(source:http://www.dmreview.com)
The utilisation of SPSS helps to uncover ‘relationships hidden in HSBC’s 35GB customer database to determine how strong a particular statistical relationship is and do "what-if" scenarios to find out what that means in terms of a business opportunity’.
(source:http://www.dmreview.com)
Using SPSS, HSBC can mine their sales data for the specific characteristics of customers. For example, customers who in the past bought a new car once their auto loan matured. Then looking at current auto loans that are about to be paid off. HSBC can predict which customers will soon be shopping for a new car, a new loan and car insurance. This kind of predictive analysis helps in contacting the right customers at the right time with the right offer.
(source:http://www.dmreview.com)
3.4 Customer Touch points
HSBC understands the importance of using its touch points (see Appendix 1) to collect customer data and make its products accessible to all customers at all times by providing alternative ways to bank
- Internet Banking
- Telephone Banking/Text-phone banking
- TV Banking
- Self Service
- Branch Banking
HSBC uses the traditional direct mailing procedure as a campaign-based marketing event to deliver messages regarding their services to targeted customers. Customers receive leaflets with offers of services such as credit card, interest free overdrafts etc in the post with their bank statements.
HSBC also sends a summary of customer accounts on a yearly basis with an upgrading form. The upgrading form used as a touch point is a discrete way of keeping customer details updated and asking customers if they are interested in other services provided by the bank.
HSBC magazines are also sent out with bank statements as a tactical activity. The magazine offers a quiz page to enter for a prize. The incentive procedure is used as a touch point to keep customer details updated. The magazine is also used to sell services using case studies.
(source: HSBC customers)
4. HSBC INTERNET BANKING
4.1 Market Information
HSBC bank provides a range of financial services including personal, commercial, investment and private banking. () In 1999, following the launch of the first nationally available interactive TV banking service, HSBC realised the importance of email and web forms of communication channels for Internet based customer contact.
4.1.1 Growing Internet Usage
According to Euromonitor, (Financial Cards in the UK report, April 2004) it has been estimated that one in three Internet users now bank online. The Internet has become an increasingly important channel of communication, whereby financial service providers and cardholders can communicate with each other.
The level of card transactions via the internet increased nearly ten fold between 1998 and 2003 (Euromonitor report Financial Cards in UK, April 2004), reflecting the growing nature of this form of payment, and thus reflects the importance of developing, establishing and maintaining a good relationship with customers.
4.2 CRM and Database Activities
4.2.1 Original database – WebSphere
Due to the large volume of electronic interactions with customers, managing the customer interactions effectively and maintaining a high quality service was of utmost importance to HSBC. The software solution adopted by HSBC was created by IBM and Amacis Ltd, and is called WebSphere, as part of the Amacis Visibility product (HSBC case study by IBM:
The solution provided by IBM and Amacis has meant that data stored in existing customer systems, databases and other applications have been integrated with the WebSphere, rather than replacing these systems. Also, the solution provided a high degree of precision, in terms of the system correctly categorising responses, in order to provide accurate classification and functionality. (Source: )
4.2.2 Current Database
Currently, HSBC are taking advantage of database solutions from Siebel systems. The bank is presently utilising the software package Siebel 7.7. ().
The Siebel 7.7 system allows ‘customer interactions across multiple communications channels—including the Web, call centres, field sales, and dealers or partner networks. The challenge is to make it easy for customers to do business with the organization any way they want—at any time, through any channel, in any language or currency— and to make customers feel that they are dealing with a single, unified organization that recognizes them at every touchpoint.’ ().
4.2.3 Customer Touchpoints
In relation to HSBC’s Internet banking, it allows you to view transaction information at your convenience. Types of details that can be viewed include statement details, the customers’ transaction and pin services. It also allows the transference of money and also amending personal details.
HSBC employ segmentation and profiling techniques, according to the details provided by a customer, the bank offers this customer certain services in relation to their situation. Such profiles are created according to the transactional data from the internal database. (Michael Collins, MG2029S, Lecture 4). Segmentation occurs with regard to the customers’ situation. For example, other products and services that are available to customers include Instant Access Savings account, personal loans, mortgages and credit cards. These services are only offered to those individuals that meet the profile requirements.
Such products and services can also be described as a Direct Marketing Strategy, in terms of Retention. The key stage of the relationship would be characterised as the ‘Uptrade’ stage. (Michael Collins, MG2029S, Lecture 5).
Diagram - Michael Collins, MG2029S, Lecture 5).
This stage refers to the customer already having purchased the basic product, i.e. the online banking service, and then uptrading them to the next product (i.e. the other products and services offered by HSBC). These products would be advertised to the customer online; therefore they exploit this as an advertising activity.
Other touchpoints utilised by HSBC include telephone banking, branch banking, and text phone banking. (See Appendix 1 – Touchpoint Analysis)
‘HSBC believes that it now talks to customers when it has identified a real need, when the timing is right and when the bank has something to offer.’
(www-5.ibm.com/services/de/pdf/bczee01063-4.pdf)
4.3 Problems with Internet banking
4.3.1 The problem
Problems faced by customers using online banking in the past are the time consuming nature of using the online banking when facing problems. For example, if a customer was to forget their password, and therefore couldn’t access their account online, the process of getting a new one is very time consuming. The procedure would involve calling a call centre, who would direct the customer to the banks website to print a password request form. This would need to be taken to a branch for signature verification and only then would a new password be issued. ()
4.3.2 Solution
Banks like HSBC have resolved this by linking their different applications - customer profiles, customer relationship management (CRM) systems and a number of different applications and databases - via a web services platform. This means that an existing bank customer’s signature and identity will be verified on-line because the applications that hold all the customer information will be able to talk to each other to confirm your identity. The result is that the bank will issue you with a new password, personal loan, travel insurance, mortgage or other service without ever having to see you. ()
Thus HSBC are creating a better and more efficient database, and in turn are building a better relationship with customers. This therefore will encourage customer retention and could also encourage enquiry from possible suspects, and may also persuade those customers that have fallen off the Retention Ladder to rejoin it, as this type of problem may have been the cause of them ‘falling off’ the Retention Ladder in the first place. (Michael Collins, MG2029S, lecture 5).
Source: Michael Collins, MG2029S lecture 5
5. EGG INTERNET BANKING
CRM
Egg is the number one pure-online Internet banking service in the world. It has over 3.6 million customers since its inception in 1998. It is 79% owned by Prudential through shareholdings.
Egg uses CRM extensively using the CHAID system, Data mining using Mosaic profiling of customers together with MapInfo GIS to get accurate information for the cross selling of financial services and overview of its customer geological distribution. The use of the SAND integrated analytical platform has enabled Egg to become more efficient and accurate in its CRM strategies.
[Evans, M., O’Malley, L. and Patterson, M. pg 82-90 (2004)]
()
()
The introduction of its new Money Manager service using an emerging model of agile programming software development has enabled Egg to develop its software models in half the time compared to conventional techniques (appendix 2.2).
Egg has begun research with Microsoft using the pre-alpha version of Microsoft’s Longhorn OS into smart client technology. It has developed an application that will use WinFS, which Microsoft is planning to ship soon in Longhorn. Key changes will be how users access their data and applications on the PC (appendix 2.3)
5.1 Touch points
Eggs customer touch points are almost entirely web based making it unique in the banking world. This enables the user to focus on its website as a one stop shop for all his/her information and financial needs. Egg uses its corporate responsibility programme to support its customer values and adds a further aspect to its customer relationship.
()
()
5.2 Developments
Online banking has become more popular with new statistics showing that one in four UK Internet users use the web to manage their finances. According to a recent Mori report for Egg it revealed that 27% of Internet users use online banking and out of 22 million people who use the web 34% have bought or applied for a financial product (appendix 2.3).
Businesses and IT have recently worked more closely together to develop systems and software technology that more accurately perform the functions clients want, especially so in the financial industry which has seen a marked consumer confidents in online banking practices. Financial institutions are working on enabling browser-based computing by making their mainframes web compatible.
With the research into smart client technology it is likely that Internet services financial or otherwise will become more interactive and personal. The research that Egg is currently undergoing with Microsoft Longhorn, if it comes to fruition and implementation, will enable the possibility of video linking to customer service staff via the clients own computer which would give an unprecedented level of personal customer relationship and service value.
6. CONCLUSION
Looking at each banking service, it has been concluded that the CRM strategy employed by them are satisfying the customer needs.
Looking at these services through a comparative analysis, it is clear that HSBC branch are utilising Data Mining strategies, HSBC online are employing Siebel 7.7 software to deal with its CRM objectives. Egg’s CRM activities are made up of the CHAID system, and the use of data mining and profiling is prevalent in their strategy.
7. RECOMMENDATIONS/ FUTURE TRENDS
HSBC:
-
‘Moving forward, the bank will be reviewing data mining capabilities and looking at various tools that can be applied across its entire range of branches.’
(www-5.ibm.com/services/de/pdf/bczee01063-4.pdf)
- Staff loyalty and incentive schemes for employees working on the shop floor in the bank
- Better identification of customer needs that will lead to long term profitability and success for the organisation
- Effective communication to the customers to ensure, enhance and improve customer take up of products and services, through an understanding of how the customers want to interact with the bank
- Focusing on giving customers the products and services they desire whilst ensuring a positive brand experience through outstanding customer service
EGG
- Continue R&D into technology that enhances and develops financial services and data collection
- Look to increase global market share through careful study of consumer financial markets in selected countries avoiding the mistakes made in the France role-out.
8. BIBLIOGRAPHY
Books
Evans, M., O’Malley, L. and Patterson, M.(2004) Exploring Direct & Customer Relationship Marketing (2nd Edition).Thomson Learning, London.
Websites
)
http://www.dmreview.com/article_sub.cfm?articleId=1874
).
www-5.ibm.com/services/de/pdf/bczee01063-4.pdf)
Online database
Financial Cards in the UK report, April 2004
Lecture Notes
Collins, Michael. MG2029S, Lecture 4
Collins, Michael. MG2029S, Lecture 5