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A

PROJECT REPORT
ON
INVESTING CUSTOMER BASE
OF HSBC BANK – AN
ANALYSIS

GUIDED BY:
SUBMITTED BY:
Dr. D.K.DHUSIA SARWAR
ALI KAMAL
JAMIA 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 study

3. Executive Summary

4. Banks as Financial Advisor

5. The influence of customer-perceived service quality on


Customers’ behavioural intentions

6. Understanding Consumer behaviour through Data


Analytics: Relevance in the Finance Industry

7. Offerings by Indian private sector banks


8. Offerings by Foreign Banks
9. HSBC in India
HSBC Group entities in India
a. HSBC Premier

i. Need for Global Premier

ii. Benefits offered to an HSBC Premier


Customer:

iii. Wealth Management

10. Relationship Management & People: Skills


competence and proposition training:
11. Process/methodology of study

12. Research Design:

13. Sampling Plan

14. Data collections


15. Analysis and interpretation
16. Customer Perception and Preferences
17. Key findings
18. Conclusion
19. Recommendations
20. Appendix
Part A : Company Profile
Part 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 Advisor


Today, 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 India


Commercial 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 Premier
HSBC 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 Management
The 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 adopted
The 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:
Businessmen
Unemployed/Retired
Service

 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.

Procedure
The 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.
Steps in the Development of the Survey Instruments
The 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


Step 1 information objectives.

The Appropriate data collection methods have been


Step 2 determined

The information required by each objective is being


Step 3 determined.

Specific Questions/Scale Measurement format is


Step 4
developed.
Question/Scale Measurements is being evaluated.
Step 5

The amount of information needed is being determined.


Step 6

The questionnaire and layout is being evaluated.


Step 7

Revise the questionnaire layout if needed.


Step 8

The Questionnaire format is being finalized.


Step 9

Revise the questionnaire layout if needed.


Step
10

2. 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.

3. 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 Plan
Elements: 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.

Data Information
Raw numbers

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 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
GEOGRAPHIC
Region Delhi
DEMOGRAPHIC
Age 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 Below 5 lacs
Rupees) 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
Frequency of tracking investment vs Income
levels

Annually

Quarterly/Six monthly above 20 lacs


15-20 lacs
Monthly 10-15 lacs
5-10lacs
Weekly
Below 5lacs

Daily

0% 20% 40% 60% 80%

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 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


Investment preference with respect to Age

100%
90%
80% Gold
70%
Real estate
60%
Direct equity
50%
40% Mutual Funds
30% Insurance
20% Fixed deposits
10%
0%
Below 30 30-45 45-60 Above 60

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 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.

CONCLUSION
There 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.
APPENDIX
Part A : Company Profile
THE HSBC GROUP
Foundation
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: Questionnaire
1. Rate the following investment options according to your
preference.

1 4 5
2 3
Highly Not very Least
Preferable Neutral
Preferable preferable 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 Newspapers/ News/Business
Financial Channels
Magazines&
Banks reports Social
Network
Financial Consultants

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?

1 4 5
2
Highly 3 Not Least
Import
Import Neutral Import Import
ant
ant ant ant
Risk Factor
Duration Of
Investment
Past
Performance
of
investment
Popularity
and brand
name
Recommend
ation by
Financial
experts
Recommend
ation 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 May or may not


important Not be important
Not very important
important

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

Daily Weekly Monthly


Quarterly/ Six Annually
monthly
4. How do you prefer your relationship with your banker?

Very formal Formal Informal


Personal

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 Neither


satisfied Dissatisfied satisfied nor
Not very dissatisfied
satisfied

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.