The Enrichment of General Banking of HSBC through customer services

Chapter 1: Introduction

1.1

Introduction

BBA program of Dhaka University is organized and tailored to provide the students with the conceptual, theoretical and practical tools of analyses. Special stresses are given on theory and practice them under an organization. There fore as an internee I have completed my practice session and prepared this required Report based on investigations carried out by myself in Hong Kong Shanghai Banking Corporation . Service industries are quite varied. The government sector, with its courts, employment, services, hospitals, loan agencies and schools is in the service business. The private non profit sector with its museums, charities, colleges, foundations and hospitals, is also in the service business. A good part of the business sector, with its airlines, banks, computer service bureaus, hotels, insurance companies, law firms, management consulting firms, medical practices, motion picture companies, and real estate firms is in the service business. A service is any act or performances that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. This report has been prepared on the service organization. The name of the organization is HSBC. The bank within a short span of ten years, has successfully built its' position in the banking arena of the country

1.2

Origin of the Report

The BBA internship program is a compulsory for the students who are graduating from the School of Business of Dhaka University. It is a 03 credit hour course and Students who have completed all the required courses (at least 114 credit hours) are eligible for this course. The organization attachment started on March 01, 2007 and end on May 31, 2007. My organization supervisor Mr. Safayat Hasan (Customer Services Officer, Motijheel Office, HSBC Dhaka) assigned me the topic of my report and my institution supervisor at Department of Finance, University of Dhaka, Prof. M. Nasiruddin duly approved it. The reason behind choosing this topic is that, recently the CEO of HSBC Bangladesh has given emphasis on better customer service and more customer satisfaction and thus the Customer service officer wants to get an idea of the current level of customer satisfaction at HSBC.

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The Enrichment of General Banking of HSBC through customer services

1.3

Objectives of the Report

The basic focus of the study is to identify the main factors that ensure the best service in the financial sector which will in future enhance the margin of HSBC in the coming year. To ensure the profitability and to increase the market share some recommendations have been drawn. The factors are identified from the findings of the questionnaires. However, the specified objectives of the report areGeneral objective  To gain practical job experiences and view the application of theoretical knowledge in the real life. Project objective  To know customer’s different views on their organization's current level of service quality and standard.    To identify the factors those are essential for providing better service. To find out organization's short term and strategic plans to ensure quality. To suggest ways of improving the present standard that accommodates a rapidly growing customer volume.

1.4

Scope of the Study

The whole activities of HSBC can be divided into three main divisions. They are corporate banking, Personal banking and Operations. From investigation, annual report and interview it has been found that there is a substantial increase in the deposit or liability sector of HSBC. The same thing was happening in the export and import sector. Less rigidity and flexibility in the sanctioning process of credit, loans and advances were enhancing the condition to maintain a good relationship. Moreover, satisfaction of the employee is also responsible for the same. The report is mainly written based on the personal banking, corporate banking and part of operations. The comprehensive knowledge on the organization and a thorough knowledge on the project come under the scope of this program and report. This report is mainly written based on the perception of the clients of the HSBC. Most of the primary information has been collected through the investigations and the rest has been from the questionnaires. The presentation of the organizational structure and policy of HSBC Bangladesh and investigating the strategies applied by it provide the scope of this report. An

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The Enrichment of General Banking of HSBC through customer services infrastructure of the organization has been detailed, accompanied by a global perspective and look into the future. The scope of this report is limited to the overall description of the company, its services, and its position in the industry and its marketing strategies. The scope of the study is limited to organizational setup, functions, and performances.

1.5

Methodology

The internship program generally starts with visit and observation. However, in respective areas of the study different methods can be used where necessary. In preparing this report some methods was followed as preparing a report about the activities of any financial organization is a difficult and complicated task and no single methods is appropriate for preparing the report. Effective research involves six basic steps, shown in the following figure:

Define the Problem

Research objective

Develop research plan

Data collection

Data analysis

Findings & Recommendation

Diagram-1: Effective Research

A problem well defined is half solved. The project title is “The Enrichment of General Banking of HSBC through customer services”. It defines the various aspects of marketing programs adopted by HSBC. It discloses the factors behind the increase in the profit margin and provides suggestions to provide more quality services than the present situation, as it is now one of the big challenges of the organization.
The next step is to set objective behind conduction the research. Every research work must be fruitful and cost effective. The basic objective is to accomplish and interpret relevant information for decision making process.

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The Enrichment of General Banking of HSBC through customer services

To make the research fruitful a research plan was developed which involved three steps.

Research Plan

Deciding the type of Research

Developing Research Design source

Determining the source of data

Primary source

Secondary source

Explanatory Research

Conclusive research Diagram-2: Research Plan

The type of this research is an exploratory research, as it is not only identifying the problems but also give suggestions. 1.5.1 Selection of sampling The sample was not selected randomly. Instead of selecting randomly the sample was selected according to the convenience, as it is not possible to satisfy every respondent to fill the questionnaire. In this way, each sample was selected for the present study. 1.5.2 Data Collection Method The sources of data are broadly classified in to two categories. Both the primary and secondary sources have been used for collecting data for the research.

Primary source: Primary data are those, which are collected by the researcher for particular purpose. For this research, primary data has been collected by surveying the corporate clients, normal consumers or end users and by surveying the employees. For collecting primary data two methods have been applied:

1)

Through questionnaire: Three sets of questionnaires have been prepared for the survey purpose. One for the corporate clients and one for the end users or the deposit holders and another one is for the employees. The copies of the questionnaires are enclosed in the appendix of this project report.

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The Enrichment of General Banking of HSBC through customer services
2) Observation method: Secondly observation method has been followed to collect the necessary data. While the project work was conducting in the organization the behavior of the clients and consumers also noted down to understand their needs and want.

Secondary source: The data about the organization and short term plan was collected from some secondary sources. They are collected from various printed materials like news paper, journals, magazines etc. The sources are :

1) Internal Sources: Company's annual report Bangladesh Bank. Information from the employees of the company.

2) External Sources: Different books, journals research paper on HSBC. Government report.

-

Newspapers.

1.5.3 Data Analysis Method

Data Analysis was done mostly through table and statistical data comparison (frequency, relative frequency). Software like MS- Excel, is used to analyze the data and come up with good findings.

1.6

Limitations
• •
Lack of comprehension of the respondents was the major problem that created much

confusion regarding verification of conceptual question. Limitation of time was one of the most important factors that languished the present

study. Due to time limitation, many aspects could not be discussed in the present study. Due to time constraints, the sample size had to be restricted to 100 only.

Confidentiality of data was another important barrier that was faced during the

conduct of this study. Every organization has their own secrecy that is not revealed to others. While collecting data on HSBC's strategic plan, the personnel did not disclose enough information for the sake of confidentiality of the organization.


data. •

Rush hours and business was another reason that acts as an obstacle while gathering Most of the employees are not much cooperative as expected

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The Enrichment of General Banking of HSBC through customer services

Chapter 2: Organization Overview

2.1 An Overview of HSBC Group
The HSBC Group is named after its founding member, The Hong Kong and Shanghai Banking Corporation Limited, which was established in 1865 in Hong Kong and Shanghai to finance the growing trade between China and Europe. Thomas Sutherland, a Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company helped to establish this bank in March 1865. He realized that there was considerable demand for local banking facilities both in Hong Kong and along the China coast. Then, as now, the bank's headquarters were at 1 Queen's Road Central in Hong Kong and a branch was opened one month later in Shanghai. Throughout the late nineteenth and the early twentieth centuries, the bank established a network of agencies and branches based mainly in China and South East Asia but also with representation in the Indian sub-continent, Japan, Europe and North America.

The post-war political and economic changes in the world forced the bank to analyze its strategy for continued growth in the 1950s. The bank diversified both its business and its geographical spread through acquisitions and alliances.

HSBC Holdings plc, the parent company of the HSBC Group, was established in 1991 with its shares quoted on both the London and Hong Kong stock exchanges. The HSBC Group now comprises a unique range of banks and financial service providers around the globe. The HSBC Group's international network comprises some 7,000 offices in 82 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.

HSBC maintains one of the world’s largest private data communication networks and is reconfiguring its business for the e-age. Its rapidly growing e-commerce capability includes the use of the internet, PC banking over a private network, interactive TV, and fixed and mobile, including wireless application protocol or WAP-enabled mobile, telephones. 6

The Enrichment of General Banking of HSBC through customer services Through a global network linked by advanced technology, including a rapidly growing ecommerce capability, HSBC provides a comprehensive range of financial services: personal, commercial, corporate, investment and private banking; trade services; cash management; treasury and capital markets services; insurance; consumer and business finance; pension and investment fund management; trustee services; and securities and custody services.

2.2 HSBC’s Mission and Objectives
HSBC Mission Statement
“We aim to satisfy our customers with high quality service that reflects our global image as the premier international bank”

Objectives of HSBC
HSBC’s objectives are to provide innovative products supported by quality delivery of systems and excellence customer services, to train and motivate staffs and to exercise social responsibility. By combining regional strengths with group network HSBC’s aim is to be the one of the leading banks in its principle markets. HSBC’s goal is to achieve sustained earnings growth and to continue to enhance shareholders value.

2.3 HSBC’s Business Principles and Values and Strategies

HSBC’s reputation is founded on adherence to these principles and values. All actions taken by a member of HSBC or staff member on behalf of a Group company should conform to them.. The HSBC Group is committed to five core Business Principles:
Outstanding customer service Effective and efficient operations Strong capital and liquidity

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The Enrichment of General Banking of HSBC through customer services
Conservative lending policy Strict expense discipline

HSBC Operates According to Certain Key Business Values:
The highest personal standards of integrity at all levels Commitment to truth and fair dealing Hands-on management at all levels Openly esteemed commitment to quality and competence A minimum of bureaucracy Fast decisions and implementation Putting the Group's interests ahead of the individual's The appropriate delegation of authority with accountability Fair and objective employer A merit approach to recruitment/selection/promotion A commitment to complying with the spirit and letter of all laws and regulations wherever we conduct our business The promotion of good environmental practice and sustainable development and commitment to the welfare and development of each local community

Strategies
HSBC’s broad strategies can be brought into being here below. With product and imaging the strategies are being categorized. Brand: make HSBC and its hexagon symbol one of the world’s leading brands for customer experience and corporate social responsibility; Personal Financial Services (‘PFS’): drive growth in key markets and through appropriate channels to make HSBC the strongest global player in PFS; Consumer Finance: extend HSBC’s new business to existing customers and penetrate new markets; Corporate, Investment Banking and Markets: accelerate growth through enhanced capital markets and advisory capabilities focused on the client; Commercial Banking: make the most of HSBC’s international customer base through effective customer relationship management and improved product offering in all the Group’s markets; Private Banking: serve the Group’s highest value personal clients around the world, utilizing the

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The Enrichment of General Banking of HSBC through customer services
investments already made; Attract, develop and motivate HSBC’s people, rewarding success and rejecting mediocrity; and TSR: fulfill HSBC’s TSR target by achieving strong competitive performances in earnings per share growth and efficiency.

2.4 Banks under the HSBC Group
Many of the members have changed their name into HSBC, The Hongkong and Shanghai Banking Corporation Limited to introduce the whole group under one brand name HSBC Holdings acquired Midland Bank one of the principal UK clearing banks in 1992. Headquartered in London, the bank has a personal customer base of five and a half million, business customers of over half a million, and a network of almost 1,700 branches in the United Kingdom. Midland has offices in 28 countries and territories, principally in continental Europe, with a number of offices in Latin America. Hang Seng Bank, in which Hongkong Bank has a 62.1% equity Hang Seng Bank interest, maintains a network of 146 branches in the Hong Kong SAR, where it is the second largest locally incorporated bank after Hongkong Bank. Hang Seng Bank also has a branch in Singapore and two branches and two representative offices in China. Marine Midland Bank headquartered in Buffalo, New York, has Marine Midland Bank 380 banking locations statewide. The bank serves over two million personal customers and 120,000 commercial and institutional customers in New York State and, in selected businesses, throughout the United States. Hongkong Bank of Canada Banco HSBC Hongkong Bank of Canada is the largest foreign-owned bank in Canada and the country’s seventh-largest bank. With headquarters in Vancouver, it has 116 branches across Canada and two branches in the western United States. Banco HSBC Bamerindus was established in Brazil in 1997. The

Midland Bank

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The Enrichment of General Banking of HSBC through customer services bank has network of some 1,900 branches and sub-branches, the second largest in Brazil. Hongkong Bank Malaysia is the largest foreign-owned bank in Malaysia and the country’s fifth-largest bank, with 36 branches. The British Bank of the Middle East (British Bank) is the The British Bank of the Middle East (British Bank) largest and most widely represented international bank in the Middle East, with 31 branches throughout the United Arab Emirates, Oman, Bahrain, Qatar, Jordan, Lebanon and the Palestinian Autonomous Area, including an offshore banking unit in Bahrain. The bank also has branches in Mumbai and Trivandrum, India, and Baku, Azerbaijan, as well as private banking operations in London and Geneva. HSBC Banco Roberts HSBC Banco Roberts was acquired in 1997. Based in Buenos Aires, it is one of Argentina’s largest privately owned banks, with 60 branches throughout the country. Hongkong Bank of Australia has 16 branches across Australia. It is the flagship of the HSBC Group’s businesses there, operating under the name HSBC Australia, and providing a complete range of financial services. The Saudi British Bank, a 40%-owned member of the HSBC Group, has 63 branches throughout Saudi Arabia and a branch in London.

Bamerindus Hongkong Bank Malaysia

Hongkong Bank of Australia

The Saudi British Bank

2.5 HSBC International Network
The HSBC Group's international network comprises of some 10,500 offices in 82 countries. The major entities are as follows: Europe
Armenia Azerbaijan Belgium Channel Islands Cyprus 2 1 6 34 144 Greece Hungary Ireland Isle of Man Italy 70 3 14 6 5 Netherlands Poland Russia Spain Sweden 1 5 3 4 3

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The Enrichment of General Banking of HSBC through customer services
Czech Republic France Germany 4 836 11 Luxembourg Malta Monaco 8 64 2 Switzerland Turkey United Kingdom 15 160 1908

Asia-Pacific
Australia Bangladesh Brunei Darussalam China Cook Islands Hong Kong India Vietnam 39 8 13 30 1 381 41 2 Indonesia Japan Kazakhstan Korea Republic Macau Special Admin. Region Malaysia Maldives 13 6 1 12 5 42 1 New Zealand Pakistan Philippines Singapore Sri Lanka Taiwan Thailand 9 4 24 26 10 19 2

Americas
Argentina Bahamas Bermuda Brazil Panama 196 5 9 1470 16 Canada Cayman Islands Chile Mexico 282 6 2 1387 United States of America Uruguay Venezuela British Virgin Islands 3566 6 1 3

Middle East & Africa
Algeria Angola Bahrain Cote d Ivoire Egypt Ghana Iran 1 1 8 1 16 1 1 Israel Jordan Lebanon Libya Mauritius Morocco Oman 4 2 6 1 14 1 5 Palestinian Autonomous Area Qatar Saudi Arabia South Africa Uganda United Arab Emirates 1 4 75 10 1 16

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The Enrichment of General Banking of HSBC through customer services

Country Classifications
To ensure that key resources (management time, capital, Human resources and information technology) are correctly allocated and that the exchange of best practice is accelerated between entities, the group has classified the countries where it operates into 3 categories: the large, the major and the international.

These classifications are a function of sustainable, attributable earnings, the number of retail clients, balance sheet and size of operation. A brief presentation of this classification is shown below:

International Brand
A key part of the Group’s business strategy, announced in 1998, is the creation of a global brand featuring the HSBC name and hexagon symbol. The symbol is now a familiar sight

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The Enrichment of General Banking of HSBC through customer services around the world. The Group has embarked on the next phase — making the HSBC brand universally synonymous with its core values of integrity, trust and excellent customer service. HSBC brand & corporate identity represents what HSBC wants its brand to mean to its customer. It is derived from the group: Corporate Character HSBC is a prudent, cost conscious, ethically grounded, conservative, trustworthy international builder of long-term customer relationships.

Basic Drives HSBC’s basic drives are Higher Productivity, Team Orientation, and Creative Organization, & Customer Orientation. The essence of HSBC brand is integrity, trust, and excellent customer service. It gives confidence to customers, value to investors, & comfort to colleagues.

2.6 Overview of HSBC Bangladesh
2.6.1 Brief History The HSBC Asia Pacific group represents HSBC in Bangladesh. HSBC opened it’s first branch in Dhaka in 17th December, 1996 to provide personal banking services, trade and corporate services, and custody services. The Bank was awarded ISO9002 accreditation for its personal and business banking services, which cover trade services, securities and safe custody, corporate banking, Hexagon and all personal banking. This ISO9002 designation is the first of its kind for a bank in Bangladesh. The Hongkong and Shanghai Banking Corporation Bangladesh Ltd. primarily limited its operations to help garments industry and to commercial banking. Latter, it is extended to pharmaceuticals, jute and consumer products. Other services include cash management, treasury, securities, and custodial service. Realizing the huge potential and growth in personal banking industry in Bangladesh, HSBC extended it’s operation to the personal banking sector in Bangladesh and within a very short span of time it was able to build up a huge client base.

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The Enrichment of General Banking of HSBC through customer services

Currently HSBC Bangladesh is providing a wide range of services to both individual and corporate level customers. HSBC in Bangladesh also specializes in self-service banking through providing 24-hour ATM services. Currently HSBC Bangladesh is offering five offsite ATM booths and five Branches, along with ATM booths, for better satisfying those geographic segments, located at various geographical areas of Dhaka & Chittagong. Another two branches will be opened at Uttara and Sylhet within June 2006.

2.6.2 HSBC Bangladesh Overview

Name of the Organization Year of Establishment Head Office Nature of the organization Shareholders

The Hong Kong Shanghai Banking Corporation Bangladesh LTD 1996 Anchor Tower, 1/1-B Sonargaon Road Dhaka 1205, Bangladesh Multinational company with subsidiary group in Bangladesh HSBC group shareholders Savings & deposit services Loan products Corporate and Institutional services Trade services & Hexagon Payments and Cash Management Products Trade services Hexagon Day & Night Banking Amanah (Islamic Banking) 8 (Dhaka, Motijheel, Gulshan, Dhanmondi, Uttara & Chittagong(2), Sylhet) 12

Products

Number of Offices Number of ATM’s

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The Enrichment of General Banking of HSBC through customer services Number of employees Technology Service Coverage & Customers 635+ Offers full online banking from branch to branch and from Dhaka to Chittagong. Serves individual and corporate customers within Dhaka & Chittagong.

Position of HSBC Bangladesh
Among Foreign Banks, Standard Chartered Bank is enjoying the name of the largest multinational bank operating in Bangladesh. According to the recent Schedule Bank Statistics, SCB shares 32% of the market share of FCB’s (Foreign commercial bank) in terms of deposit. SCB holds the largest market share in terms of advance also among all the foreign banks.

Market share of major Multinational Banks
SCB 22%

HSBC 11% SCGB 43% AMEX 10%

Others 3%

CAI 4%

CITIBANK 7%

Source: Schedule Bank Statistics In comparison, HSBC Bangladesh shares only 11% of the market share of FCB’s in terms of deposit.

2.6.3 Branches & Booths
 Dhaka Main Office (Full service branch with one ATM’s) Anchor Tower, Sonargaon Road - Dhaka  Gulshan Office (Personal Banking Booth with one ATM) House # SWG -2, Gulshan Avenue, Dhaka 15

The Enrichment of General Banking of HSBC through customer services  Motijheel Office (Personal Banking & Remittance office with one ATM) 1/C, Rajuk Avenue, Motijheel- Dhaka  Chittagong office (Full service branch with one ATM) Osman Court, 70, Agrabad – Chittagong  Dhanmondi Office (Full service branch with one ATM) House # 352 (old), Road # 27, Dhanmondi, Dhaka  Amanah Finance (Full service Islamic Banking with an Amanah ATM ) House # SWG -2, Gulshan Avenue, Dhaka

Offsite ATMs
 Uttara Model Town, Uttara - Dhaka  Mumtaz Plaza, Dhanmondi - Dhaha  Kemal Ataturk Avenue, Banani - Dhaka  Concord Twin Towers, Shantinagar – Dhaka  Nasirabad – Chittagong

2.6.4 Management of HSBC Bangladesh

In Bangladesh HSBC follows a 4-layer management philosophy. These are Managers, Executives, officers & Assistant officers. The top most authority of all the levels is the CEO. All Managers are the departmental heads who are responsible for the activities of their departments. They are the heads of their respective department and formulate strategies for that department. The Executives have the authority next to managers. They are ultimately responsible for certain activities & organizational functions. Officers are the next persons to stand in the hierarchy list. These officers are responsible for managing the operational activities and operating level employees. Assistant Officer (AO’s) fill the last layer of this hierarchy; this is the entry-level position in HSBC Bangladesh. They perform day-to-day operational activities and maintain close relationship with the end customers of HSBC. An organizational hierarchy chart is shown below:

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Managers The Enrichment of General Banking of HSBC through customer services

Executives

Officers

Assistant Officers Figure 4: Organizational Hierarchy

Chief Executive Committee

Figure 5: Chief Executive Committee

The organizational structure of HSBC Bangladesh is designed according to the various service and functional departments. The Chief Executive Officer (CEO) heads the chief executive committee, which decides on all the strategic aspect of HSBC. The CEO is the person who supervises the heads of all the departments and also is the ultimate authority of HSBC Bangladesh. He is responsible for all the activities of HSBC Bangladesh and all its consequences. He administers all the functional departments and communicates with the department heads for smooth functioning of the organization. The HSBC Chief Executive 17

The Enrichment of General Banking of HSBC through customer services Committee is formed with the heads of all departments along with the CEO. Besides the CEO the CEC is staffed with 6 more managers: Manager of Human Resources, Manager of Services, and Manager of Financial Control Department, Chief of Personal Banking, Chief of Corporate Banking, and Manager of Marketing.

2.7 Progress of HSBC

Deposit position HSBC has achieved notable growth in deposits. Deposits of the Bank reached at Tk.5723 million in 2005. In 2004 deposit of bank was 4766 million. Average increase in deposit is 20%. The following table shows the deposits position of HSBC relative to other banks.

Year 2000 2001 2002 2003 2004 2005

Deposit 3,234 3,556 3,985 4,365 4,766 5,723

Relative Size in the Industry 0.40% 0.45% 0.51% 0.57% 0.61% 0.63%

Relative Size in Rank in the the Group 9.03% 11.03% 15.01% 19.34% 22.02% 22.08 Industry 30 32 29 29 29 29

Rank in the Group 5 5 4 4 4 4 (In million)

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The Enrichment of General Banking of HSBC through customer services

Deposit Growth of HSBC
6,000 5,000 4,000 3,000 2,000 1,000 0

Deposit

2000

2001

2002

2003

2004

2005

Year

Loan and Advances

Year Advances 2000 2001 2002 2003 2004 2005 2,055 2,456 2,755 3,325 3,749 4258

Relative Size in Relative Size in the Industry 0.32% 0.36% 0.39% 0.43% 0.47% 0.48% the Group 9.00% 10.08% 10.65% 11.03% 11.59% 11.78%

Rank in the Industry 30 28 28 28 28 28

Rank in the Group 4 4 4 4 4 4

Progress of Loan and Advances
5,000 4,000 3,000 2,000 1,000 0

Advances

2000

2001

2002

2003

2004

2005

Year

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The Enrichment of General Banking of HSBC through customer services

Foreign Trade

Year 2000 2001 2002 2003 2004 2005

Foreign Relative Size in Relative Size in Rank in the Trade 28,114 32,355 38,000 41,278 45,162 47,512 the Industry 2.78% 3.55% 4.62% 5.12% 5.96% 6.03% the Group 15.30% 17.06% 19.22% 21.37% 23.64% 24.48 Industry 13 12 11 11 11 11

Rank in the Group 5 5 4 4 4 5 (In million)

Progress of Foreign Trade
50,000 40,000 30,000 20,000 10,000 0 2000 2001 2002 2003 2004 2005

Year

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The Enrichment of General Banking of HSBC through customer services

2.8 Organization Structure
2.8.1. Board of Directors
Headed by the Chairman and Deputy Chairman, the HSBC Holdings Plc has 20 (twenty) members in its board of directors position with one Advisor to the Board and one Group Company Secretary. Their names are given in “Table 1: Names and Positions of the Members of Board of Directors of the HSBC” (Appendix 1: Tables):

Table 1: Please See Appendix 1

The group structure chart of HSBC is given in (Figure 1: The Group Structure of HSBC) the Appended Part (Appendix 2: Charts & Figures).

Figure 1: Please See Appendix 2

2.8.2. Foreign Correspondence
HSBC has got number of foreign correspondents to meet their daily business operations efficiently. The foreign correspondents can be accessed through their outstanding online banking solution software Hexagon. Hexagon can bring all the statements of transactions with foreign correspondents within seconds. The most important foreign correspondents are, Group’s Bank in different countries, Marine Midland Bank, HSBC itself. List of foreign Correspondence are given in Appended Part (Appendix 1: Tables) with the ‘Table 2: List of Foreign Correspondences”

Table 2: Please See Appendix 1

2.8.3 HSBC Branches
HSBC has got eight branches in total in Bangladesh to offer its services to the customers. Of them five are situated in Dhaka city, two in Chittagong and one in Shylet. Beside full functioning branches HSBC has a Call Center for information about personal financial services for seven days a week. HSBC also has seven Customer Service Centers in different locations in Dhaka and Chittagong.

a. Functional Difference(s)
Except one branch (Amanah) there is no functional difference between branches of HSBC in

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The Enrichment of General Banking of HSBC through customer services
Bangladesh. HSBC Amanah is the global Islamic financial services division of the HSBC Group, responsible for the development of Islamic financial products for distribution to customers of the HSBC Group. It was established in 1998 and is now based in Dubai, UAE with regional offices in the UK, the US, Saudi Arabia, Malaysia, Indonesia, Bangladesh, Singapore and Brunei. HSBC Bangladesh currently offers Amanah Current Account and Amanah Import finance. The Gulshan branch of HSBC Bangladesh is the Amanah branch.

2.9 Automation/IT Systems
HSBC is a major user of advanced information technology. The Group’s IT systems are rapidly growing their e-business channels, including use of the internet, PC banking, interactive TV, and telephone banking via both fixed and mobile phones. HSBC maintains its own private telecommunications network – one of the world’s largest – to deliver IT services to customers and to staff around the world. HSBC web sites attracted 388 million visits in the first six months of 2004. HSBC is an example of fully automated banking services. One of its exceptional automated services is ‘Phone banking’, which is a 24 hour automated telephone banking service. ‘Phone banking’ allows the HSBC customers can have exclusive banking services like checking balances, transferring money between accounts, details of last five transactions, statement and cheque book ordering, paying bills, inquiring interest rates (deposits), opening or renewing time deposit, reporting about ATM card, enquiring foreign exchange rates, etc. HSBC offers fully functional online banking to its customers through its five branches and ATM network. It also offers an attractive service like Easy Pay through which any body can pay their utility bills. The PCs in HSBC office is linked with highly sophisticated network and the IT department is in charge of continuous monitoring of the network performance and upgrading. Through ‘Hexagon’ HSBC Bangladesh offers an elegant worldwide banking service to its customers. Beside its automation includes electronic DC advising. By its website (www.hsbc.com.bd) HSBC always provide all the up to date information to the people.

2.10 Major Functions, Description of Business and Details of Various Functional Departments 2.10.1 HSBC Major Functions 22

The Enrichment of General Banking of HSBC through customer services
HSBC Bangladesh is now offering some attractive banking services for its customers. Key/major areas of HSBC Bangladesh business are: Personal Financial Services Commercial banking Corporate and Institutional banking

2.10.2. HSBC Business Descriptions
In this section readers will get some basic descriptions of HSBC’s business in Bangladesh. ◊ Prsonal Banking: With five branches, HSBC offers a full range of personal banking and related financial services including current and savings accounts, personal loans, time deposits, traveler’s cheques and inward and outward remittances. ◊ Commercial Banking: Commercial banking is a traditional strength of the HSBC Group. In Bangladesh, HSBC is a popular choice for customers because of the Group’s international reach and a wide range of financial services and products. HSBC has an offshore banking unit (OBU) license and can therefore also provide foreign currency financing to qualifying customers. ◊ Corporate and Institutional Banking: Corporate and institutional banking provides dedicated relationship management services to HSBC’s clients in major corporate and financial institutions. The Bank’s focus is on fostering long-term relationship based on its international connections and extensive of Asia and Asian business. ◊ Hexagon: Hexagon, a proprietary computer-based software package, provides customer with an instant link into the HSBC Group’s international computer networks, allowing them to perform transactions and obtain a diverse range of up-to-date information 24 hours a day, 365 days a year. ◊ Trade Services: Trade finance and related services are a long-standing core business of HSBC based on the depth and spread of its corporate customer base, highly automated trade processing systems and extensive geographic reach. ◊ Payments and Cash Management: HSBC is one of the leading providers of payments and related services to financial institutions, corporate and personal customers in Bangladesh. Underpinned by the Group’s extensive network of offices and capabilities, payments and cash management assist companies in efficient cash management through the provision of payments, collections, liquidity and account services. ◊ Custody and Clearing: HSBC is a leader in custody and clearing in the Asia Pacific region and

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The Enrichment of General Banking of HSBC through customer services
the Middle East. The network uses advanced securities clearing system, which was developed inhouse and provides round-the-clock online real-time access to clients’ securities portfolios. ◊ Investment banking and markets: This division together the advisory, financing, asset management, equity securities, private banking, trustee, private equity, and treasury and capital market activities of the HSBC Groups. ◊ Treasury and Capital Markets: HSBC’s treasury and capital markets business ranks among the largest in the world and serves the requirements of supranational, central banks, international and local corporations, institutional investors, and financial institutions as well as other market participants. ◊ Amanah: HSBC Amanah is the global Islamic financial services division of the HSBC Group, responsible for the development of Islamic financial products for distribution to customers of the HSBC Group. It was established in 1998 and is now based in Dubai, UAE with regional offices in UK, the US, Saudi Arabia, Malaysia, Indonesia, Bangladesh, Singapore and Brunei. HSBC Bangladesh currently offers Amanah Current Account and Amanah Import Finance. 2.10.3. HSBC Functional Departments The HSBC Bangladesh has the following departments, which controls the whole operations here. The departments are listed below with their basic functions in the following table. The departments are divided into two main groups. A. Corporate and B. Personal Financial Services (PFS). Table 3: Department in HSBC Bangladesh Major Sections Department Name PCM (Payment & Cash Management) HTV (Trade Service) IB (Institutional Banking) FIG CNC (Custody & Clearing) Global Market (Treasury) PFS Credit PFS MIS BI (Bangladesh International) Front Office MSO (Mobile Sales Office) HR (Human Resource) FCD (Financial Control Department) HUB (HSBC Universal Banking) IT (Information Technology) NSC (Network Service Center) Administration CRM (Credit Risk Management) MIC (Management Internal Control)

Corporate

Personal Financial Service (PFS) Other Operational Departments

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The Enrichment of General Banking of HSBC through customer services
Major Sections Source: Primary Data Department Name GPA (Group Public Affairs) Marketing

2.10.4. The Financial Control Department
The COO (Chief Operating Officer) of HSBC directly controls the FCD (Financial Control Department). COO also supervises other departments of the bank like HSBC Universal Banking (HUB), Network Support Center (NSC), Administration, Information Technology (IT), and Management Internal Control (MIC). The FCD is under taut security in the bank and it deals with all the sophisticated information (i.e. financial planning, payments, etc.) of the bank. The primary purpose of FCD is to maintain a rigorous financial control environment to ensure the maintenance of proper accounting records and the preparation of appropriate financial reports for GHQ, regulators and management to ensure compliance with tax and company law and regulations and to contribute to to the effective planning and control of profitability and risk through the Asset and Liability Management Committee (ALCO) process. FCD has got some important responsibilities. These are: Financial accounting and reporting to the appropriate Head Office in accordance with prescribed reporting procedure Financial reporting as required by local regulations and law Asset and liability performance analysis Management accounting Use of management information system Co-ordination of planning Financial planning, including capital budgeting Cost control Setting tax, investment and administration policy Monitoring exchange rate and interest rate exposures and Tax compliance and planning FCD is especially controlled by dividing it into five sub departments within. The five sub departments are shown in the following organogram:

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The Enrichment of General Banking of HSBC through customer services
Figure 2: Partial Organogram of HSBC Depicting FCD

COO

NSC Manager

HUB Manager

IT Manager

MIC Manager

FCD Manager

Treasury Back Office

Return

Payments

Reconciliation

Asset & Liability Committee

Source: Primary Data

Brief descriptions of the above FCD sub departments have been endowed here: Treasury Back Office The treasury department of FCD is the treasury back office. It acts as a support function of treasury front office that is the Capital market dealing room. The treasury back office calculates the (CRR) Cash reserve Ratio and (SLR) Statutory Liquidity ratio and that is analyzed by the front office and treasury deals are done. The cash reserve ratio is in BDT amount. The bank has to maintain a minimum amount of 4% of demand and time liability. The customer deposits and demand liabilities are taken into account for calculation. Statutory Liquidity ratio is set as 16% as minimum to be maintained. The back office of FCD processes both the local currency and the foreign currency deals made by front office. The treasury back office of FCD also checks the deals and authenticates the dealing. Then the information is inputted in the HSBC Universal Banking (HUB). The treasury back office also makes conformations with local counterparts and sends swift messages to foreign counterparts for deals made by the front office. Return The Return section acts as an important support function of financial control department. The

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The Enrichment of General Banking of HSBC through customer services
department works to maintain proper Bangladesh Bank Regulatory policy. The department maintains proper financial reports and also looks after the bank compliance with tax and company laws. By this way the return section overviews the different sections of FCD which as a result give optimum level of performance. Payments The payments section of Financial Control Department looks after the cost of operation aspects HSBC Bangladesh. The payments department deals with appropriate bills under their proper payments. The department allocates proper bills under the proper cost centers of the bank. The payment section also verifies the authenticity of the bill as per bank’s policy. Reconciliation The Reconciliation section of FCD deals with the Nostro and Vostro balances with other banks and entities. The section deals with HSBC’s accounts in other banks (Nostro) and other banks account in HSBC (Vostro). The section checks the transfer of fund with different accounts. This department settles payable and receivable balances in different accounts and informs treasury about different account positions. Asset & Liability Committee (ALCO) The word ALCO stands for Asset and Liability Committee. This section of Financial Control Department acts as a Management Information System of the bank. The department cosines all the data in a manageable form for the authority to look into. These data helps to make managerial decision for the top level of the bank. The asset and Liability management section segregates all the business lines of the bank. This helps the top level to understand the different business lines performance in specific terms. The ALCO also sets the targets to be met to the departments as per the Group Head office and Intermediate Head office. The department reports various information to group Head Office situated in England and Intermediate Head Office in Hongkong as per bank policy. The department also calculates various ratios related to bank’s performance. That is why the section maintains a high degree of secrecy, so that there is zero level of information drainage out side the section. The section uses software like HMI, Sarasen etc. for performing their job.

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The Enrichment of General Banking of HSBC through customer services

Chapter 3: Products and Services

3.1 Products and Services at HSBC
HSBC is always working with product shown below:
Personal Loan Home Loan Car Loan developments. Products Tax Loan Education Loan Personal Secured Loan & Credit

and services from HSBC are briefly

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The Enrichment of General Banking of HSBC through customer services

Under Personal Financial Services
◊ ATM Service ◊ Savings Account ◊ Current Account ◊ Car Loan ◊ Credit Card ◊ Personal Secured Credit ◊ Personal Installment Loan ◊ Day & Night Banking ◊ Traveler’s Cheques ◊ Monthly Interest Bearing Time Deposit ◊ Hexagon ◊ Phonebanking ◊ Time Deposit ◊ Home Loan ◊ Call Centre ◊ Personal Secured Loan ◊ Bangladesh International ◊ Power Vantage ◊ Investment Watch

◊ Corporate Employee Privilege Scheme (CEPS)

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The Enrichment of General Banking of HSBC through customer services

Under the name My Loan HSBC offers: ◊ Professional Loan, Lifestyle Loan, Furniture Loan, Wedding Loan ◊ Student Loan ◊ Car Loan ◊ Travel Loan ◊ Motorbike Loan ◊ Home Loan

Corporate banking
◊ Corporate Credit: Overdraft, Import and Export Finance, Documents Against Acceptance (DA)/ Documents Against Payments (DP) purchase, Long-term Loans, Guarantees and Bonds, etc. ◊ Payments and Cash Management: Account Management Services, Countrywide Payments/Countrywide Collections, etc. ◊ Electronic Banking: Cash Management Services, Trade Services, Salary Payments, Information Services, Hexagon Report Writer, Offline Hexagon operationos, Hexagon Cheque Writer, etc. ◊ Trade Services include Export Services, Import Services, Trade Express, Document Tracker, Electronic DC Advising, etc.

Treasury Service
◊ Spot Foreign Exchange ◊ Forward Foreign Exchange ◊ Competitive Forex Rates for Remittances, Export and Import ◊ Weekly Currency Newsletter ◊ Market Outlook from our Global Desks

Amanah – Shariah Compliant Solutions
◊ Amanah Current Account ◊ Amanah Import Finance ◊ Amanah Day & Night Banking

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The Enrichment of General Banking of HSBC through customer services

Chapter 4: Industry Analysis

4.1 Industry Analysis
Industry analysis builds on customer & competitor analyses to make more strategic judgment about a market & its dynamics. One primary objective of industry analysis is to determine the attractiveness of a market to current & potential participants. A second objective of a market analysis is to understand the dynamics of the market. The need is to identify the key emerging factors, trends & threats, opportunities & strategic uncertainties that can guide information gathering & analysis.

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The Enrichment of General Banking of HSBC through customer services Porter’s approach can be applied to an industry, but it can also be applied to a market or submarket within the industry. A complete understanding of the competitive area helps to guide strategy design & implementation.

4.2 Micro Environment of HSBC
Driving Forces from the External Environmen t

Anticipated

Moves from Key Competitors

HSBC CCC

CCCC

HSBC’s Competitors ’ Moves

Industry Attractiveness ess

4.3 Porter’s Five Forces at HSBC 1. Rivalry among existing competitors:
The rivalry among the competitors and the growth in the industry depends upon the intensity of competition. A high amount of competition is observed in the banking sector of Bangladesh. There are more than 50 commercial banks in Bangladesh that fight for there own share of the market. The national banks have the highest banking network in Bangladesh. They compete against the banks with their low cost of operation and government support.

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The Enrichment of General Banking of HSBC through customer services Again, Standard Chartered bank is the largest multinational banking network in Bangladesh that has its network in many metropolitans of Bangladesh. There are other international banks who also take part in the competition and are aggressive in nature. This high intensity of competition makes companies difficult to sustain in the long run

2. Threat of new entrants:
The next force highlights the possibility of new competitors entering the market. Existing firms may try to discourage new competition by aggressive expansion & other types of entry barriers. The banking sector of Bangladesh seriously faces the threat of new entrants. However the threat comes from two direction. The first threat comes with the arrival of the multinational banks and her branch expansion particularly due to the booming energy sector. Secondly, the continuous entry of local banks with lower cost structure also pose a severe threat to this industry. In the context of HSBC the various new & upcoming Banks pose a significant threat, being new entrants in the banking sector of Bangladesh. But HSBC is aware of these potential competitors and is trying to expand countrywide to make the sector unattractive & to create entry barrier.

3. Threat of substitute products:
This force considers the potential impact of substitutes. New products that satisfy the same customer needs are important sources of competition including alternative products in the definition of product market structure identify substitute forms of competition. HSBC continuously faces the threat of various substitute products launched by its strong competitors in the market place. For example, the launch of premiere banking by SCB poses a strong threat on HSBC’s premium customer group and HSBC is at a condition where it should launch an even better product. More over the various consumer credit schemes offered by various local banks with lower interest rates and cost also pose a strong threat on the HSBC personal banking products. Again the lower service charge at national banks also discourages a wide group of customers to hold account in HSBC. These are some of the threats posed by substitute products in the market place.

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The Enrichment of General Banking of HSBC through customer services

4 Bargaining power of suppliers:
The fourth force is the power of suppliers that may have impact on the producers in an industry. Companies may pursue vertical integration strategies to reduce the bargaining power of suppliers. In the context of HSBC, suppliers are those customers and organizations that provide financing to the firm via depository schemes. If the cost of financing rises, then HSBC will have to increase the interest rate that it charges to its customer in order to remain in the business. This may result in severe customer dissatisfaction & as a result poor profitability. HSBC is aware of this devastating situation.

5 Bargaining power of buyers:
Finally, buyers may use their purchasing power to influence the producers or service providers. Understanding which organizations have power & influence in the distribution channel provides important insight into the structure of competition. In the banking sector of Bangladesh, customers have a strong bargaining power since there a large number of commercial banks providing similar services. Customers have a wide range of options in deciding where to bank. They can either go for the Multinationals or turn to new local banks for getting quality service. Others may also consider the national banks for large credit facilities. Therefore banks have to pursue the customers with attractive interest rates and provide them with tailor made customized services in order to attract the customer or hunt depositors. In the context of HSBC, the firm is more or less free from the cope of the bargaining power of the buyers. HSBC has its own policies to carry out its operations & employees follow those rules to deal with the customers. But too much rigidity of the prevailing policies when to deal with the clients may under cut its client base as well as profitability. To overcome this worst scenario – a positive & personalized approach to the needs of customer - has become HSBC’S motto.

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The Enrichment of General Banking of HSBC through customer services

4.3 SWOT ANALYSIS
STRENGHTS: HSBC is the leading provider of financial services Strong corporate Identity worldwide. With its strong corporate image and identity it can better position in the minds of customers. This image has helped HSBC grab the personal banking sector of Bangladesh very rapidly. HSBC in known worldwide for its distinct operating Distinct operating procedures procedure. The company’s Managing for Value strategy better satisfy customers needs and also keeps 35

The Enrichment of General Banking of HSBC through customer services the firm profitable. Everyone in HSBC from the appraiser to the top management has to work to the same schedule toward a Distinct schedule different aspect of the same goal, interfacing simultaneously at all level over quite a long period of time. HSBC employees are one of the major assets of the Strong employee bonding and belongingness company. The employees of HSBC have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards HSBC. the strong culture of HSBC is the main reason behind this strength. HSBC provides hassle free customer service to its client Efficient Performance base comparing to the other financial institutions of Bangladesh. Personalized approach to the needs of customers is its motto. The selection & recruitment of HSBC emphasizes on having the skilled graduates & postgraduates who have Young Enthusiastic workforce little or no previous work experience. The logic behind is that HSBC wants to avoid the problem of ‘garbage in & garbage out’. & This type young & fresh workforce stimulates the whole working environment of HSBC. The human resource of HSBC is extremely well thought & perfectly managed. As from the very first, the top management believed in empowered employees, where Empowered Work force they refused to put their finger in every part of the pie. This empowered environment makes HSBC a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures. All office walls in HSBC are only shoulder high partitions & there is no executive dining room. Any of Companionable Environment the executives is likely to plop down at a table in its cafeteria & join in a lunch chat with whoever is there. One of the employees has said, “Its exciting to know

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The Enrichment of General Banking of HSBC through customer services you may see & talk to the top management at any time. You feel a part of things”. DBD has tried hard to avoid communication barriers & No communication barriers structural bureaucracies. The little existence of authoritative barriers among the different level of management stimulates a feeling of importance as their work get priority over the position. At HSBC workshops are conducted periodically. On the Equalization workshops, all people participate as equals, with new members free to openly challenge top managers. At HSBC the main objective is to setting up workshops are to remove authority from an artificial spot at the top, & place it where the most knowledgeable people Free exchange of communication are, the people closest to the operations. The free exchange of ideas is reinforced by a policy of “constructive confrontation”. Each employee is expected to challenge ideas openly & aggressively, but never attack an individual’s motives for presenting an idea. HSBC also has Management by Objectives (MBO) everywhere. Each person has multiple objectives. All MBO the employees must have to get the approval of their bosses on what they are going to do. Later they review as how well they have performed their job with their management as well as the peer group. The MBO makes the review a communication device among various groups. The key to the system is a “one“One-to-one” meeting to-one” meeting between a supervisor & a subordinate. In the meeting, the problems in dealing with customers are put forward first & every one dug it to solve them. HSBC owns the best banking and information technology equipments in Bangladesh. It ultra modern Modern Equipment & technology banking systems starting from terminal pc’s to HUB’s are based on the international HSBC group standards

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The Enrichment of General Banking of HSBC through customer services and are the latest. The Hexagon product is one of the Visually Appealing Facilities best examples in this context. HSBC has some of the best visually appealing branches and office premises in Dhaka & Chittagong that highly attracts customers attentions and customers also feel the international environment while banking with HSBC.

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The Enrichment of General Banking of HSBC through customer services WEAKNESSES: HSBC has a very narrow operating span in Bangladesh. It has only 2 full service branches in Bangladesh situated Narrow operating span only at Dhaka and Chittagong. Various geographic segments are currently not availing the services of HSBC due to inconvenient branch location or absence of neighborhood branches. Currently the personal banking divisions of HSBC do No investment products not have investment products for its customers. The banning of investment loan by central bank posses a strong pressure to design new products. AS HSBC is fairly new to the banking industry of Lack of customer confidence Too many contract workers Bangladesh average customers lack the confidence in HSBC and judge the bank as an average new bank. HSBC has contract workers who lack the commitment with superior quality service and also are pretty dissatisfied as being a contract worker. This hampers the bank’s service quality as a whole. The remuneration packages for the entry level officers are considerable low. Since other foreign and local Low remuneration Package banks offer a more lucrative salary package, it will be difficult for HSBC to attract MBA’s in future with its current salary package. HSBC can peruse a diversification strategy in expanding its current line of business. The management can consider options of starting merchant banking or diversify in to leasing and insurance. As HSBC is one of Diversification the leading provider of all financial services, in Bangladesh it can also offer these services. This is one of the most popular and emerging product in Bangladesh which offers customers total financial mobility. Various other banks and institutions are currently offering this product. HSBC can also take Credit Cards advantage of this product and grab the market share.

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The Enrichment of General Banking of HSBC through customer services

Acquisition

HSBC is one of the experts in acquiring various firms and organizations. In Bangladesh it can also diversify quickly by acquiring various local established banks and increase it’s total operation within Bangladesh rapidly.

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The Enrichment of General Banking of HSBC through customer services

OPPORTUNITIES: HSBC is noted for its distinct operating procedures. Repayment capacity as assessed by HSBC of individual Distinct operating procedures client helps to decide how much one can borrow. As the whole lending process is based on a client’s repayment capacity, the recovery rate of HSBC is close to 100%. This provides HSBC financial stability & gears up HSBC to be remain in the business for the long run. The ultimate goal of HSBC is to expand its operations to whole Bangladesh. Nurturing this type of vision & Countrywide network mission & to act as required, will not only increase HSBC’s profitability but also will secure its existence in the log run. The top management team of HSBC is expert in banking activities. The operating policies established by them are More experienced & managerial know-how unique & unified. All the members of the team carry out their management roles exhaustively. They equally contributed to HSBC’s superior leadership, by carrying out their unique roles. They worked well together, respecting each other’s abilities, & arguing openly & without any rancor when they disagree.

THREATS: The upcoming private local & multinational banks

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The Enrichment of General Banking of HSBC through customer services

posses a serious threat to the existing Upcoming Banks banking network of HSBC. it is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against and win the battle of banks. Absences of various products such as credit card, International debit card are causing various customers Lose of Customers to detract from HSBC. This is a serious threat for HSBC Bangladesh. HSBC should continuously improve its customer Moderate levels of Customer Satisfaction service strategies and the overall service quality needs to win the customer satisfaction undoubtedly. This is a major problem in Bangladesh. As HSBC is a very new organization the problem of nonperforming loans or default loans is very minimum or insignificant. However, as the bank becomes older this problem will arise Default Culture enormously and the bank may find itself in a more threatening environment. Thus HSBC has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.

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The Enrichment of General Banking of HSBC through customer services

Chapter 5: General Banking under PFS and Consumer Satisfaction

5.0 Personal Financial Services (PFS)
PFS is the most flourishing department of HSBC Bangladesh. This department basically deals with the management of products and services offered to the individual consumers. Within a span of only ten year HSBC PFS has grown tremendously and is still growing with its innovative products and service offerings. The 8 branches of HSBC basically deal with the personal banking activities and provide various accounts services to individual customers. It basically deals with the personal banking activities and provides various accounts services to the customers. Some of the other operations include:-

• • • • • • • • • •

Manages daily operation Plans and directs sales and marketing Plans for service development Top-level authority for customers’ dealings and transaction Provides required service to the customers directly Maintains documentation and report flow vary rapidly Helps in planning at field level Assists PFS Head in decision-making process and researches Assists PFS Head day-to-day work Keeps track and inform PFS Head in present condition of the competition in the market

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The Enrichment of General Banking of HSBC through customer services

The departments under PFS are shown in the following diagram:

PFS Head

Manager Bond & ATM

Manager CCR

Manager Product

Manager Branches

Manager Sales

Manager ATB

Executive Bond & ATM

Executive Approval & Operations

Executive Product

Executive ATB

Officer Bond

Officer ATM

Officer ATB

Officer Operations

Officer Collection

Officer MIS

Mobile Sales Officers

CSM DAK Branch

CSM Chittagong Branch

CSM Dhanmondi Branch

CSM Motijheel Booth

CSM Gulshan Booth

Branch Staff Team

Branch Staff Team

Branch Staff Team

Branch Staff Team

Branch Staff Team

Figure: Structure of Personal Financial Services Department

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The Enrichment of General Banking of HSBC through customer services

5.1 Consumer Confidence in Bank’s Strategy
Perhaps, one of the most important factors that keep a business running is the confidence of customers towards that business. Once the customer confidence is built, the business is likely to grow in size and profits. Therefore, customer confidence related to the expectation fulfillment is an extremely important and critical issue facing business in the competitive business environment of today. The same can be said for the banking industry. With the increase in the number of banks in Dhaka alone, it can be said that banks like HSBC, have started to focus more on the customer service and satisfaction. Based on what customers have indicated in various banking situations, personalized and quality customer service will provide banks with the ability to be more competitive than their counterparts. Therefore, it is important to obtain customer input as to the services and products they desire to avoid situations where the institution fails to live up to customer expectations due to failed communications.

5.2 Review of Literature
5.2.1 Definition, Significance and Risks of Consumer Confidence
Consumer confidence may be defined as the consumer’s appraisal of the current economic conditions and his expectations of future economic conditions. George Katona, the developer of the confidence theory, suggests that two broad factors influence consumer decision to buy: the ‘ability to buy’ and the ‘willingness to buy’. The second factor is mainly related to the consumer confidence and relates to the consumer’s perception and assessment of the level playing field and efficiency currently being maintained in the present and future market. (Chowdhury and Azad)

Traditional economic factors point out that consumer spending influence the strength of the overall economy. Therefore, consumer confidence is of utmost importance in the financial market where consumers consists of depositors, lenders, investors, borrowers and others who purchase financial services. However, the level of consumer confidence of financial market is quite low in Bangladesh and most other developing countries which is why the economy of these countries is affected as a whole. In such a case, any sudden fall in the consumer confidence level will lead to panics and crisis that will spread in the economy like wild fire

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The Enrichment of General Banking of HSBC through customer services and cause considerable amount of damage. Therefore, it is vital that the government along with the Bangladesh Bank and other financial authority keep a strong watch over the confidence level. Consumer Confidence increases when the customers have a positive perception towards the particular product or service. A satisfied consumer will always come back wanting more and choosing the product or service over its competitors. However, apart from the quality of the service in the financial industry, there are other factors that affect the level of confidence. Below is a list of typical risks that a consumer can face in the financial service area. ( Chowdhury and Azad 2006) a) Prudential Risks: in which a financial entity collapses and consumers lose their deposits. Although rare in Bangladesh, two banks, the Bank of Credit and Commerce International (BCCI) and Bangladesh Commerce and Investment (BCI) collapsed as the central bank (Bangladesh Bank) have collapsed. b) Misconduct Risks: which arise from fraud, deliberate mis-selling or failure to disclose relevant information, which may be broadly termed as moral hazard and asymmetric information problem. This is a common problem in Bangladesh where corruptions at the high levels are eminent. Misconduct risks include: Counterfeiting of Currency Notes: One of the biggest problems is the rise of counterfeiting money which like a computer virus damages the monetary system from within. There has been a drastic increase in counterfeit currency which rose from BDT 1.4 million in 2004 to Taka 3.8 Million in 2005. Loan Default: The most important indicator used to identify problems with safety and soundness of financial sector in Bangladesh is the percentage of non-performing loans (NPLs) to total loans of banks. Even though there have been improvements in the ratio of Gross NPL to the total loans, the Nationalized Commercial Banks (NCB) and the Development Institutions (DFI) still manages high percentage of loan default. This is mainly because of the fact that they maintain loan with poor appraisal, inadequate follow-up and supervision and poor quality of collaterals. This makes the loans more 46

The Enrichment of General Banking of HSBC through customer services of a burden on the institutions’ portfolio where bad loans are hard to write off due to loopholes in legal complications or bad collaterals. Moreover, the loan default is a serious injustice to the banking system since borrowers who are consistent and timely in their loan payments face a higher implicit rate of interest on their loan than those who default. This is because the defaulters enjoy the debt rescheduling and interest remission that in the long run lowers the cost of capital. Capital Shortfall: Capital adequacy is intended to protect the depositors from the potential shocks of losses that a bank might incur. It helps absorbing major financial risks like credit risk, foreign exchange risk, interest rate risk and risk involved in off-balance sheet operations. Banks in Bangladesh are to maintain a minimum Capital Adequacy Ratio (CAR) of not less than 9.0 percent of their risk-weighted assets (RWA) with at least 4.5 percent in core capital or Taka 1.0 billion, whichever is higher. Unfortunately, the CAR of NCB and DFI continue to remain below the require standard while the Private Commercial Banks (PCBs) and the Foreign Commercial Banks (FCBs) maintained CAR of 9.5 and 24.6 percent respectively.

Capital Flight: Capital flight is a situation where capital seeks investment outside the home country. Since capital is being illegally transferred abroad, it is normally interpreted to reflect a low level of investors’ confidence in the domestic economy. In the case of Bangladesh it is also underpinned by the existence of a hidden economy. According to researchers it has been found that on average, around $176 million/year fled Bangladesh according to the method of World Bank and Erbe, $77 million/year by Cline’s method, and Cuddington’s method gives an amount of around $14 million a year. There can be many means of capital flight which includes: 1) carrying foreign exchange out of the country in a suitcase, (2) investing proceeds from smuggling directly abroad (3) over-invoicing of imports and under-invoicing of exports (4) understating indenting commission and holding the same outside the country (5) corruption by government officials and politicians.

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The Enrichment of General Banking of HSBC through customer services c) Complexity Risk: financial products and services are gradually becoming complex and there is real risk that consumer fails to understand a product or assess its suitability. d) Performance Risk: investment may not deliver the expected return to the investor depending on market environment or the particular product. e) Access to restore: without appropriate and affordable options of redress, when the market fails for whatever reason, consumer may lose their investment without hope for return. For instance, investors losing money on account of 1996 share market scam could find little or no restore for their suffering.

5.2.2 Taking measures for improving consumer confidence in the financial sector
In order to improve the consumer confidence in Bangladesh, the government and BB took certain measures, both legislative and regulatory, which aimed not only to safeguard consumers, but to also enhance the efficiency and soundness of the financial sector and to develop the missing markets and institutions that were required to cater customer needs. Below are a list of such important measures introduced by the Bangladesh Bank and the Securities and Exchange Commission. a) Prevention of counterfeiting of notes: The main factor of decreasing the incline of counterfeit notes is to take the action at the ground level. The shopkeepers should play their part to keep a careful eye for such notes and incase of any information should report to the banks. Moreover, with a view to curbing the incidence of counterfeiting and assessing measures against spread of forged currency notes, the Department of Currency Management and Payment Systems of the Bangladesh Bank holds regular meetings with the representative of concerned ministries and agencies. b) Prevention of money laundering: Under the Money Laundering Prevention Act initiated in Bangladesh in April 2002, illegal acquisition of assets and the acts of transfer, transformation and concealment of such assets are identified as money laundering offences punishable with prison sentences from six months to seven years, along with fines up to twice the amount involved in money laundering. The Act entrusts the responsibility of its implementation and enforcement with the Bangladesh Bank, and makes it mandatory for banks, financial institutions and other entities engaged in financial intermediation to maintain customer identification and

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The Enrichment of General Banking of HSBC through customer services transaction records, and to furnish to the Bangladesh Bank such information as it may prescribe for identification, investigation and prosecution of money laundering offences. The Bangladesh Bank has issued guidelines to banks and financial institutions for identifying and reporting unusual/suspicious transactions to the Money Laundering Prevention Department in the Bank. Suspicious transactions with prima facie evidence of money laundering offences are referred to the Anti-Corruption Commission or the Police authorities for formal investigation and eventual prosecution under the new law, where necessary with court orders for freezing or seizure of the assets involved. c) Free floating of Taka: There has been a incline in growth of inward remittances and checking capital outflow due to the introduction of free floating exchange rate regime for Taka in May 2003. This has helped to maintain an exchange rate of taka that is consistent with the country’s economic progress. d) Electronic Securities: One step to reduce the investor’s risk associated with paper certificates was to introduce in January 2004 the script-less electronic securities transaction through Central Depository Bangladesh Limited (CDBL). e) Facilitating investor’s diversification: In order to assist investors’ diversification, 5-year and 10-year Bangladesh Government Treasury Bond has been enlisted for secondary trading in Dhaka Stock Exchange from January 1, 2005, which are known as extra coupon bonds and initially issued through open market operations (auctions) conducted by the Bangladesh bank. f) Statutory liquidity requirements: Statutory liquidity requirement (SLR) imposed by the Bangladesh Bank serves simultaneously as a monetary policy tool and as a safeguard against possible failure of banks to cash disbursements on demand by the depositors. At present SLR is set at 18% of demand and time liabilities for scheduled banks and 10% for Islamic Shariar Banking. g) Deposit insurance: A depositor of a scheduled bank in Bangladesh is insured up to a loss of Taka 0.1 million under Bank Deposit Insurance Act 2000, to be paid to them within ninety days following liquidation of a bank. h) Checking misappropriation of deposits: Periodically, Bangladesh Bank alerts the banks through circulars, to take preventive measures to check any misappropriation of depositor funds by bank officials or by others by performing rigorous internal control system check. If any offenders are caught, the right disciplinary measures must be taken. 49

The Enrichment of General Banking of HSBC through customer services i) Customer Complaint Cell: All the banks in Bangladesh have been advised to open a Complaint Cell which allows them to know first hand whether the customer has any problems or not. This allows them to fid out if the customers are satisfied with their services. A complaint page on the BB website has been started too. j) Representation in board: The Bank Company (Amendment) Act 2003 provides for two independent directors representing the depositors’ interest among the maximum of 13 directors in a bank board. k) Capital adequacy requirement: Capital Adequacy seemed to be a great problem in NCBs and DFIs whose CAR were well below the required amount of Taka 1 billion or equivalent to 9% of risk weighted assets, whichever is higher. TAs mentioned earlier all scheduled banks in Bangladesh are required to maintain capital amounting Taka 1.00 billion or equivalent to 9.0 percent of risk-weighted assets, whichever is higher. The PCBs and FCBs, on the other hand were well above the requirement. l) Loan classification and provisioning: Bangladesh Bank has prescribed loan classification and provisioning criteria for banks and non-bank financial institutions in line with international standards. m) Exposure limits: In order to prevent concentration of bank loans among limited number of borrowers, single borrower exposure limit has been prescribed by the Bangladesh Bank, including funded and non-funded facilities, which is now set at 35 percent of the capital of a lending bank. Funded facility is however restricted to 15 percent of a bank’s capital. n) Risk management: Internationally there are five core risks areas recognized in the banking which are credit risks, asset and liability risks, foreign exchange risks, internal control and compliance risks and money laundering risk. Some of these risks have been discussed in the previous section. Recently, due to deregulation and globalization of banking business, banks are now exposed to diversified and complex nature of risks. Therefore, to maintain a competitive and efficient risk management system, the Bangladesh Bank has issued guidelines for banks to follow to manage these risks. o) IT security: In order to ensure security in IT setup as well as in IT operation and to protect the interest of the clients, Bangladesh Bank has issued guidelines on information and communication technology for banks and financial institutions. These

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The Enrichment of General Banking of HSBC through customer services guidelines are intended to provide a base to develop banks’ and financial institutions’ own IT policy and security standards. p) Criteria for appointment of chief executive and board members: To be efficient, banks must have a strong internal structure that is lead by responsible, well qualified and efficient chief executive and board members. Therefore, ‘Fit-andproper’ test criteria have been introduced by the Bangladesh Bank for approving appointments of directors, chief executives and advisers of private banks. q) Information disclosure: One of the major factors that led to the downfall of consumer confidence in Bangladesh was due to the fact that information was not presented in a timely, transparent and symmetrical manner. In order to improve the quality of information, the following steps have been taken by the authorities. • Disclosure requirements of financial information for banks have been substantially enhanced by the Bangladesh Bank prescribing revised forms and guidelines for preparation of financial statements as per the International Accounting Standards (IAS) with effect from end December 2003. • The Securities and Exchange Commission made the preparation and presentation of financial statements as per IAS and statutory audit as per International Standards of Auditing (ISA) mandatory for the listed companies still earlier from the year 2000. • To ensure compliance with international accounting and auditing standards and reflection of the correct state of affairs of the company, rules have also been framed requiring the financial statements of the listed companies to be audited by partnership audit firms of at least two partners each having not less than seven years experience. • The Commission is also empowered to direct the company, whose financial statements do not reflect the correct state of affairs, to get the financial statements audited by a Commission-appointed auditor at company’s costs. r) Inspection and surveillance: Bangladesh Bank conducts two types of inspections of banks: • Comprehensive inspection which aims at evaluating the performance / conditions of banks including their compliance of rules and regulations under the annual inspection program prepared well ahead of each calendar year.

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The Enrichment of General Banking of HSBC through customer services • Special inspections which are conducted on banks on specific / particular issue(s) as well as to investigate complaints received from the depositors, general public or institutions. The special inspections thus provide a mechanism to restore consumer problem in the banking sector. s) Credit rating for raising capital: In order to bring transparency in investment in the banking sector and safeguard the interest of concerned investors, Bangladesh Bank made it mandatory to include credit rating report for banking companies floating shares through IPO at par like shares issue able at premium or right share There are two credit rating firms now in operation in Bangladesh. • • Credit Rating Information and Services Ltd.(CRISL) Credit Rating Agency of Bangladesh (CRAB).

Chapter 6: Findings & Recommendations
6.1 Findings While preparing the report we were done a questionnaire survey. Thirteen questions were asked to the PFS’s (Personal Financial Services) clients. Due to limitation, only 25 clients

52

The Enrichment of General Banking of HSBC through customer services were asked and they were chosen randomly. The collected opinions and analysis were as follows: 1. Why are you maintaining account with HSBC?
Frequenc To get better services Good trust ship than other banks y 10 8 5 2 None of these Total 25 Percent
Frequency 12 9 6 3 0

40 32 20 8 100

HSBC always maintained good liquidity

Figure: Reason for maintaining account When the clients were asked why they prefer HSBC to maintain their accounts than other banks, 40% told that they are looking for better services, 32% customers’ supports for good trust ship of HSBC than other banks. A little bit 20% voted for the good liquidity maintain by the bank while only 8 % showed some other reasons.

2. Which services are you getting from HSBC’s PFS?
Frequenc Maintaining deposit account Country Payments Hexagon Salary processing Total wide collection y 4 6 8 4 3 25 Perce nt 16 24 32 16 12 100
Deposit account Payments Salary processing collection Hexagon

Figure: Preferable service of PFS

When the respondents were asked that which services they were enjoying from HSBC’s PFS, 16% respondents support for maintaining deposit account. A high percentage (32%) voted for the payments and (24%) voted for the countrywide collection. Hexagon (16%) service was not so poor. This service was satisfied to the users.

3. Is PFS Operation always fulfilling your Expectations?

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The Enrichment of General Banking of HSBC through customer services

Yes Not always Very often No Total

Frequency 12 5 7 1 25

Percent 48 20 28 4 100
Frequency

12 10 8 6 4 2 0 Yes Not alw ays Very often No

Figure: Customer expectation about PFS In the above table, a high percentage (48%) customers voted that PFS’s operation always fulfill their expectations. An average percentage (28%) voted that PFS’s operations very often fulfill their expectations. 20% said that PFS’s operations not always fulfill their expectations and very poor percentage (4%) voted that the PFS’s operations no fulfill their expectations.

4. Rate about the service quality that you are getting services from HSBC’s PFS?

Excellent Good Average Not satisfactory Total

7 7 2 25

28 28 8 100

Frequency

Frequency 9

Percent 36

10 8 6 4 2 0 Excellent Average Good Not satisfactory

Figure: Rating of PFS services

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The Enrichment of General Banking of HSBC through customer services The table shows the rate from the customers for the services of HSBC’s Personal Financial Services. Among the respondent about 64% rated the service quality of HSBC’s Financial Services as excellent and as good. A few percentages (28%) of customer told that the service quality was average. Only (8%) voted for not satisfactory because they were not getting good services & good relationship with this bank. A few of respondents told that they were always getting delay collection & delay payment salary from the bank.

5. How quickly PFS staff response to solve your problems?
Frequenc Very quickly Within one week Within two week More than two week Total y 6 4 10 5 25

Percent
Frequency

10 8 6 4 2 0 Very quickly Within one w eek Within More tw o than tw o w eek w eek

24 16 40 20 100

Figure: Problems solved by PFS According to survey, 40% of

customers give their opinion that within two weeks Personal Financial department solved their problems. Only 16% told that their problems were solved within one week by PFS. Few customers voted for very quickly and more than two weeks.

6. What types of benefits do you receive from CWC (Country Wide Collection)?
Frequenc y Cheque honors within 3 6 7 9 25 12 24 28 36 100 very short period of time Receive better information Improve Cash flow No benefit Total Perce nt
Frequency

10 8 6 4 2 0

Figure: Benefits from Country Wide Collection

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The Enrichment of General Banking of HSBC through customer services According to survey, 36% customers said that no benefit received from this service and 28% percentage customers give their opinion that PFS operation improves cash flow. A low percentage (24%) voted for receive better information and very poor percentage of (12%) voted for the cheque honors within very short period of time.

7. Why have you Chosen HSBC’s Electronic Banking (Hexagon)?
Frequenc To get account information To get fund transfer facility To get Trade Service 4 16 25 16 64 100 facility All of these Total y 4 1 Perce
Frequency

nt 16 4

16 14 12 10 8 6 4 2 0

Figure: Reason for choosing Hexagon When the clients were asked that why they were chosen HSBC’s electronic banking (Hexagon), a high percentage (64%) voted for all of these reasons, only (16%) voted for to get trade service facility at HSBC. A few people (16%) said to get account information and only 4% to get fund transfer facility.

8. Are you getting better benefits from “Hexagon” product?

Frequency Yes Not always Very Often No Total 9 10 4 2 25

Percent
Frequency

10 8 6 4 2 0 Yes Not Very Often always No

36 40 16 8 100

Figure: Benefits from Hexagon products

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The Enrichment of General Banking of HSBC through customer services When the respondents were asked were they getting better benefits from “Hexagon” product, 40% of customers give their opinion that they were not always getting better benefits from “Hexagon” product. On the other hand, 36% voted for the better benefits from “Hexagon” product. An average percentage (16%) voted that they were very often getting better benefits from “Hexagon” product. A little bit (8%) respondents supported for “not get better benefits” from Hexagon product.

9. Are you satisfied with the services of Hexagon CheqWriter?

Frequency Excellent service Good service Average service Not satisfied 1 17 Total 5 2

Percent 20 8 4 68
Frequency

20 15 10 5 0 Excellent Good Average Not satisfied

25

10 0

Figure: Customer Satisfaction about CheqWriter

When the customers were asked were they satisfied with the services of Cheqwriter, very few customers (28%) rated the service of Cheqwriter as excellent or good. 4% voted for average while a high percentage (68%) of respondent remarks that they were not satisfied with the service of Cheqwriter.

10. If you are not fully satisfied, why?
Frequenc
12 Not secured 10
Frequency

Percen t 20 28 44 8
Both a

y 5 7 11 2
Need more knowledge Not secured

Need more knowledge 8 Both are the reason 6 None of all 4
2 0

0

None

Total

25

10

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The Enrichment of General Banking of HSBC through customer services Figure: Reasons for not satisfied of CheqWriter Among the respondent who were not satisfied with the service of Cheqwriter, 44% of them think that the Cheqwriter was not so secured and they need more knowledge about it. 20% of customers rated the service as not so secured and 28% said that they need more knowledge.

11. Is it possible by “Hexagon” to provide you better services than normal banking activities in case of salary transfer?

15

Frequency 5 14 4 2 25
Yes

Percent 20 56 16 8 100
No

Yes
frequency

12 9 6 3

Figure: Hexagon service in case of salary transfer In the above table, we find that a high percentage (56%) voted that

Not always Very often No

Total 0

Not alw ays Very often

“Hexagon” not always provide better services in salary transfer. A moderate percentage (20%) voted for the “Hexagon” to provide their better services in salary transfer. A little bit (16%) percentage voted for the “Hexagon” to provide very often services in case of salary transfer and only (8%) voted for the negative opinion.

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The Enrichment of General Banking of HSBC through customer services 12. Do you get extra ordinary facilities from Cash Management’s Cash Pick-up & Delivery Services?

Frequency Yes Not always Very often No Total 12 4 25 3 6

Percent 12 24 48 16 100
Frequency

12 10 8 6 4 2 0
Yes Not Very often alw ays No

Figure: Facilities from Cash Pick-up & Delivery service When the respondents were asked did they get extra ordinary facilities from Cash Management’s cash pick-up and delivery services, a high percentage (48%) voted for “very often”, very few (12%) told that they get this kind of facility and a few (16%) told that they do not get this kind of facility.

13. How would you rate Cash Management service to you?

Excellent Good Average Poor

Frequency 3 8 9 5

Percent 12
Frequency

10 8

32 36 20 100

6 4 2 0 Excellent Good Average

Total

25

Figure: Service quality of PCM the customer

according to

In response of the question, 12% customers told that the service was excellent; a high percentage (68%) customer voted that the service was good and average standard. However, 20% of them told that the service quality is poor.

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The Enrichment of General Banking of HSBC through customer services

6.2 Cross Tabulation
We have some interrelated questions. Therefore, we developed cross tabulation for some interrelated questions.

How would you rate Cash Management service? Vs. Which services are you getting from HSBC’s PFS?
How would you rate Personal Financial Excellent Maintaining Which services are you getting from HSBC’s PFS? Hexagon Salary processing Total
_ 2
66.67%

service? Good Average
1
25%

Total Poor
3
37.5%

deposit account Country wide collection Payments

1
16.67%

3
75%

4
100%

1
16.67%

4
66.67%

6
100%

-

3
37.5%

2
25%

8
100%

2
50%

2
50%

4 3
100%

1
33.33%

9
36%

5
20%

3
12%

8
32%

25
100%

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The Enrichment of General Banking of HSBC through customer services Question 2 Vs. Question 13: The above table is a cross tabulation between different types of services the respondents are enjoying and the rating they gave to cash management service. Clearly, there was a difference in the level of satisfaction to various services provided by HSBC. The table reveals that one fourth of customers who were maintaining deposit account in the bank rated the performance of cash management service as good and three fourth as average. But no one was to found to call the service as excellent or poor.

Among the respondents who are enjoying country wide collection three fourth (67%) rated Personal Financial service as average, while equal number (16.67%) said it was excellent and good and no one said that it was poor. Similarly equal number (37.5%) of the respondents who maintaining payments with HSBC’s PFS called the service as good and poor. Only 25% said that it is average and no one rated it as excellent. Equal number of customer said that “Hexagon” is good and poor and no one rated it excellent.

Overall, most of the respondents (68%) rated the PFS service as good or average, while reasonably by few (32 %) rated it as excellent and poor.

Why are you maintaining accounts with HSBC? Vs. Is PFS Operation always fulfilling your Expectations?

Is PFS Operation always fulfilling your Expectations Not Very always 3 30% 2 25% often 4 40% 3 60% Total No 1 12.5% 10 100% 8 100% 5 100% 2 100%

Yes

Why are you maintaining accounts with HSBC?

To get better services Good trust ship than other banks HSBC always maintained good liquidity None of these

3 30% 5 62.5% 2 40% 2 100%

-

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The Enrichment of General Banking of HSBC through customer services
25 100%

Total

12 48%

5 20%

7 28%

1 4%

Question 1 Vs Question 3: In the above table, we find that 30% of the respondents who choose to keep their accounts with HSBC in order to get better services were fully satisfied with the bank’s performance, while around 40% were satisfied very often, and no were found to be unsatisfied. Again among customers who preferred HSBC for good trust ship than other banks, most (about 62.5%) of them said that their expectations were always fulfilled by PFS’s operation, while 25% remarked that they found their expectations fulfilled not always. Only 12.5% found to be unsatisfied.

Among the people who were found to report that HSBC always maintained good liquidity, 40% percentage were always satisfied and 60% were very often satisfied. No one was found to be unsatisfied.

Overall most of (48%) of the respondents think that HSBC’s PFS operations had fulfilled their expectations, 20% find their expectations fulfilled very often, while only a little (only 4%) are not satisfied at all. Why have you Chosen HSBC’s Electronic Banking (Hexagon)? Vs. Are you getting better benefits from “Hexagon” product?

Are you getting better benefits from “Hexagon” product? Not Very always 1 25% 3 75% often Total No 1 25% 4 100% 1 100% 4 100%

Yes Why have you Chosen HSBC’s Electronic Banking (Hexagon)? To get account information To get fund transfer facility To get Trade Service facility 2 50% 1 100% 1 25%

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The Enrichment of General Banking of HSBC through customer services
5 31.25% 9 36% 9 56.25% 10 40% 1 6.25% 4 16% 1 6.25% 2 8% 16 100% 25 100%

All of these Total

Question 7 Vs Question 8: The table shows that half (50%) percentage of customers who are choosing Hexagon to get account information remarks that they were always getting better benefits from Hexagon. 25% respondents said that they were not always get benefit from Hexagon product while another 25% told that they are not getting any benefit from Hexagon. Among the respondent who are choosing Hexagon to get fund transfer facility, 100% of customers respectably said that they are satisfied Again among the customers who choose Hexagon to get trade service facility, a high percentage (75%) said that they were very often getting better benefits from Hexagon. A few percentages (25%) were get better benefit. Among the respondents who were choosing Hexagon for all of the above reasons almost 56% said that they were very often getting better benefits from Hexagon. 31% customer remarks that they were get better benefits from Hexagon while only 6.25% respondent said that they were not getting better benefits from Hexagon products. Overall 36% of the respondents’ said that they were getting benefits from Hexagon while only a few (8%) said that they were not getting any benefits from Hexagon products.

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The Enrichment of General Banking of HSBC through customer services

6.3 Implications
It is found from the analysis that about 32% customers were very satisfied with the services of Cash Management of HSBC because it provides quicker service than any other local commercial banks. Only 11% customers were not satisfied. They said that the service charge is too high than other banks. 32% of customers are chosen payment services among the products of Cash Management to transfer fund in remote area, while 24% chosen countrywide collection. & about 16% voted for HSBC were electronic banking Hexagon. So we can say that the service quality of PCM department was very good. 36% respondents said that they were always getting better benefits from Hexagon products while only 8% told that they were not getting any benefits from Hexagon products. 68% customers were not satisfied with the services of CheqWriter. Only 20% were satisfied. So they had to improve a lot in this service. 40% customers told that PCM department solved their various problems within two weeks, 16% told that within one week their problems were solved while 20% said that their problems were solved by more than two weeks. To get customer satisfaction, PCM department had to be quick to solved customer problems. Then they will get more customers.

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The Enrichment of General Banking of HSBC through customer services

Chapter 6: Conclusion

6.1 Recommendations for HSBC to enrich general banking through improving their customer service
HSBC is one of the most flourishing Banks of Bangladesh with wide growth opportunities in the industry. The key to success for HSBC is to maintain a steady growth in its customer base which can be achieved only by improving consumer confidence. In the previous section, measures for improving the financial sector as a whole have been discussed. In this section, a list of recommendation is presented based on the findings of the survey conducted on HSBC customers: a) Improving their services: As an intern for the Personal Finance Department, I have noticed four main areas where HSBC can improve their services. • Delivery of ATM cards: Currently, it takes more than two weeks for a new customer to acquire his ATM card while the other competing banks produce their ATM cards within 2 days. HSBC needs to stop issuing their card from Hong Kong and instead should try to make arrangements to produce new cards locally. As an intern for the ATM department, I have seen first hand that the customers faced a lot of difficulties in the absence of the ATM card. HSBC needs to undertake better steps to prevent this kind of dissatisfaction. • Launch of Credit Cards: Currently, HSBC do not provide any credit card facilities in Bangladesh. One of the major reasons is due to the cost of operation it would take to run the credit card department. They have a joint venture with Prime Bank to produce credit cards which is still quite inefficient when compared to the other credit cards offered through competing banks. Many local and foreign banks are currently providing these services and are satisfying customer needs more widely. According to my experience at HSBC, out of 20 calls received a day, at least 5

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The Enrichment of General Banking of HSBC through customer services customers enquire about credit card. HSBC need to step up their services and take advantage of a potential market. • Locker Services: Another thing that I have noticed while working as an intern, was that a huge amount of customers demanded locker services which was yet not available in HSBC. This is another potential target market that HSBC should take advantage of. People are aware of HSBC’s corporate image which is why they will feel more secure for storing their treasured belongings with them.

Inefficient Mailing Network: One of the most common complaints that I have faced was that many customers don’t receive their financial mails in time. This includes the ATM cards, credit cards, statements, check books, etc. Therefore, HSBC should strictly monitor the courier services that are engaged in delivering mails and documents to ensure proper delivery of mails and documents.

b) Improving Market Research: The management of HSBC should regularly administer marketing research activities in order to keep a regular track of satisfaction levels. Regular research should also be conducted to find out customer expectations about various service aspects. As customer expectations and satisfaction are not static figures, regular research at sufficient intervals should be conducted. c) Managing the Complaints: As mentioned earlier, the BB has made it mandatory to have a complaint box so that the banks know where they stand. HSBC should actively manage the complaints of various customers and encourage customers to give feedback about the services. The management should collect, document complaints, use that information to identify dissatisfied customers, correct individual problems where possible and identify common service failure points. d) Focusing on existing relationships: The bank should focus more on existing customers in order to build strong and loyal relationship with them as most satisfied customers recommends the bank to friends and relatives. Thus the power of relationship will foster positive Word of Mouth Communication and will attract new customers at a lower cost.

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The Enrichment of General Banking of HSBC through customer services

e) Employee Trainings: Employee trainings and workshops should be administered in order to give them knowledge and professionalism in customer interactions. With a more professional base, employees can better satisfy the customers. f) Individual Attention & Care: Individual attention should be given to customers in order to better understand their needs and better satisfy them. The HSBC Premier services focuses on individual care and offers the best service for their specialized customers. g) Deploying new Branches and ATM Hubs: New branches should be constructed in Dhaka city satisfying more geographic segments especially towards Mirpur area, since customers from that area has to come all the way to Gulshan for their financial needs. Likewise, more ATM machines should be positioned tactically around the city and country. This has two benefits since the convenience raises the satisfaction of the customers and secondly it acts as an advertisement board where customers can gain access to information. . h) Reconsider interest rates on Savings: Majority of the customers suggested that the savings rates should be redesign as most of the customers were currently dissatisfied with the savings rates. HSBC should restructure the interest schemes of its savings product to attract more valuable customers.

i) Process Management: The actual procedures, mechanisms and flow of activities at customer service should be well-managed and structured in order to form a good experience of the service in the minds of customers. As the services of the Bank are complex in nature, the employees should provide adequate guidance to customers in order to avoid service failures. Thus the whole process should follow a broad service philosophy, which is tailored to customer needs.

6.2 Conclusions
HSBC is a global banking and financial services organization headquartered in London. The group’s international network comprises more than 10000 offices in 82 countries and

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The Enrichment of General Banking of HSBC through customer services territories, operating the Asia Pacific region, Europe, USA, and Middle East & Africa. HSBC Group is represented in Bangladesh by its subsidiary bank HSBC, Bangladesh. I had the opportunity to work for this banking giant during my internship program. I was placed at the customer service department of HSBC Main Office, Anchor Tower. During this time I got an opportunity to observe the overall service process of HSBC personal banking division. I also got the scope to interact with customers and reveal their expectations and perceptions about the bank’s services. During my interaction with customers I felt that somewhere there are gaps between customer expectations and banks services and since the CEO of HSBC Bangladesh has given emphasis on better customer service and more customer satisfaction, thus the Customer service officer asked me to work on this topic.

This research has provided some interesting insight into what kind of service the customers give importance to and what quality service they get from HSBC. It is quite obvious from the research that the customer requirements are not fully met and they are very dissatisfied with some of the aspects of the bank (location, saving rates, credit services, investment services, etc.). Again the research revealed that only one third of customers were more of less satisfied with the services of the bank and more than half of the respondents were on the neutral side of satisfaction line. HSBC should attract this half and bring them to the positive side of the road so that strong relationship with the customers can be maintained.

Finally, I would say that this internship at HSBC has increased my practical knowledge of Business Administration and made my BBA education more complete and applied. In this report I got the opportunity to apply various tools and concepts I learned in my BBA courses. Some such courses were Strategic Marketing, Strategic Management, Services marketing, Consumer behavior, etc. I look forward to work as a permanent employee of this world-class banking giant.

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