Marketing Financial Services: HSBC Bank - Essay Example

MARKETING FINANCIAL SERVICES: HSBC Bank INTRODUCTION Our world today is beset with financial crisis of insurmountable coverage. A multitude of corporations on a global scale declare bankruptcy and render thousands of employees jobless. The inevitable nature of factors which interplay and caused this financial turmoil on a global scale affect other facets of the organization’s operations, including marketing. Several financial institutions are most affected by the crisis, of which HSBC Bank is one. The strategies employed by the organization, especially in the area of marketing, assist in its survival. The objective of this essay is to identify an international financial organization and to produce for that organization a SWOT (strengths weaknesses, opportunities and threats) analysis. The organization chosen for this essay is HSBC Bank. The following marketing areas would be considered in the discourse: the marketing tools used by the organization, the customers of the organization, including issues such as customer care, the current issues faced by the organization, and the control systems used by HSBC. BACKGROUND OF HSBC HSBC Bank has been operating in England and Wales at the registered office located at 8 Canada Square, London E14 5HQ. It offers a diverse portfolio of financial instruments including savings and current accounts, investment accounts, credit cards, loans, mortgages, insurance and international services. It supports a wide range of education projects and initiatives throughout the communities where they do business. In addition, “HSBC supports a wide range of projects and initiatives that underline their commitment to UK businesses.” (HSBC, 2010, 1) The management of HSBC promotes diversity and equality of opportunities through programs where they establish partnerships with other business organizations. Accordingly, “representatives of HSBC Bank plc can provide advice on investment and pension products from selected providers, including companies within the HSBC Group, and on life insurance products from HSBC Life (UK) Limited.” (HSBC, 2010, 1) SWOT ANALYSIS With the extent of drastic effects that the financial crisis have wrought, HSBC Bank remains strong in the market due to its strengths, as presented: (1) diversity of financial portfolio; (2) a strong customer relations skills; (3) a competent and professional management; (4) extensive global reach; (5) substantial resources. The multitude and variety of products and services enable HSBC to tap a wider range of clientele base from children to retirees. Their strong customer relations skills make their management and staff adept and competent to address customer relations issues and impending threats in the environment. An extensive global reach is a plus factor to tap potentials in diverse markets where HSBC currently holds corporate banking offices. Finally, the substantial resources (money, man, and materials) equip HSBC in employing the necessary marketing strategies to meet competitive pressures and to innovate in the market. The weakness which can be seen is the effect of competition in its continuing operations. With the number of banks currently existing and fighting for market shares, HSBC is not except from competitive threats. This threat is exacerbated by the effects of the financial crisis on personal funds that investors have and are willing to put in the financial institutions. Clients are more cautious to release their funds and to rely solely on the advice of financial organizations. However, instead of dwelling on these as threats or weaknesses, HSBC Bank sees these as opportunities and challenges to improve on their products and services, especially on the quality of mortgages that they offer. It offers specialist mortgages and a variety of payment options. In addition, by offering financial advice, HSBC presents various investment alternatives which would assist clients in determining which options would yield higher returns. MARKETING TOOLS USED BY HSBC Products and Services HSBC boasts of offering a variety of products and services to cater to the diverse and unique needs of its clientele. From among the host of products and services, the following stand out: Savings Accounts in this contemporary globally competitive world should be diverse and enticing to capture the interest of the customers. HSBC offers the following savings accounts, to wit: tax free savings (cash e-ISA, variable and fixed rate cash ISA); instant access savings (online bonus saver, flexible saver and HSBC premier savings); fixed rate (regular and fixed rate saver) and specialist accounts (savings for children and saving for retirement). The savings accounts are designed to cater to the needs of their wide range of clientele from children to retirees. The accounts entice the customers by giving incentives (tax free, bonus when not making withdrawals, various options in rates and accessibility. Investment Options are also accorded to customers in the form of Selected Investment Funds, tax efficient savings account, investment bonds, share dealing, guaranteed income bond, financial advice, and retirement solutions, among others. These services are catered to clients who have excess funds which can be utilized for investment purposes. The financial advice option would assist the clients in determining the alternative ways to manage their funds at the most effective and efficient way. HSBC also offers personal loan, mortgages and several insurance alternatives (car, home, travel, life, student, business and even pet insurance). The bank provides international services for clients leaving the country and requiring a variety of international services (travel and holiday, currency transactions, offshore banking and investment). Pricing Strategies It is revealed in Papers4You (2007, 1) discussing the Marketing Mix that “pricing is basically setting a specific price for a product or service offered.” In a simplistic way, Kotler and Armstrong (2004, 258) refer to the concept of price as the amount of money that customers have to pay to obtain the product. Setting a price is not something simple.  Normally it has been taken as a general law that a low price will attract more customers. It is not a valid argument as customers do not respond to price alone; they respond to value so a lower price does not necessarily mean expanded sales if the product is not fulfilling the expectation of the customers (Lazer, 1971, 156).” Pricing strategies of banks are highly competitive in terms of the rates given for savings and investment accounts, bonds, loan facilities and currency exchange rates. The rates follow those that are dictated by the market. The current yearly average interest rate for savings account in UK is a little above 5%. (Rate Finance For Everyone, 2010, 1) Financial institutions assess their competitors in the area and peg their rates accordingly. Place Strategies HSBC have several corporate banking offices scattered all over UK, to wit: Mark Brown, London, Home Countries (includes Cambridge), Manchester (includes Merseyside), Midlands (includes Birmingham and Leicester), Offshore (Jersey, Guernsey and Isle of Man). Scotland (includes Aberdeen, Edinburgh and Glasgow), South (Southampton) South East (Crawley), Thames Gateway (Romford), Thames Valley (includes Oxford and Reading), West and Wales (includes Bristol, Cardiff, Exeter and Swindon), West End, and Yorkshire (includes Leeds and Sheffield). (HSBC, 2010, 1) The locations are chosen strategically depending on the demographic factors, population of the area, business locations, among others. Promotion Strategies With the technological advantage offered by the internet, most promotional activities are implemented through social networking through the internet. In addition, HSBC employs a uniform corporate branding strategy. According to Roll (2004, par. 8), “HSBC employs the same common expression throughout the globe with a simple advertising strategy based on the slogan “The world’s local bank.” This creative platform enables the corporation to bridge between many cultural differences, and to portray many faces of the same strategy.” HSBC continues to pursue its vision of being the world’s leading financial services company. Accordingly, by leading, they mean: “preferred, admired and dynamic and being recognized for giving the customer a fair deal”. (HSBC, 2010, 1) This vision is aimed to be achieved by emphasizing corporate values such as “long term ethical client relationships; high productivity through teamwork; a confident and ambitious sense of excellence; being international in outlook and character; prudence; creativity and customer focused marketing” (HSBC, 2010, 1). By being aware of their strengths, HSBC can utilize these to sustain market share and to convince the public that they have not resorted to sub prime mortgages which were the ultimate cause of the financial breakdown. By acknowledging that HSBC still emphasize the utilization of prime mortgages and employ the necessary steps to ensure that their customers were appropriately assessed to ensure regular payments, the company would assure the public that they adhere to the vision, values and corporate responsibility in their banking practices. Since HSBC has a wide global reach and enormous financial resources, the public would be assured that their products and services were least affected by the financial turmoil. CUSTOMERS OF HSBC HSBC has over 125 million customers all over the world with 25 million registering for internet banking (Subramanian, n.d., 1). It employed about 55,000 staff in the United Kingdom. One of the strategies implemented by HSBC is “Managing for Growth”, building on the company’s strengths and addresses areas where improvement have been identified as desirable and attainable (HSBC, 2010, 1). As manifested in the diversity of products and services that HSBC offers, the profile of HSBC is of a wide age range encompassing children and retirees. Their savings for children and savings for retirement attest to the fact that HSBC captures a wide market base. Customer Issues The proliferation of social networking made it inevitable for HSBC to address issues of safeguarding the accessibility of their Personal Internet Banking service with the installation of a security device. (HSBC Security Device, 2010, 1) According to Oladimeji, Supakkul & Chung, “a security threat is simply a potential violation of the security of a system - an event that may have some negative impact.” Their study delved into the importance of “designing security into software applications rather than retrofitting it as an afterthought”. (Oladimeji, Supakkul & Chung, n.d., 1) HSBC invests on managing their risks readily anticipates and identifies the threats in their system and devises a comprehensive plan of action to ensure that day-to-day operations are not compromised. In addition, a study conducted by the QM Group (2007, 1), revealed that the “leading global bank HSBC recognized there was a chance to improve the way it managed non-transactional enquiries within its UK branch network and turned to queue management specialist Qm Group to help it drive innovation, reduce waiting times and improve customer service.” Further, to improve customer service and satisfaction, “HSBC is also investing heavily in the latest banking technology, installing 600 next generation ‘smart’ deposit devices, as well as 1,200 ‘Express Banking’ kiosks, which allow customers to pay bills, transfer funds and obtain statements, and a further 500 new fee-free Automatic Teller Machines.” (QM Group, 2007, 3) ANALYSES OF THE SITUATION AND WAYS TO CONTROL THE CHALLENGES The interplay of factors contributing to the financial dilemma which affected financial institutions like HSBC created a crisis so severe that the situation became unmanageable and complex. The serious repercussions it created were its effects on the economies of all neighboring countries in scales so enormous that it continues to threaten the lives and survival of people, especially in poor countries of the world. The effects of global food crisis, bankruptcy, credit crunch, and decline in the confidence in the financial market are still eminent that until now, solutions seem to be far from reach. Further, it diminished the confidence on financial institutions which are pinpointed as the cause of the financial breakdown. However, like HSBC, other financial institutions could restore confidence in financial services by adhering to the high standards of the codes of banking and those set by the Financial Services Authority. Likewise, by building on the company’s strengths and addresses areas where improvement have been identified as desirable and attainable, HSBC would ensure its customers that their financial institution remains strong despite economic pressures and a highly competitive global environment. By emphasizing corporate values such as long term ethical client relationships; high productivity through teamwork, its personnel would remain confident in delivering high standards of service ensuring customer satisfaction. A confident and ambitious sense of excellence exemplified and manifested by management and the rest of the human resources of HSBC is required to continue looking for ways to adapt and adjust to the competitive environment. It is an effective strategy to focus on international issues and be global in outlook and character. Finally, prudence, creativity and customer focused marketing helps establish the leadership that HSBC gained in their respective markets. In addressing the concerns emerging on internet security, the most critical factor to consider is the organization’s awareness to the threats, issues, developments, applications that encompass internet security. It is commendable that HSBC immediately addresses the issues of safeguarding the personal internet accounts of their clientele. Likewise, by applying innovative banking features, waiting times are reduced and customer service and satisfaction are improved. HSBC must be aware that marketing strategies must be monitored in light of both the external industry globalization drivers and internal organization factors. The external drivers were identified as market factors; cost factors; competitive factors; technology factors; and environmental factors (Zou & Cavusgil,1995, 62). The internal organizational factors, on the other hand, are market orientation, managerial orientation and commitment, organizational culture, organization capabilities and international experience. These factors are classified as difficult to imitate, hard to substitute for, and the value of which is more internally than external. Finally, global business performance assimilates financial and strategic goals of the organization. CONCLUSION The breakdown of the financial markets of the world is, sad to say, attributable to a few, who have had such insurmountable opportunities to enrich themselves that they failed to realize that their actions could devastate and affect the whole world. In the midst of the effects of this crisis, global enterprises are all struggling to regain their market shares. For financial institutions, greater challenges are faced in regaining public confidence. These could be difficult given the circumstances but not futile. A creative manager who knows all about his company could devise strategies to ensure that it would continue to pursue its mission and vision regardless of the seemingly insurmountable tasks which lie ahead. The strategies employed by HSBC in evaluating and examining the marketing mix that needs to be improved and developed to survive in the increasingly competitive global market are instrumental in its survival and success. The marketing tools focused on examining their strengths in products and services, place, promotions and pricing strategies – and enhancing these strategies to benefit its wide range of clientele. The use of a SWOT analysis helps in identifying the organization’s weaknesses and threats and finding ways and means to develop strategies that would effectively address them. Marketing strategy must recognize the multidimensional aspect of global strategy to ensure its successful implementation. Clear and concise performance goals must be explicitly stated by the organization before the formulation of a marketing strategy. Global organizations, like HSBC, must be vigilant in monitoring changes in the external environments to appropriately adjust marketing strategies. Only then would global organizations be ensured that performance goals are indeed achieved. Reference List HSBC Bank plc, 2010. About HSBC. Viewed 13 February 2010. HSBC. 2010. Security Device. Viewed 13 February 2010. Kotler, P & Armstrong, G.,2004, Principles of Marketing, Tenth Edition, New Jersey: Pearson Education Inc. Lazer, W., 1971, Marketing Management: A Systems Perspective, New York:  John Wiley & Sons Oladimeji, E.A., Supakkul, S. & Chung, L. (n.d). Security Threat Modeling and Analysis: A Goal-Oriented Approach. Viewed 13 February 2010. Papers4You. 2007, Marketing Mix. Viewed 13 February 2010. < http://university-essays.tripod.com/marketing_mix.html> QM Group, 2007, HSBC IMPROVES BRANCH CUSTOMERSERVICE WITH Qm’s MATCHMAKER® SOLUTION. Viewed 13 February 2010. < http://www.cisco.com/web/strategy/docs/finance/HSBC_case_study.pdf> Rate Finance for Everyone, 2010. Savings. Viewed 13 February 2010. < http://www.rate.co.uk/savings/index.html> Roll, M., 2004, Understanding the Purpose of a Corporate Branding Strategy. Viewed 12 February 2010. < http://www.brandchannel.com/brand_speak.asp?bs_id=81> Subramanian, C. HSBC Software. Viewed 13 February 2010. Zou, S. & Cavusgil, S.T., 1995. Global strategy: a review and an integrated conceptual framework. European Journal of Marketing, 30 (1): 52 – 69. Read More