SUMMER TRAINING

PROJECT REPORT

ON

PERFORMANCE ANALYSIS OFCUSTOMER RELATIONSHIP MANAGEMENT SYSTEM

HSBC BANK CONNAUGHT PLACE BRANCHDELHI

IN PARTIAL FULFILLMENT OF THE REQUIREMNT FOR THE AWARD OF THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED BY

SANDEEP KUMAR

MBO6042

(2006-2008)

EXTERNAL GUIDANCE INTERNAL GUIDANCE

Mr.

FACULTY

IMS DEHRADUN

INSTITUTE OF MANAGEMENT STUDIES

DEHRADUN

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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 Institute of Management Studies,

Dehradun affiliated to Uttarakhand Technical University, is record of my

own work and was carried out under the guidance of Miss. Chitra

SANDEEP KUMAR

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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.

SANDEEP KUMAR

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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

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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.

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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.

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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.

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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 collection-

fill 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.

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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.

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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

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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:

Primary data

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.

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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:

Internal data

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.

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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

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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

requirements, risk appetite levels and providing a basket of investment

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options and value-added advisory services. The thrust was more on

safeguarding the customer’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 ‘wealth

management’ 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.

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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.

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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

advisors to understand not just their clients’ risk disposition, wealth base and

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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, fixed-income

securities, mutual funds etc. are purchased and monitored in keeping with

customer’s strategy for principal growth, income and liquidity.

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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

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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 Asia-

Pacific 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 Group’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.

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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;

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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.

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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'.

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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 of the HSBC Group in India.

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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 organization’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

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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 .

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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 non-

resident Indians.

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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

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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

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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 to perform financial transactions, obtain

international financial markets information, and review details of their

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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.

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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.

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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.

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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.

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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.  

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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. 

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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.

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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 bank’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 – the former three are made available both under

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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.

40

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 latter’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 technologies—

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

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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 customers’ 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 customers’

interactions are customized based on the individual’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.

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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 company’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

44

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 “Customer Knowledge” 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.

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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 customers’ 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

customers’ interactions are customized based on the individual’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.

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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

institution—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

customers’ expectations are based upon prior observed behavior. This

complex effort is essential to managing the customer experience effectively.

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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

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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

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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

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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

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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

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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.

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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

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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

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

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"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

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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 to be looked into.

. High profitability, multi-product packages usage - There are many personal

banking products at HSBC. Investment and insurance are classified as high

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.

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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.

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.

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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

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. Inbound Calls - Call for Enquiries

. Outbound Calls - Tele-Marketing

. Inbound Email - Email for Enquiries

. 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

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. 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

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. 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

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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,

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.

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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.

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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.

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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

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.

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CustomersCost of AcquisitionLTV

EarningsDCF/NPVEVA

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.

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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 operate—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.

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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

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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 bank’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 customers’ circumstances and changing needs.

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:

• Bank Consultants, who work in branches with face-to-face customer

contact, and

• Services and Sales Representatives who work in the call centre with

telephone contact.

(b) Instrumentation and Procedure

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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 in

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

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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

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

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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

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thus more interaction with the consultants. Thus it was felt that these

customers’ 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

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.

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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

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.

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Q1. WHAT DO YOU THINK OF HSBC BANK?

Schedule pvt bank 27

Independent bank 16

Foreign bank 46

Public bank 11

78

27%

16%46%

11%

1

2

3

4

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

Electronic banking 20

Ambience 4

Better services 28

Safety of funds 6

Speedier operations 20

Convenient location 12

Efficient staff 10

79

22%

4%

31%12%

7%

13%

11%1

2

3

4

5

6

7

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

Error in transactions 26

Delayed processing 40

Non cooperating staff 24

Insufficient cash in ATM 6

Others 4

80

26%

40%

24%

6% 4%

1

2

3

4

5

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

YES 62

NO 38

81

YES62%

NO38%

YES

NO

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

YES 80

NO 20

82

YES80%

NO20%

YES

NO

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

YES 85

NO 15

83

YES85%

NO15%

YES

NO

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

YES 75

NO 25

84

YES75%

NO25%

YES

NO

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

YES 24

NO 76

85

YES24%

NO76%

YES

NO

Recommendations

The following recommendations are brought forth:

1. The bank needs to control input of information at acquisition stage as

discrepancies arising later on can lead to below standard customer

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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:

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(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 FPM’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

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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

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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.

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Bibliography

1. www.hsbc.com2. www.hsbc.co.in3. HSBC customer segmentation and processes handbook4. HSBC CRMS presentations

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