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Apr 10, 2012

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CRM Implementation in HSBC

A CRM Case Study

Yuen Po Shan, Polly www.g-cem.org

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Nowadays, quality service is the main goal for most of the business organizations in this challenging and fast changing commercial world. Customer satisfaction is one of the main concerns for them. An effective Customer Relationship Management could be able to help a company to compete in the market, acquire potential customers, retain profitable customers, lower operational costs, and finally bring in a profit. As the largest domestic bank in Hong Kong, HSBC adopted the Customer Relationship Management system in order to maximize customer convenience and provide anytime, anywhere and anyhow banking. Moreover, it is revolutionizing customer empowerment and beating its competitors in the market place. Company Background The HSBC Group, one of the world's largest banking and financial services organizations, had its beginnings in Hong Kong more than 130 years ago. Today, the HSBC Group has some 10,000 offices in 76 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East, and Africa. Globally speaking, at the Group's core lies domestic commercial banking and financial services, which fund themselves locally and do business locally. Highly efficient technology links these operations to deliver a wide range of international products and services, adapted to local customers' needs.

The Hong Kong and Shanghai Banking Corporation (HSBC) is the founding member of the HSBC Group. It is the Group's flagship in the Asia-Pacific region and the largest bank incorporated in Hong Kong. Known in Chinese as Wayfoong (which translates as "focus of wealth" or "abundance of remittances"), the bank is also one of the SAR's three note-issuing banks, accounting for more than 63.6% of its banknotes. HSBC provides a full range of personal financial and wealth management services in Hong Kong. These include HKD/USD currency and RMB/multicurrency savings accounts, integrated accounts, mortgage finance, personal credit services, hire purchase and leasing for motor vehicles, term deposits and credit/debit cards, financial planning, investment services such as unit trusts, bonds and certificates of deposit, local and overseas securities, broking services, Mandatory Provident Fund investment options, and insurance. Services are distributed through channels such as HSBC's ATM network, internet banking service, 24-hour phone banking centre, more than 20 Mortgage Advice Centers providing customized advice seven days a week, and a network of over 180 branches and offices. At the end of April 2004, online@hsbc, HSBC's internet banking

service, was being used by over 700,000 customers. Define The Best Customer By performing customer segmentation, the company can make resource planning effectively and efficiently. Precise customer segmentation requires a huge amount of customer information and sales figures for analysis. To perform this, the company has to categorize its existing customers into active or inactive accounts. In addition, company should capture both the Prospectives whom the company's sales team has information on and communications with and the Possible customers with whom the company does not have direct communications. The customer pyramid model is one of the helpful tools for performing customer segmentation. It is the foundation of the 3C method. Below is the typical Customer pyramid which contains customer groups of Top, Big, Medium, Small, Inactives, Prospects and Suspects.

HSBC Personal Banking categorized customers by their "Total Relationship Balance". To make it simple, it is the total amount of money flowing between the bank and the customer, including money deposits, investments, insurance, etc.

From the above Customer Pyramid, the customer categories of HSBC Personal Banking are as follow: 1. Top - this is the customer segment the customers of which are those who have a total relationship balance of over one billion Hong Kong Dollars. They are HSBC's Premier Customers, and are the top 5% of highly valuable customers of HSBC Personal Banking. 2. Big - this is the customer segment of those who have a total relationship balance of over one million Hong Kong Dollars. They are HSBC's Premier Customers as well and are in the next 15% of highly valuable customers 3. Medium - this is the customer segment of those who have a total relationship balance of over twenty thousand Hong Kong Dollars. They are the PowerVantage Customers of HSBC. They are the largest group amongst the customer segments, and make up 60% of HSBC's Personal Banking customers. 4. Small - this is the customer segment of those who have a total relationship balance below twenty thousand Hong Kong Dollars. They are the normal customers of HSBC Personal Banking. 20% of HSBC Personal Banking customers fall into this segment. 5. Inactives - those customers whose account status is "Dormant" or "Closed". Accounts with a dormant status are those accounts that have not been in operation for a long period of time, say 2 years. Accounts with a closed status are those that have been formally closed by the customers.

6. Prospects - those customers who are using HSBC products other than Personal Banking, such as Corporate Banking. The bank has some data about them, and has already established communications with him/her through their use of that product. 7. Suspects - the customers of other banks. HSBC has collected some data about them, but has not yet established communications with them. As is the case in this fast changing and dynamic financial world, changes will occur due both to local and global factors, and the above figure of "Total Relationship Balance" in defining the customer segments should be changed accordingly. Therefore, it is suggested that the above segmentations should be done on a regular basis. Customer segmentation can also allow for more in-depth analysis of customer performance to point out where those 20% of profitable customers are located.

According to the customer pyramid of HSBC Personal Banking, the customer groups for Top, Big, Medium and Small have been figured out. However, in order to find out their profitability, there are some more customer value parameters that have to be looked into. . High profitability, multi-product packages usage - There are many personal banking products at HSBC. Investment and insurance are classified as high profitability so that HSBC will try its best to cross sell and up sell for its customers to buy more. On the other

hand, money deposits are one of the low profit products. . Transaction amount per transaction - Transaction amount per transaction is the amount of money involved in every single transaction. If a customer always has a high transaction amount per transaction, the relative operational cost for serving that particular customer will be small, which means he or she is more profitable. . Relationship over time - Relationship over time can show the levels of customer loyalty. The longer a customer stays with HSBC, the higher the level of customer loyalty that can be attributed to them. . Referral record - Referral record is concerned with the number of customers that are brought in by an existing customer. It also pertains to the willingness of the customer to refer HSBC products to his/her friends. Now, we can derive the customer profitability grouping as follow: 1. High profitability customers - they are the customers in the Top and Big categories. They use the high profitability, multi-product packages. They have a high transaction amount per transaction. They have a long relationship over time with HSBC. They have plenty of referral records. 2. Sustainable profitability customers - they are the customers in the Medium category. They use the medium profitability, multiproduct packages. They have the medium transaction amount per transaction. They have a relationship over time with HSBC but not for very long. They have some referral records. 3. Negative profitability customers - they are the customers in the Small category. They seldom use the high profitability, multi-product packages. They have a small transaction amount per transaction. They have a short relationship over time with HSBC. They seldom have referral records. One of the main purposes of implementing a CRM program is to retain the profitable customers. Customers are only retainable when they are loyal to the products and services provided, and are satisfied with the features of the products, and the prices of the products and services offered. Below, by using Customer Experience Management, HSBC is going to retain its Personal Banking customers, especially the high profitability customers, by finding out and fulfilling their critical needs.

Define the Best Experience A loyal customer is a good customer. There are two Customer Relationship Management principles about customer loyalty, customer satisfaction and customer experience: . Only very satisfied customers will be very loyal to a company. . Customer Satisfaction equals Customer Experience minus Customer Expectations. From the above two principles, customers can become very loyal if they are very satisfied. And, customer satisfaction can be achieved if they offer a better (i.e. higher level of) customer experience or meet with low customer expectations. As customer expectations are more or less uncontrollable, increasing customer satisfaction by increasing the quality of customer experiences is a big topic in Customer Relationship Management. By performing the Customer Experience Management (CEM), the company can find out the critical needs of and decisive stages in dealing with the customers, make resource planning, marketing, as well as company strategies effectively and efficiently. Under CEM, customer critical moments are defined accordingly under each part of the customer process cycle, which are the PREpurchase/consumption, AT-purchase/consumption, and POSTpurchase/consumption. Each customer process cycle will have its own customer multi-channel touch points, and for simplification, they are grouped into "Physical Touch", "Call", "Internet" and "Others". Here is the CEM critical moment spreadsheet which lists the critical moments of HSBC Personal Banking customers in their customer process cycle of Pre-Purchase, At-Purchase and Post-Purchase:

In the Pre-purchase Phase, there are eight customer touch-points, which include: . Customer Service Center - Financial Analysis . On-site service - Financial Analysis . Events - Exhibition . Inbound Calls - Call for Enquiries . Outbound Calls - Tele-Marketing . Inbound Email - Email for Enquiries . Outbound Email - e-Marketing . Portal - FAQ session . Advertising - Image Building In the At-purchase Phase, there are ten customer touch-points, which include: . Branch - Make Transaction . Customer Service Center - Customer Package Upgrading . On-site service - Contract Signing . Events - Sales Road Show . Inbound Calls - Place Order by Phone . Outbound Calls - Tele-Sales . Inbound Email - Make Transaction by Email . Outbound Email - e-Sales . Portal - e-Banking . Advertising - Invitation to Use the Service In the Post-purchase Phase, there are nine customer touch-points,

which include: . Branch - Customer Enquiries . Customer Service Center - Customer Enquires . On-site service - Financial Review . Events - VIP Gathering . Inbound Calls - Call for Complaints . Outbound Calls - Follow-up by Phone . Inbound Email - Email for Complaints . Outbound Email - e-Follow-up . Portal - DIY services, e.g. customer information update. Due to the different needs of customers in their Pre-purchase, Atpurchase and Post-purchase, customer critical moment will be different in every customer process cycle. For HSBC Personal Banking, the critical customer moments are Financial Analysis for Pre-purchase, Making Transaction for At-purchase and Customer Enquires for Post-purchase. PRE-Purchase Financial analysis in a customer service centre or as an on-site service - The most important mission in the customer PRE-purchase process is to attract new customers. In HSBC Personal Banking, financial analysis is an effective way for asking customers to buy the bank's product. So, it is regarded as the critical moment for the potential customers, which are still only a prospective ones at this stage. In order to serve the potential customers, HSBC Personal Banking employs many professional financial planers. Together with the internal training in customer service, banking service and investment knowledge, they are all well equipped in their own position. AT- Purchase Making transactions at the branch - Among all of the banking services, making a transaction is always the most critical service from the point of view of the customers. Customers expect that they can make and complete their transactions within a short period of time and in a convenient way. Once identified as a critical customer interaction point, the customer satisfaction levels in this specific area should be analyzed. With a network of over 180 branches and offices throughout Hong Kong, HSBC believes that the location of their branches are convenient

enough for every single personal banking customer to reach within a short journey. However, due to the large numbers of its customer base, HSBC's Personal Banking service cannot meet the customers' need for "fast" service all the time: there are always long queues at HSBC branches that keep customers waiting for over 30 minutes. After considering the costs and effectiveness factors against the customer satisfaction factors, instead of opening more branches HSBC decided to improve this critical customer interaction moment in the following ways: 1. Dividing customers into customer groups, serving them separately according to their needs and value to the bank (similar to the customer segmentation of the previous section). 2. Changing general service branches into service centers for specific functions, for example, HP Centers, Mortgage Advice Centers, Day and Night Centres, etc. 3. Enhancing the automated channels which include the ATM network, internet banking service, 24-hour phone banking centre, etc. POST-Purchase Customer enquiries to the customer service centre or from inbound calls - It is understandable that customers need professional advice and assistance in their banking/financial service. So, at HSBC Personal Banking, customer enquiries are considered the critical service moment for customers in the Post-purchase customer process. For customer enquiries to the customer service centre, as mentioned in the At-purchase process, there are dozens of Day and Night Centers in Hong Kong to specially deal with customer enquiries. For the inbound customer enquiry calls, once again by considering the costs and effectiveness factors against the customer satisfaction factors, HSBC is moving its customer call center to a lower cost city, such as Genzheng, China. Rollout After finding out about the best customers, and about their customer experience (critical moments), Customer Relationship Management is ready to undergo implementation by working together with the other four Customer Relationship Management factors, which are strategy,

people, process and technology, a company-wide kick-off should be made by the top management of HSBC. Feedback Mechanism Having a tailor-made version of the CRM 3C Method that is best suited to the latest company conditions is essential as it will directly affect how successful the Customer Relationship Management can be. Therefore, adopting a good feedback mechanism, repeating cycles of running the implementation, and making adjustments, are all essential steps. Conclusion In this paper, we have simulated the implementation of Customer Relationship Management at HSBC Personal Banking by using the CRM 3C Method, and we have used Customer Segmentation and Customer Experience Management to explain how it works in the Personal Banking of HSBC. We can see that it (the 3C Method) works well. In the circumstances, it is really what HSBC Personal Banking is doing and planning to do now. However, of course, Customer Relationship Management in the REAL business world is much more complicated. More analysis and calculations should be involved in the various processes. As mentioned in the very beginning, there are five elements in a Customer Relationship Management implementation; they are customer, strategy, people, process and technology. Although this paper has focused on the Customer, it is good to always bear in mind that all of the other four elements are important as well. Successful Customer Relationship Management cannot be done without anyone of them.

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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

The Hongkong and Shanghai Banking Corporation Limited (HSBC) HSBC Asset Management (India) Private Limited HSBC Global Resourcing / HSBC Electronic Data Processing (India) Private Limited HSBC Insurance Brokers (India) Private Limited HSBC Operations and Processing Enterprise (India) Private Limited HSBC Private Equity Management (Mauritius) Limited HSBC Professional Services (India) Private Limited HSBC Securities and Capital Markets (India) Private Limited HSBC Software Development (India) Private Limited HSBC InvestDirect (India) Limited

HSBC Group Entities in India

Commercial Banking
The Hongkong and Shanghai Banking Corporation Limited (HSBC) Personal Banking HSBC offers a wide range of retail banking and wealth management 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 online@hsbc . Non Resident Indian Banking HSBC's Non Resident Indian Banking (NRI) centres located in Asia-Pacific, the Middle East, Europe and North America, together with HSBC's offices worldwide, provide the international Indian Diaspora access to a range of products and services. These include NRI related investment (both international and domestic), transactional and deposit products, together with a full range of personal and private banking products in India and overseas. Internet banking also provides easy access to HSBC's services. Financial Planning Services Services include investment and custodian management and access to stock broking and insurance services, which are offered to resident as well as non-resident Indians. 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 BusinessVantage Account. Services include Business Phone Banking, Business Doorstep Banking and Multi Branch Business Banking. Payments and Cash Management HSBC provides integrated domestic and regional transaction support to corporate clients through a sophisticated range of cash management solutions, including collection and payment services and integration with customer back-end systems. Operations and client services are ISO 9001 certified. Hexagon, the HSBC Group's dedicated electronic banking service allows users to perform financial transactions, obtain international financial markets information, and review details of their domestic and international accounts, from anywhere in the world, 24 hours a day. Trade (international and domestic) and Factoring Services A wide range of solutions tailored to meet customer's requirements for both domestic and international businesses is offered. HSBC is also one of the leading banks involved in the bullion business through its offices in Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi and is supported by the Group's global expertise in the precious metal business. HSBC is the leading provider of trade services in India and its trade centres are ISO 9002 certified. Institutional Banking Working closely with Group offices in India and overseas, trade services, payments and cash

management, treasury and capital markets, custody and clearing, and correspondent and electronic banking activities are offered to banks, financial institutions, securities houses, insurance companies, asset management companies and other non-banking companies, nongovernment and development organisations operating in India. Treasury and Capital Markets Clients consistently rate HSBC's Treasury business as one of the best in India. Its dealing room in Mumbai is one of the largest in the country, serving clients in Mumbai and in the major metropolitan centres across the country. It provides a comprehensive range of products which include - foreign exchange, money market and fixed income products and derivatives in both rupees and major currencies. 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. Top

The HSBC Group develops and applies advanced technology to the efficient and convenient delivery of banking and related financial services. In India, the Group provides:

Self-Service Banking with over 150 in-branch and off-branch ATMs and 24-hour Phone Banking. Trade and Corporate Banking services with real-time access to a centralised information database Instantaneous inter-city transactions through online connections between all branches A state-of-the-art treasury dealing system A sophisticated card system supporting debit and credit cards, domestic and international VISA, MasterCard, and co-branded cards A dedicated acquiring system for both MasterCard and Visa transactions online@hsbc, HSBC's internet banking service, provides customers with an integrated and secure platform to access their accounts. Internet Payment Gateway handles credit card transactions on the internet


Asset Management
HSBC Asset Management (India) Private Limited provides a comprehensive range of investment management solutions to a diverse client base and is committed for aiming to deliver consistent investment performance, world-class service and a broad range of solutions for all types of investors. Our range of offerings in India comes under two broad categories Mutual Fund and Portfolio Management Services. Visit www.assetmanagement.hsbc.com/in for more info. Top

HSBC Global Resourcing

HSBC Global Resourcing is the largest, captive, banking and financial services off shoring organization in the world. A vital part of the HSBC Group's global strategy, Global Resourcing plays a key role in delivering shareholder value and seamlessly integrates and helps the Group remain competitive in the ever changing world of banking and finance. Global Resourcing is present in India as HSBC Electronic Data Processing India Pvt. Ltd., and operates out of 7 Group Service Centres (GSC) in Hyderabad, Bangalore, Kolkata, and Vishakhapatnam. Visit www.hsbcglobalresourcing.com for more info. Top

HSBC Insurance Brokers (India) Private Limited is licensed by the Insurance Regulatory Development Authority (IRDA) to operate as a composite insurance broking company, which will function as a direct and a reinsurance broker. Top

Data Processing
HSBC Operations and Processing Enterprise (India) Private Limited, through two centres in Mumbai and Chennai, provides operational processing services for HSBC offices in India. Top

HSBC Group Entities in India

Private Equity
HSBC Private Equity Management (Mauritius) Limited a subsidiary of HSBC Private Equity (Asia) Limited in Hong Kong, has a Liaison Office in Mumbai. The company specialises in the provision of equity capital to unlisted growth companies in India and Sri Lanka. Top

Audit Service
HSBC Professional Services (India) Private Limited provides internal audit services to the HSBC Group's internal audit units worldwide, with particular emphasis on the IT, Treasury, Asset Management, Private Banking and Insurance functions. Top

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

Software Development
HSBC Software Development (India) Private Limited has established a software centre in Pune to develop solutions for HSBC's Group offices worldwide. Top

HSBC InvestDirect (India) Limited

HSBC InvestDirect (India) Limited (HIDL) with its headquarters in Mumbai, has a pan-India presence and through its subsidiaries, offers a range of products & web based services that include Stock Broking Services, Investment Advisory, Distribution of Financial products and Securities related financing (NBFC), to individuals and corporates. For more information, visit www.hsbcinvestdirect.co.in.

Banking Policies and Fair Practice Codes

At HSBC, we want to make sure that you get the service which you, our valued customer, deserve. As part of our service, we consider it important to keep our customers informed about banking policies and fair practice codes adopted by HSBC. Please feel free to contact us in case of any queries on these.

Grievance Redressal Policy Cheque Collections Policy (Last updated on 15 November 2010) Policy for Settlement of Claims for deceased Depositors & Safe Deposit Lockers (Last updated on 29 Oct 2010) Compensation Policy (Last updated on 13 September 2011) Policy for Lending to Micro and Small Enterprise (MSE) Customers (Last updated on 1 March 2010) Know Your Customer (Last updated on 1 April 2009)

HSBC Fair Practice Code for Lenders (Last updated on 26 November 2008) Policy on Bank Deposit (Last updated on 17 October 2008) Policy on Collection of Dues and Repossession of Security (Last updated on 5 May 2011) Model Code of Conduct for the DSAs (Last updated on 28 July 2008) List of Collection Agencies (Last updated on 31 March 2012)

Prime Lending Rate

The Benchmark Prime Lending Rate (BPLR) is 15.50% per annum with effect from 15 May 2007. The maximum spread above BPLR is 8%.

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The antecedents of the HSBC Group in India can be traced back to October 1853 when the Mercantile Bank of India, London and China was founded in Bombay (now Mumbai). Starting with an authorised capital of Rs 5 million, the Mercantile Bank soon opened offices in London, Madras(Chennai), Colombo and Kandy, followed by Calcutta(Kolkata), Singapore, Hong Kong, Canton(Guangchow) and Shanghai by 1855. The following hundred years were in many ways propitious for the Mercantile Bank. In 1950 it moved into its new head office building in Mumbai at Flora Fountain. The acquisition in 1959 by The Hongkong and

Shanghai Banking Corporation Limited of the Mercantile Bank was a decisive factor in laying the foundation for today's HSBC Group. Founded in 1865 to serve the needs of the merchants of the China coast and finance the growing trade between China, Europe and the United States, HSBC has been an international bank from its earliest days. After the Mercantile Bank was acquired by The Hongkong and Shanghai Banking Corporation, the Flora Fountain building became and remains to this day, the Head Office of the HSBC Group in India. Through the 1990s, HSBC has vigorously developed its role as one of the leading banking and financial services organisations in the world. Its strategy of 'managing for value' emphasises the Group's unique balance of business and earnings between older, mature economies and faster-growing emerging markets. HSBC in India is proud to have retained the Group's pioneering streak by being an active partner in the development of the Indian banking industry - even giving India its first ATM way back in 1987. The organisation's adaptability, resilience and commitment to its customers have further enabled it to survive through turbulent times and prosper through good times over the past 150 years. Privacy and Security | Terms of Use | Hyperlink Policy Copyright 2012. The Hongkong and Shanghai Banking Corporation Limited, India (HSBC India). Incorporated in Hong Kong SAR with limited liability. All rights reserved.