Investing Customer Base of HSBC Bank an Analysis

APROJECT REPORT

ONINVESTING CUSTOMER BASE OF HSBC

BANK – AN ANALYSIS

GUIDED BY: SUBMITTED BY:Dr. D.K.DHUSIA SARWAR ALI KAMALJAMIA MILLIA ISLAMIA B.I.B.F (FINAL YR.)NEW DELHI Enroll no: 08-4673

Roll no: 08-HON-1291

Contents

1. Introduction: Overview of Financial Sector in India.2. Objective of the study3. Executive Summary4. Banks as Financial Advisor5. The influence of customer-perceived service quality on Customers’

behavioural intentions6. Understanding Consumer behaviour through Data Analytics: Relevance in the

Finance Industry7. Offerings by Indian private sector banks

8. Offerings by Foreign Banks9. HSBC in India

a. HSBC Group entities in Indiab. HSBC Premier

i. Need for Global Premierii. Benefits offered to an HSBC Premier Customer:iii. Wealth Management

10. Relationship Management & People: Skills competence and proposition training:

11. Process/methodology of study12. Research Design:13. Sampling Plan14. Data collections

15. Analysis and interpretation

16. Customer Perception and Preferences

17. Key findings

18. Conclusion

19. Recommendations20. Appendix

Part A : Company ProfilePart B: Questionnaire

21. References

INTRODUCTION

Overview of Financial Sector in India.

The financial sector in India has become stronger in terms of capital and the number

of customers. It has become globally competitive and diverse aiming, at higher

productivity and efficiency. Exposure to worldwide competition and deregulation in

Indian financial sector has led to the emergence of better quality products and

services. Reforms have changed the face of Indian banking and finance. The

banking sector has improved manifolds in terms of capital adequacy, asset

classification, profitability, income recognition, provisioning, exposure limits,

investment fluctuation reserve, risk management, etc

Diversifying into investment banking, insurance, credit cards, depository services,

mortgage financing, securitization has increased revenues. As large number of

players in various fields enters the market, competition would be intensified by

mutual funds, Non Banking Finance Corporations (NBFCs), post offices, etc. from

both domestic and foreign players. All this would lead to increased sophistication and

technology in the sector. Corporate governance would come into the picture and

other financial institutions would have to reach global standards. Also the limit for

FDI in private banks is increased to 74% and the limit for FII is 49%. There are many

challenges ahead for the banking sector such as technology, consumer satisfaction,

corporate governance, risk management, etc. and they are redefining their priorities,

which are now focused on cost reduction, product differentiation and customer

centric services.

Objective of the study

The Research project has been carried out to aid the HSBC bank in increasing the

amount of investments from the existing customers by understanding their needs

and improving services.

The objective of this project:

To study the perception of clients investing with HSBC Delhi and understand

their general outlook towards investments.

To analyse the customer needs and improve HSBC’s product offerings and

services accordingly.

To understand the customer relationship with the bank and its people.

Executive Summary

There has been a major upsurge in the quantum of mass affluent offerings and

premier banking services being offered by the large flock global banks in the country

and all over the world. Reforms have changed the face of Indian banking and

finance. The banking sector has improved manifolds in terms of capital adequacy,

asset classification. Profitability, income recognition, provisioning, exposure limits,

investment fluctuation reserve, risk management etc. Wealth management industry

in India today stands at USD 6 billion dollar out of the total retailing of USD 10 billion

A bank which provides the entire product suite of liability, asset, and wealth

management products is more likely to retain customers. Leading foreign banks

have been following this strategy globally and have successfully built there

franchises over the years. The involvement of the bank in this service is high. The

bank provides a dedicated investment manager to the client and gives

comprehensive investment service. It tailors a portfolio for the customer based on his

economic and “risk profile”. Based on this, the bank also implements the plan. It

makes investment decisions on behalf of the client, who gives the bank the power of

attorney for this purpose. The portfolio is assessed everyday and the customer is

given regular updates on its performance. The investor can pullout the arrangement

in case he is not satisfied.

The Indian banking industry is going through turbulent times. With the lowering of

entry barriers and blurring product lines of banks and non-banks since the financial

sector reforms, banks are functioning increasingly under competitive pressures

emanating from within the banking system, from non-banking institutions, and from

the domestic and international capital markets. In this era of mature and intense

competitive pressures, it is imperative that banks maintain a loyal customer base. In

banking, the relationship between employee satisfaction, customer loyalty and

financial performance of the financial institution, is significantly associated with each

other.

Hence to gain and sustain competitive advantages in the fast changing banking

industry in India, it is crucial for banks to understand in depth what customer

perceive to be the key dimensions of service quality and what impacts the identified

dimensions have on customer’s behavioral intentions

The objective of this project is to study the perception of clients investing with HSBS

Chandigarh to understand their general outlook towards investments and analyze

the customer needs and improve HSBC’s product offerings and services accordingly.

The study thus focuses on the following dimensions.

1. To identify critical factors that influences the buying behavior of individuals.

2. To assess their needs and requirements from the bank’s services.

3. To analyze the customer’s relationship with the bank.

For this purpose a primary research was conducted among the already investing

customers of HSBC in the region of Delhi. The target consumers were segmented on

the basis of age-group, sex, monthly income, occupation. The total field work was

done for 40 days in which a sample of 60 customers was covered. The questionnaire

covers a wide range of issues and it helps in analyzing the information of the

respondents with the savings account parameters. It helps in predicting the banking

behavior of the respondents by segmenting the population in respect to age, sex,

annual income and occupation.

The research will help the HSBC bank in increasing the amount of investments from

the existing customers by understanding their needs and improving services.

Banks as Financial AdvisorToday, more and more banks are offering investment services. And they are getting enough enquiries because they are convenient to access and inspire trust. The two levels of investment services banks offer are financial advisory services and portfolio (or wealth) management. Financial advisory service is free and carries no stipulation regarding minimum corpus. In this, the role of the bank is limited to advice and the

decisions have to be made by the investor. Wealth management, on the other hand, comes for a price - the minimum corpus in this case is Rs 1.5 million.

In the financial advisory service the customer approaches the relationship manager at the bank. A detailed discussion about the customer's financial status, age, liabilities and investment objectives follows. As every person has different appetite for risk, the bank draws up a "risk profile" of the client. While some may be willing to sacrifice a higher return to ensure safety of capital, others may be more adventurous, preferring to invest in risky instruments in the hope of high yield. The client then specifies his investment goals. A younger person may want to build his wealth for future expenses, while a retired person may want a regular stream of income. The investor's needs and his "risk profile" form the basis of the investment plan recommended by the financial advisor. This suggests how the investible corpus is to be allocated among various asset classes: bonds, fixed deposits, mutual funds, equity and insurance - in the bargain, the bank takes care to see that the investments are tax-efficient; prior investments made by the client are also taken into account during this exercise. Within each class of investment, the bank also recommends the most suitable product. For example, if the advisor says that 20 per cent of the portfolio should be in mutual funds, he picks out the most appropriate fund for you. Typically, a portfolio made for a retiree would carry a high proportion of debt instruments, while a young person's portfolio would be more equity-heavy.

Though all banks claim to recommend products based on impartial analysis of their merit, some banks have mutual fund products from their own stable that might get more favors. Banks deny any such bias, though. What works is, the advice is not binding on the client. The investor can choose to substitute the recommended product with one he thinks is better. After all, in this service, the onus of monitoring the portfolio rests with the customer, while the relationship manager only provides the investment framework and options.

On the other hand, wealth management is generally part of priority banking and private banking services for those with deep pockets. For example, European bank BNP Paribas will only manage assets above Rs 50 million and HDFC Bank stipulates that the corpus must be Rs 15 million. For Indusind Bank, though, the figure is lower at Rs 5 million and Yes Bank will manage anything above Rs 1.5 million. The justification of banks for a huge corpus, besides, of course, likelihood of greater income for them: the larger the corpus, wider the leverage to invest across various asset classes.

The involvement of the bank in this service is high. The bank provides a dedicated investment manager to the client and gives comprehensive investment service: it tailors a portfolio for the customer based on his economic and "risk profile". Based on this, the bank also implements the plan. It makes investment decisions on behalf of the client, who gives the bank the power of attorney for this purpose. The portfolio is assessed every day and the customer is given regular updates on its performance. The investor can pull out of the arrangement in case he is not satisfied.

SEBI (Securities Exchange Board of India), the regulating body for portfolio managers, does not prescribe the fee structure for this service, but stipulates that banks charge a fee according to a prior written agreement with the client. It may be a fixed amount, a return-based fee or a combination of both. Generally, banks commit to give the customer a benchmark return and get a share of the profits made through the investments.

The influence of customer-perceived service quality on Customers’ behavioural intentions

The Indian banking industry is going through turbulent times. With the lowering of entry barriers and blurring product lines of banks and non-banks since the financial sector reforms, banks are functioning increasingly under competitive pressures emanating from within the banking system, from non-banking institutions, and from the domestic and international capital markets. In this era of mature and intense competitive pressures, it is imperative that banks maintain a loyal customer base. In order to achieve this and improve their market and profit positions, many retail banks are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality. In the present competitive Indian banking context, characterized by rapid change and increasingly sophisticated customers, it has become very important that banks in India.

Determine the service quality factors, which are pertinent to the customers’ selection process. With the advent of international banking, the trend towards larger bank holding companies, and innovations in the marketplace, the customers have greater and greater difficulty in selecting one institution from another. Therefore the current problem for the banking industry in India is to determine the dimensionality of customer-perceived service quality. This is because if service quality dimensions can be identified, service managers should be able to improve the delivery of customer perceived quality during the service process and have greater control over the

overall outcome. Moreover, investigating the influence of the dimensions of service quality on customers’ behavioural intentions should provide a better understanding of the drivers of customer satisfaction and also help to specify measure, control and improve customer perceived service quality. Hence, to gain and sustain competitive advantages in the fast changing banking industry in India, it is crucial for banks to understand in-depth what customers perceive to be the key dimensions of service quality and what impacts the identified dimensions have on customers’ behavioural intentions. The statistical analyses of survey responses in this study reveal interesting findings. The study suggests that customers distinguish four dimensions of service quality in the case of the retail banking industry in India. These four dimensions of customer-perceived service quality are: customer-orientedness, competence, tangibles and convenience. The first factor, customer-orientedness is primarily related to the attitude and skills of the employees providing the service. The second factor, competence, is primarily associated with the concept of providing reliable services to customers. The third factor, tangibles, is primarily associated with the visual appeal of the banks’ physical facilities and communication materials to the customers. Finally, the fourth factor, convenience, encompasses items related to the convenience of the banks’ branch locations and the spread of the banks’ ATM networks. Identifying the underlying dimensions of the service quality construct in the Indian retail banking industry is the first step in the definition and hence provision of quality service. The results of this study also offer strong support for the intuitive notion that improving service quality can increase favorable behavioural intentions, namely, WOM (Word-of-Mouth) communications and purchase intentions and decrease unfavorable intentions, namely, complaining behavior. Furthermore, the results yielded.

An intricate pattern of service quality-behavioral intentions relationship at the level of the individual dimensions. The service quality factor customer-oriented ness was found to be the most important for influencing WOM about the bank and customers’ complaining behavior, followed by competence, tangibles and convenience, whereas in the case of purchase intentions, competence emerged as the most important factor followed by customer-oriented ness, tangibles, and convenience. The results thus provide evidence of the usefulness of service quality research, since WOM communications and purchase intentions have been suggested as important dimensions of the concept of service loyalty. Investigating the influence of the dimensions of service quality on customers’ behavioral intentions should help to measure, control and improve customer perceived service quality.

Understanding Consumer behavior through Data Analytics: Relevance in the Finance Industry

By Vineet Hemrajani , Analytics Manager ,GE- SBI.

Understanding consumer behavior is the key to success in the marketplace. Companies are constantly looking at customer behavioral patterns to predict future trends. Among the many tools is data analytics. Broadly speaking, data analytics can be described as the process of collecting, analyzing and using data (related to demographic information, past behavior trends, etc) to better understand and predict the behavior of existing and prospective customers for business decision-making.

The recent years have seen increased use of data analytics in driving business strategies across various industries. While the data analytics methods have been extensively used in FMCG, pharma and telecom companies, their mainstay has been the consumer finance industry. With the exponential increase in computing power and application of information technology in business processes, more and more data analytics techniques and statistical tools are now being applied for Marketing, Risk Management, Pricing and NPI functions in the consumer finance industry. In India, it is common for major banks and financial services companies to use data analytics to better manage their credit card, housing, personal and auto loan and insurance portfolios. Businesses increasingly are adopting the use of data analytics in their day-to-day working clearly because it allows these firms to predict the behaviour of existing and potential customers. Empowered with this information, firms are able to devise suitable strategies to better manage their respective businesses.

On the marketing side, the use of data analytics in the form of response models helps companies to design and execute cross sell, up sell, deep sell and formulate retention strategies. In the long run, creative use of past customer data through predictive modeling helps companies in building powerful and effective analytical CRM (customer relationship management) platforms.

After a particular business strategy (a new risk policy or marketing campaign) has been implemented, the companies need to measure the performance of the business strategy and make sure that the results can be tracked effectively for future use. The process of continuous designing, executing, and tracking and allows companies to `test and learn' and thereby helps them gain a competitive edge.

The above process requires firms to make investments in technology — database packages, statistical software, implementation platforms, and reporting and analysis tools. Most major software companies have developed data mining and analytics software, however the use of specialized statistical software such as SAS, SPSS for predictive modeling and of reporting and analysis tools such as Business Objects and COGNOS is common.

The market for consumer finance products is growing at a rapid rate in India. To seize this opportunity, new financial services firms are entering the industry and the existing banks are increasingly focusing on retail portfolios. The pressure to make high profits remain high in the face of increasing competition. For consumer finance companies, use of data analytics is no more a luxury but a necessity. Firms that invest in data analytics now will reap in the benefits for a long time to come.

Offerings by Indian private sector banks

HDFC Bank: Risk profiling and asset allocation under financial advisory service. Wealth management is part of personal banking

UTI Bank: Online financial advisory service

Kotak Mahindra Bank: Financial advice as part of investment services, mutual funds advisory service, model portfolio construction, wealth management services

Yes Bank: Wealth management and advisory

Indusind Bank: Wealth management, financial advisory for retail investors

ING Vysya: Advisory service for retail investors and wealth management service as part of private banking

Offerings by Foreign Banks

ABN Amro: Portfolio advisory services as part of private banking services

BNP Paribas: Investment advisory and portfolio management services for private banking clients

Citibank: Investment advisory in select cities

HSBC: Wealth management service "HSBC Premier" for high net-worth individuals. Financial planning services to all account holders free of cost

Standard Chartered Bank: Investment advisory service as part of personal banking DBS Bank: Financial advisory and wealth management services for priority banking customers.

HSBC in India

HSBC's origins in India date back to 1853, when the Mercantile Bank of India was established in Mumbai. The Bank has since, steadily grown in reach and service offerings, keeping pace with the evolving banking and financial needs of its customers.

In India, 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.

HSBC Group entities in IndiaCommercial Banking

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) centers 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.

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.

Business Banking

HSBC's Extra Mile Business Banking offers two types of account to small and medium-sized businesses - The Business Account and the Business Vantage 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 banking service allows users to 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.

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.

HSBC PremierHSBC Premier provides its customer:

International Recognition

Wherever the premier customer lives or travels across the globe, with HSBC Premier, he or she can always expect a warm welcome at an International Premier Center.

Worldwide Assistance

HSBC Premier always remains by the customer’s side from working overseas to moving abroad. This includes setting up of accounts, property advice, online banking and the individual support of an HSBC Premier Relationship Manager.

Privileges and Rewards

With HSBC Premier, one card is provides to access a wealth of financial privileges from a leading mileage programme, exclusive offers on life's little luxuries, and the security of emergency support.

Investment Expertise

HSBC Premier provides global insight and financial experts when it comes to considering new international investments.

Need for Global Premier To differentiate HSBC Premier from competition in the ‘affluent segment’

banking propositions Global inconsistencies in delivery, proposition, relationship management and

service experience needed to be addressed Also, there is a need to position HSBC Premier as a global wealth

management proposition, by leveraging HSBC’s global footprint and capabilities

Benefits offered to an HSBC Premier Customer: Relationship Management:

You can enjoy access to a dedicated HSBC Premier Relationship Manager who will be your single point contact with the Bank.

24 Hour Banking:As an HSBC Premier customer, you will have access to your bank through our personal telephone banking service, 24 hours a day, 7 days a week.

Investment Services: You can avail of our exclusive investment services- execution of your investments in Mutual Funds.

HSBC Broking Services:You can avail of the broking services thorough our HSBC Securities India Holdings Ltd for buying and selling transactions.

Free Home Banking: You can request for cheque pickups, delivery of cash up to Rs. 200,000/- and delivery of drafts to your correspondence address absolutely free of charge.

HSBC Premier Global Services:As an HSBC Premier customer, you will have access to a wide range of special services and facilities when you travel across the globe.

HSBC Premier service center: An exclusive Premier Service center is available in selected branches to provide you with complete confidentiality and comfort while conducting your banking and financial transactions.

The Debit cum ATM Card: It gives you free, unlimited 24-hour access to all HSBC ATMs across the world and at other bank VISA ATMs in India.

High Cash Withdrawals: You can withdraw up to Rs. 100,000/- per day from any HSBC ATM in India.

HSBC Premier Master Card Credit Card:This premium credit comes with a pre approved credit limit of at least Rs. 200,000/-. This card is provided absolutely free.

Wealth ManagementThe objective of this financial service is:

To provide access to information about what’s happening in the markets, financial plans from knowledgeable and qualified individuals to assist the customer

In making informed choices.

Achieving their life goals.

Providing the customer with regular performance tracking and the best solutions HSBC can access from around the world

HSBC Premier attempts to deliver these through:

Providing a comprehensive product range

Providing an introductory statement to all customers

Brochures and other product documentation with key product features

Applying specific procedures for sales to vulnerable customers

Adopting rigorous sales quality controls

Maintaining a needs based sales process

Providing updated global & local market information to facilitate customers’ informed investment decisions

Providing a regular consolidated statement of a customer’s investments with HSBC

Relationship Management & People: Skills competence and proposition training:

The objective is to provide knowledgeable and skilled Relationship Managers to assist customers in achieving their life goals.

The Relationship Managers are navigators – helping customers make informed choices – and are trained and accredited to provide the highest levels of service.

PROCESS/METHODOLOGY OF STUDY

Methodology adoptedThe design chosen for our study is the causal design. The causal research study is typically concerned with determining the frequency with which something occurs or the relationship between two variables. The method applied in this project is as stated follows:

Analysing the Secondary data. Developing the questionnaire. Conducting Customer Survey Analyzing the Primary Data collected and interpreting the data.

The study requires a clear specification of who, what, when, where, why, and how. Who: The target audience for our research is males and females between the

age group of 18 and above who are currently investing with HSBC Delhi. The audience were divided into the following categories:

BusinessmenUnemployed/RetiredService

What refers to the characteristics of the audience which needs to be measured. The major characters that needed to be measured were identified as:

Age Annual Income Sex

When: When refers to the time in the product life when the research was done. Wealth management services at HSBC Premier initiated noticeably last year.

Where: The various target audiences were contacted at their workplace, homes and at HSBC Delhi branch. The target audience was from the Delhi.

Why: The results of the study will be used by the bank for improving income generated per customer by way of encouraging more investments through them, for developing future strategies, finally, for understanding the customer needs and improving service.

How: The study was conducted with the help of a highly structured questionnaire. The questionnaire filling was administered by personal interviews.

ProcedureThe procedure followed for conducting the study can be shown in steps as:

1. Studying about our products and services.2. Determining the objective of the project.3. Developing the survey instruments such as questionnaire.4. Conducting personal interviews of audience by segmenting them according to

age-group, sex, annual income, occupation and some other demographic features.

5. Analyze and study the data collected.6. Report Writing.

The whole process after the decision of the objective can be given in the form of the simple flow chart below:

Design Methodology

Determine Feasibility

Develop Instruments

Select Sample

Conduct Pilot Test

Revise Instruments

Conduct Research

Analyze Data

Prepare Report

Process adopted 1. Gaining knowledge about the products and services:

Reading about the product with the help of material available on the net and the material made available by the bank was the first step that was undertaken. This gave not only in depth knowledge about what is been offered by the bank but also proved useful while developing the questionnaire.

2. Steps in the Development of the Survey InstrumentsThe main instruments required for survey was a well-developed questionnaire. The questionnaire development took place in a series of steps as described below:

Research objectives are being transformed into information objectives.

The Appropriate data collection methods have been determined

Step 2

Step 3

Step 4 Specific Questions/Scale Measurement format is developed.

Step 5 Question/Scale Measurements is being evaluated.

Step 6 The amount of information needed is being determined.

Step 1

The information required by each objective is being determined.

Step 7The questionnaire and layout is being evaluated.

Step 8

Step 9

Revise the questionnaire layout if needed.

Revise the questionnaire layout if needed.

Step 10

The Questionnaire format is being finalized.

3. Consumer Survey:The people play an important part as a clear perception of people if known can help the organization formulate better strategies. Studying the need levels of the people regarding the bank and its services was a vital component of the research.

4. Referred to brochures and websites of competitors:A competitor’s analysis was also undertaken so as to understand their strengths and weaknesses by referring to their brochures and related websites.

5. Preparation of the report The report was prepared to communicate the findings of the study in an understandable manner to the reader. The report was prepared while keeping in mind the various writing criterion of completeness, accuracy, clarity and conciseness.

Research Design:A two stage Research was conducted:

1. Secondary Research:Data was collected from websites and catalogues to understand products and services and related functionalities of the bank. Latest information available on internet and in various journals about the current and future market also forms part of research.

2. Primary Research:A Primary Research was conducted:The questionnaire was prepared for the investing clients and following areas covered:

Preference over various forms of investment Their sources of information Consumer profile and knowledge Awareness of bank’s wealth management services Satisfaction level

Service Requirements Desirable services and suggestions

Sampling PlanElements: The target population of the study included the investing clients

of HSBC Delhi. Above the age of 18 yrs.

Time: 1st June- 31st July 2009

Sample size: 60

DATA COLLECTIONS

Data Collection Plan:The Research consisted of secondary data search from the following sources:

Catalogues Websites

In this, information about different banks, different features the banks are offering to their investing clients, their market share , their spread in the northern region and their areas of focus. For the conclusive research, questionnaires were developed on the basis of secondary data to gather information on the research objective.A pilot study was conducted to test these questionnaires. In this sample of 10 people was picked up from the target population on convenience basis, so as to determine the limitation and deficiencies in the questionnaires. The final draft of the questionnaire (see Appendix) was then prepared on the basis of the observations from the pilot study. These were then finally filled by 60 investing customers, for the conclusive study.Finally the data collected was analysed with the help of descriptive statistics, cross tabulations . Therefore, it can be said that the data collection is an important part of the project.

Types of Primary Data collected:Demographic /Socioeconomic Characteristics:

Demographic and socioeconomic characteristics are sometimes called “states of being” in that they represent the type of people. The factors on which we are

DataRaw numbers

Information

working are age, sex and occupation. Annual income is also an important parameter but it is difficult to verify. Although the amount of money that an individual earns in a year is an absolute, not a relative quantity but it is a sensitive topic in our society and it is difficult to determine.

Attitudes/Opinions:Through the questionnaire we have tried to get hold of individual’s preference, inclination and requirement from the products that the bank delivers to its customer. Attitude is an important notion in the marketing literature, since it is generally thought that the attitudes are related to the behavior of individual.

Awareness/Knowledge:The questionnaire aims at identifying their knowledge about various investment options. It also aims at knowing, how much interest the client takes in his investments.

Obtaining the Primary Data:The data collection was primarily done through communication. Communication involves questioning respondents to secure the desired information, using a data collection instrument called questionnaire.

SEGMENTATION

GEOGRAPHICRegion Delhi

DEMOGRAPHICAge Below 30,

30-45,

46-60

Above 60

Gender Male, Female.

Occupation Servicemen & Professionals (e.g. Doctors, Architects, etc.),

Businessmen, Unemployed/Retired

Annual Income (in Rupees) Below 5 lacs

5 lacs-10 lacs

10 lacs-15 lacs

15 lacs-20 lacs

Above 20 lacs

Limitations and Caveats There was difficulties/obstacle faced during the initial part of the project, which were however overcome successfully. To list:- It was difficult to break the ice with the customers initially. It was a daunting task

to convince them to fill in the personal details of the questionnaire where they have to mention their personal details especially annual income.

To convince the people for a proper interviewing process is also difficult.

ANALYSIS AND INTERPRETATION

General Outlook of HSBC Delhi Investing clients

Nearly 70% of the customers believe in taking moderate risks and are satisfied with moderate returns. This is a very significant observation since it is evident that the clients are not very demanding in terms of getting higher returns. Keeping their money safe is important for them. The relationship managers in order to win their confidence should advice them on making more safe investments than more profitable ones. The clients’ general outlook about investment decision revolves around taking calculated risks. This is also supported by their response where risk factor has been considered important while selecting investments; which is described later in the research.

Risk taking in Males Vs Females

The above figure displays the tendency of risk taking among males and females. It is evident from the graph that men are more willing to take risks with their investments as compared to women. 40% of the existing male clients are ready to take higher risks and only 24% of female clients want to classify themselves in the same category.

Customers’ source of information about investments

Customers rely more on authentic sources of information like business channels, financial reports, business magazines and newspapers which together account for 50%. The bank must realize that the data clearly identifies that there is a need for delivering authentic information. But even though the clients are investing with the bank, only 10% rely on banks for investment related information. The most probable reason for the same is lack of confidence with the bank to some extent. People’s perception towards the bank is that it is known for a better service experience; however consumer focus needs to be improved.

Frequency of tracking Investment Vs Income Levels

The graph depicts that variation of income levels affects the participation of client in keeping track of his investments.In the income level below 5lacs people keep almost 43% of people keep a track of their investments on a daily basis. They are more active in their investing habits even though their investing volume is small. Moreover, the lower income group is less willing to take bigger risks. As a result this group monitors its investments very frequently.In the next two income levels, almost 51% customers monitor their investments on either weekly or monthly basis or can be called moderately active. This is so because their focus goes more towards other things as they are willing to take greater risks.The top two income levels have majority of customers who check their investments on quarterly or annual basis. These customers may have large volumes of investment but they rely on their banker to handle their investments as these clients

Frequency of tracking investment vs Income levels

0% 20% 40% 60% 80%

Daily

Weekly

Monthly

Quarterly/Six monthly

Annually

above 20 lacs

15-20 lacs

10-15 lacs

5-10lacs

Below 5lacs

being of utmost importance for the bank are always dealt with extreme care. As a result their personal initiative and interest is low.

Customer Perception and Preferences

Preferred modes of investment

After collecting the responses through questionnaire, it was found out that mutual fund, insurance and fixed deposits account for 48% of the total investments of the clients. Hence it is visible that clients are primarily interested in investments which the bank is offering. However, all these investments are not sourced from the bank. Therefore, it becomes all the more important to know the reasons for the same.

Age Vs Investment preference

0%10%20%30%40%50%60%70%80%90%

100%

Below 30 30-45 45-60 Above 60

Investment preference with respect to Age

Gold

Real estate

Direct equity

Mutual Funds

Insurance

Fixed deposits

The above graph indicates the difference in thinking and attitude of people of different age groups. Their needs change at different stages of lifecycle and so do their investment habits.

Fixed deposits:

It is considered to be a secured form of investment. As age increases, the tendency to take risks diminishes. The same is confirmed by the data collected, since there is an increasing trend towards fixed deposits. However , in the age group of 30-45 fixed deposits account for only 4% since people focus on spending more for building assets like house , car , etc.

Insurance:

Insurance has more or less a uniform trend. However, people, after 60 do not qualify for many insurance plans, therefore there is a decrease in the share.

Mutual Funds & Direct Equity:

Mutual Funds and Direct Equity follow a similar declining trend with age. As age increases people tend to invest less in these options. However, their investments decline more sharply in direct equity than in mutual funds.

Real estate:

As age increases people invest more in real estate as it is comparatively a more secured form of investment. It is one of the most preferred forms of investments.

Gold:

People in the age group of 30-45 and 45-60 invest 33% and 31% in gold. Investment in gold is more due to the fact that in the middle age people tend to buy gold or their personal needs as well as future needs like children’s marriage etc. However in the age bracket of 60 and above the overall desire to make purchases reduces. Therefore investment reduces.

Factors considered while selecting an investment option

The customer responses reveal that clients of the bank are well informed and their knowledge helps them make wise decisions in investment. It must be understood that majority of the customer base is knowledgeable since they pick more appropriate factors while selecting their investment option. Past Performance of the investment has been considered most important factor by 23% followed by duration of investment ad risk involved. The relationship managers should be extremely careful while handling their customers since they are expected to be high on their knowledge quotient which is also confirmed by their reliance on authentic sources of information.

Type of relationship preferred with the banker

Since HSBC is an organization of foreign origin, it is very important to know in what kind of relationship are the customers most comfortable with their banker so that they can be dealt accordingly. This can be a useful means to develop better relations and enhance the loyalty factor. It is observed that almost 50 % prefer Informal relations and 29% do not mind having very informal or personal equating with their bankers. Thus, the relationship manager needs to understand that he should customize his ways of dealing with clients to grow a long term relationship with the bank.

Need to get information updates

Different customers may have different requirements in terms of services. For instance only 29% customers would like to receive service calls regarding their investment updates on a periodic basis. Thus, it is evident that the rest of the customers do not appreciate getting service calls too often. However, a majority of almost 57% wants that they should be informed about any new opportunity in

investment. This should be taken care of and this can again become a tool to win the customers trust as he would develop faith towards the expertise of the relationship manager since he would feel that they are keep a close watch on all opportunities for the clients and the information comes first from their bank than from any other source.

Customer experience with the bank

Importance of banker’s advice for customers

According to the data collected, 56% of the customers consider their banker’s advice important. However, this does not hold true for 22% of the customers. They rely on their own knowledge for making their investment selection. The bankers definitely have less hold on these clients. Therefore these clients would be low on their loyalty factor towards the bank.

Frequency of checking investments

About 8% of the investing customers keep a track of their investments on a daily basis and 28% keep a track on weekly basis. These can be classified as active investors with the bank since these customers constantly monitor their investments. 8% of the customers can be classified as passive customers and they check their investments on annual basis.

Level of satisfaction among customers

Nearly 71% of the customers are satisfied with the banks’ services. However there is a lot of 30% customers whose satisfaction level is know. It is well known that HSBC’s major strength is its quality of service. Therefore, the findings are not in consistency with the same. There could be certain gaps in the service levels which could be removed and may lead to more productivity.

OCCUPATION vs. SATISFACTION LEVEL

Satisfaction level is observed to be highest in unemployed or retired people. When asked about the same, these respondents attributed their satisfaction to pleasant ambience, friendly staff and an overall good experience with the bank. Only 58% of the businessmen are satisfied. These respondents suggested that the bank should improve the service time since they frequently had to wait to meet their respective bankers during their working time.

KEY KEY FINDINGS The branch in Delhi is catering to a mass market which is very knowledgeable

and well informed about where to invest their money. Not only they are capable to make wise decisions with their investments but the majority also takes personal initiative to keep a track of their investments.

Risk taking capabilities of males and females differ. Females are more comfortable making safer investments than highly profitable ones.

They rely on more on authentic sources like business channels and financial reports more than opinion of financial advisors or their social circle.

Their focus over their investments varies according to their demographic segmentation. For instance, as the income level increases, their personal initiative over their investments and investment decisions decreases and their reliance over experts increases. Firstly, because in higher income levels attention is spread across many different things at a time and ones own work life demands a lot of focus. Therefore due to time constraints initiative goes down. Secondly, as income increases, volume of money invested increases, as a result; to cover

risk, customers prefer to take more assistance from financial experts. Also, they are in a position to afford such services.

The tapped market is quite convinced to make investments in mutual funds, fixed deposits and insurance, however all are not sourced through the bank. The expected reasons revolve around products offered and their relationship with the bank.

The customers’ preference over different types of investments varies with the age band. With increasing age, people tend to make more secured form of investments. That is the reason why investment in stocks decreases with age.

More than half of the customers hold great significance to their bankers’ advice. The customers are more or less regular in tracking their investments. However, one third of the customers cannot be classified as highly satisfied customers; though HSBC’s unique selling proposition is its quality of services. The organization needs to identify and fill in the gaps in service. One major area of concern should be to decrease the service time as suggested by many customers.

CONCLUSIONThere is a potential to increase investments from the existing customers which would increase the SOW (Share of Wallet) of each customer for the bank.

The challenges facing the banks today are coping with new markets, demanding customers, the quest for efficiency, and the need to control reputation and operational risks. Major Banks have begun the process of reinventing themselves to deal with these issues and others. Despite the number of challenges facing the industry, opportunities for growth are plentiful – particularly through expansion in new markets, technology and personalization to enhance customer relationships and new products and advisory services to meet the needs of retiring baby-boomers. The biggest opportunity facing the global banks is catering to and satisfying the needs and desires of the niche segment – the high end customers.

The competitive landscape is changing rapidly. New technology has cut interaction costs enabling a number of new online entrants in the market, global banks in India are competing with each other in provision of greater quantity & quality of products & services to their customers.

RECOMMENDATIONS

Tailored advice

The banks’ value proposition to the mass affluent should be quality advice on a full range of financial products. The advice needs to add as much value as possible and therefore has to feel bespoke, even though it may be off-the shelf. This is a rather difficult task, as the mass affluent customers do not like to feel standardized. In order to achieve the customization, the bank could look into the following areas for improvement:

Identify and understand customer needs, enrich their range of product offerings.

Formulate a business structure and culture that foster the customer proposition. Expand their network of financial consultant in the targeted geographic area

Take advantage of new technology to enhance CRM, master advanced advisory tools over the internet, thus improving service quality and reducing service time.

The bank must strike a balance between standardization and customization. On one hand, it should use a certain degree of mass processing to achieve cost efficiency; on the other hand, it must address the specific needs of the mass affluent by providing sophisticated planning tools and tailored services and products. At the same time, it should also be careful not to alienate their higher net worth private banking customers.

Aggressive customer segmentation

The bank’s success does not just lie in its insight to serve the mass affluent but also in its rigorous segmentation of its customer base. However, many banks are yet to exploit the power of data mining to its full extent. It is only through more aggressive segmentation, the bank could identify the customer needs in each segment and sub-segment, so that the product and pricing can be tailored appropriately. At the same time, it should also be careful not to alienate their higher net worth private banking customers.

Expansion within the city

The bank has only a single branch in the city of Delhi and the competitors have a larger spread. Improvements in the retail banking services by way of increasing the number of ATMs would help to tap more customers and encourage more investments from them at a later stage.

Focus on Customized service

The bank should make an attempt to figure out customer service requirements. One possible way of implementing the same would be to maintain a separate service form in the database for each client where his preferences about frequency of service calls, etc. is specified.

Reach customers’ comfort zone

The Relationship manager needs to reach the comfort zone of the customer by treating him the way he wants to be treated. The World’s local bank has to have a global uniformity in ambience, procedures and service standards, yet it should have a local appeal to some extent. Otherwise, people sometimes feel uncomfortable to open up and discuss their monetary issues.

Special Services

In order to strengthen the relation and loyalty among customers , the manager must take initiative in performing special services for example remembering the client’s and his family members’ birthday. Such activities are being practiced but in a different way. For example, it would be more meaningful to send flowers to the client by the relationship manager’s name more than the banks’ because his trust factor is more dependent on his relationship with his banker than the bank itself.

APPENDIXPart A : Company Profile

THE HSBC GROUPFoundation

The HSBC Group is named after its founding member, The Hong Kong and Shanghai Banking Corporation Limited, which was established in March 1865 to finance the growing trade between China and Europe. HSBC is headquartered in London. It is one of the largest banking and financial services organizations in the world. HSBC’S international network comprises over 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americans, the Middle East and Africa. 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: HSBC provides more than 100 million customers worldwide with a full range of personal financial services, including current and savings accounts, mortgages, insurance, credit cards, loans, pensions and investments.

Commercial banking: HSBC provides financial services to small, medium sized and middle market enterprises. The group has almost 2.5 million of such customers, including sole proprietors, partnerships, clubs and associations, incorporated business and publicly quoted companies.

Corporate, Investment Banking and Markets: This customer group provides tailored financial services to corporate and institutional clients. Business lines comprise global markets, corporate and institutional banking, global transactions banking and global investment banking.

Private banking: Private banking provides financial services to high net worth individuals and their families.

Part B: Questionnaire1. Rate the following investment options according to your preference.

1Highly

Preferable

2Preferabl

e

3Neutra

l

4Not very preferabl

e

5Least

Preferable

Fixed Deposits

Insurance

Mutual Funds

Direct equity

Real Estate

Gold

2. On which of the following source the most for getting information and updates about various investment options?

Internet

Banks

Newspapers/ Financial Magazines& reports

Financial Consultants

News/Business Channels

Social Network

3. Rate the importance of the following factors on a scale of 1-5 (1-Highly Important, 5-Least Important) for selecting an investment option?

1Highly

Important

2Important

3Neutral

4Not

Important

5Least

Important

Risk Factor

Duration Of Investment

Past Performance of investment

Popularity and brand name

Recommendation by Financial

experts

Recommendation by peers and

relatives

Related tax benefits

1. Which of the following combinations is highly acceptable to you?

Higher Risk, Higher Returns Moderate risk, Moderate returns

Low Risk, Lower returns

2. Rate the importance of your bankers’ advice about your investments.

Highly important

Not very important

Important

Not important

May or may not be important

3. How often do you keep track of your investments?

Daily

Quarterly/ Six monthly

Weekly

Annually

Monthly

4. How do you prefer your relationship with your banker?

Very formal

Personal

Formal Informal

5. How would you like to get information related to investments from the bank?

Your banker should inform you on a regular basis on his own.

Your banker should inform you only whenever there is a new investment opportunity.

Your banker should inform you only when you ask for the information.

6. What is your level of satisfaction from the services of HSBC?

Highly satisfied

Not very satisfied

Satisfied

Dissatisfied

Neither satisfied nor dissatisfied

PERSONAL INFORMATION

Name : _____________________________________

Sex : Male/ Female

Age (in yrs) : Below 30 30-45 46-60 Above 60

Annual income : Below 5 Lacs 5-10lacs 10-15lacs 15-20lacs above 20 lacs

REFERENCES

“Business Research Methods”(2004), Tata McGraw Hill Edition World Bank Report HSBC Annual Report Chambers of Commerce (Industry Report) Textbooks HSBC Premier Manual Business India Business Standard Internet

Predicting Consumer Behavior in Banking, Journal of Business and Management, 2007

Thank You for sparing your valuable time.