The commercial role of banks

Banking

A bank is a financial establishment which accepts deposits and directs those deposits into lending activities. Banks primarily provide financial services to customers while enriching investors. [1] The commercial role of banks includes:

  • Processing payments
  • issuing bank drafts
  • issuing bank cheques
  • accepting deposits
  • lending money by way of overdraft, installment loan or otherwise
  • safekeeping of documents such as deeds and other items such as jewelry
  • currency exchange
  • acting as a 'financial supermarket' for the sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products
  • Banks offer different kinds of channels to access their services. Most of these channels are highly IS enabled in modern banks. Some of them are:

  • branches in different locations
  • ATM machines
  • Mail
  • Telephone banking
  • Online banking
  • Mobile banking

HSBC - The world's local bank

HSBC is one of the largest banking and financial services organization in the world. The aim of HSBC is to enhance customer relationships on a long term basis by following stringent procedures to the highest ethical standards. [2]

HSBC's international network comprises around 8,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in HSBC Holdings plc are held by around 220,000 shareholders in 119 countries and territories. The shares are traded on the New York Stock Exchange in the form of American Depositary Receipts.[3]

Through an international network linked by advanced technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial services: personal financial services; commercial banking; corporate; investment banking and markets; private banking; and other activities.

Topic: Use of IS for Converting Regular Clients to Heavy Clients (HSBC)

The main goal of this report is to give a clear understanding of how HSBC Uses IS for Converting Regular Clients to Heavy Clients by maintaining an excellent customer relationship. Customer relationship management (CRM) entails all aspects of interaction HSBC has with its clients, whether it is sales or service related and how it supports to enrich these relationships.

What is CRM?

CRM can be considered as an enterprise-wide strategy designed to maximize profits by solidifying customer loyalty. This involves bringing together all data sources (both internal and external) in order to make a single, holistic view of each client in real-time basis. CRM enables sales, customer support, marketing, and top level staff to make quick and better decisions on everything from cross-selling and up-selling opportunities to target marketing strategies to competitive positioning tactics. CRM brings together lots of pieces of information about customers, sales and marketing effectiveness, responsiveness, and market trends.

CRM should be strategically implemented within an organization to learn more about clients' needs and behaviors in order to build stronger relationships with them. The reason is excellent customer relationships are the building blocks of business success. Therefore CRM is the valve that pumps a company's life blood.

CRM is best suited to support businesses use people, processes, and technology gain insight into the behavior and value of clients. This enables improved customer service, increased efficiency, streamlined sales and marketing processes, improved customer profiling and targeting, reduced costs, and increased share of customer and overall profitability.

CRM in a large organization can be highly complex process, often involving multiple information systems and technological innovations, all tied together in a single interface.

Topic Justification

Today's market place is becoming brutally competitive. To stay competitive, banks need to take appropriate decisions strategically. This is where the CRM plays a major role. Converting regular clients to heavy clients simply means the methodology or the process of building stronger relationships with existing clients. This is vital for any business specially in knowing their customer's needs and behavior.

Many businesses stay under the impression that once they have served a customer, he or she, will stay with them. But this is where they go wrong. Then after a few years they open their old customer's file and are left wondering where they suddenly vanished.

A customer can ruin the business on many ways when the bank does not caring enough for him/her or because of an unresolved complaint. Therefore these are the biggest mistakes of the business point of view which shift customers to competitor's services.

On the other hand it is not enough to just keeping the client with the business. To maximize the profits and stay competitive; banks always have to take necessary steps to enhance the customer relationship or in other words convert the regular clients into heavy clients. To know how to maximize the businesses potential and make heavy clients, it is a must to know what the clients are thinking. This is where the CRM success is important.

Talking about CRM success IS plays a major role in the modern business environments. Information systems can be used to automate customer service and support, customer data analysis and supports e-commerce storefronts. CRM in the banking industry is constantly evolving and it has already led to some remarkable changes in the way they interact with customers.

Therefore use of IS for converting regular clients to heavy clients in a bank is a highly important and interesting topic to investigate.

Research & findings

The objectives that were required from the report were challenging with the limited time scale. Previous task carried out as the group project was a solid foundation for completing this particular milestone.

Lot of information could be gained from the company intranet, interview with the strategic manager, the Internet, books and finally from the questionnaire survey.

The intranet gave a lot of information about how HSBC uses IS to maintain and enrich their customer relations. The previous interview with the manager supported as greatly as we were able to answer and clarify many grey areas.

HSBC is a bank which moves with the changing world and they are the people who implement new technologies when emerged. That is the reason many customers retain and with HSBC due to their ability to satisfy their customers. The research gave me a vast idea to write this particular report and show how productive it is with the use of IS to improve the customer relations.

Customers too have moved from the traditional banking and they too like to stick to environments that provide quick, efficient, secure, innovative environments. That is the reason HSBC is using IS to improve their customer relationships and to be the banking leader by providing better customer experience.

Literature Review

Literature is rich with studies on improving profitability through better customer relations and many banks are turning towards CRM tools in their efforts to address not only day-to-day but also long term challenges for profitable banks in order to gain competitive advantage (Adam and Michael, 2005; Bill, 2006; Timothy et al, 2006).

Michael Otto, Head of CRM at Erste Bank, Austria defines CRM for banks as '' having the right offer for the right client, at the right time via the right channel''. He further states "optimizing every customer contact by effectively creating value for both clients and business, using customer knowledge, is the main differentiator compared to non-CRM focused organizations''.(5)

According to Michael Otto What banks must achieve is to improve;

  • knowledge about the clients
  • active customer contact
  • customer satisfaction

Gopal Sondur, Group Head for Products & Strategy, Finacle Infosys technologies Ltd describes; "CRM is fundamental to building a customer-centric organization. With the growth of fee-based income and increasing focus on advisory services, the role of CRM in banks is now more critical and pivotal than ever before. The benefits that banks hope to achieve through deploying CRM solutions will be to arrive at satisfactory, measurable answers to questions such as 'how profitable is the customer', 'which products/services does the customer require; when, where and through which channel' and 'what risks does the customer present to the bank."(6)

There is a dramatical improvement of the integration of different information systems in banks. Therefore it has become possible to have a 360 degree view on the client (Radi Badidi).

CRM goes beyond just identifying who are the customers are, it must include providing quality service and analyzing customers' interests. Improvement of customer loyalty and customer profitability should be the main objective of CRM process (Cockburn, Dec 2000).

According to Guenther Hartfeil (1996), vice president and director of Bank One Corporation, in Ohio, "Products are not profitable; customers are, and we analyzed our customer base, segment by segment, we found that each required a different strategy to maximize its profitability to the bank"[7]. (Guenther, 1996).

Dozens of authors highlighted the importance of targeting on customers, building relationships with them and converting them into heavy customers (Christopher et al, 1991; Johnson, 1992; Storbacka, 1993; Peck, 1997; Intindola, 1991; Reichhield, 1993).

A survey of 300 American and Australian general and finance managers conducted by Foster and Young (1997) found "customer profitability / satisfaction to be the single most important current management priority". [8]

In order to fulfill client requirements banks must have raw information processing systems in their databases to measure customer profitability. For large scale banks, the real challenge will be making a huge number of existing, diffuse systems, compatible, to make all that new information useable (Hartfeil,1996).

Customer Relationship Management Models

The following models are included in the report.

  1. Customer Life Cycle Model (CLC)
  2. mySAP CRM Model & mySAP CRM System for Banking
  3. Hewlett-Packard's Four Principles for Building Strong Customer Relationships
  4. Business Strategy and CRM - Hybrid Model
  5. Customer relationship model - Hewlett-Packard
  6. E-CRM Model - Jellasi and Enders
  7. Seven Critical Steps to a Successful CRM Solution

Customer Life Cycle model (CLC)

Creation and delivery of lifetime value to the customer is the basis for CLC. This model focuses upon the provision of services and products to the customer according to the requirements at the several ages throughout their lives.

Figure 2 - Customer Life Cycle

18+ year olds can be attracted by implementing a saving account with loan facilities including the above mentioned account facilities. Because this is the age that the client can be enrolled with his or her higher education achievements. If the client enrolled to a College or University there are Student Loan facilities.

When the client begins working after the successful education it can be targeted with the many types of current and savings accounts. He/she can be a requirement of buying a property and also takeout a mortgage or to take out a car loan, to buy a vehicle.

When the client progresses through his/her carrier life, begins his/her own family, and saves for his/her own children's education. Using the strategy, a bank can recruit and retain client and then extend additional services to them - throughout the individual's life. This model depicts how to enhance the relationship throughout the life span of a customer.

mySAP CRM Model & mySAP CRM system for Banking

This model addresses the major challenges of the CRM in banking sector and including how to:

  • Thoroughly Identify the clients who have the most assets (would be the most profitable)
  • Identify the most profitable products.
  • Cross-sell and up-sell products that are most relevant to a customer's life stage and financial needs.
  • Improve the customer satisfaction while minimizing service costs in basic areas, such as account inquiry, transfers, and cash management.

This model brings together four powerful concepts. (Please refer the figure 3)They are;

  • People-centric CRM - ensures that users interact with information based on their roles. Only information relevant to their roles is provided to ensure they can carry out their task in the best manner.
  • Integrated CRM - ensures applications support end-to-end business process integration across the enterprise
  • Collaborative CRM - ensures financial institutions, their employees, relationship managers, and customers can work closely with each other
  • Industry specific CRM - provides capabilities to support specific financial and banking industry business processes.

With people-centric CRM;

  • Users can easily access all information and systems that are needed to perform customer-related tasks.
  • All content sources and business processes can easily be accessed across application boundaries, independent of where the data resides tasks according to each user's role.
  • Whether a user is a relationship manager, credit analyst, investment banker, or client, the information presented to that user is always role specific.
  • Content can be adapted according to role-specific requirements. All employee, partner, and customer roles involved in relationships can be adapted and further personalized.

Business Strategy and CRM - Hybrid model

This model considers the business strategy perspective of CRM which is a hybrid, and typical of many of the models of CRM. The model has three key phases and three contextual factors. (Please refer the figure 5)

Three key phases:

  1. Customer Acquisition
  2. Customer Retention
  3. Customer Extension
  4. Three contextual factors:

  5. Marketing Orientation
  6. Value Creation
  7. Innovative IT
  1. Customer Acquisition - This is the process of attracting the client for the first deal.
  2. Growth - Through market orientation, innovative IT and value creation; aim is to increase the number of clients that deal with the bank for the first time.

  3. Customer Retention - This involves keeping the existing clients with the bank regularly. Except the products or services, which is already given to the existing customer the bank can introduce next level of products and services.
  4. Growth - Through market orientation, innovative IT and value creation; aim is to increase the number of clients that deal with the bank regularly.

  5. Customer Extension - This involves extension of the relationship of regular clients by introducing additional, supplementary products and services that may not wholly relate to their original purchase. Goal of the customer extension is to improve the customer relationship and gain more profits.
  6. Growth - Through market orientation, innovative IT and value creation; aim is to increase the number of customers that purchase additional or supplementary products and services and finally convert regular clients to heavy clients.

  7. Marketing Orientation - means that the whole organization is focused upon the needs of customers.
  8. Value Creation - centers on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage.
  9. Innovative IT/IS - This is exactly the use of IT/IS to be efficient, speedy and focus upon the needs of customers. CRM systems collect data on clients and their transactions. Huge databases store data on individuals and groups of individuals. Banks can track individuals, and try to market products and services to them based upon similar client behavior seen in other individuals.

Customer relationship model - Hewlett-Packard

This model describes how to acquire, strengthen, and retain strong customer relationships in the era of electronic delivery channels.

Principle 1: By knowing more about the customer value and anticipating relationship needs better than when the customer was involved in a high-touch relationship.

Principle 2: Consolidate and make available all customer interaction information from all channels.

Principle 3: Develop a customer centric infrastructure that can consistently support the customized treatment of each customer.

Principle 4: Assign dedicated people, process and technology resources to achieve profitable results.

Customer relationship is strengthened by Relationship Building tactics, which are continuously measured through time. The end result is a strong customer relationship, which lead to acceptable customer loyalty, profitability and retention.

Basic CRM involves;

  • Data marts and data warehouses as the core components to support the decision making process in CRM.
  • Marketing models such as Customer Segmentation, Life Time Value, Campaign analysis, and Profitability analysis are fed as information to the Customer data warehouse.

E-CRM Model - Jellasi and Enders

E-CRM is the use of the Internet and IT/IS applications used to manage relationship with customers. There are four elements in this model.

  1. Customer Selection
  2. Customer Acquisition
  3. Customer Retention
  4. Customer Extension

Customer Selection

This involves the targeting, segmenting, and mass customization of customers which offers a customized product or service which fulfils the individual requirements and maintains a low-cost position via mass-market operations.

The importance of mass customization is it identifies customers' unique set of needs and desires. The fast growth of information technologies has made it possible to meet these individual needs to a high degree.

The Internet integration with CRM gives possibility to capture and analyse customer's click streams data e.g., by monitoring customer's behaviour when they are online.

Benefits of mass customization

  1. It increases the customer satisfaction level because only those services and products are provided which create benefit.
  2. 2. It gives the potential to keep the customer which will reduce the threat of switching to competitor.

  3. Customer Acquisition
  4. It focuses acquisition of new customers and to serve existing customers to come online. While in online channels the firm should have at least the e-mail address of the customer. Detail customer profile includes information like age, financial status, personal interests and customers role in purchase process.

  5. Customer Retention
  6. It turns one-time customers to regular customers and keeps them as long as possible in online environment. It is achieved from personalization. Personalisation is done by considering the needs of the customer and it makes possible for him/her to stick to particular web system. Sometimes online communities can be use to create network effect with different users.

  7. Customer Extension

This focuses the maximization of lifetime value of a customer. Companies expand this through enhancing existing customer relationships.

Phase I - Analysis and Strategy

Devise a Business Strategy

The success of a CRM solution will depend on how clearly the goals and objectives are defined. In devising a business strategy, consider these questions as a check list:

  • Why are we implementing this?
  • What is not working well in the current system or process?
  • What are the most critical phases in the process?
  • Where will the system save time and effort on repetitious tasks or duplicated work?
  • What are the specific tasks we want to automate?
  • What areas of existing customer relations will be incorporated into the CRM strategy?
  • What areas outside the existing customer relations process should be considered for expansion into the CRM strategy?

The answers to these questions will frame the business strategy and define a successful CRM solution.

Perform an Evaluation

To perform an evaluation, all groups that plan to use the system (i.e. Sales, Marketing, Service, or Support) need to provide or create an outline of their current business or sales processes.

A key factor for a successful CRM implementation is automating only the winning practices into the CRM strategy; automating ineffective practices will result in a failed CRM solution.

Determine Process Enhancements

Process enhancements are determined by viewing the system as a whole, and then by considering how each component of the CRM strategy relates to the each other.

Select of a CRM Suite

The choice of a CRM vendor product is dependent on the business requirements. By carefully establishing the complete strategy and automation potential, businesses can avoid choosing the wrong CRM suite.

Phase II - Implementation and Deployment

Determine Infrastructure Requirements

To determine the infrastructure requirements the following questions have to be asked:

  • Where will the actual hardware and software reside?
  • What type of server(s) will be used?
  • What type of database will be used?
  • What level of security will be required?
  • What data sources will be imported versus data that will be linked?
  • Does it make sense to use an ASP (Application Service Provider) model?

Implementation of New CRM System

  • Develop a project plan to track and schedule the implementation.
  • The implementation team provides task estimates and input regarding delivery dates to help drive the project plan milestones and schedule.
  • The new system is then installed and configured.
  • The new CRM system is put through a Quality Assurance process & acceptance criteria.

Provide Customized Training

Three different user groups are addressed in the training:

  • Sales / Field / Customer Support Representatives (End-users)
  • Management (End-users)
  • Administration (System-users)

Conceptual Framework

Summary of the Topic Specific Literature Review

As the pace of competition intensifies in today's brutally competitive market place, the use of information systems as competitive weapons is accelerating. Information systems offer exciting approaches to enhance customer relations that were not even dreamed of two or three decades ago. Therefore IS can revolutionize banking industry and could bring advances that would improve customer relations dramatically.

If desired, the Web allows banks to build much better relationships with customers than has been previously possible in the offline world.

By merging the abilities to respond directly to customer requests and to provide the client with a highly interactive, customized experience, banks have a greater opportunity today to set up, nurture, and sustain heavy customer relationships than ever before.

The following section summarizes the topic specific models (or related parts of the models) of the previous literature review (page 10-23).

mySAP CRM Model & mySAP CRM system for Banking

Some features of this model/system can be used to make regular clients into heavy clients in banks. It includes how to:

  • Thoroughly identify the clients who have the most assets & enhance their relationship.
  • Improve the customer satisfaction while minimizing service costs.

One of the major concepts of mySAP model is People-centric CRM which ensures that clients interact with information systems based on their needs therefore the requirements are fulfilled in a best manner. All clients involved in relationships can be adapted and further personalized.

Collaborative CRM is another vital concept which ensures banks and customers can work closely with each other through modern information systems. This collaboration can be used to enhance the customer relationship & convert regular clients to heavy clients in a bank.

Business Strategy and CRM - Hybrid model

One key phase of this model is Customer Extension. This involves extension of the relationship of regular clients by introducing additional, supplementary products and services that may not wholly relate to their original purchase. Ultimate goal of the customer extension is to improve the customer relationship and gain more profits.

This is achieved through three contextual factors (Marketing Orientation, Value Creation, and Innovative IT). Marketing Orientation means that the whole organization is focused upon the needs of customers. Value Creation centers on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage.

Innovative IT/IS - This is exactly the use of Information Technology & sophisticated Information Systems to be efficient, speedy and focus upon the needs of customers. CRM systems collect data on clients and their transactions. Huge databases store data on individuals and groups of individuals. Banks can track individuals, and try to market products and services to them based upon similar client behavior seen in other individuals.

Customer relationship model - Hewlett-Packard

Part of this model describes how to strengthen customer relationships in the era of electronic delivery channels. There are four principles to achieve this strong relationship.

Principle 1: By knowing more about the customer value and anticipating relationship needs better than when the customer was involved in a high tech, high-touch relationship.

Principle 2: Consolidate and make available all customer interaction information from all channels through Information Systems.

Principle 3: Develop a customer centric infrastructure. This includes the use of Information Systems.

Principle 4: Assign dedicated people, process and IS resources to achieve profitable results.

Customer relationship is strengthened by Relationship Building tactics, which are continuously measured through time. The end result is a strong customer relationship, which lead to acceptable customer loyalty and profitability.

E-CRM Model - Jellasi and Enders

E-CRM is the use of the Internet and IT/IS applications used to manage relationship with customers. There are four elements in this model.

  1. Customer Selection
  2. Customer Acquisition
  3. Customer Retention
  4. Customer Extension

Customer Selection

This involves the targeting, segmenting, and mass customization of customers which offers a customized product or service which fulfils the individual requirements and maintains a low-cost position via mass-market operations. The importance of mass customization is it identifies customers' unique set of needs and desires. The fast growth of information systems has made it possible to meet these individual needs to a high degree.

The Internet integration with CRM gives possibility to capture and analyze customer's data. e.g., by monitoring customer's behavior when they are online.

Benefits of mass customization are it increases the customer satisfaction level because only those services and products are provided which create benefit.

Customer Acquisition

One aspect of this 'acquisition' is to serve existing customers to come online and enhance their relationship with the bank. Here personalization is done by considering the needs of the customer and it makes possible for him/her to stick to particular web system.

Customer Extension

This focuses the maximization of lifetime value of a customer. Companies expand this through enhancing existing customer relationships.

Frame work for Use of IS for Converting Regular Clients to Heavy Clients

In order to achieve the intended benefits; CRM initiatives requires a framework to make sure that programs are approached on a strategic, balanced and integrated basis. This framework will maximize the benefits to the HSBC and its clients through mutually beneficial relationships.

Achieving the goal which is converting regular clients to heavy clients in HSBC, requires a strategy involving the whole business and should be approached at an enterprise level. Executing an enterprise-level CRM system is not an easy task! This involves a board-level vision and leadership to drive a "persistent focus on the client".

It consists of the following challenges;

  • Learning new customer management skills
  • Potentially difficult changes to processes
  • cultural and organizational aspects
  • Technology challenges of multichannel alignment
  • Information systems integration
  • Data quality

The framework emphasizes the need to create a balance between the requirements of the enterprise and the customer (Valued customer experience and organizational collaboration).

The following model has developed by using the concepts of the existing CRM models (refer the section 3.1) & using my own ideas. It includes the following components;

  1. CRM Vision
  2. CRM strategy
  3. Valued customer experience
  4. Customer-centric CRM
  5. Collaborative CRM
  6. Customer Information
  7. Customer selection, Acquisition & extension
  8. Technology

CRM Vision

In order to be successful; proper customer relationship management system requires a clear vision at the top level so that a strategy and implementation can be developed to achieve it.

It is basically the customer-centric bank wants to look and feel to its clients and prospects the customer value and the corporate brand values. Without this vision, the bank will not be able to prominent from the competition, customers will not know what to expect from it and employees will not know what to deliver in terms of external customer experience.

Vision should be there to motivate the staff, to generate customer loyalty and to gain a greater market share.

CRM strategy

CRM strategy should take the direction and financial goals of the business strategy and display how the bank is going to build customer loyalty that means clients stay longer, more interaction, recommend the bank to others and are more willing to go for additional programs. The objective of the CRM strategy should be to convert regular clients to heavy clients to achieve corporate goals.

Valued customer experience

Clients' experiences when interacting with the bank play a key role in shaping their perception. Good customer experiences drive satisfaction, trust and long-term loyalty.

Poor customer experiences have the opposite effect and, because bad news travels faster and further than good news, they harm the enterprise's ability to enhance relationships with prospects.

Use of information systems plays a major role here.

Example from HSBC: At the interview with the strategic manager (previous group assignment), one fundamental question we asked was" what are the technological innovations that HSBC has implemented in order to advance the customer relationship?" The explanation we got was very impressive.

HSBC have strategically adopted numerous technologies and information systems which enhance the customer relationship in a broader way. By using these innovative technologies and information systems; the bank has been able to convert considerable amount of their regular clients to heavy clients.

Another aspect of IS concerned with the creation, development and enhancement of individualised customer relationships with carefully targeted customers and customer groups resulting in maximizing their total customer life-time value. Technological approaches involving the use of information systems and data mining can assist organisations to escalate customer value and their own profitability. For example, this type of technology can be used to keep a record of customers' names and contact details in addition to their history of using banking services. This information can be used to target customers in a personalised way and offer them services to meet their specific needs. This personalised communication provides value for the customer and increases customers' loyalty with the bank.

Customer-centric CRM

One major problem of CRM is that CRM means different things to different people. For some, CRM means direct e-mails. For others, it is mass customization or developing products that fit individual customers' needs.

Customer-centric CRM which ensures that clients interact with information systems based on their needs therefore the requirements are fulfilled in a best manner. All clients involved in relationships can be adapted and further personalized.

Collaborative CRM

Collaborative CRM is another vital concept which ensures banks and customers can work closely with each other through modern information systems. This collaboration can be used to enhance the customer relationship & convert normal clients to heavy clients in a bank.

It is a mistake to believe that after implementing CRM technologies that makes the bank a customer-centric organization. True CRM means that the whole bank must become more focused on the needs and wants of the client. This highlights the many aspects of the customer-centric internal change needed to deliver the required and desired external customer experience.

Customer Information

Customer Information systems are the key factor of successful CRM. There should be a tight integration between operational and analytical systems. Proper Information systems should be there to have the right information at the right time which is a fundamental to successful CRM strategies, providing customer insight and allowing effective interaction across any channel.

Numerous and fragmented departments, databases and computer systems makes CRM information capabilities much poor. A bank that establishes a business plan for managing and leveraging customer information assets is more likely to achieve their CRM goals and objectives and gain a competitive advantage.

Customer selection, Acquisition & extension

Customer Selection involves the targeting, segmenting, and mass customization of customers which offers a customized product or service which fulfils the individual requirements and maintains a low-cost position via mass-market operations. The importance of mass customization is it identifies customers' unique set of needs and desires. The fast growth of information systems has made it possible to meet these individual needs to a high degree.

The Internet integration with CRM gives possibility to capture and analyze customer's data. e.g., by monitoring customer's behavior when they are online.

Benefit of mass customization is it increases the customer satisfaction level because only those services and products are provided which create benefit.

Apart from the general customer acquisition another aspect of this 'acquisition' is to serve existing customers to come online and enhance their relationship with the bank. Here personalization is done by considering the needs of the customer and it makes possible for him/her to stick to particular web system.

Customer Extension focuses the maximization of lifetime value of a customer. Banks expand this through enhancing existing customer relationships.

This can be achieved through three contextual factors (Marketing Orientation, Value Creation, and Innovative IT/IS). Marketing Orientation means that the whole organization is focused upon the needs of customers. Value Creation centers on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage.

Innovative IT/IS - This is exactly the use of Information Technology & sophisticated Information Systems to be efficient, speedy and focus upon the needs of customers. CRM systems collect data on clients and their transactions. Huge databases store data on individuals and groups of individuals. Banks can track individuals, and try to market products and services to them based upon similar client behavior seen in other individuals.

Technology

Without technology; there is nothing called CRM systems in this information era. Information Systems is an essential enabler for any modern CRM. Technological decisions are vital for enabling CRM strategies. CRM requires seamless customer-centric processes, supported by integrated technology across the bank and its supply chain.

Conclusion & Recommendations

By analyzing the questionnaires the following conclusions were obtained.

In order to be successful; proper customer relationship management system requires a clear vision at the top level so that a strategy and implementation can be developed to achieve it. When analyzing the managers' views it is clear that HSBC has a clear vision at the top level regarding their CRM solutions & these systems are capable of enhancing the relationship of regular clients.

The objective of the CRM strategy should be to convert regular clients to heavy clients in order to achieve corporate goals. When analyzing the managers' views it is found that only the half of managers agree that one of the objectives of the HSBC CRM strategy go with conversion of regular clients into heavy clients to achieve corporate goals. But another 30% of the managers do not agree and another 20% has not given a clear expression. Therefore it is much wiser to revise the HSBC's CRM strategy in order to maximize the results.

Note: One assumption made here is that the managers who filled the questionnaire has familiar with HSBC CRM strategy.

Clients' experiences when interacting with the bank play a key role in shaping their perception. Good customer experiences drive satisfaction, trust and long-term loyalty. Use of information systems plays a major role here.

Majority of managers are accepting that;

  • HSBC has strategically adopted numerous technologies and information systems which enhance the customer relationship in a broader way.
  • By using these innovative technologies and information systems; the bank has been able to convert considerable amount of their regular clients to heavy clients.

All most all the customers have valued customer experience with HSBC. Therefore everyone is satisfied.

Customer-centric CRM which ensures that clients interact with information systems based on their needs therefore the requirements are fulfilled in a best manner.

In this case half of the managers are accepting that HSBC has implemented customer-centric CRM successfully. On the other hand it is important to consider that nearly a half of managers disagree with that fact. Therefore HSBC has to make improvements to their customer-centric CRM strategy.

Majority of customers accept that HSBC offers customized & personalized range of services that suits the individual customer needs. Requirements are fulfilled in a best manner due to the success of client-centric CRM. But it is also important find out the reasons for disagreed 20% In order to maximize the customer relationship. Every customer is important! That is the rationale to be applied.

Collaborative CRM ensures banks and customers can work closely with each other through modern information systems. This collaboration can be used to enhance the customer relationship & convert normal clients to heavy clients in a bank.

Majority of managers disagree with the fact that HSBC has implemented collaborative CRM which is helpful to enhance the customer relationship. Same time it is important to consider that there are 40% of clients who distrust or disagree HSBC's collaborative CRM. Therefore HSBC has to find out the root causes and redesigned their collaborative CRM system for better customer relations.

Customer Information systems are the key factor of successful CRM. Proper Information systems should be there to have the right information at the right time which is a fundamental to successful CRM strategies, providing customer insight and allowing effective interaction across any channel. When consolidating both manager and customer views it is clear that HSBC has implemented proper Information systems.

Customer selection, 'Acquisition' & extension can be achieved through three contextual factors: marketing orientation, value creation, and Innovative IT/IS. Answers from both parties show this has successfully achieved by HSBC.

Without technology; there is nothing called CRM systems in this information era. Information Systems is an essential enabler for any modern CRM. Conclusion for this question is HSBC has implemented powerful CRM systems which are highly IS enabled. Customers heavily agree that HSBC uses advanced technologies to serve their clients.

References

  1. http://en.wikipedia.org/wiki/Bank
  2. http://en.wikipedia.org/wiki/HSBC
  3. www.hsbc.com.au/1/2/about/world
  4. http://whitepapers.zdnet.com/abstract.aspx?docid=971897
  5. www.infosys.com/finacle/usa/pdf/.../CRM-in-banking.pdf
  6. http://aux.zicklin.baruch.cuny.edu/critical/html2/8098zaman.html
  7. http://www.britannica.com/bps/additionalcontent/18/35637628/THE-ROLE-OF-CUSTOMER-RELATIONSHIP-MANAGEMENT-CRM-TO-DEVELOP-LIFETIME-CUSTOMER-PROFITABILITY-ANALYSIS-MODEL-LCPAM-A-CASE-STUDY-OF-AUSTRALIA
  8. http://www.sap.com/southafrica/industries/banking/pdf/BWP_CRM_banking.pdf
  9. http://www.crminfoline.com/crm-articles/crm-business-models.htm
  10. http://www.microsoft.com/industry/financialservices/banking/businessvalue/tgcrmarticle.mspx
  11. http://marketingteacher.com/Lessons/lesson_crm_business_strategy.htm
  12. www.crmodyssey.com/.../Seven_Critical_Steps_to_a_Successful_CRM_Solution.pdf
  13. www.gartner.com/resources/103200/103204/103204.pdf

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