questionnaires from the customers of mobile, survey of the market and some information was collected by interview of the users of the cellular at Dehradun.

SAMPLING I used random sampling method because from a finite population refer to that method of sample selection which gives each possible sample of combination an equal probability of being picked up and each item in the entire population to have an equal chance of being included in the sample. SAMPLE DESIGN A sample design is a definite plan for obtaining a sample from a given population.

Sample design may as well lay down the number of items to be included in the size of the sample. i.

Type of universe The first step in developing any sample design is to clearly define the set of objects, technically called the universe to be studied. The universe is infinite as the number of customer is unlimited.

ii.

Sampling unit

The study to be taken on the suppliers and consumer of mobile connection. iii.

Size of the samples As the universe is infinite so the number of consumers will be limited. Hence sample size is of 50 customers belonging to various sections of the society.

STEPS IN SAMPLING

1. Define the universe 2. Select the sample frame 3. specify the sampling units 4. Select the sample design/methods 5. Determine the sample size 6. specify the sampling plan 7. Select the sample

AREA OF RESEARCH DEHRADUN

SOURCES OF DATA RESEARCH DATA Data collection is the key activity of marketing research. The design of the data collecting method is the backbone of the research design. Data constitute the foundation of statistical analysis and interpretation. Hence the first step in statistical work is to obtain data. Data can be obtained from two important sources, namely: â&#x20AC;˘ Primary data â&#x20AC;˘ Secondary data PRIMARY DATA: Primary data are gathered for the specific purpose or for a specific research project, consisting of original information for the fulfillment of the project objective. When the data are required for the particular study it is necessary to collect original data.

Primary data can be collected in four ways; 1) Observation 2) Focus 3) Survey 4) Experiment

SECONDARY DATA: Secondary data are the data which already exists somewhere. Secondary data provide starting point for research and serves the advantage of low cost and ready availability. Secondary data can be divided into two types: â&#x20AC;˘ Internal data â&#x20AC;˘ External data

When the data researcher uses the data that has already been collected by other data are called secondary data. Secondary data can be obtained from journals i.e. internal sources, reports, government publication and books, professional bodies etc.

Internal data are reports and memos generated within an organization to facilitate its operations. External data are those especially produced for outside consumption.

Sources from which I have taken the secondary data are as under: • Direct observation • Websites • Books • Survey and customer data and reports

WEALTH MANAGEMENT A progression from the aggressive retail banking focus of most large banks across the world, wealth management is a reflection of the emerging trend of an altogether new set of clients, a subset of “individual” or “retail” clients, but with the potential to amass significantly higher levels of wealth. Naturally, such clientele require a higher level of personalization, both in terms of relationship management as well as product offering. To the banks, it means a big opportunity in terms of quantum of assets managed as well as ongoing fee income potential.

As was the case in retail banking, the initial wealth management offering was largely undifferentiated and commoditized, with some cosmetic changes by way of stratifying higher-end retail customers as ‘Gold’, ‘Preferred’, ‘Platinum’ etc., often based on very simple criteria like account balances, deposit/asset values etc. Apart from preferential interest rates or fees and some degree of personalized service .e.g. tagging a ‘Relationship Manager’ to a set of clients, there was no significant value added from the client’s point of view. What most banks were clearly missing was the concept of understanding the customer’s current financial position, ongoing financial needs, funds flow 14

requirements, risk appetite levels and providing a basket of investment options and value-added advisory services. The thrust was more on safeguarding the customerâ&#x20AC;&#x2122;s wealth, resulting in mismatched offerings at sub-optimal returns. The wealth creation activity is no longer restricted to advanced markets as emerging markets are being tightly integrated with the global economy. New, wealthy investors, in large numbers, are arriving on the scene in an unprecedented manner. Their expectation: professional guidance from their financial services provider to grow, protect, and transfer their wealth freely across borders, to enable them to maximize their wealth as well as diversify their interests.

Banks have acted swiftly in spotting and leveraging this opportunity to tap this rapidly growing and extremely promising segment and augment their revenues. The result: an intensely competitive environment with financial services providers outdoing each other in terms of promised returns, risk management, personalization of services as well as customer experience. Banks have also leveraged their distribution capabilities and captive customer base effectively to market a wide spectrum of â&#x20AC;&#x2DC;wealth managementâ&#x20AC;&#x2122; offerings to enable their clients accumulate, grow and preserve their wealth, tailored to customer-specific needs on cash flows, returns and risk appetite. These days bank provides its customers and clients with the facility of financial planning. 15

This particular service is synonymous with the concept of wealth management. It is the integration of asset, debt, and risk management strategies into one seamless financial solution .it involves certain critical issues like asset allocation, estate and trust planning, retirement planning etc. It can be defined as a series of logical financial transitions • Accumulation of wealth • Protection of wealth • Tax advantaged distribution of wealth during life • Tax advantaged distribution of wealth at death Such financial transitions depend upon the stage of life an individual is in and the personal goals for transfer of assets.

NEED FOR WEALTH MANGEMENT Investors today face bewildering choices about what to do with their money. As market conditions change and new financial products appear and disappear, making sense of information and innuendo about effective ways to manage wealth can be extraordinarily difficult. Making decisions about investments and portfolios is no easy task. Individuals are bombarded with a dizzying array of investment options. Information abounds, advice comes from all quarters, recommendations often contradict one another, and new products and asset classes are invented at breakneck speed. How should investors make sense of the chaos of information and innuendo that exists about wealth management? How should they create a portfolio of investments that will provide sufficient money to see them through life and help them achieve their goals? While these questions may seem daunting, they are necessary. Indeed, the need to save and invest money for the future is one of life's certainties, along with death and taxes (and not unrelated to them). FINANCIAL PLANNING MANAGER Wealth management is a knowledge business and deals with customers who have specific short and long-term investment plans and cash flow requirements. They need to feel valued and unique; unsurpassed investment performance is one of their key expectations. It is critical for the financial 17

advisors to understand not just their clientsâ&#x20AC;&#x2122; risk disposition, wealth base and funds flow requirements, but also the banking & investment milieu, and arrive at a structured investment plan tailored to the client needs. This domain is still in a nascent stage and growing rapidly. This growth has primarily been driven by demographic and economic shifts, increased customer expectations and demands for sophisticated offerings, coupled with real-time information, personalized service, and most importantly, full control over their investment portfolio.

Apart from growing the net worth, the financial service providers need to address unique challenges in dealing with High Net worth Individuals. Managing such a relationship requires a different orientation & positioning from standard retail banking: one that is primarily driven by personalization, readiness of information and based on a long-term relationship with the customer and her immediate circle (family, friends, social circle etc.), whilst continuing to preserve very high degree of confidentiality in the client relationship. The relationship is essentially based on trust the customer reposes in her financial advisor. The advisor is expected to not just control and grow the assets but continuously aim to increase the rates of return and minimize risk and eventuality of loss. Typically, an advisor works with the customer in developing an investment strategy to achieve her financial goals. The appropriate mix of investment products like equities, fixedincome securities, mutual funds etc. are purchased and monitored in keeping with customerâ&#x20AC;&#x2122;s strategy for principal growth, income and liquidity.

A key factor contributing to the growth of private banking services is the advent of advanced tools that help to better understand & profile customers, recommend, plan & forecast possible outcomes arising out of various investment options (what-ifs) etc., which financial advisors have been able to leverage strongly to give greater comfort to their investor clients. WEALTH MANGEMENT IN INDIAN CONTEXT The Indian wealth management market is ripe for development. Strong economic growth has created wealth that needs somewhere to go and consolidated the position of those with old money. Despite the country's rapid development the market is immature; investment propositions have traditionally centered on deposit accounts and currency controls limit access to the international capital markets. But change is in the air and both domestic banks and international players alike are now gearing up to meet the needs of the wealthy. The natural evolution of the wealth management market can only be helped along by continued economic growth that will do much to stimulate demand. So with such an abundance of wealth then how can banks, both domestic and international, best meet demand? The wealth management industry at present is immature compared with offerings by private banks and wealth 19

managers in the West. There is no doubt however than the Indian market is in the early stages of development.

HSBC INTRODUCTION Headquartered in London, HSBC is one of the largest banking and financial services organizations in the world. HSBC's international network comprises around 10,000 offices in 82 countries and territories in Europe, the AsiaPacific region, the Americas, the Middle East and Africa. With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 200,000 shareholders in over 100 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts. Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities. Although the Groupâ&#x20AC;&#x2122;s holding company, HSBC Holdings plc, was formed as recently as 1991, many of its principal constituent companies opened for business over a century ago and have long experience in their home and international markets.

BUSINESS PRINCIPLES AND VALUES The HSBC Group is committed to five core business principles: •

outstanding customer service;

•

effective and efficient operations;

•

strong capital and liquidity;

•

prudent lending policy;

•

strict expense discipline;

Business principles are supported by loyal and committed employees who make lasting customer relationships and international teamwork easier to achieve. HSBC also operates according to certain key business values: •

the highest personal standards of integrity at all levels;

•

commitment to truth and fair dealing;

•

hands-on management at all levels;

•

commitment to quality and competence;

•

a minimum of bureaucracy;

•

fast decisions and implementation;

•

putting the team’s interests ahead of the individual's;

•

the appropriate delegation of authority with accountability;

•

fair and objective employer;

•

a diverse team underpinned by a meritocratic approach to recruitment/selection/promotion;

•

a commitment to complying with the spirit and letter of all laws and regulations wherever we conduct business;

the exercise of corporate social responsibility through detailed assessments of lending proposals and investments, the promotion of good environmental practice and sustainable development, and commitment to the welfare and development of each local community. HSBC’s reputation is founded on adherence to these principles and values. All actions taken by a member of the HSBC Group or staff member on behalf of a Group company should conform to the principles and values. Additionally, they have codes of conduct for staff in all operations.

GROUP STRUCURE HSBC Holdings is a public limited company incorporated in England and Wales. Headquartered in London, the HSBC group operates in five regions: Europe; Hong Kong; the rest of Asia Pacific; including the Middle East and Africa; North America; and South America. The entities which form the HSBC Group provide a comprehensive range of financial services to personal, commercial, corporate, institutional and investment, and private banking clients. To more easily promote the Group as a whole, HSBC was established as a uniform, international brand name in 1999. In 2002, HSBC launched a campaign to differentiate its brand from those of its competitors by describing the unique characteristics which distinguish HSBC, summarized by the words 'The world's local bank'.

HSBC Bank- India The antecedents of the HSBC Group in India can be traced back to October 1853 when the Mercantile Bank of India, London and China was founded in Bombay (now Mumbai). Starting with an authorized capital of Rs 5 million, the Mercantile Bank soon opened offices in London, Madras(Chennai), Colombo and Kandy, followed by Calcutta(Kolkata), Singapore, Hong Kong, Canton(Guangchow) and Shanghai by 1855. The following hundred years were in many ways propitious for the Mercantile Bank. In 1950 it moved into its new head office building in Mumbai.at Flora Fountain. The acquisition in 1959 by The Hongkong and Shanghai Banking Corporation Limited of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group. Founded in 1865 to serve the needs of the merchants of the China coast and finance the growing trade between China, Europe and the United States, HSBC has been an international bank from its earliest days.

After the Mercantile Bank was acquired by The Hongkong and Shanghai Banking Corporation, the Flora Fountain building became and remains to this

day,

the

Head

Office

the

HSBC

Group

India.

Through the 1990s, HSBC has vigorously developed its role as one of the leading banking and financial services organizations in the world. Its strategy of 'managing for value' emphasizes the Group's unique balance of business and earnings between older, mature economies and faster-growing emerging markets.

HSBC in India is proud to have retained the Group's pioneering streak by being an active partner in the development of the Indian banking industry even giving India its first ATM way back in 1987. The organizationâ&#x20AC;&#x2122;s adaptability, resilience and commitment to its customers have further enabled it to survive through turbulent times and prosper through good times over the past 150 years.

The Bank offers a comprehensive suite of world-class products and services to its corporate and commercial banking clients as also to a fast growing personal banking customer base. It has 33 branches in the cities of Ahmedabad, Bangalore, Chandigarh, Chennai, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Trivandrum and Visakhapatnam. There has been major business growth in India. 2001 saw the opening of the only branch in the HSBC network that is open 365 days a year in Pune, western India, and, in the same year, HSBC was able to enter the insurance market in India for the first time. The Group has also pioneered the use of 25

global resourcing centres to achieve a competitive advantage. Situated in Bangalore and Hyderabad these centres have allowed HSBC to utilize its worldwide reach and to improve services by conducting back office functions on an international basis. HSBC Group entities in India 1.Commercial Banking The Hongkong and Shanghai Banking Corporation Limited (HSBC) Personal Banking

HSBC offers a wide range of personal financial services, including personal lending and deposit products, through its branch network in Ahmedabad, Bangalore, Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana, Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam. Also offered branch-wide are international Gold and Classic credit cards from VISA and MasterCard and debit cards from Visa. Customers have access to 24-hour banking services through an extensive network of automated teller machines (ATMs), an integrated Call Centre, and internet banking .

Non Resident Indian Banking

HSBC's Non Resident Indian Banking (NRI) centres located in Asia-Pacific, the Middle East, Europe and North America, together with HSBC's offices worldwide, provide the international Indian Diaspora access to a range of products and services. These include NRI related investment (both international and domestic), transactional and deposit products, together with a full range of personal and private banking products in India and overseas. Internet banking also provides easy access to HSBC's services. Financial Planning Services

Services include investment and custodian management and access to stock broking and insurance services, which are offered to resident as well as nonresident Indians.

Corporate Banking

HSBC has well-established, long-term corporate banking relationships with large domestic Indian corporations and foreign multinationals operating in India. Services include term and working capital finance, trade facilities, corporate deposits, syndications, payments and cash management services and factoring. Corporate Banking represents the wide range of banking and financial services provided to domestic and international operations of large local corporates and local operations of multinationals corporations. Services include access to commercial banking products, including working capital facilities such as domestic and international trade operations and funding, channel financing, and overdrafts, as well as domestic and international payments, INR term loans (including external commercial borrowings in foreign currency), letters of guarantee etc.

The Investment Banking and Markets division brings together the advisory and financing, equity securities, asset management, treasury and capital markets, and private equity activities of the Group to complete the CIBM structure and provide a complete range of financial products to our clients. Increasingly, ECA financing is being considered by customers and HSBC

works closely with project export finance teams, both onshore and offshore, to provide structured solutions.

Clients are serviced by sector based client service teams that combine relationship managers, product specialists and industry specialists to develop customized financial solutions. These form the relationship team along with the Investment Banking & Advisory division. Each team supports the client's worldwide operations, ensuring a full understanding of the company's business and financial needs. Based on our client's requirement, HSBC also assigns Global Relationship Management teams to provide structured solutions.

Global Relationship Management teams are tasked with understanding in depth the sectors in which our clients operate with the aim of adding value through detailed industry knowledge and structured financial solutions. The Corporate Bank in India was ranked 2nd overall in the 2004 Greenwich Survey and is aiming at achieving the top rank in the 2005 survey. Currently CIB manages approx. 365 CIB relationships with total advances of approx. USD 1.1 Bn as at 31 May 2005. This portfolio is largely spread within 9 sector teams divided as under : •

Consumer Brands

•

Industrials

•

Energy and Utilities 29

•

Telecommunications

•

Automotive

•

Healthcare

•

Transport and Logistics

•

Metals and Mining

•

Media

Business Banking

HSBC's Extra Mile Business Banking offers two types of account to small and medium-sized businesses - The Business Account and the BusinessVantage Account. Services include Business Phone Banking, Business Doorstep Banking and Multi Branch Business Banking. Payments and Cash Management

HSBC provides integrated domestic and regional transaction support to corporate clients through a sophisticated range of cash management solutions, including collection and payment services and integration with customer back-end systems. Operations and client services are ISO 9001 certified. Hexagon, the HSBC Group's dedicated electronic banking service

allows

users

perform

financial

transactions,

obtain

international financial markets information, and review details of their

domestic and international accounts, from anywhere in the world, 24 hours a day. Services provided are: •

Effective cash flow management

•

Minimised costs and reduced operating expenses

•

Maximised returns and interest benefits

•

Enhanced risk management

•

Improved security and audit controls

Trade

(international

and

domestic)

and

Factoring

Services

A wide range of solutions tailored to meet customer's requirements for both domestic and international businesses is offered. HSBC is also one of the leading banks involved in the bullion business through its offices in Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi and is supported by the Group's global expertise in the precious metal business. HSBC is the leading provider of trade services in India and its trade centres are ISO 9002 certified.

Institutional Banking

Working closely with Group offices in India and overseas, trade services, payments and cash management, treasury and capital markets, custody and clearing, and correspondent and electronic banking activities are offered to banks, financial institutions, securities houses, insurance companies, asset management companies and other non-banking companies, non-government and development organisations operating in India.

Treasury and Capital Markets Clients consistently rate HSBC's Treasury business as one of the best in India. Its dealing room in Mumbai is one of the largest in the country, serving clients in Mumbai and in the major metropolitan centres across the country. It provides a comprehensive range of products which include foreign exchange, money market and fixed income products and derivatives in both rupees and major currencies. Backed by the HSBC Group and a network of some of the world's most experienced professionals, HSBC is one of the leaders in foreign exchange, new bond issues, syndicated loan financing and derivative solutions.

In India, they have a large corporate clientele, with whom they have partnered in creating long-term relationships. HSBC attributes this to their ability to provide quick and innovative solutions with an underlying customer focus.

The aim is to put HSBC in its entirety to work for each of our clients. From the provision of credit to the delivery of top quality banking services, they coordinate our activities closely around the client's global needs, taking advantage of HSBC's presence in 80 countries and territories. HSBC

Global

Relationship

Management

teams

are

tasked

with

understanding in depth the sectors in which our clients operate. Their aim is to add value through detailed industry knowledge. HSBC has extensive derivative trading and sales networks in four hubs globally, with additional regional centres that maintain an active presence. The dealing hub in Mumbai services clients in other cities including New Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Kochi, Pune, Vizag, etc. They are dominant participants in the foreign exchange, money, government and corporate debt, and over-the-counter off-balance sheet product markets.

The Bank Aims to Provide: •

The full risk management services to their corporate and institutional client base

•

Suitable investment products to investor client base

•

Focus on delivering wealth management applications

Custody and Clearing

The leading custodian in Asia, HSBC's custody and clearing services are available in 28 markets in Asia-Pacific and the Middle East. With experienced staff and the latest technology, HSBC is the premier provider of sub-custodian and clearing services to foreign institutional investors (FIIs) in India. HSBC clients include the domestic fund management sector in both the retail and institutional segments. Institutional Fund Services launched by the bank offers a comprehensive suite of products to domestic mutual funds and insurance companies ranging from custody, fund administration services, unit distribution and Cash Management Services. 2. Technology The HSBC Group develops and applies advanced technology to the efficient and convenient delivery of banking and related financial services. In India, the Group provides: •

Self-Service Banking with over 150 in-branch and off-branch ATMs and 24-hour Phone Banking.

•

Trade and Corporate Banking services with real-time access to a centralised information database

•

Instantaneous inter-city transactions through online connections between all branches

•

A state-of-the-art treasury dealing system

•

A sophisticated card system supporting debit and credit cards, domestic and international VISA, MasterCard, and co-branded cards

•

A dedicated acquiring system for both MasterCard and Visa transactions

•

online@hsbc, HSBC's internet banking service, provides customers with an integrated and secure platform to access their accounts.

•

Internet Payment Gateway handles credit card transactions on the internet

3.Asset Management HSBC Asset Management (India) Private Limited offers mutual funds to its customers. With the Group's Global Fund Management expertise and investment capabilities, it is able to deliver quality products to meet customers' investment objectives. 4.Global resourcing HSBC Electronic Data Processing (India) Private Limited, through its offices in Hyderabad, Bangalore and Visakhapatnam provides data processing / customer service facilities for the HSBC Group's overseas operations.

5.Insurance HSBC Insurance Brokers (India) Private Limited is licensed by the Insurance Regulatory Development Authority (IRDA) to operate as a composite insurance broking company, which will function as a direct and a reinsurance broker. 6.Data processing HSBC Operations and Processing Enterprise (India) Private Limited, through two centres in Mumbai and Chennai, provides operational processing services for HSBC offices in India. 7.Private equity HSBC Private Equity Management (Mauritius) Limited a subsidiary of HSBC Private Equity (Asia) Limited in Hong Kong, has a Liaison Office in Mumbai. The company specialises in the provision of equity capital to unlisted growth companies in India and Sri Lanka. 8.Audit service HSBC Professional Services (India) Private Limited provides internal audit services to the HSBC Group's internal audit units worldwide, with particular emphasis on the IT, Treasury, Asset Management, Private Banking and Insurance functions.

9.Investment Banking HSBC Securities and Capital Markets (India) Private Limited has two main business lines. Its Institutional and proprietary broking business is based in Mumbai and, has seats on two of India's premier stock exchanges, the Bombay Stock Exchange and the National Stock Exchange. It deals in Indian securities for both Indian and international institutions and for select retail clients and is backed by an extensive research team. The Corporate Finance and Advisory business, with offices in Mumbai and New Delhi, offers a full range of integrated investment banking services in India and internationally. 10.Software development HSBC Software Development (India) Private Limitedhas established a software centre in Pune to develop solutions for HSBC's Group offices worldwide.

WEALTH MANAGEMENT AT HSBC In India, the Finance Ministry through the Reserve Bank of India (RBI), Security & Exchange Board of India (SEBI), Insurance Regulatory & Development Authority (IRDA), Association of Mutual Funds in India (AMFI), Company Law Board,Department of Company Affairs and Registrar of Companies oversee the various segments of the financial services industry. In addition there are other entities, as well as various legislation, which may affect the business of the financial planners. Anyone engaging in the profession of financial planning advice and/or services must ensure that he or she is legally capable to render such advice and is properly licensed to transact business with regard to various financial products. Financial Planning Services is a part of the PERSONAL FINANCIAL SERVICES (PFS) thrust of the Bank. It is the primary wealth management for delivering Investment & Insurance products to the bankâ&#x20AC;&#x2122;s customers in India and other areas. Investment & Insurance Services is a part of the Wealth Management thrust of the Bank. The various Investment & Insurance products made available to customers include mutual funds, fixed income securities (bonds), direct equities and insurance products â&#x20AC;&#x201C; the former three are made available both under

advisory as well as non-advisory basis while insurance products are available only on a non-advisory basis.

HSBC PowerVantage HSBC's PowerVantage Account is an exclusive proposition that offers, amongst other benefits, a unique feature, called the Personalised Financial Review (PFR). A trained Financial Planner uses the PFR to help the client evaluate their finances, identify current and future financial needs and assist the clients in drawing up a plan to meet them. This sets it apart from any other banking account. Financial Planning Services HSBC's Financial Planning Services offer assistance to secure clients future needs by planning for contingencies like inflation, falling interest rates and fluctuating market conditions. Mutual Funds HSBC offer investment options in funds that meet customers selection criteria and fit their requirements, helping

create and increase

wealth

potential in the long-term scenario.

The first step to this is creating a risk profile for the individual. This questionnaire helps the bank understand customers attitude towards investment risk and therefore offer the customer investment products that 39

match a particular risk profile from a range of carefully selected funds.

With the personal attention of a Financial Advisor (FA), leveraging a team of recognized industry specialists, the bank work continuously with the clients, so that clients can benefit from banks individual knowledge and collective professionalism. Leading this team, the Financial Advisor will seek to: • Understand client’s personal priorities and needs • Help clarify goals • Develop (or refine) financial plan • Create integrated strategies to help achieve objectives • Guide the client through the implementation of plan • Monitor and adjust your plan as your priorities and needs shift Concept of Wealth Management At HSBC the Financial advisors are referred to as Financial Planning Managers (FPM) and Premier Managers.

CUSTOMER RELATION MANAGEMENT SYSTEMS Interactive approach that achieves an optimum balance between corporate investments and the satisfaction of customer needs to generate maximum profit. It entails measuring inputs like marketing, sales, and service costs as well as outputs in terms of customer revenue and it entails acquiring, continuously updating and applying knowledge on customers to improve performance. This demands an integration of marketing, sales, and service activities and the implementation of appropriate systems to support customer knowledge acquisition, sharing, and the measurement of CRM effectiveness. The various types of CRM processes: CRM delivery processes are those processes with direct customer contact (i.e. campaign management, sales management, service management, and complaint management). CRM analysis and support processes are processes that consolidate and analyze the customer knowledge that has been collected in other CRM processes. The findings of the analysis are passed on to the CRM delivery processes to improve the latterâ&#x20AC;&#x2122;s effectiveness (i.e. customer scoring, lead management, customer profiling, customer segmentation, feedback management, and knowledge management). CRM relies heavily upon the integration of many technologies for success. And yet CRM is not wholly and solely reliant upon these technologiesâ&#x20AC;&#x201D; properly trained employees and precisely aligned business processes play an equally important role in CRM. To gain the full value of any investment in a CRM-related technology, banks must place proper emphasis upon training

the people who will be interacting with customers and upon the reevaluation of existing business processes to assure conformance with CRM. CRM systems can be classified into the following three sub-categories: Operational CRM systems improve the efficiency of CRM delivery and support processes. They entail solutions for marketing, sales and service automation. Analytical CRM systems store and evaluate knowledge about customers, e.g. data warehousing and data mining systems. They therefore support the CRM analysis processes. Collaborative CRM systems manage and synchronize customer interaction points and communication channels (e.g. the telephone, email, and the web). The technologies that can be described as CRM-related fall into two categories: Gathering and mining customer data and the execution of strategies at the customer interface. Although customer interaction technologies are critical to the execution of a CRM business strategy, it is the customer knowledge capability that enables the creation of customer specific strategies for sales and service. Simply put, customer knowledge capability drives the CRM business strategy, and the customer interaction technologies deliver it. CRM was viewed as integral to the marketing of products and services within the bank, but it can also be seen as a discipline for managing customer interactions. The quality of customer interactions is believed to be integral to the customersâ&#x20AC;&#x2122; expectations and loyalty with the bank. CRM was soon viewed as a discipline that not only could offer the most appropriate 42

products and services to customers but also could ensure that the customersâ&#x20AC;&#x2122; interactions are customized based on the individualâ&#x20AC;&#x2122;s current and potential value as a client. The four perspective of their CRM is: the Customer Value perspective that measures the financial benefits gained from customers, the Customer Satisfaction perspective that measures the level of satisfaction achieved by products and services, the Customer Interaction perspective that measures the operational excellence of internal processes and multi-channel management and the Customer Knowledge perspective that measures the quality of customer knowledge and data analysis. Customer Data and Information found in the CRMS at HSBC includes broadly the following:1. Contact information: postal and email addresses, fax and telephone numbers, 2. Household Information: family relationships, household income, and other associations, 3. Group Information: population segments a customer belongs to based on interest, profession and other factors, 4. Account Information: customer purchasing, interaction and service history. In the financial services industry, this information includes account history, account conduct, account balances, credit limit and any information pertaining to customer account.

A major classification not found in the CRMS and crucial to judging the performance of a CRMS and for making judgment about a customer is not located within the CRMS. This refers to the Customer Lifetime Value concept. Measuring success of CRMS Measuring CRM performance is a challenge: it is difficult to define the causal connections between CRM activities and the companyâ&#x20AC;&#x2122;s economic results. These difficulties result from the manifold relationships between functional areas such as marketing, sales and service, and CRM processes and systems. In addition, many CRM benefits are of a qualitative nature and it is therefore difficult to prove their influence on financial results. Performance measurement in CRM can either focus on calculating the monetary benefit of CRM investments, or on measuring and managing the success of CRM activities and processes. In order to facilitate strategy implementation in organizations and to measure and manage performance, banks can use other types of measurement frameworks. These include financial and non-financial measures to present a comprehensive picture of the situation. In this project we follow the same strategy and analyze the CRMS from two perspectives: 1. Analytical strength provided by the CRMS. This was done by trying to integrate the Customer Life Value concept for the CRMS being used by HSBC (Noida branch). This will help us in understanding whether the financial information stored in the CRMS is potent

enough to help implement such a tool and what can be the uses if such a tool can be implemented. 2. How market responsive and employee centric is the CRMS. This has been done by conducting two surveys. (a) Group of employees are surveyed to establish the relative importance of items shown in the CRMS. (b) Clients are interviewed to understand the importance of the information they give to banks and the extent to which this information changes service quality. Analytical or Customer Profitability Information Two things which come forward on analyzing the CRMS are: (1)Does the company measure the â&#x20AC;&#x153;Customer Knowledgeâ&#x20AC;? perspective? CRM is based on the assumption that better customer knowledge makes for higher profits. This is achieved through the gathering, analysis and use of customer data such as master data, transaction data and soft facts, e.g., interests and hobbies. The data allow HSBC to customize customer contacts and product offers, and thus achieve a higher service quality. Creating additional value for customers also improves customer retention and loyalty. In turn, improved customer retention leads to higher customer profitability, since long-lasting relationships have higher customer lifetime values (CLV). Additionally, retention costs are far lower than the costs of customer acquisition. In this way the hoped for positive effects of improved customer knowledge on company profits should be achieved, an assumption that plays an important role in the CRM philosophy. However, in practice 45

the role of customer knowledge reveals a different picture. HSBC scarcely measure the perspective of “Customer Knowledge”. Their systematic gathering and storage of customer data in information systems do, in fact, improve the availability of customer knowledge for employees in branches and call centers. However, when it comes to the systematic analysis of customer data, quality problems, especially with soft customer information, prevail. Soft facts about customers are often incomplete or obsolete and thus scarcely useful for automatic data analysis, as the quality of the results cannot be guarantied.

Does the company measure the “Customer Value” perspective? Here comes the essential question whether at a branch level keeping in mind different geodemographic profiles it is possible to calculate the future oriented “Customer Lifetime Value” and how is it implementing at the ibid level. The challenge of measuring customer value is, in general, determining the costs of customer relationships. Strategic differentiation, e. g., of product offers or communication channels offered, between customers according to their monetary value for the company is scarce, with the exception of the traditional overall classification into retail and private banking. Here again at a branch level information relating to customer value is not calculated and provided to the front end staff.

CRMS AT HSBC As the largest domestic bank in Hong Kong, HSBC adopted the Customer Relationship Management system in order to maximize customer convenience and provide anytime, anywhere and anyhow banking. The customer acquiring process involves six stages and the CRMS is an integral tool used at all of these six stages. At HSBC CRM serves two purposes. CRM was viewed as integral to the marketing of products and services within the bank, but it was also seen as a discipline for managing customer interactions. The quality of customer interactions was believed to be integral to the customersâ&#x20AC;&#x2122; expectations and loyalty with the bank. CRM was soon viewed as a discipline that not only could help the bank offer the most appropriate products and services to customers but also could ensure that the customersâ&#x20AC;&#x2122; interactions are customized based on the individualâ&#x20AC;&#x2122;s current and value as a client. Here we find that the potential value as a metric is not considered. It is important to understand that the Indian banking environment is unique and reflects the nuances of the larger social fabric. Social norms dictate the value of all banking activities. In banking, this translates into a sense that all customers are important to the bank and that product and services should be designed and priced accordingly.

If a customer relationship is viewed as unprofitable, popular belief is that the fault lies with the bank rather than the customer. HSBC embodies this philosophy and strives to tailor its products and services accordingly. Sales Culture. HSBC is a proponent of proactively selling its products and services to customers. The bank has developed a sales infrastructure that includes weekly sales goals, regular sales meetings, and a system of sales incentive compensation. HSBC sales culture is highly disciplined and compliant to banking as well as organization norms. The bank finds it imperative to match the appropriate product and service to the customer. Selling for the sake of selling is not tolerated. Rather, the bank strives to ensure that sales discussions are solidly based upon an understanding of the customer’s financial needs and goals. Service Culture. Royal Bank’s service orientation is to provide critical customer information to the points of customer contact. In essence, the bank is attempting to use technology as a distributed platform for institutional memory. The key elements that allow customers to receive excellent service in their home branches are captured and distributed across the touch points. Customer contact people still deliver “service,” but they do so with an enhanced knowledge of who the customer is as well as their preferences. Building Individualized Customer Relationships It is important to recognize that relationships with customers vary significantly. Every HSBC customer has a relationship with the bank, but the nature and definition of the relationship vary according to the needs and requirements of the customer. As an example, some customers have no 48

interest in being recognized by bank personnel when they contact the institutionâ&#x20AC;&#x201D;for these customers low price or speed of service are the dominant properties of the relationship. For other customers, highly personalized interactions are the most important aspect of their relationship with the bank. The critical challenge for HSBC is to recognize that it must act in accordance with the wishes of its customers while still trying to achieve its own strategic objectives. If customers do not emphatically make known their expectations of the organization, the bank attempts to predict what the customersâ&#x20AC;&#x2122; expectations are based upon prior observed behavior. This complex effort is essential to managing the customer experience effectively.

Information items covered in CRMS currently employed at HSBC under different subheadings. Overview 1. Name 2. Preferred name 3. Address 4. Home Phone 5. Written Language 6. ID Type/Number 7. Nationality 8. Package Since 9. RM Branch 10.RM Code 11.Customer No. 12.Classification 13.Date of Birth 14.Spoken Language 15.Gender 16.Country Of Residence 17.Customer since 18.RM Name 19.RM Pone Identification 1. Classification/Market Sector 2. RM Branch/Name 50

Personal Details 1. Title 2. First Name 3. Initials 4. Last Name 5. Preferred Name 6. Gender 7. ID Type/No. 8. DOB 9. Nationality 10.Country of Residence 11.How introduced to bank 12.Name of Parent and natural guardian 13.Statement Dispatch Address Demographics 1. Employment 2. Employer 3. With this employer since 4. Nature of business 5. Previous Employee 6. How long in previous work? 7. Years Months

Income 1. Salary 2. Other income 3. Household income 4. Monthly personal income Personal details 1. Home address ID 2. Work address ID 3. Educational level 4. Car ownership 5. Marital Status 6. No. of Dependents 7. No. of other banks used 8. Name of major bank 9. Existing Credit card used (Bank name, Card type) Contact Preferences 1. Preferred name 2. Lang preference Written

Spoken

3. Contact details: Home Business Phone 52

Fax Email Cell/mobile

Meeting Preferences 1. Day 2. Time 3. Location 4. Preference channels Family 1. Partners Name 2. No. of children 3. Details 4. Name 5. DOB 6. Customer No. Lifestyle Data 1. Hobbies Customer Assets & Liabilities Contact History Address 53

1. Add detail P1-Residential P2-Local P3-Overseas D1-Business 2. Name 3. Address 4. Postal Code 5. Dispatch 6. Home Ownership Status 7. Designation 8. At this office since

SEGMENTATION BASED ON CRMS AT HSBC By performing customer segmentation, the company can make resource planning effectively and efficiently. Precise customer segmentation requires a huge amount of customer information and sales figures for analysis. To perform this, the company has to categorize its existing customers into active or inactive accounts. In addition, company should capture both the Prospective whom the company's sales team has information on and communications with and the possible customers with whom the company does not have direct communications. The customer pyramid model is one of the helpful tools for performing customer segmentation. It is the foundation of the 3C method. Below is the typical Customer pyramid which contains customer groups of Top, Big, Medium, Small, Inactive, Prospects and Suspects.

HSBC Personal Banking categorized customers by their "Total Relationship Balance". To make it simple, it is the total amount of money flowing between the bank and the customer, including money deposits, investments, insurance, etc. As part of the project we try and develop such categorizations for a single branch (Noida) on the basis of total amount of money flow between customer and bank over a certain period of time.

From the above Customer Pyramid, the customer categories of HSBC Personal Banking are as follow:

1. Top - this is the customer segment the customers of which are those who have a total relationship balance of over one billion Hong Kong Dollars. They are HSBC's Premier Customers, and are the top 5% of highly valuable customers of HSBC Personal Banking.

2. Big - this is the customer segment of those who have a total relationship balance of over one million Hong Kong Dollars. They are HSBC's Premier Customers as well and are in the next 15% of highly valuable customers 3. Medium - this is the customer segment of those who have a total relationship balance of over twenty thousand Hong Kong Dollars. They are the PowerVantage Customers of HSBC. They are the largest group amongst the customer segments.

4. Small - this is the customer segment of those who have a total relationship balance below twenty thousand Hong Kong Dollars. They are the normal customers of HSBC Personal Banking.

5. Inactives - those customers whose account status is "Dormant" or "Closed". Accounts with a dormant status are those accounts that have not 57

been in operation for a long period of time, say 2 years. Accounts with a closed status are those that have been formally closed by the customers. 6. Prospects - those customers who are using HSBC products other than Personal Banking, such as Corporate Banking. The bank has some data about them, and has already established communications with him/her through their use of that product.

7. Suspects - the customers of other banks. HSBC has collected some data about them, but has not yet established communications with them. As is the case in this fast changing and dynamic financial world, changes will occur due both to local and global factors, and the above figure of "Total Relationship Balance" in defining the customer segments should be changed accordingly. The flowchart below tries to show how data inputs into the CRMS help in creating customer clusters.

From the above diagram we can easily see that customer segmentation can be done on the basis of information contained in the CRMS. During this project we will try and develop a better understanding of this procedure by conducting an analysis of accounts held with the bank. As of now the customers are divided into three major personal segments. 1. Mass market customers 2. Power Vantage customers 3. Premier clients According to the customer pyramid of HSBC Personal Banking, the customer groups for Top, Big, Medium and Small have been figured out. However, in order to find out their profitability, there are some more customer

value

parameters

that

have

looked

into.

. High profitability, multi-product packages usage - There are many personal banking products at HSBC. Investment and insurance are classified as high 59

profitability so that HSBC will try its best to cross sell and up sell for its customers to buy more. On the other hand, money deposits are one of the low profit products.

. Transaction amount per transaction - Transaction amount per transaction is the amount of money involved in every single transaction. If a customer always has a high transaction amount per transaction, the relative operational cost for serving that particular customer will be small, which means he or she is more profitable.

. Relationship over time - Relationship over time can show the levels of customer loyalty. The longer a customer stays with HSBC, the higher the level of customer loyalty that can be attributed to them.

We can derive the customer profitability grouping as follow: 1. High profitability customers - they are the customers in the Top and Big categories. They use the high profitability, multi-product packages. They have a high transaction amount per transaction. They have a long relationship over time with HSBC. They have plenty of referral records. 60

2. Sustainable profitability customers - they are the customers in the Medium category. They use the medium profitability, multi-product packages. They have the medium transaction amount per transaction. They have a relationship over time with HSBC but not for very long. They have some referral records.

3. Negative profitability customers - they are the customers in the Small category. They seldom use the high profitability, multi-product packages. They have a small transaction amount per transaction. They have a short relationship over time with HSBC. They seldom have referral records. One of the main purposes of implementing a CRM program is to retain the profitable customers. Customers are only retainable when they are loyal to the products and services provided, and are satisfied with the features of the products, and the prices of the products and services offered.

CUSTOMER TOUCH POINTS Here is the CEM critical moment spreadsheet which lists the critical moments of HSBC Personal Banking customers in their customer process cycle of Pre-Purchase, At-Purchase and Post-Purchase.

In the Pre-purchase Phase, there are eight customer touch-points, which include: . Customer Service Center – Financial Analysis On-site service – Financial Analysis . Events – Exhibition . Inbound Calls - Call for Enquiries . Outbound Calls - Tele-Marketing . Inbound Email - Email for Enquiries 62

. Outbound Email - e-Marketing . Portal - FAQ session . Advertising - Image Building

In the At-purchase Phase, there are ten customer touch-points, which include: . Branch - Make Transaction . Customer Service Center - Customer Package Upgrading . On-site service - Contract Signing . Events - Sales Road Show . Inbound Calls - Place Order by Phone . Outbound Calls - Tele-Sales . Inbound Email - Make Transaction by Email . Outbound Email - e-Sales

. Portal - e-Banking . Advertising - Invitation to Use the Service

In the Post-purchase Phase, there are nine customer touch-points, which include: . Branch - Customer Enquiries . Customer Service Center - Customer Enquires . On-site service - Financial Review . Events - VIP Gathering . Inbound Calls - Call for Complaints . Outbound Calls - Follow-up by Phone . Inbound Email - Email for Complaints . Outbound Email - e-Follow-up . Portal - DIY services, e.g. customer information update.

Due to the different needs of customers in their Pre-purchase, At-purchase and Post-purchase, customer critical moment will be different in every customer process cycle. For HSBC Personal Banking, the critical customer moments are Financial Analysis for Pre-purchase, Making Transaction for At-purchase and Customer Enquires for Post-purchase.

PRE-Purchase Financial analysis in a customer service centre or as an on-site service - The most important mission in the customer PRE-purchase process is to attract new customers. In HSBC Personal Banking, financial analysis is an effective way for asking customers to buy the bank's product. So, it is regarded as the critical moment for the potential customers, which are still only prospective ones at this stage.

In order to serve the potential customers, HSBC Personal Banking employs many professional financial planers. Together with the internal training in customer service, banking service and investment knowledge, they are all well equipped in their own position. AT-Purchase Making transactions at the branch - Among all of the banking services, 65

making a transaction is always the most critical service from the point of view of the customers. Customers expect that they can make and complete their transactions within a short period of time and in a convenient way. This can be done in the following ways.

1. Dividing customers into customer groups, serving them separately according to their needs and value to the bank (similar to the customer segmentation of the previous section).

2. Enhancing the automated channels which include the ATM network, internet banking service, 24-hour phone banking centre, etc.

POST-Purchase Customer enquiries to the customer service centre or from inbound calls - It is understandable that customers need professional advice and assistance in their banking/financial service. So, at HSBC Personal Banking, customer

enquiries are considered the critical service moment for customers in the Post-purchase customer process.

CUSTOMER NET PRESENT VALUE/ CUSTOMER LIFETIME VALUE

Customer lifetime value (CLV) is a key-metric within CRM. In the banking industry customer behavior is rather complex, because customers can purchase more than one service, and these purchases are often not independent from each other.

Customer lifetime value (CLV) has become an important metric within marketing and CRM. Usually CLV is defined as the net present value of future earnings or profit of an individual customer. One key-issue when using CLV is whether the firm can assess the value of the future earnings of each individual customer. In this respect the firms should try to predict the lifetime characteristics of a customer as early as possible and then act accordingly. The latter refers to the fact that assessment of the future value can be used in determining the marketing investments (e.g. retention budgets) for each individual customer. However, in the case of incorrect assessments of the value of individual customers, there could be a severe mismatch between the assigned customer budget and the true delivered value of an individual customer. As CLV predictions are used for segmentation purposes wrong predictions will lead to customers being assigned to the wrong value segment. In that case, customers might receive special treatments (e.g. being invited for an event for most profitable customers) based on their expected value, while they are actually far less profitable. Again, marketing budgets are wasted by targeting the wrong customers. Let us put into perspective where we can place Customer Lifetime Value.

MARKETING METRICS

FINANCIAL

METRICS

Customers Cost of Acquisition LTV

Earnings DCF/NPV EVA

Thus when we talk of using CLV we are moving away from a product orientation to a customer orientation. This has become important because of the following trends. •

Valuations rely on growth projections;

•

Marketing metrics can be leading indicators of growth;

•

Many firms appear and disappear without EVER making a profit;

•

Off-balance sheet assets (customers, brands, systems) are increasingly relevant;

• Marketing metrics are suggesting new ways to manage businesses and set strategy.

Thus CLV though a financial measure finds its place in the marketing matrix. CLV is the expected NPV of the cash flows from a customer relationship.

USING CLV TO CREATE CLIENT CLUSTERS

Fee-based revenue growth derived from assets under management (AUM) continues to act as the principal driver for the wealth management and private banking expansion at HSBC. HSBC continues to reap the rewards derived from private banking revenue diversification and improving financial markets, making significant progress in diversifying revenues through an increase of fee-based and recurring revenue sources as well as rapidly changing demographics. As quality of service and specialization of financial advisors continue to rank as leading criteria for selecting a wealth management practice or private client service, client segmentation is emerging as a critical competitive weapon. Client segmentation, at its core, represents the increasing complexity of the environment in which we operateâ&#x20AC;&#x201D;one size does not fit all. Increasingly, financial institutions will need to provide tailored offerings for the many different segments of the affluent from lifecycle stages of pre-retirement planning well into the retirement age. HSBC will need to become more distinct in several areas with their customers including generating income, preserving AUM, managing risks and offering hedges against catastrophes. Competitively, HSBC will need to secure and protect their installed base of wealth management customers. This will entail intimately understanding their segmentation model and key value propositions, how to service each unique segment optimally over their distinct lifecycle and how to understand, interpret and best act upon key trends developing within their key segments. As there was difficulty in implementing the CLV model we are not able to cluster clients on the basis of their value.

ANALYSIS OF CRMS MARKETING ORIENTATION Employee Feedback Customer Touch Points HSBC (Noida) customers are serviced through four main channels: ATMs, bank tellers, banking consultants and the contact centre. The ATMs can perform quite complex transactions but customers tend to use them for simple transactions. They are used mainly for simple transactions such as cash withdrawals or deposits, balance queries, and fund transfers between personal accounts. This channel is available twenty-four hours a day, seven days a week. It benefits both customers and the bank, being a convenience to customer while reducing the workload for branches, especially for tellers and banking consultants. Tellers provide all the services offered by ATMs plus customer account maintenance such as change of name or addresses, set up of automatic payment, and changes of Personal Identification Number (PIN) on credit cards and ATM access card. Customers seeking advice on financial products or specialized services such as loans are referred to a banking consultant. From the bankâ&#x20AC;&#x2122;s perspective, the primary function of a banking consultant is to sell bank services and products. Banking consultants typically come to know many of their customers well, and become proactive in suggesting financial services to meet customersâ&#x20AC;&#x2122; circumstances and changing needs. 72

METHOD The research uses a survey-based case study in which end-users are approached to determine their information requirements. This is a common method of eliciting information requirements in information systems research.The time frame of the research was around one month but required data collection from many banking consultants. (a) Sample and population For the purpose of this study, the population of interest can be divided into two groups: â&#x20AC;˘ Bank Consultants, who work in branches with face-to-face customer contact, and â&#x20AC;˘ Services and Sales Representatives who work in the call centre with telephone contact. (b) Instrumentation and Procedure The research was conducted in two stages. The main objective of stage one was to generate a list of information required by Bank Consultants and Services and Sales Representatives. A secondary objective of stage one was to

detect

what

analytical

information

currently

available

marketing/management CRM application would be used by sales agents if it were made available to them. The objective of stage two was to collect importance ratings for the information requirements identified in stage one.

(c) Eliciting Information Requirements A three-part questionnaire was designed for the first survey. In part one, respondents were asked to list the ten most common tasks they performed in their dealings with customers. This section was designed to focus the respondents on their role as Bank Consultants or Services and Sales Representatives. In part two, they were asked to list the information they used in their dealings with customers. This section was designed to capture the information that first came to their mind. Part three contained a list of information items compiled from HSBC’s existing front-end system and proprietary applications used in analyzing the customer base. This section served two objectives: first to probe for further information required in managing customer relationships, and second to test if respondents would select analytical information, such as customer contribution and profitability score and, if so, which they would select. For stage one four Bank Consultants and four Services and Sales Representatives were selected. Those selected were the highest sales performers in each job category in the previous three months as shown in performance reports. In selecting the ‘best’, it was assumed that higher sales performers would be better at selecting and using information to understand customers' needs. Participation was voluntary and no incentives were used.

(d) Rating Information Requirements A two-part questionnaire was designed for the second survey. Part one contained a cleaned list of information requirements from the first questionnaire. By ‘cleaned’ we mean that duplicated items were removed 74

and, where necessary, standard bank terminology was substituted for some terms. Respondents were asked to rate the resulting 10 of the 51 information items on a 5-point Likert scale anchored by polar adjectives of “not at all important” to “very important. For stage two, 5 Bank Consultants and 5 Services and Sales Representatives were selected. All respondents were based in the greater National Capital Region (NCR) region. Participation was again voluntary and no incentives were used. (e) Data Analysis Given the exploratory nature of the study and the small sample size, only descriptive statistics were calculated pending future research. Stage one was an item identification task and no analysis was conducted beyond identification and clarification. In stage two, the average importance ratings of 10 identified items were calculated for the entire sample, for each respondent

group

(Bank

Consultants

and

Services

and

Sales

Representatives).The outcome was lists of information items ordered by importance ratings overall.

CUSTOMER ORIENATION TOWARDS CRMS

This exercise was carried out to map the output of the in house survey with the perception of the customer. METHOD The research uses a survey-based case study in which end-customers were approached to determine what information requirements they think the bank best utilizes from the data that it takes from the customers. This is a common method of eliciting information requirements in information systems research. The time frame of the research was around one month and the required data was collected from those customers who fell into the Power Vantage account holder category. (a) Sample and population For the purpose of this study, the population of interest is customers who fall into high the Power Vantage segment at HSBC. This is primarily done as these customers have a tendency to have more number of transactions and thus more interaction

with the consultants. Thus it was felt that these

customersâ&#x20AC;&#x2122; responses would better help us in identifying information content and requirements of the CRMS and help to map it with output of the previous survey. (b) Instrumentation and Procedure The research was conducted in a single stage and the main objective was to generate understand what is the perception regarding information handling at the bank and what are particular traits that the end customer thinks a good 76

relationship manager should have. A secondary objective was to check whether the customer and the manager agree on the importance of some major information items and the contribution of these items in building a long term relationship. (c) Eliciting Information Requirements A questionnaire was designed for the survey. In question one, respondents were asked to rate how well the information that they provide to the bank is utilized by the bank. In the second question they were asked to comment on to what extent the information held by the relationship manager help in providing better service. Question three asked the customers to rate individual qualities desirable in a relationship manager in terms of the importance they assign to them. Question four listed crucial elements of information as per the in house survey. These elements were now shown to the customers and the same were asked to rank them in order of importance on a 5 point Likert scale. With the help of the last question we were able to map the differences between information requirements from the view of the manager and the customer. For the survey fifty prospective Power Vantage customers were chosen in a random draw from the CRMS and they were then administered the questionnaire. Participation was voluntary and no incentives were used. (d) Rating Information Requirements The survey required the customer to rate the information items. (e) Data Analysis 77

Given the exploratory nature of the study and the small sample size, only descriptive statistics were calculated pending future research. The outcome was lists of information items ordered by importance ratings overall.

Q1. WHAT DO YOU THINK OF HSBC BANK? Schedule pvt bank

Independent bank

Foreign bank

Public bank

Q2. WHAT INSPIRED YOU TO OPEN ACCOIUNT WITH HSBC BANK? Electronic banking

Ambience

4 79

Better services

Safety of funds

Speedier operations

Convenient location

Efficient staff

11%

22%

13%

2 4%

3 4 5

6 12%

31%

Q3. WHAT ARE THE PROBLEMS FACED BY YOU AT THE BANK? Error in transactions

Delayed processing

Non cooperating staff

Insufficient cash in ATM

Others

4% 26% 1

24%

2 3 4 5

40%

Q4. IF COST OF SERVICES OF HSBC BANK INCREASES, WILL YOU STILL BE A CUSTOMER OF THE BANK? YES

38 81

NO 38% YES NO YES 62%

Q5. HAVE YOU EVER REFERRED HSBC BANK TO YOUR FRIENDS/RELATIVES/OTHERS? YES

NO 20%

YES NO

YES 80%

Q6. ARE YOU SATISFIED WITH THE CRMS OF THE BANK? YES

15 83

NO 15%

YES NO

YES 85%

Q7. ARE YOU SATISFIED WITH THE TREATMENT FIVEN TO THE CUSTOMERS AT HSBC? YES

NO 25%

YES NO

YES 75%

Q8. DO YOU ADVICE ANY CHANGES IN THE PRESENT CRMS AT HSBC? YES

24 85

YES 24%

YES NO

NO 76%

Recommendations The following recommendations are brought forth: 86

1. The bank needs to control input of information at acquisition stage as discrepancies arising later on can lead to below standard customer service and makes it difficult to analyze customer trends and behaviour. 2. Financial output of the CRMS is not provided at branch level to front end sales team. This project tried to implement a CLV at the branch level but such inputs need to be provided as it will help financial managers better understand customers. 3. Certain information items contained in the CRMS can be better utilized. These information items need to be updated more frequently. 4. Customer orientation towards Information content should be considered by the bank more prudently. 5. Financial basing of the CRMS is needed as right now only customer soft points are looked at. A financial grounding will help bank create better profitability groupings within its customers.

Constraints 1. The data available at the branch proved to be not comprehensive enough on the following three counts:

(a) The CLV model which was put in place for calculating future value of the customer could not be implemented because of lack of transactional data for an extended period. (b) Customer Segmentation could not be carried out on the basis of the CLV as final customer values could not be arrived at. (c) Some of the data inputs at the time of customer acquisition turned out to be erroneous. 2. For the in house survey the sample size of the FPMâ&#x20AC;&#x2122;s may be too small to pass judgment on CRMS.

Feasibility The CLV model did not come out to be sustainable because it the kind of data requirement for such a model is not available at the branch level. The

crucial factors needed to implement such a model cannot be calculated without these data elements.The survey carried out offers the bank more sustainable insight into the information items required for the CRMS. Profitability elements like CLV can only be integrated into the CRMS at a higher level in the organization. The model for CLV holds good only till the stage we are forecasting purchase frequency.

Learnings Academic

The internship gave me an opportunity gave me an insight that all the academic learnings are of no use if they are not used with prudence and common sense. Many times, we wanted to use extra tools and techniques for using our knowledge base but our guide helped us understand that what is important is who is going to use our output. Thus, based on our target audience we need to modify our methodology. Business Environment One not only needs to respect what other functions do, but one also needs to have a basic knowledge about all of them. This is required because to have a proper understanding of the business one needs to have a comprehensive and not isolated view. We had to interact with marketing, HR, and administration teams to help develop a model which is realistic and practical. Also in everyday running of the business all functions need to be understood.

Bibliography 1. www.hsbc.com 2. www.hsbc.co.in 3. HSBC customer segmentation and processes handbook 4. HSBC CRMS presentations