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“CUSTOMER EXPERIENCE AND WEALTH PRODUCT AWARENESS (WEALTH MANAGEMENT) AT HSBC LTD”
By V SIVARAMA RAJU VEGESNA A0101910099 MBA (G) Class of 2012 Under the Supervision of Mr. T.V.RAMAN Assistant Professor Department of Finance In Partial Fulfilment of the Requirements for the Degree of Master of Business Administration – MBA(G)
At AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA 2011
AMITY BUSINESS SCHOOL CUSTOMER EXPERIENCE AND WEALTH PRODUCT AWARENESS (WEALTH MANAGEMENT) AT HSBC LTD
(a) That the work presented for assessment in this Summer Internship Report is my own, that it has not previously been presented for another assessment and that my debts (for words, data, arguments and ideas) have been appropriately acknowledged.
(b) That the work conforms to the guidelines for presentation and style set out in the relevant documentation.
Date: Place: Noida
V SIVARAMA RAJU VEGESNA Enroll. No: A0101910099 (MBA Class of 2012)
AMITY UNIVERSITY UTTAR PRADESH
AMITY BUSINESS SCHOOL
CERTIFICATE I hereby certify that V SIVARAMA RAJU VEGESNA, student of Masters of Business Administration, MBA Batch of 2012, at Amity Business School, Amity University Uttar Pradesh have completed Summer Internship on “CUSTOMER EXPERIENCE AND WEALTH PRODUCT AWARENESS (WEALTH MANAGEMENT) AT HSBC LTD” under my guidance.
MR. T.V.RAMAN Assistant Professor, Department of Finance
This is an acknowledgement of the intensive drive and assistance of many individuals who have contributed to the successful completion of the research.
I am grateful to Mr. Srinivas Mendu (Branch Manager and Vice President, HSBC), for granting permission to carry out the research in their organization.
I am also obliged and grateful to my industry guide Mr. Bharat Ramanujam (Associate vice president, HSBC Advance), for his valuable suggestions, sagacious guidance in all respects during the course of my training.
My sincere thanks are due to my faculty guide Asst Prof. T.V.RAMAN, Finance Department, Amity Business School, Amity University, Noida for his valuable guidance rendered from time to time during the course of the summer training.
I wish to put on record of my thanks to Dr. Sanjay Srivastav, ADG, Mr. K.Ratheesan, CRC and Ms. Kritika Dasgupta, CRC, Amity Business School, Amity University, Noida, whose encouragement led to the successful completion of the summer training research project.
Great acknowledgements are expressed to all coordinators, teaching and nonteaching members whose support cannot be ignored in completing this project in time.
(V SIVARAMA RAJU VEGESNA)
Indian banking sector……………………………………………….. An overview of Wealth Management……………………………….. References………………………………………………………………….... 5.No 1. Wealth management at HSBC……………………………………… Purpose of Study…………………………………………………… Theoretical Framework-Competitor Analysis……………………… Literature Review…………………………………………………………. Review Of Methodology…………………………………………… Results of Research Questions……………………………………... Industry Profile……………………………………………………... Implications for Practice…………………………………………… Implications for Future Research…………………………………. Page No. 2. Annexure2…………………………………………………………………. Bibliography………………………………………………………………. Summary Of Findings ……………………………………………… Findings from wealth managers informal interviews………………. Company Profile…………………………………………………… HSBC Advance……………………………………………. 4... Conclusions & Recommendations…………………………………………... Purpose of Study…………………………………………………… Research Design…………………………………………………… Research Questions………………………………………………… Participants………………………………………………………… Data Collected……………………………………………………… Instruments Used…………………………………………………… Data Analysis & Findings………………………………………………….. Topic Introduction………………………………………………………………... 1 1 2 4 5 6 8 13 13 17 20 20 20 21 22 22 22 23 23 23 35 36 37 37 39 40 40 40 41 42 43 45 vi . Annexure1…………………………………………………………………. Discussion of Research Questions…………………………………...... Limitations………………………………………………………….TABLE OF CONTENTS S. Research Methods and Procedures…………………………………………. Recommendations…………………………………………………. 3.
Primary objective of customers behind investments…………………………… Rating of wealth management by customers…………………………………… Page No. Prior information to customers by HSBC employees………………………….2 4. Source of information about the products………………………………………. Percentage of customers done investments in bank…………………………….No 4..8 4.10 Name of the Figure Awareness of customers regarding wealth products offered at HSBC………….9 4. Percentages in terms of investments in different banks………………………… Reason behind not investing in HSBC…………………………………………. 24 25 26 27 28 29 30 31 32 33 vii .. Customers interest to know about HSBC products…………………………….1 4..5 4. Types of wealth products at HSBC…………………………………………….4 4.3 4.6 4.List of Figures S.7 4..
..5 Name of the Table Awareness of customers regarding wealth products offered at HSBC……….4 4.. Percentage of customers done investments in bank…………………………...No 4. Page No.3 4.2 4. 23 27 28 29 33 viii . Rating of wealth management by customers…………………………………. Prior information to customers by HSBC employees………………………… Customers interest to know about HSBC products………………………….1 4.List of Tables S.
This sector is also known as BFSI (Banking. ix .ABSTRACT India is a nation with emerging financial markets. Wealth management is one of the sectors which is emerging now a days in India. which include customer experience. HSBC is the first bank in India to start up with wealth management services. This project totally deals with the various aspects of wealth management of HSBC. Financial Services and Insurance) Industry. The growth is immense in this sector. wealth product awareness. The scope also includes where and why HSBC lacks behind in the market has analyzed and the necessary recommendations have been suggested. This research was also conducted to know the reasons behind different customers investment activities. In order to achieve this personal interviews are carried out and structured questionnaire is used to extract the same.
but include several general services as well. banking also involves providing various other services along with its main banking activity. A banker is one who undertakes banking activities. accepting deposits and lending money for different purposes. It accepts deposits from the public and grants loans and advances to those who are in need of funds for various purposes. 1949 defines banking as an activity of accepting funds from the public for the purpose of lending or investment. These are mainly agency services. and it also provides a variety of services to the public in general. In addition to accepting deposits and lending funds.1 CHAPTER 1: INTRODUCTION Industry profile Banking is an important aid to industry and trade. cash credit facility. Indeed banking may be regarded as an indispensable part of the economy of every country. Bank is an institution which deals in money and credit. The essential features of banking activities are as follows: Accepting deposits from public Lending or investment of such deposits Incidental to the activities of accepting deposits for lending or investing. The Banking Regulation Act. and transfer of funds from one place to another . The significance of banking has increased all over the world with the rise in income levels and growth in the volume of financial transactions. Banking is an activity which involves acceptance of deposits for the purpose of lending or investing. overdraft. banks undertake the following activities: Promoting and mobilizing savings of the public Providing funds to trade and industry by way of discounting bills.
etc. etc. pension fund regulation. consumer finance. Most of the banks in India were founded by Indian entrepreneurs and visionaries in the pre-independence era to provide financial assistance to traders. banks have diversified their activities and are getting into new products and services that include opportunities in credit cards. investment banking. purchase and sale of securities. In every country. The General Bank of India and the Bank of Hindustan. In India the central banking authority is the Reserve Bank of India.2 Providing agency services to customers. The origin of banking in India can be traced back to the last decades of the 18th century. private equity. locker facility. Money deposited with the bank is assured as far as its safety is concerned. credit cards. which started in 1786 were the first banks in India. Most of the leading Indian banks are going global. by themselves or through their subsidiaries. life and general insurance. and other general services. payment of insurance premium. At present. mutual funds. Such interest helps in the growth of funds deposited with the bank. such as collection of bills. agriculturists and budding Indian industrialists. such as issue of travelers cheques. etc. The oldest bank in existence in India at the moment is the State Bank of India. setting up offices in foreign countries.. custodian services. Thus the rate of interest provided on deposits acts as an incentive to the depositors. the bank which is entrusted with the responsibility of guiding and regulating the banking system is known as the Central Bank. SBI is presently the largest commercial bank in the country. wealth management. . Indian Banking Sector India has a well developed banking system. Both the banks are now defunct. stock broking services. Further the depositor is allowed to withdraw it whenever required. Banks allow interest on deposits.
Indian Bank has signed an agreement with Weizmann Forex Ltd.7 per cent of GDP with over Rs. innovation. 2010 became the first set of banks to go live with the IMPS. and to provide over 1. as compared to a 27 per cent growth in the market index during the same period. growth and value creation in the sector remain limited to a small part of it. profitability and non-performing assets (NPAs). The sector now compares favorably with banking sectors in other areas on metrics like growth.5 million jobs. HDFC Bank.7. It is projected that the sector has the potential to account for over 7. Axis Bank and YES Bank on November 22. Bank of India. the banking sector index has grown at a compounded annual rate of over 51 per cent since the year 2001. growth and value creation. ICICI Bank. However. This is reflected in their market valuation. The National Payment Corporation of India is rolling out an instant interbank mobile payment service (IMPS) that will enable retail customers of seven banks to enjoy 24X7 funds transfer. and will now offer foreign remittances service over the counter at all its branches. 500 billion in market cap. The cost of banking intermediation in India is higher and bank penetration is far lower than in other markets. India‘s banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which India aspires to be.3 The last decade has seen many positive developments in the Indian banking sector. A few banks have established an outstanding track record of innovation. improved regulations. State Bank of India. . and Union Bank of India. As per the McKinsey‘s report ‗India Banking 2010‘. Major Developments Indian Bank has received the Central Bank of Sri Lanka's nod to open its branch at Jaffna in Sri Lanka.
and one of the leading banks for an increasing number of SMEs. with around 8.000 offices in 87 countries and territories and assets of USD 2. Company Profile The HSBC Group commenced operations in India in 1867 with a branch in Calcutta (now Kolkata).4 Amongst the private banks. The Hong Kong and Shanghai Banking Corporation Limited in India offers a full range of banking and financial services to over 1.3 million a year ago.7 million customers through its 50 branches and 152 ATMs across 29 cities HSBC is a leading custodian in India. China and London. investment banking and capital markets. as the Mercantile Bank of India. The Bank is the founding and a principal member of the HSBC Group which. the country‘s third largest private sector lender. asset management. HSBC is one of India's leading financial services groups. More than 5% of India's exports and imports pass through HSBC India's banking channels. owing to strong growth in interest income. was established in 1853. a 38.000 employees in its banking.7 percent rise in net profits at US$ 204. reported a net profit of US$ 166. India‘s second largest private lender reported a 32. insurance. They claim an earlier commencement. 2010. The Bank is at the forefront in arranging deals for Indian companies investing overseas and foreign investments into the country. Axis Bank. The asset management business in India is one of the leading players in the industry. with over 35. is one of the world‘s largest banking and financial services organizations.28 per cent increase from US$ 120.3 million for the quarter ended September 30. HDFC Bank. It is one of the leading players in domestic and export factoring. which the Group acquired in 1959. .418 billion as at 30th June 2010. with a branch in Bombay (now Mumbai). insurance broking.3 million for the second quarter of FY11. It has a fully enabled and established insurance advisory of international standards. software development and global resourcing operations in the country.
it is their endeavor to suggest products and services. income stability. but do not require the level of attention that a Premier customer may require in managing their finances. Financial needs may differ. With the help of a PFR.insurance& security.loans & mortgages Investment . HSBC Advance is the Bank‘s second global premium product and is positioned alongside HSBC Premier.saving & retirement Protection. The PFR assists in analysing the customers‘ current finances as well as future financial needs by taking into consideration his lifestyle. based upon an understanding of the customers‘ financial needs and aspirations. which is in line with financial goals. emerging mass affluent segment which is estimated to be around 154 million worldwide. HSBC Advance captures the globally growing. At HSBC. risk profile.wealth & growth Planning. but the need to do financial planning does not. HSBC advance account comes with a financial planning tool called the Personalized Financial Review (PFR). This is in accordance with HSBC‘s global strategy to increase its market share among affluent consumers. financial obligations and other factors. for customers who are looking for priority service offering. The long term investment perspective aims to preserve the purchasing power. HSBC Advance A new emerging mass affluent proposition from The world‘s local bank. HSBC Advance also serves as the second tier proposition of HSBC Premier. thereby bringing customers closer to tomorrow. investment objectives. . HSBC Advance is the entry proposition that introduces consumers for relationship-based banking and wealth management‘.5 HSBC performs the following functions: Banking .accounts & cards Borrowing. Wealth Manager of HSBC Advance helps to draw a financial plan for the future.
Wealth Thus Management is the process of tying all these pieces together. Investors need not to spend their valuable time. WHO REQUIRES WEALTH MANAGEMENT SERVICES? Wealth management is helpful for Individuals who have accumulated wealth and the main objective of the person is to save the same.into a cohesive and holistic strategy to achieve goals and objectives along the life cycle. etc. investment management.i.6 Wealth Management Wealth Management can be defined as an all inclusive set of strategies that aims to grow. insurance planning). Risk Management . Investors do not have to endure complicated transactions and a lot of paperwork.a. protect and distribute assets in a much planned. professional. Life style issues . It is simply the term applied to the complete integration of critical personal financial planning. Pre and Post Retirement planning – PF’s. Integrating and maximizing after-tax income – Tax advice etc.Insurance portfolio planning. systematic and integrated manner. financial planning. and family goals.specifically portfolio construction and ongoing monitoring. manage.k.Doing the above to achieve personal. . and estate & legacy planning . risk management (a. The concept places equal importance on related components such as: Investment . 'Wealth Management' is the term given to the process of integrating financial planning components .e. The benefits of wealth management It is better way to manage the wealth.
7 It is the most efficient and profitable use of one’s resources (through trust) It provides proper planning of estate. It enables an investor to evaluate where he is now (current situation). WEALTH MANAGEMENT SERVICE PROVIDERS Wealth management services are provided by several entities such as: Banks Professional trust companies Brokerages houses Thus the major players in the industry are: HSBC Standard Chartered Citibank BNP Paribas ICICI Bank HDFC Bank Anand Rathi Kotak Mahindra Bank ABN Amro Bank and brokers DSP Merrill Lynch and JM Morgan Stanley . where he want to get to (identifying future goals) financially in the future and how he can achieve his goals (provides direction). It can provide a strategy for one’s financial affairs. Building for sound financial planning through experience. The HNWIs face complexity and need tailored solutions to manage their wealth by a specialist.
Which stage of life are you in currently and what time frames do you need to consider for investments Your attitude . They will guide him through everything his need to consider identifying the best strategies for success.What are the most efficient tax strategies for you considering your current circumstances? . RISK PROFILING The financial planner will ask the client to consider: Your time .8 WEALTH MANAGEMENT PROCESS AT HSBC The various phases of the Wealth Management process followed at HSBC are the following: Risk Profiling Personal Financial Review Portfolio Designing Monitoring and Reviewing Getting Started The first thing to do is set up an obligation free meeting. Then. The job for the adviser is to create his or her own definition that is acceptable and attractive to prospective clients. each adviser must figure out how he or she will fulfill this coordinating role. The financial planner will take the time to get to know the client and learn about his current situation and goals.Do you want to achieve your goals sooner or are you prepared to wait to see long term results? What risks are you prepared to take? Your circumstances -What are your immediate cash flow needs? Do you want your investments to grow or do you need them to provide an income as well? Your options .
the client’s investment motives. which can be categorized into the following: Aggressive Moderately Aggressive Balanced Moderately Conservative Conservative So this gives a fair idea about the possible avenues of asset allocation suited to clients needs. one year at a time. It is software designed to identify and seek to achieve the returns necessary to get client to the income he will need. experience. loans. insurance. . the Relationship Manager maps out a course to help the client achieve the income he will need to do exactly what he wants to. asset allocation. real estate. stock options and equity compensation. assets locked up in a business. questions pertaining to composition of existing portfolio. They work through an in-depth discovery process with the clients to understand and document what they want to do in this lifetime. Taking this information. plan comprehensively… HSBC’s Relationship Managers take a different approach than other investment advisors. attitude towards investment volatility. education funding. etc advisor can ascertain the risk appetite of the client. PERSONAL FINANCIAL REVIEW To live comfortably. earnings. Start by seeing a complete picture of you today… The Wealth Manager’s comprehensive approach to wealth management starts by identifying all the varied pieces of the client’s financial life today.9 With the help of the tool of Investment Suitability Questionnaire. and a similarly thorough understanding of all their assets and liabilities today. from now until retirement. It is a detailed procedure because what comes out will be a blueprint for the client’s lifestyle. time horizon. It will include analysis of the client’s net worth. and retirement plan distributions and social security. when he wants to. based on how he intends to live. and from then on.
The financial planner will recommend a financial strategy designed to meet the client’s specific goals and objectives. it starts with asking the client to define what his major goals in life are. And the HSBC’s Relationship Manager will review with the client a range of strategies designed to help him accomplish the tasks identified together. He will talk the client through their recommendations. strategies that go far beyond investments to incorporate every aspect of his financial picture.10 And craft a Blueprint for income. the next step is to develop his financial plan. Once the client and the financial planner have come to an understanding of what it is that he wishes to achieve. The outcome—the comprehensive wealth management plan—will include sophisticated cash flow models for what the client will need today and what he will need in retirement in order to fund the lifestyle he envisions. HOW DOES IT WORK? In this particular software. So first of all inputs are derived as to his major goals in life. and more.Some examples of the same are: Children’s Education Child’s Marriage Car House Vacation Retirement Property . where he would like to retire. year by year… The advisor works with the client to understand how long he wishes to work. give them practical advice as to how can it be implemented and allow them to ask questions in case of any queries and make any necessary changes.
they then decide how much should be allocated in each asset class chosen by them suited for the client according to his requirements. The Relationship Managers review quarterly. or annually. These reviews can be done in person or by telephone with materials sent ahead by mail or internet. he makes adjustments for: • • Inflation Returns Expected PORTFOLIO DESIGNING Once the client’s needs are identified. Once that is decided. MONITORING. They also express how much capital are they willing to invest. . It is then the wealth managers who decide the asset allocation across different asset classes. as appropriate to the case and pre-agreed between client and the manager. Portfolio Designing consists of two interrelated parts: Determining a Strategic Asset Allocation (deciding how much of your capital should be invested in each asset class) and Investment Selection (choosing the investments within each asset class). HSBC helps the clients in lodging their investments. it's time to put it into action. financial review done and financial plan finalized.11 Once the Relationship Manager gets an understanding of his aspirations and objectives. As part of the financial planning service. The client specifies their needs and risk profile. semi-annual. REVIEWING AND SERVICING Periodic formal reviews of the client’s finances are essential to his ultimate financial success. risk profiling done.
By providing him with ongoing support. Finally. asset allocation and investment-specific updates. feedback is encouraged on what is being done right and what can be done better. Clients may also occasionally receive a call from a team member if it is felt that some action should be taken in the client’s portfolio. an email newsletter 6 to 8 times per year is also sent out. should he wish to monitor his account on a more frequent basis. the Wealth Managers are always just a phone call away if the clients have questions. it is possible that the needs of the clients undergo a change. Additionally. wealth protection. This is also a good time to discuss any changes in his financial circumstances or investment goals. superannuation or retirement incomes. . HSBC provides statements quarterly. Helpful In Selection of Investment Strategy: The wealth Management team has a customer-centric approach and helps the customer plan his investment strategy and analyze risk and return. plus for any other month that there is activity in his account. The following are the advantages of wealth management: Helpful In Tax Planning: The wealth management professional always shows the good path to the customers and provides the service of tax planning.12 Each review will address market conditions. As time goes by. It also provides an excellent system of secure internet access. It may be appropriate to review and update aspects of his financial planning. whether they revolve around wealth creation. From time to time. Last but not least. the financial planner will be able to recommend options that best suit client’s current needs. HSBC mails out special updates on market conditions or on specific securities that its clients hold. the return on client’s portfolio for the preceding period. So the financial planner can help ensure that the financial plan continues to meet those changing circumstances.
The challenge faced by HSBC is to know whether its customers are aware of its wealth products are not. Reliance‘s entrance into the Indian wealth market poses a number of threats to even the largest foreign banks. as banks. Theoretical Framework-Competitor Analysis HSBC has several competitors globally. The influx of foreign competitors has led to a domestic fight back. the firm has a pre-existing base of investor to target. Helpful for Indian Economy: Banks which are engaged in business of WM earn revenues from the foreign countries which are beneficial for the domestic economy. and that is apparent from the competition between domestic and foreign players. and the potential for referrals from other Reliance businesses is considerable. Of all the domestic competitors seeking to target HNWIs in 2009-10.000 outlets across 5. the most notable is perhaps Reliance Money with a network of over 10. brokerage houses and new entrants develop their offerings. the basic investment objectives of the customer and also their perception of investing on wealth products. Purpose of the Study In wealth management sector many financial institutions have come up other than HSBC and a heavy competition is present in the market. and the type of business. The study also includes the wealth managers reviews on wealth management and their customer experiences. in addition to domestic competitors in each location. As the largest brokerage house in India. The importance of the each largely depends on the customer segment. With its extensive local network and considerable knowledge of the local market. . The Indian wealth market is delicately poised.13 Helpful in forward looking: Wealth Management aims at planning and thus reduces the level of uncertainty for the future. They also wanted to know the reasons of the customers for not investing in HSBC.000 towns and cities in India to do so.
Bank of America and Deutsche Bank. are much more selective and in some cases are narrowing their activities in emerging markets. 5th largest bank by market capitalization in India provides payroll services to over 12000 corporates across 2. HSBC. including JPMorgan-Chase and Deutsche Bank. India's No. and UBS for catching the clients for Wealth Management business. The Axis Bank. In terms of assets. ICICI Bank and its subsidiaries are engaged in the development of various attractive products (services) for the clients with net worth of $ 1 million. The list of recent entrants takes in all types of wealth managers. Axis bank also combined with Banque Privee Edmond de Rothschild Europe based wealth management expertise institution & is going to make new standard for the NRI's wealth management.14 In India ICICI bank and Axis-Bank are very well known banks in the field of wealth management. 490 crore worth of assets in fiscal 2010. However. ICICI Bank is using the services of global players like Merrill Lynch. . followed by HSBC (Rs90. from longestablished players like Goldman Sachs to burgeoning brands such as Barclays Wealth and domestic brokerages such as Motilal Oswal. City group. refocusing on investment banking and private banking activities. depending upon the market segmentation virtually all sized banks can present competition to each other.8 million salary accounts. One of India's leading private sector bankers.2 lender banker ICICI expects to sustain the 70% growth in its private wealth management business. Others. Citibank is the biggest foreign player in India with Rs95. The obvious competitors of HSBC are similar giant sized global banking groups such as Citibank. 441 crore) and Standard Chartered (Rs89. JP Morgan Chase.545 crore). and Standard Chartered have developed strong and profitable local franchises with a wide range of services. ING. Some large multinational banks—the local subsidiaries of Citibank.
While calculating their market share these are also taken into account. In contrast. India‘s growing markets has created a first generation of wealthy individuals who own small.23 trillion. The compound annual growth rate (CAGR) of HSBC‘s assets in the past five years was 19. the nation‘s largest lender with Rs10.27%. Goldman Sachs and Morgan Stanley are awaiting RBI‘s nod to enter commercial banking while Nomura is planning to move the regulator for a banking license. among others. HDFC Bank Ltd.27%. . Standard Chartered started its Indian operations by opening its first branch in Kolkata in April 1858. 30 years old in India. Among other foreign banks. foreign banks are behind their local peers. which launched its India operations in November 2006. is present in 12 centres through 13 branches.15 Considering the pace of growth. better than Citibank and Standard Chartered. Deutsche Bank AG. Additionally the willingness to list these enterprises on the Indian stock market. unlike Europe which has had a wealthy group for the last 200 years. Barclays Bank Plc. Citi‘s 16% and Standard Chartered‘s 14. securitized loans. Inheritance has not been a vital wealth forming segment in India. Most of India‘s private wealth has not been created by sophisticated portfolio management strategies. has grown its book at 16. another Indian private bank with an asset base of Rs2. have been higher than the domestic banks.36%. which is double the size of HSBC‘s India operations. medium and large enterprises. when Mercantile Bank of India. has grown at 29. the growth in off-balance sheet items in foreign banks‘ books such as guarantees.54 trillion of assets.41%. Citibank is 108 years old. However. UBS AG is one of the latest entrants in Indian banking space. or transact them has created a significant amount of wealth. London and China was founded in Mumbai. has seven branches.78%. In terms of experience HSBC ranks the 1st among all. derivatives. Axis Bank Ltd. has grown at a five-year CAGR of 24. HSBC‘s origins can be traced back to October 1853. It comes from simply riding the wave of India‘s stock market boom. Even State Bank of India.
and make huge gains in new product offerings such insurance and capital market instruments.998-strong branch network across the nation. HSBC is keen to ramp up presence in India and is also not averse to go in for a subsidiary bank model in this market. it would become easier for foreign banks to obtain licenses to set up branches and offer new financial products to their retail customers. But. their growth will depend on how fast the local players are growing. Ltd. there are 32 foreign banks in India and collectively they have 310 branches. Foreign banks in India have. They will double their market share of loans. foreign banks need to channel only 32% of loans to the priority sector. Currently.16 Currently. The liquidity in HSBC stock is mainly in London and Hong Kong. 0. Once they choose to take the subsidiary route for Indian operations. under the central bank‘s proposals. The Reserve Bank of India. irrespective of any priority sector demands. has suggested this year allowing foreign banks to operate via a wholly-owned subsidiary model. operated as branches of their headquarters. . the country‘s central bank. Its ambition is to be not just the largest foreign bank (in India). Incremental market share that the foreign banks will gain will translate into profits too good to ignore. foreign banks will be given time to achieve the priority sector lending target. The RBI estimates allowing them to double their share of Indian banking assets from the current 7. Foreign banks‘ market share in assets is doubled.43% of the 71. or HSBC (50) and Citibank (43). so far. Their tax liability will also go down from 40% to around 33%. It is a bank which is well capitalised and the opportunity to support Indian operations exists. but also play the leading role in international flow two-way between India and rest of the world. which for them also includes loans given to exporters. Standard Chartered Bank leads the pack with 95 branches. Most of their profits are currently accrued from wholesale banking operations.7 per cent to 15 per cent. There is no stipulation on rural branches though RBI is relatively liberal with foreign banks proposals for setting up branches in such areas. followed by Hong Kong and Shanghai Banking Corp. but they are now trying for a share of the country‘s growing retail banking industry. In terms of distribution.
. This article mainly talked about UltraHNWIs and families in India. Ultra-HNWIs have high risk taking abilities as compared to HNWIs. It also speaks about NBFC’s (Non Banking Finance Companies) which are neglected in Indian Financial market for obvious reasons but this report has provided necessary information and knowledge about the Financial Market. Due to high invest able base and diversified needs. A clear note of how the policy environment is present is shown through various other parts of the same report. It deeply analyzes the segregation advisory services on the basis of wealth in India. It also talks about the global developments in regard to the macroeconomic scenario and also financial markets. RBI Report (2010) on ‘Trends and progress of Banking in India’ gives us information regarding the current state of Indian Banking industry and also prospective from global trends and how these perspectives work on Indian banking industry. It also talks about the emergence of family offices in India. Thus. It was also mentioned Indian Ultra-HNWIs have unique demands in terms of products and services. they also require more customized and tailor-made services to manage their family needs as well as grow their wealth.Family Offices for Ultra-High Net Worth Individual (UHNWI)” has said that the focus of companies are now shifting towards Ultra high net worth individuals or families (those who have invest able assets more than rupees 45 crore or $10 million) from the high net worth individuals (those who have investable assets more than rupees five crore or $1 million). 2011) published an article “Private Wealth Management India . It also discusses about the performance of the banks in the particular year the developments that are taking place in the industry.17 CHAPTER 2: LITERATURE REVIEW Dublin Business Wire Research and Markets (March 29. the products offered to them are more sophisticated and risky.
which plays a crucial role in promoting Mutual Fund schemes among retail households. They have also given the position of India in wealth management. In the annual survey done by Cap Gemini. The limitations given by the authors are chances of fraud. Singh (June 2008) in their paper on ‘Wealth management in India : Issues & Concerns’ has told that now a days the word wealth management is becoming more important and so many banks are engaged in wealth management. This news letter gives a clear not of how the mutual fund companies are doing so that new investors can have a look before they invest. The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund Industry on professional. It talks about the current trends and challenges in the industry. India & China has got increase in millionaires by 23% & 20% respectively. The challenge for the industry right now is to activate. healthy and ethical lines and to enhance and maintain standards in all areas with a view to protect and promote the interest of mutual funds and their unit holders. Dharmendra Kr. They also concluded that wealth management has various aspects some are favorable and friendly for the Indian economy and some are very dangerous for the Indian economy. because the number of richer people grew in India and China where India is competing China. It gives information about the mutual fund industry that particular quarter. .18 AMFI (April 2010) newsletter is the official quarterly review of Association of Mutual Fund in India. The customers have to beware and they have to make SWOT analysis before choosing the wealth management option. SA and Merrill Lynch it was found that ranks of millionaires grew 6% in the previous year. Punit Kumar Dwivedi. So they told that there will be more wealth management business opportunities in India and China. strengthen and support the distribution system. regulatory body meeting. This paper gives the updates on SEBI. inflation. Dr. Amit Kumar Dwivedi.
wealth management service revenues are expected to contribute to over a third (32-37 per cent) of full-service financial institutions. such as impact of ownership. Rashmi Shankar & Paroma Sanyal (2007) have mentioned in their paper. the country’s wealth management market to be $1 trillion. The share of the financial institutions would grow to 18 per cent by 2012. private sector banks and multinational banks which have entered Indian Banking sector in the name of green field investments. The paper also talks about the foreign banks outshining the Indian private banks. competition and productivity on profitability. He also quoted a report named ‘Overview of Indian Wealth Management Market’ which has said that over the next four-five years. ’What Drives Bank Performance?’ the factors that drive all the banks. it is estimated. This paper also gave insight about the different ball game between public sector banks. This paper has indirectly supported the investment of the banks in Information Technology. . The results in the paper explain that profitable banks are more likely to have a diverse range of output. It was forecasted that by 2012. More the amount of competition and profits leads to more amount of innovation in the process automation which leads to technology investments.19 ChandraShekhar (Jan 2008) in his article ‘India’s wealth management business set to boom’ he mentioned that Indian wealth management industry is emerging up with more opportunities. He also said that disposable income is expected to grow from the current 2 percent to 5 percent in 2017. Indian financial sector shares about 7 per cent of the total national disposable income. to be operationally efficient and to have high spreads. with approximately 42 million households where in it was 13 million households at that point of time. They also came to a conclusion that banks in India have resorted to output expansion rather than efficiency enhancement as a strategy to boost profits. In 2008.
20 CHAPTER 3: RESEARCH METHODS AND PROCEDURES Purpose of study In wealth management sector many financial institutions have come up other than HSBC and a heavy competition is present in the market. knowledge and investment activities in wealth management. Research Design The research design of customer wealth product awareness is descriptive in nature since it provides an answer to below questions: Who is considered? The potential customers who are part of HSBC bank. To know the primary objectives of the customers behind wealth investments. . The study also includes the wealth managers reviews on wealth management and their customer experiences. The challenge faced by HSBC is to know whether its customers are aware of its wealth products are not. the basic investment objectives of the customer and also their perception of investing on wealth products. Why are we obtaining the information from respondents? To know the effectiveness of the organization in wealth management department and to know drawbacks if any. What information should be obtained? To know the customers interest. They also wanted to know the reasons of the customers for not investing in HSBC.
To know the major competitors of HSBC. To know the primary investment objectives of the customers. Wealth Managers Reviews The basic objectives of this research are: To know the wealth managers reviews on their clients. Research Questions Customer wealth product awareness The basic objectives of this research are: To know the awareness of HSBC customers regarding HSBC wealth management. The research design for the wealth managers is explorative since informal interviews are taken from them. Primary data is collected by taking the responses of the HSBC customers with an aid of a structured questionnaire.21 In what way are we going to obtain the information? The information is obtained through a structured questionnaire through personal interview of the respondent. To know the problems faced in wealth management . To know the customers perception about investing on wealth products.
Instrument Used The research instrument used for understanding the wealth product awareness and wealth management of HSBC Ltd. . And also wealth managers who are part of HSBC Advance. Data Collection The data of customer wealth product awareness is collected by marking the responses given by the potential customers of the HSBC bank. Hyderabad who walked in to the bank and who generally have a basic idea about wealth management. Hyderabad are part of my research.22 Participants The participants in my research are potential customers of HSBC bank. The research instrument used to understand wealth managers reviews are open ended informal interview of 9 questions. It is done my meeting the walk in customers personally in the branch and collecting the data with the help of a structured questionnaire of which the results are discussed later in the report. The questionnaire motivates and encourages the respondents to become involved in the interview to co-operate. The sample size of customers is 35. The sample size taken is 15. The questionnaire method was selected because it translates the information needed into a specific question that the respondents can and will answer. and to complete the interview. The data is also collected from the wealth mangers of the same bank regarding the wealth management by taking the informal interviews in the HSBC bank itself. are closed ended questionnaires of 10 questions excluding demographics.
0 40.0 100. The data analysis is as follows. Results of Research Questions Q1) Are you aware of the wealth products provided by HSBC? Table 4.23 CHAPTER 4: DATA ANALYSIS AND FINDINGS Review of Methodology The survey was conducted through personal interviewing the potential customers of the HSBC Ltd. The prime intention of the survey was to know the how far the customers of HSBC are satisfied to have their investments in wealth management sector of HSBC and the primary motive of the customer to invest on wealth products.0 Total 35 .1: Percentage of Awareness Awareness Frequency Percent Valid Yes 21 No 14 60. who had walked in to the bank with an aid of personal questionnaire. The sample size is 35.
1: Percentage of Awareness From the above results it clearly says that 60% of the customers said that they are aware and 40% of customers are unaware of wealth products provided of HSBC.24 Figure 4. .
15% of the customers are aware of Fixed Deposits. 7% of the customers are aware of Broking. 25% of the customers are aware of Insurance. what are the products you are aware of? Figure 4. 24% of the customers are aware of SIP.2 : Types of wealth products at HSBC From the above pie chart it is clear that 29% of the customers are aware of Mutual Funds. .25 Q2) If yes.
10% of customers came to know about the wealth products through advertisements. .26 Q3) How did you get to know about these products? Figure 4. 3% of customers came to know about the wealth products through other sources. 17% of customers came to know about the wealth products through their Relatives and Friends.3 : Source of information about the products From the above pie chart it is clear that 70% of customers came to know about the wealth products through RM.
4: Prior information to customers by HSBC employees From the above results it clearly says that 82.1 100.9 17. .0 Total 35 Figure 4.9% of the customers said that employee from HSBC tried to contact regarding the wealth management.2: Prior information to customers by HSBC employees Informing customer regarding WM Frequency Valid yes no 29 6 Percent 82.27 Q4) Does any employee from HSBC have ever contacted you before regarding wealth management? Table 4.
5: Customers interest to know about HSBC products From the above results it clearly says that only 17.1 82.3: Customers interest to know about HSBC products Intersted to know about WP_HSBC Frequency Valid yes no 6 29 Percent 17. .9% are not interested.9 100.1% of the customers said that they are interested to know about the HSBC wealth products and the remaining 82.0 Total 35 Figure 4.28 Q5) Are you interested to know about the wealth products offered by HSBC? Table 4.
.29 Q6) Have you already invested in wealth products in any bank? Table 4.1% of the customers said that they have invested on wealth products of some bank and only 2.4: Percentage of customers done investments in bank Investment on WP in any bank Frequency Valid Yes No Total 34 1 35 Percent 97.9% did not invest.0 Figure 4.9 100. Out of 35.6: Percentage of customers done investments in bank From the above results it clearly says that 97.1 2. only one customer did not invest on wealth products in any bank.
. 32% of customers invested in OTHERS(SBI.30 Q7) In which bank did you invest? Figure 4. IDBI etc). 19% of customers invested in HDFC. 19% of customers invested in ICICI.7: Percentages in terms of investments in different banks From the above pie chart it is clear that 30% of customers invested in HSBC.
Not even a single customer gave the reason lack of RM’s interaction. 41% of customers did not invest due to different reasons.8: Reason behind not investing in HSBC From the above pie chart it is clear that 59% of customers are unaware of the products at the time of investment.31 Q8) Why not HSBC? Figure 4. .
22% of customers primary objective is to preserve the initial capital.9: Primary objective of customers behind investments From the above chart it is clear that 20% of customers primary objective is to earn inflation adjusted returns. . 27% of customers primary objective is to earn a supplement and possibly some capital gain.32 Q9) What is your primary investment objective? Figure 4. 8% of customers primary objective is to earn regular income. 23% of customers primary objective is to maximize the long term potential growth.
00 2.00 Total 2 1 9 19 4 35 Percent 5.5: Rating of wealth management by customers Investment on WP is a wise option_Rate Frequency Valid 1.7 54.10: Rating of wealth management by customers .00 5.33 Q10)On a scale of 1 to 5.00 4.0 Figure 4.7 2. how do you rate investment on wealth products is a wise option? Table 4.4 100.9 25.00 3.3 11.
2. .34 From the above bar diagram the percentages are as follows: 5.4% of customers rated 5. 25.3% of customers rated 4. 11. 54.7% of customers rated 1.9% of customers rated 2.7% of customers rated 3.
The percentages are as follows. The general reason behind customers not investing in wealth products in HSBC was derived to be lack of knowledge at the time of investment. 6. 24% of the customers are aware of SIP. 7% of the customers are aware of Broking. They ranked it high to say that investment on wealth products is a wise option. 2. 7. Investments are mostly done with other banks. 5. It was found from the data that customers are mostly into other banks when compared to HSBC. The level of awareness of the HSBC customers towards its wealth products is 60% which is less. 29% of the customers are aware of Mutual Funds.35 Summary of Findings 1. The main objective of the customers to invest on wealth products is to have an supplement income and most probably some capital gain. Generally the customers who are aware of these products provided by HSBC came to know through mostly through RM only. Most customers reacted positively regarding investments on wealth products. . 15% of the customers are aware of Fixed Deposits. 4. 3. Most of the customers are aware of SIP and insurance. 25% of the customers are aware of Insurance.
tax protection from wealth management process. Average size of wealth managed per each customer is around Rs 5-30 lakhs. mutual funds etc.36 Findings from wealth managers’ Informal Interviews As part of my primary research. I took some informal interviews from the wealth managers. secure investments. Wealth manager see very huge potential market in middle income group which have monthly income of 50k to 1lakhs.. They also do this planned investment in order to fulfill the future needs like car. . The main basic objectives of clients for availing wealth management services are to have capital appreciation with less risk ie. private employees by profession. Average age of customers availing wealth management services is 35-60yrs. Wealth Manager face challenges in area of trust building. Customers mostly availing this wealth management services are doctors. Customers are more concerned with risk and return. competition. On basis of Wealth manager Survey we able to analyze following things Customers have moderate level clarity about wealth management concepts like stocks. businessman. The problems can be overcome by convincing the customers. Customers are mostly interested to invest in Mutual Funds and SIP’s mainly. The major problems in the wealth management sector are very dynamic markets and having the consistency in payments by the customer. The sample size is 15 managers who are part of HSBC Advance. investing in sectors where you have low risk low returns. Customer ask question related to how their wealth is managed. awareness. house etc. details about the investment product etc. going for long term investments.
. ICICI. Place is playing a major factor and also the services too. It is to say HSBC is performing in the moderate level and HSBC should take necessary measures. The customer who wants to get high returns in short term should go for high risks. though I took the responses from potential customers of HSBC only 60% are aware of wealth products provided by HSBC. Through my research I found that the basic motive of customers to invest in wealth products is to earn a supplement and possibly some capital gain. SBI. Reliance Mutual Fund are the major threats for HSBC Bank.37 CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS Discussion of Research Questions Customer wealth product awareness Understand the level of awareness of the HSBC wealth products. An individual invest on different wealth products in order to have some returns. The major banks like HDFC. To know the major competitors of HSBC bank. This is because less connectivity of HSBC. To know the primary investment objectives of the customers. The customer who want to play safe should either go for long term investment or low risk investments which might give low returns. HSBC is facing a lot of competition from different banks. Wealth management is still in the emerging stages in India.
Perception change from person to person. It was found through the research that many people have positive perception on these investments so many customers rated 4 and 5. Basically I took the ratings of the customer on a scale of 1to 5 whether investing on wealth products is a wise option or not where 1 is the lowest rating and 5 being the highest. Wealth managers reviews To know the wealth managers reviews on their clients. There many problems and challenges faced by the wealth managers and the risks involved in wealth management sector like market fluctuations etc. To know the problems faced in wealth management. .38 To know the customers perception about investing on wealth products. This is basically to know the reviews of their clients regarding the conceptual quality of their clients. clients basic objective etc. through the informal interviews taken I came to know that clients are moderately matured in terms of conceptual clarity.
The habit of daily reporting and monitoring of activities should be promoted. Wealth management is still emerging in India so it will be good for HSBC if it takes the initiative and work on it to capture the maximum share. The Relationship Managers must be made aware of the importance of activity management. A number of global marketing initiatives act as opportunities because it will continue to build the HSBC brand. HSBC should also start promotion campaigns about wealth management and importance of investments on wealth products because many people are unaware of these services. HSBC can increase its share of the non-resident Indian business by providing more convenient and comprehensive cross-border banking services to them. HSBC should build upon its strengths and enhance its competitive advantage to stay ahead of competition. HSBC should increase its branching across the major cities in India because presently its operations in India are very less. . ICICI do so that it can compete with them.39 Recommendations HSBC should target the mass affluent segment and satisfy their wealth management needs through innovative financial solutions. HSBC should start providing more customization as other banks like HDFC.
Implications for Practice Thus as discussed in the project. Then the research can be conducted not only in the metropolitans but also it can be carried out in many cities. HSBC can do this by conducting campaigns in private offices. and it is very necessary to educate people regarding it and its products. Implications for Future Research The concept wealth management is in the earliest stages in India. Limitations My research was undertaken only in Hyderabad Region. through this it can create awareness in the literates. Response bias might distort the data being collected.40 New branch banking licenses have been granted to foreign banks such as Australia New Zealand Bank. corporate etc. customers are not totally aware of it. both in the private and public sector. . Competition will continue to be tough with local players. HSBC is now doing airport advertizing program it should expand this program. so HSBC should be aggressive before these banks become. The awareness must be created. Commonwealth Bank of Australia and Credit Suisse. They also should improve their operations in India so that they can increase their market share and also create convenience to the existing customers. National Australian Bank. So after creating awareness about this in India and once the wealth management reaches the boom this research with bit changes in the questionnaire can be done again to know how effectively HSBC is performing in wealth management and the data collected then will be more reliable. Even it should target industrialists and business man by conducting many promotions. wealth management is emerging in India. As wealth management is not popular in India.
thehindubusinessline. Private Wealth Management India ..com/news/home/20110329005826/en/Research-MarketsPrivate-Wealth-Management-India RBI. (2011).com/ Chandrasekhar. Dwivedi Kumar Punit.rbi.G.htm DR.org. (2007).edu/~psanyal/India_Bank_Performance. “ India’s wealth management business set to boom” Retrieved from: http://www.What Drives Bank Performance?.amfiindia. (2008). Dwivedi Kumar Amit. Trends & progress of banking in india Retrieved from http://www.Family Offices for Ultra-High Net Worth Individual (UHNWI) Retrieved from:http://www.41 REFERNCES Dublin Research and Markets.com/investment_in_india/banks_in_india.html Rashmi.in AMFI. Singh KR Dharmendra. Journal Retrieved from http://www. (2008).indiamart. Sanyal. “Wealth Management in India: Issues & concerns” Retrieved from http://finance.businesswire. Shankar & Paroma. Retrieved from: http://people.in/2008/01/23/stories/2008012350651200. (2010). (2010).brandeis.pdf .
pdf http://www.aspx?cat_id=60&art_id=17575&refer=n49 http://www.com/webshop/opportunities-for-wealth-management-in-india212.investorwords.hsbc.pdf http://www.co.com/PressReleases/20080102/WMIndia.celent.ibef.wealthbriefing.bobsguide.html http://www.htm .com/locations/india/mckinseyonindia/pdf/india_banking_2010.html http://www.html http://reports.in http://HSBCprivatebank.com/wealth-tax-india/latest-on-wealth-management-in-india.42 BIBILOGRAPHY www.com/pdf/MWiI%20TOC%20and%20Summ.mckinsey.tax4india.html http://www.com/2510/insurance.php?option=com_content&view=article&id= 76&Itemid=167 http://www.com/services/index.vrl-financial-news.html https://www.ie/development2009/index.org/artdisplay.iba.com/guide/news/2010/Dec/10/Key_Trends_in_the_Indian_Wealth _Management_Market%3A_Market_Dynamics_at_Work_.
43 ANNEXURE1 Questionnaire for wealth product awareness Demographic Details: Name: _______________________________________________ Age: ___ Sex: ○ Male ○ Female Occupation: ______________________ Wealth Product Awareness: 1) Are you aware of the wealth products provided by HSBC? o Yes o No (if no. please specify ________________ 4) Does any employee from HSBC have ever contacted you before regarding wealth management? ○ Yes ○ No . go to question 4) 2) If yes. what are the products you are aware of? ○ Mutual funds ○ SIP (Systematic Investment Plan) ○ Fixed Deposits ○ Online Broking ○ Insurance 3) How did you get to know about these products? o RM o Advertisements o Relatives/friends o If any other.
5-highest) . SPECIFY______ 8) Why not HSBC? o Unaware of the products at the time of investment.44 5) Are you interested to know about the wealth products offered by HSBC? ○ Yes ○ No 6) Have you already invested in wealth products in any bank? ○ Yes ○ No 7) In which bank did you invest? ○ HSBC ○ ICICI ○ HDFC ○ OTHERS. o Lack of RM’s interaction. ○ To preserve the initial capital ○ To maximize the long term growth potential ○ To earn regular income ○ To earn a supplement income and possibly some capital gain 10) On a scale of 1 to 5. please specify_________________ 9) What is your primary investment objective? ○ To earn inflation adjusted returns. how do you rate investment on wealth products is a wise option? (1-lowest. o If any other.
Which are the maximum services used by clients? 6.45 ANNEXURE2 Questionnaire for Wealth Managers (Informal Interviews) Name of the Wealth Manager: Age: 1. How do you overcome the problems faced? . What are the kinds of questions asked by clients before or after taking services? 5. What are the concerned areas of the clientele regarding wealth management? 4. What is the level of conceptual clarity of clientele about the Wealth Management? 2. What are the problems faced in the wealth management sector? 9. What are the opportunities unexplored as yet in wealth management? 8. Details related to Client Profiles Average Age : Average size of their wealth 7. What is the basic objective of client while availing the services of wealth management? 3.
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