Chapter 1: Introduction to HSBC Group

1.0 HSBC Mission Statement:

“We aim to satisfy our customers with high quality service that reflects our global image as the premier international bank”

Objectives of HSBC:

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

1.1 An Overview of HSBC Group

The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking Corporation Limited, which was established in 1865 in Hong Kong and Shanghai to finance the growing trade between China and Europe.
Thomas Sutherland, a Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company helped to establish this bank in March 1865. Throughout the late nineteenth and the early twentieth centuries, the bank established a network of agencies and branches based mainly in China and South East Asia but also with representation in the Indian sub-continent, Japan, Europe and North America.
The post-war political and economic changes in the world forced the bank to analyze its strategy for continued growth in the 1950s. The bank diversified both its business and its geographical spread through acquisitions and alliances.
HSBC Holdings plc, the parent company of the HSBC Group, was established in 1991 with its shares quoted on both the London and Hong Kong stock exchanges. The HSBC Group now comprises a unique range of banks and financial service providers around the globe.
HSBC maintains one of the world’s largest private data communication networks and is reconfiguring its business for the e-age. Its rapidly growing e-commerce capability includes the use of the internet, PC banking over a private network, interactive TV, and fixed and mobile, including wireless application protocol or WAP-enabled mobile, telephones.

1.2 HSBC History

The HSBC Group has a history, which is unique. Many of its principal companies opened for business over a century ago and they have a history rich in variety and achievement.
Foundation and Growth:
The inspiration behind the founding of the bank was Thomas Sutherland, a Scot who was then working as the Hong Kong Superintendent of the Peninsular and Oriental Steam Navigation Company. Realizing the considerable demand for local banking facilities both in Hong Kong and along the China coast and he helped to establish the bank in March 1865. Then, as now, the bank's headquarters were at 1 Queen's Road Central in Hong Kong and a branch was opened one month later in Shanghai.
Throughout the late nineteenth and the early twentieth centuries, the bank established a network of agencies and branches based mainly in China and South East Asia but also with representation in the Indian sub-continent, Japan, Europe and North America. In many of its branches the bank was the pioneer of modern banking practices. From the outset, trade finance was a strong feature of the bank's business with gold bars, exchange and merchant banking also playing an important part. Additionally, the bank issued notes in many countries throughout the Far East.
During the Second World War the bank was forced to close many branches and its head office was temporarily moved to London. However, after the war the bank played a key role in the reconstruction of the Hong Kong economy and began to further diversify the geographical spread of the bank.

The Making of the modern HSBC Group:
The post-war political and economic changes in the world forced the bank to analyze its strategy for continued growth in the 1950s. The bank diversified both its business and its geographical spread through acquisitions and alliances. This strategy culminated in 1992 with one of the largest bank acquisitions in history when HSBC Holdings acquired the UK’s Midland Bank plc (now called HSBC Bank plc). However, it remained committed to its historical markets and played an important part in the reconstruction of Hong Kong where its branch network continued to expand.

1.3 Banks under the HSBC Group

Many of the members have changed their name into HSBC, The Hongkong and Shanghai Banking Corporation Limited to introduce the whole group under one brand name.
|Midland Bank |HSBC Holdings acquired Midland Bank one of the principal UK clearing banks in 1992. Headquartered |
| |in London, the bank has a personal customer base of five and a half million, business customers of|
| |over half a million, and a network of almost 1,700 branches in the United Kingdom. Midland has |
| |offices in 28 countries and territories, principally in continental Europe, with a number of |
| |offices in Latin America. |
|Hang Seng Bank |Hang Seng Bank, in which Hongkong Bank has a 62.1% equity interest, maintains a network of 146 |
| |branches in the Hong Kong SAR, where it is the second largest locally incorporated bank after |
| |Hongkong Bank. Hang Seng Bank also has a branch in Singapore and two branches and two |
| |representative offices in China. |
|Marine Midland Bank |Marine Midland Bank headquartered in Buffalo, New York, has 380 banking locations statewide. The |
| |bank serves over two million personal customers and 120,000 commercial and institutional customers|
| |in New York State and, in selected businesses, throughout the United States. |
|Hongkong Bank of Canada |Hongkong Bank of Canada is the largest foreign-owned bank in Canada and the country’s |
| |seventh-largest bank. With headquarters in Vancouver, it has 116 branches across Canada and two |
| |branches in the western United States. |
|Banco HSBC Bamerindus |Banco HSBC Bamerindus was established in Brazil in 1997. The bank has network of some 1,900 |
| |branches and sub-branches, the second largest in Brazil. |
|Hongkong Bank Malaysia |Hongkong Bank Malaysia is the largest foreign-owned bank in Malaysia and the country’s |
| |fifth-largest bank, with 36 branches. |
|The British Bank of the |The British Bank of the Middle East (British Bank) is the largest and most widely represented |
|Middle East (British Bank) |international bank in the Middle East, with 31 branches throughout the United Arab Emirates, Oman,|
| |Bahrain, Qatar, Jordan, Lebanon and the Palestinian Autonomous Area, including an offshore banking|
| |unit in Bahrain. The bank also has branches in Mumbai and Trivandrum, India, and Baku, Azerbaijan,|
| |as well as private banking operations in London and Geneva. |
|HSBC Banco Roberts |HSBC Banco Roberts was acquired in 1997. Based in Buenos Aires, it is one of Argentina’s largest |
| |privately owned banks, with 60 branches throughout the country. |
|Hongkong Bank of Australia |Hongkong Bank of Australia has 16 branches across Australia. It is the flagship of the HSBC |
| |Group’s businesses there, operating under the name HSBC Australia, and providing a complete range |
| |of financial services. |
|The Saudi British Bank |The Saudi British Bank, a 40%-owned member of the HSBC Group, has 63 branches throughout Saudi |
| |Arabia and a branch in London. |

Figure 1: Banks under the HSBC Group

Other associated Group banks are British Arab Commercial Bank, The Cyprus Popular Bank and Egyptian British Bank.

1.4 Customer Segments of HSBC Group

|Personal Financial Services |HSBC provides a full range of personal financial services, including current and savings account,|
| |mortgages, insurance, credit cards, loans, pensions and investments. In 2000, residential |
| |mortgages across the Group – excluding Household – grew by 15%, while non-mortgage personal |
| |lending increased by over 20%. Credit cards in issue grew by 20% worldwide. Sales of repayment |
| |protection insurance and deposit growth reached record levels. Current account balances in the UK|
| |exceeded £ 20 billion for the first time at year-end 2010. The number of customers registered for|
| |e-banking services – via the internet and telephone – more than trebled in 2010. The internet |
| |generated sales of over 3 million products and 150 million transactions. |
|Consumer Finance |Through Household International, Inc., HSBC is now a major provider of consumer finance and a top|
| |10 issuer of credit cards in the USA. Household provides consumer loans, credit cards, vehicle |
| |finance, mortgage financing and credit insurance to middle America. During 2004, Household |
| |achieved good organic loan growth, which it supplemented with portfolio acquisitions. The |
| |strongest growth was in the real estate portfolio and the mortgage services business, and also in|
| |branch-based consumer lending. Synergy benefits with HSBC included store cards and point-of-sale |
| |financing. |
|Commercial Banking |The provision of services to small and medium-sized enterprises around the world is core strength|
| |of HSBC. During 2010, HSBC increased its leading position in the UK business start-up market to |
| |30% and attracted record levels of business current and deposit account balances. Business |
| |internet banking was offered in 20 countries and territories, and the number of registered users |
| |more than doubled to 600,000. Money transmission revenues, trade finance fees, wealth, savings |
| |and insurance products all showing growth during 2010. |
|Corporate, Investment Banking |This customer group comprises four main business lines – Corporate and Institutional Banking, |
|and Markets |Global Investment Banking, Global Markets and Global Transaction Banking – which focus on |
| |long-term relationships with major international corporations and institutions. Record results |
| |were achieved in 2010. The Global Markets business excelled, particularly in international debt |
| |issuance, risk management and structured products, and foreign exchange. Global Investment |
| |Banking was entrusted with a number of landmark deals in capital restructuring, corporate |
| |reorganization and strategic advice. |
|Private Banking |This customer group provides world-class financial services to high net worth individuals and |
| |their families. In 2010, Private Banking posted improved financial results in all regions, led by|
| |Asia, which had a record year. New business initiatives and a general improvement in investment |
| |markets led to increased client activity across a range of products. An increase in discretionary|
| |mandates, together with a strong demand for client-tailored structured products, contributed to |
| |higher fee revenues and dealing income. Funds under management grew by 25%, reflecting both net |
| |inflows of client assets and improving market conditions. |

1.5 HSBC’s International Network

Offices by Region

|Region |Number of offices |
|Americas |3,821 |
|Asia-Pacific |1,830 |
|Europe |2,315 |
|Middle East & Africa |302 |

Fig 2: HSBC’s International Networks

International network

HSBC's international network comprises around 7,500 offices in 87 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. There are 13 offices all over Bangladesh.

1.6 Country Classifications

To ensure that the key resources (management time, capital, human resources and information technology) are correctly allocated and that the exchange of best practice is accelerated between entities, the group has classified the countries where it operates into 3 categories: the large, the major and the international.
These classifications are a function of sustainable, attributable earnings, the number of retail clients, balance sheet and size of operation. A brief presentation of this classification is shown below:
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Figure 3: Map of HSBC's Country Classifications

Large: United Kingdom, USA and Hong Kong SAR/Mainland China.

➢ Definition ► More than one million personal clients ► Sustainable earnings greater than US$ 200 million

➢ Business Focus ► Concentrated group resources on wealth management ► Be a top 10 player in any market or region served ► Develop cross selling, loyalty programs and value added products.

Major: Argentina, Canada, Malaysia, India, Kingdom of Saudi Arabia, Singapore and United Arab Emirates.

➢ Definition ► Sustainable earnings between US$ 100 - 200 million

➢ Business Focus ► Universal bank’s (personal, corporate, and investment banking with domestic business) ► Platforms for international group business ► Next generation of large companies ► Stable self funding entities ► Onshore HQ

International: The rest of the world.

➢ Definition ( Earnings below US$ 100 million

➢ Business Focus ► Platforms for international group business ► Limited domestic presence ► “Nursery” for developing management ► Tomorrow’s major businesses ► Supported by offshore HQ

1.7 International Brand

A key part of the Group’s business strategy, announced in 1998, is the creation of a global brand featuring the HSBC name and hexagon symbol. The symbol is now a familiar sight around the world. The Group has embarked on the next phase — making the HSBC brand universally synonymous with its core values of integrity, trust and excellent customer service.

HSBC Brand & Corporate Identity:

The Hexagon logo of HSBC derives from HSBC’s traditionally flag, a white rectangle divided diagonally. The design of the flag was based on the cross of ST.Andrew, The Patron Saint of Scotland.
HSBC brand & corporate identity represents what HSBC wants its brand to mean to its customer. It is derived from the group:

Corporate Character:

HSBC is a prudent, cost conscious, ethically grounded, conservative, trustworthy international builder of long-term customer relationships.

Basic Drives:

HSBC’s basic drives are Higher Productivity, Team Orientation, and Creative Organization, & Customer Orientation.
The essence of HSBC brand is integrity, trust, and excellent customer service. It gives confidence to customers, value to investors, & comfort to colleagues.
Through the process of listening to individuals needs and then acting in partnership to deliver the right solutions, HSBC is committed to help the clients make the most of their financial assets.
HSBC operate on a global basis, but also work on a local level to ensure the cross-border differences are identified and any related benefits exploited. HSBC teams of specialists ensure that whether you need solutions across the world, regionally, or locally, and they have the skills, expertise, and resources to deliver them. They automate as many functions as possible, even as ensuring retains control.
HSBC claims that they are the people to talk to if anyone wants the following: - ➢ Global cash flow co-ordination ➢ Enhanced risk management ➢ Improved security and audit controls ➢ Minimized costs and reduced operating expenses ➢ Maximized liquidity, returns and interest benefits

1.8 Group Business Principles and Value

The HSBC Group is committed to Five Core Business Principles: ➢ Outstanding customer service; ➢ Effective and efficient operations; ➢ Strong capital and liquidity; ➢ Conservative lending policy; ➢ Strict expense discipline;

HSBC Operates According to Certain Key Business Values: ➢ The highest personal standards of integrity at all levels; ➢ Commitment to truth and fair dealing; ➢ Hand-on management at all levels; ➢ Openly esteemed commitment to quality and competence; ➢ A minimum of bureaucracy; ➢ Fast decisions and implementation; ➢ Putting the Group’s interests ahead of the individual’s; ➢ The appropriate delegation of authority with accountability; ➢ Fair and objective employer; ➢ A merit approach to recruitment, selection, promotion; ➢ Promotion of good environmental practice and sustainable development and commitment to the welfare and development of each local community.
HSBC’s reputation is founded on adherence to these principles and values. All actions taken by a member of HSBC or staff member on behalf of a Group company should conform to them.

Chapter 2: Overview of HSBC Bangladesh

2.1 HSBC Bangladesh

The HSBC Group is represented in Bangladesh by its main office which is located at Anchor Tower, 108 Bir Uttam C R Dutta Road, Dhaka 1205, a second full-service branch in Chittagong (Agrabad) and other 11 branches with a vision to satisfy its customer with high quality service that reflects its global image as the premier International Bank. The Bank has been serving customers in Bangladesh since 1996. It has also an Offshore Banking Unit, which provides banking services for foreign companies based in the Export Processing Zones in Dhaka and Chittagong. In September 1999, it introduced ATM and telephone banking for Personal Banking. Five ATMs located at the five branches, there are other off-site ATMs located in Uttara, Dhanmondi, Banani, Shantinagar and GEC (Chittagong).

2.2 HSBC Bangladesh Overview

|Name of the Organization |The Hong Kong Shanghai Banking Corporation Bangladesh LTD |
|Year of Establishment |1996 |
|Head Office |Anchor Tower, 1/1-B Sonargaon Road Dhaka 1205, Bangladesh |
|Nature of the organization |Multinational company with subsidiary group in Bangladesh |
|Shareholders |HSBC group shareholders |
|Products |Savings & deposit services |
| |Loan products |
| |Corporate and Institutional services |
| |Trade services & Hexagon |

HSBC Bangladesh currently provides services from two of its full service branches one in Dhaka and the other one in Chittagong. Besides these offices there are two personal banking Booth offices located at Gulshan & Motijheel, and a new branch opened at Dhanmondi. There is currently nine ATM’s operating in Dhaka and 1 in Chittagong.

2.3 Different Activities in Bangladesh

As one of the largest international banks in Bangladesh, HSBC has a long-term commitment to its customers and provides a comprehensive range of financial services: personal, commercial and corporate banking; trade services; cash management; treasury; consumer & business finance; and securities, and custody services.

Personal Banking Services:

The Hongkong and Shanghai Banking Corporation Limited offers a full range of personal banking products and services designed to take care of its customers’ growing needs and requirements. HSBC in Bangladesh has launched a number of loan products during 2000. Personal Installment Loan is an unsecured loan that does not require any personal guarantee or cash security; Car Loan, also, does not require any down payment or personal guarantee. The Bank has already launched Phone banking, a state-of-the-art automated telephone banking service available 24 hours a day, 7 days a week, and 365 days a year, which allows customers to access their account from the comfort of the office or home. HSBC is the market leader in the local Auto pay service with which the company can initiate bulk Taka payments to, or Taka collections from, any HSBC current or savings accounts of counterparts for a specified sum at a specified date, regardless of the branch. HSBC also offers Power vantage, a unique all-in-one package of products and services designed to give total financial control to the customer; a unique savings account, which allows the customer to do any number of transactions without any charges being incurred or credit interest lost. To satisfy the growing needs of real estate HSBC Bangladesh recently launched Home Loan Scheme and a special type of deposit product named “Bangladesh International” for non-resident Bangladeshi.

Corporate Banking Services:

The Hongkong and Shanghai Banking Corporation Limited offers a wide range of cash financing, working capital, short and medium-term loans and guarantee facilities from its Head Office and Chittagong branch. The Offshore Banking Unit (OBU) provides US Dollar denominated working capital as well as short-term finance for capital imports to eligible businesses. Using high-speed communication links, HSBC connects customers to international payment systems.

Trade Services:

As the leading provider of trade finance and related services to importers and exporters in Asia, HSBC in Bangladesh operates a highly automated trade-processing network and offer an Electronic Data Interchange (EDI) capability through Hexagon. The Bank also uses SWIFT, an efficient and secure mechanism for bank-to-bank global communications used for all trade related activities including fund transfers and issuance of DC’s (Documentary Credit).

Financial Institutions:

HSBC provides global trade services and cash management services to local banks. HSBC’s worldwide network strength, with over 7000 offices in 81 countries and territories, coupled with a world class reputation in Trade Finance (“Best Trade Documentation Bank” – Euro money) and an unparalleled presence in Asia (“Best Bank in Asia” — Euro money), places HSBC in an ideal position to render unmatched correspondent banking services.
HSBC’s commanding presence in the USA (5th largest USD clearing bank globally), UK (largest GBP clearing bank globally), and the Euro land (largest Euro clearing bank in the UK) both in terms of network strength and clearing ability allows the Bank to provide first class cash management solutions in 3 major global currencies; US dollar, Pound sterling, and the Euro.

Payments and Cash Management (PCM):

HSBC is the pioneer in introducing electronic cash management solutions in Bangladesh, by introducing its state-of-the-art proprietary software, Hexagon, back in 1997. This was initially made available to corporate clients only but has since been expanded to include banks and retail clients.
With Hexagon, the Bank’s proprietary cash management system, corporate customers can access banking services from anywhere in the world to view account balances and statements, make transfers and international payments, and to open documentary credits, by using only a PC, a modem, and a telephone line.

Chapter 3: An Overview of Functional Departments

3.1 Management of HSBC Bangladesh

HSBC Bangladesh is such a company that has to overcome a lot of hurdles to reach the position it now holds. To maintain a close touch with the organization each man works in separate area of HSBC’s complex. Their offices are indistinguishable from all other cubicles where HSBC’s junior executives & secretaries work in. There are no office walls in HSBC and all the staff starting from the CEO to the lower operating level employees shares the same premises under one roof. There are no specialized cabins for top management and executives and also no executive dining rooms. This has created a management team that is unified, cohesive, & energetic.
Each and every employee of HSBC takes pride of being an employee at HSBC and his or her pride comes from the freedom of direct communication with the top management. The management of HSBC is supportive in the sense that the top management deliberately supports the suggestions, values, ideas, innovation, and hard work of the employees and officers. Again high amount of employee participation is encouraged in the management process. There are also systems for awards, incentives, and status for innovative ideas and hard works. Again the management style can also be termed as collegial as high amounts of teamwork and participation exists between the top and bottom parts of HSBC.
HSBC follows a 4 layers management philosophy in Bangladesh. These are Managers, Executives, Officers, and Assistant Officers. The CEO is the top most authority of all the levels. Managers are the departmental heads who are responsible for the activities of their departments. They are the heads of the department who formulate strategies for that department. e.g. Human Resources Manager. Executives have the authority next to managers. They are basically responsible for certain activities & organizational functions. e.g. Admin Executive. These two layers represent the management level of HSBC Bangladesh.
Officers are the next persons to stand in the hierarchy list. They are the typical mid-level employees of HSBC organizational hierarchy. These officers are responsible for managing the operational activities and operating level employees. The operating level employees of HSBC who are ranked as Assistant Officer fill the last layer of this hierarchy. They perform the day-to-day operational activities of HSBC. An organizational hierarchy chart is shown below:

Figure 4: Organizational Hierarchy

3.2 Chief Executive Committee

Figure 5: Chief Executive Committee

The organizational structure of HSBC Bangladesh is designed according to the various service and functional departments. The Chief Executive Officer (CEO) heads the chief executive committee, which decides on all the strategic aspect of HSBC. The CEO is the person who supervises the heads of all the departments and also is the ultimate authority of HSBC Bangladesh. He is responsible for all the activities of HSBC Bangladesh and all its consequences. He administers all the functional departments and communicates with the department heads for smooth functioning of the organization. The HSBC Chief Executive Committee is formed with the heads of all departments along with the CEO. Besides the CEO the CEC is staffed with 6 more managers: Manager of Human Resources, Manager of Services, and Manager of Financial Control Department, Chief of Personal Banking, Chief of Corporate Banking, and Manager of Marketing.

3.3 Functional Departments of HSBC

HSBC activities are performed through functional departmentalization. So, the departments are separated according to the functions they perform (HR, Marketing, Personal Banking, etc.). There are 6 major functional departments at HSBC: Human Resources Department, Financial Control, Personal Banking, Corporate Banking and Marketing. Within these major departments there are some other subsidiary departments that allow smooth operation of their own major departmental function. A graphical presentation of all the departments (Major & minor) is shown below. Brief functional descriptions of these departments are-

3.4 Human Resource Department (HR)
The Human Resource Manager currently heads this department. The major functions of this department are strategic planning and policy formulation for Compensation, Recruitment, Promotion, Training, and Developments, Personnel Services, and Security. The HR department is very much concerned with the discipline that is set up by the HSBC group. HSBC group has got strict rules and regulations for each and every aspect of banking, even for non-banking purposes; i.e. the Dress Code. All these major personnel functions are integrated in the best possible way at HSBC, which results in its higher productivity. The Human resource officer monitors the employee staffing and administration activities. The Training officer supervises training, development, & rotation activities. The structure of the HR department is shown below:

Figure 7: Structure of Human Resource Department

HSBC activities are performed through functional departmentalization. So, the departments are separated according to the functions they perform. Within the major departments there are some other subsidiary departments that allow smooth operation of their own major departmental functions.

3.5 Personal Financial Services (PFS)

PFS is the most flourishing department of HSBC Bangladesh. This department basically deals with the management of products and services offered to the individual consumers. Within a span of only five year HSBC PFS has grown tremendously and is still growing with its innovative products and service offerings. The 3 branches and 2 booths of HSBC basically deal with the personal banking activities and provide various accounts services to individual customers. The departments under PFS are shown in the following diagram:

Operations:

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

3.6 Branch Network

There are five branches of HSBC, four situated at different locations in Dhaka and one at Chittagong. Only the Dhaka office (head office) & Chittagong branch deals with both corporate and personal banking. Other three offices only deal with the personal banking activities. Their functions are to provide various financial services to the consumers. These include customer services, sale of various PFS products, opening new accounts, providing cash, remittance, and other teller services, etc. The branches are quite decentralized for better delivery of services to customer and have their own premises and facilities. Branch managers head these branches. Each branch is staffed with its own team of employees. A great deal of teamwork is seen within these branches. ATM’s are situated with each branch premises.

Figure 9: Branch Network

3.7 Credit Department

The personal banking credit department deals with the consumer credit schemes such as the Personal loan, Car loan, Travel Loan, Personal Secured loan, etc. which are tailored to meet the demand of individual customers. The manager of PFS credit who approves and administers all the activities of this department. He is staffed with five approval officers, four operations officers, and two MIS officers. The approval officers mainly reject or approve the credit requests. After being checked by the approval officer, the credit requests go to the operations for further processing of the application and disbursement. This department is a member of ALCO (Asset Liability Management Committee), which coordinates in preparation of lending analysis and data on concentration of risk and identifies possible lending risks. This department is also responsible for monitoring all necessary documents and securities related to loans.

3.8 ATM Center

The ATM center ensures smooth operation of the ATM machines that are located at Dhaka and Chittagong. The ATM center is responsible for regular replenishment of the off-site ATM’s and servicing of all the ATMs. Currently a total 10 ATMs are in operation. The ATM center also deals with issuance, termination, and servicing of the ATM cards. On a whole, the ATM center is the department that is solely responsible for all the activities related to ATM and is the facilitating department that enables customers 24 hours banking support.

3.9 Bond Department

This department is under the same manager as the ATM center. They basically deal with all the buying and selling of government bonds and treasury bills as per customer instruction, i.e. BSP, PSP, and TSP etc. This department keeps under its control the transactions regarding USDB, USDIB, and WEDB.

3.10 ATB Center

ATB refers to Automated Tele Banking. This department deals with the back office serving the HSBC phone banking services provided to customers. This department is basically responsible for the activation of ATB, ATB pin generation, and ATB security management, ATB blocking and troubleshooting of all ATB problems. This department is fairly new and was constructed on January 2000. Currently this department is staffed with two executive and two officers.

3.11 Corporate Banking

This division if HSBC provides financial services to organizational (corporate) clients. HSBC is a worldwide leader in banking and financial services whose success is based on its relationships with its corporate clients. Whether it is locally or around the world, HSBC offers a comprehensive range of services that can be tailored to the individual needs of the company. The Head of this department is the Chief of Corporate Banking. He is also the Vice-CEO of HSBC Bangladesh. The chief of Corporate Banking manages the activities of corporate banking of HSBC Bangladesh. Two offices of HSBC Bangladesh offer corporate banking services to corporate clients. These are the Dhaka Head Office and Chittagong office. Corporate Banking of HSBC Bangladesh includes Corporate Institutional Banking (CIB), Trade Service (HTV), and Hexagon. These sub-divisions are discussed briefly in the following sections.

3.12 Corporate Institutional Banking (CIB)

As their major customers operate internationally, HSBC services them internationally. Operating through the major centers and in close liaison with HSBC Investment Bank, Corporate and Institutional Banking provides the full range of the Group's capabilities at local and global levels, with a particular focus on payments and cash management, trade, and securities custody. HSBC also offers local financial institutions and banks access to wide range of financial services available on an international basis. The services are tailored to suit the needs of the companies. CIB has two separate wings: Relationship management department and Hexagon. These are discussed below:

Relationship Management Department:

The RM department consists of various relationship managers who are assigned to different corporate client to better satisfy their needs. These RM’s communicate with the clients and are solely responsible for the companies they deal with. Any information regarding a corporate client must be communicated through the respective RM assigned to that corporate client. A relationship manager may be assigned more than one company and this decision depends on the chief of Corporate Banking.

Hexagon:

The Hexagon department deals with all aspects related to HSBC’s unique banking software product - Hexagon. It is the global Electronic Banking system of HSBC, which offers the customers more convenient and efficient banking than ever before. It is an innovative desktop banking system developed by the HSBC group, which operates via the group’s proprietary worldwide communications network.

3.13 HSBC Trade Services (HTV)

Trade service is known by various names in other banks, e.g. Trade Finance Foreign Exchange, Foreign Trade etc. However, the functions are the same. As the name suggests, this department is involved in facilitating trade, both international & within Bangladesh. HSBC is the leading provider of trade finance and related services to importers and exporters in Asia. Trade is considered a core business of the group. The group’s presence in 81 countries of the world gives a good opportunity to control both ends of a trade transaction and keep the business within the Group. The various awards it has won from the leading publications of the world acknowledge HSBC’s excellence in trade. The trade service department has two separate subsidiaries: Credit Administration & Foreign Exchange Division.

Credit Administration:

Credit Administration department basically deals with all the documentation, processing, administration, and disbursement of the import-export services provided to corporate clients. This department is known to be the heart of HSBC trade services that administers and manages all the trade tools and facilities provided by HSBC Corporate Banking. Some important aspects of this department are LC advising, documentation, OD facilities, guarantees, etc.

Foreign Exchange Division:
The For-ex division of trade services is solely concerned with the management of Foreign exchange inflow and outflow. The For-ex division of trade service in relation with NSC and FCD manages the foreign currency traffic of HSBC that originates from Corporate Banking and trade services.

3.14 Finance Department of HSBC Bangladesh

This is considered as the most powerful department of HSBC. It keeps tracks of each and every transaction made within HSBC Bangladesh. Manager of FCD who ensures that all the transactions are made according to rules and regulation of HSBC GROUP heads it. Violation of such rules can bring serious consequences for the lawbreaker. FCD is responsible for the preparation of the Annual Operating Plan (AOP), monitoring treasury risk limits, profit exposure, and maintaining strong liquidity. FCD is the key member of the Asset Liabilities Management Committee (ALCO), which deals with how efficiently the bank’s assets and liabilities are managed. FCD also deals with money market matters. FCD acts as a custodian of all vouchers. FCD as the name implies does all the banks monitoring of the banks internal compliance and all local regulatory requirements.
The functions of FCD are briefly discussed below along with an organogram of the department:

Figure 10: Finance Department

3.15 Foreign Correspondence (FC)

FC keeps records of all the accounts of HSBC. All the vouchers, notes, advices and transaction reports of the branches are sent to FC for record keeping purposes. FC also prepares the financial statements for the banks and decided upon banks assets and liabilities. It also deals with the returns that are submitted to the Central Bank on regular interval.

3.16 Treasury

This department works under FCD. Their main job is to take decisions regarding purchase and sell of foreign currency. The purpose of treasury's operations is to utilize the funds effectively and arrange funds at a lowest possible rate of interest, through maintaining effective relationship with other banks and following the Government rules and foreign exchange regulations

3.17 Payment and Cash Management (PCM)

PCM deals with the inter-bank payment. PCM strategies are designed to ensure efficiency, profitably, and comprehensive support.

3.18 Services Department of HSBC

This is an integral and vital part of the bank. The services department ensures smooth operation and functioning within and between all the departments of HSBC. It also provides continuous support to the core banking activities of HSBC. The Manager of Services heads this department who formulates and manages various critical issues of the services function of HSBC. He is followed by a group of executives who are the heads of various subsidiary divisions that operate within the services department. The services department is considered as the backbone of all other departments. The various subsidiary divisions within this department are Administration, IT, Internal Control (IC), Network Services Center (NSC), and HUB. A structure of the services department is presented below followed by a briefing of the subsidiary divisions:

3.19 Administration
Like any other organizations, the Admin department of HSBC makes sure that the organizations moves on with all its departments and staffs operating according to all the rules and regulations of the company. It also prevents any bottlenecks within the work process and ensures smooth functioning. The admin department has two divisions – General Administration and Business Support Services.
The general admin division is pretty much similar to the admin departments of other companies that ensure discipline and regulatory concerns. The business support services provide supports to the departments during employee leaves and sudden terminations so that the department can function without problems.

3.20 Information Technology (IT)

This department gives the software and hardware supports to different departments of the bank. As HSBC is engaged in online banking, the role of IT is very crucial for the bank. This department is the most active department of HSBC where employees always stand by to solve any problems in the system. The managers and executives of IT division work continuously to develop the total IT system of HSBC so that it can be operated with ease, accuracy, and speed.

3.21 Internal Control

HSBC has internal auditors who visit on regular basis and submit the report to the higher authority for audit purposes. This gives different departments the chance to know their mistakes and take necessary corrective actions. Again, the Bank annually administers a company wide audit program to evaluate the overall performance of the bank in Bangladesh.

3.22 HSBC Universal Banking (HUB)

The HSBC banking system is called HUB. HSBC does the online banking and it is HUB, which sets up the parameter for that. This HUB is linked with the HSBC group via satellite and each and every transaction made by HSBC within Bangladesh is being recorded at the HSBC Asia-pacific headquarters at Hong Kong via HUB. Thus the HUB is the most powerful and important equipment of HSBC Bangladesh that monitors and tracks any fraud and faults made with HSBC Bangladesh.

3.23 Network Services Center (NSC)

This department can be described as the ‘Power House’ of HSBC Bangladesh. NSC does the back office job for the bank. The main four jobs that are performed by NSC are Clearing, Scanning of signature cards, issuing checkbooks, and sending & receiving Remittances. NSC looks after the clearing process of HSBC and makes necessary contact with the central bank for maintaining account flows. All the customer signatures are scanned in this department and are entered into the system. NSC also issues checkbooks for new and old accounts based on requisition from various branches. ‘Remittance’ is a banking term, which means ‘Transfer of funds through banks’. When a bank remits on behalf of its customers, it is termed as outward remittance. On the other hand, when the bank receives the remittance on behalf of the bank, it is inward remittance. The following methods that NSC uses to remit money for customers: Telegraphic Transfer (TT), Demand Draft (DD), & Cashier’s Order.

3.24 Marketing Department

The sixth major department of HSBC is the marketing department. The marketing department of HSBC play a vital role in fostering the continuos growth HSBC in Bangladesh. A manager is assigned to this department who looks after the overall marketing operation of HSBC in Bangladesh. This department is basically concerned about marketing the company’s products, services, and building a strong corporate image. The marketing department of HSBC has three subdivisions: Direct Sales, Promotion, & Marketing Administration.

Figure 12: Marketing Department

3.25 Amanah Finance Department

Amanah Finance is an ethical and indigenous form of community banking that is compliant with the Shariah (Islamic law). It involves financing based on the sale or lease of assets; i.e. the bank is a selling goods for use (trade) rather than selling money itself. This facility is extended by the way of providing finance for imports. The issuance of import documentary credits and the retirement of bills are handled in compliance with the Shariah law.
The process of issuance of Amanah DCs (DCI) and handling of bills (IBR) is very similar to the existing products, except for the exceptions detailed on the following: Under this product the customer requests the Bank to buy goods which the customer will buy from the Bank at a deferred sales price. The Bank then appoints the customer as an agent (Wakala) for buying the goods so specified. The Customer opens the DC as a buying agent, and when the goods arrive, constructive delivery is made, buys it from the bank. The purchase price for the Bank is the bill value and the Bank sells the goods at a profit in consideration of the customer paying at a later date.

While the overall contract and the transaction are different, the DC itself does not differ significantly from conventional DCs. A small number of clauses are proposed to be mandatory in Bangladesh i.e. no TT reimbursement is allowed and payment is made only upon receipt of documents at counter, the goods are consigned to the order of the Bank, and the beneficiary has to notify the applicant of the shipment. These are standard clauses in Bangladesh market and are normal business practice and local norm.

Two additional documents are required for Amanah DC transaction compared to the conventional DCs, the Purchase Transaction Notice and the Murabaha Transaction Notice. In the Purchase Transaction notice the customer requests a transaction whereby they will purchase goods as the bank agent and also promises to buy the same goods from the Bank, which the Bank must accept to go ahead with the transaction. In the Murabaha Transaction Notice, the customer proposes to buy the goods on a deferred sales price, and agrees to pay a markup over the purchase price of the goods, payable at a future date.

3.26 Overview of Process • Customer executes Master Murabaha and Wakala agreement, the omnibus Trust Receipt and the Promise to Purchase documents which sets the framework along with Facility Offer Letter • Facility Set up • DC application along with Purchase Transaction Notice placed to Bank • Bank opens DC with specific set of conditions • Exporter Prepares goods and notifies applicant • Customer submits the Murabaha Transaction Notice (MTN) to Bank • Exporter ships goods and sends document to Bank • HSBC accepts MTN before or at least on the day the documents are receives. Customer is advised that documents are received. • Customer provides acceptance of documents after reviewing them at the Banks counter. A New Bill advice is sent, and if there are any discrepancies, customer must accept this or the DC amended. If documents are in order but the customer does not provide the MTN or does not wish to pay, the RM to be referred and the conventional procedures to be followed. • HSBC retires bill by creating CLI or Customer Account Debit and endorses documents in the name of the customer. • Customer retires the CLI by paying the pre agreed amount equal to Bill Value + Profit.

3.27 Trade Services Operations

New Product Codes for HSBC Amanah Import Finance are:

|Amanah Import Finance |
|Product Code |Description |
|DCI |Islamic Sight Doc Credit |
|DIG |Islamic Usance Doc Credit |
|DIB |Islamic Sight DC. (Back to Back) |
|IBR |Islamic Bill Receivable |
|SIG |Islamic Shipping Guarantees |
|AWI |Islamic Airway Bill Release |
|CLI |Islamic Clean Import Finance |

Although the above will support a full range of DC and related products, we will be using only DCI, IBR, SIG, AWI and CLI for the time being.

3.28 Important Notes

Discrepant Documents

Discrepant documents should be treated the same as with a discrepant document for a conventional DC. All other Amanah procedures still apply.

Partial Shipments

For each DC, one DC application and one transaction notice are required. For partial shipments, a separate ‘Murabaha Notification’ must cover each shipment.

Late payment

For late payment, the same charges will apply as with a conventional DC. These are generated automatically by the system. No changes are necessary in the system, however when talking to the customer interest should not be mentioned.

3.29 Communication with Customers

Never say “interest” or “loan” to an Amanah Customer
For “Interest” use “Profit”
For “Loan” use “Financing”

3.30 Glossary Agent

Under Shariah requirements the bank will have to purchase the goods before it is allowed to sell them on cash or deferred payment basis. The bank is however allowed to appoint an agent who can go in the market and source the goods for the bank. Since it is recognized that the bank is not in a position to buy the goods itself it will appoint the customer as its undisclosed agent (solely) for the purpose of sourcing the required goods and purchase them on behalf of the bank. This will also include negotiation with the seller or exporter. The bank after the purchase can sell the goods to the customer.

Financing Requirements:

With the offer to buy or any time before receipt of the offer to buy, under Shariah, the customer must inform the bank if they require any financing. If the customer informs that they require any financing after the receipt of the Offer to Buy, the transaction is not Shariah compliant. Bank still can provide financing but the customer is aware that the transaction is not Shariah compliant.

Master Murabaha Agreement (MMA):

It is the equivalent to a general financing agreement or, in Trade Services case, Trade Finance General Agreement (TFGA) that has stated terms and conditions applicable to transaction under the overall agreement.

Murabaha:

It is an Islamic-financing tool based on the idea of selling goods at a stated profit. The crucial element in Murabaha is that there must be an underlying asset involved. In other words, the bank is selling goods for use (which would be trade) rather than selling money itself (which would be interest).

Murabaha Notification:

MN is essentially a formal offer from the customer to purchase the goods from the Bank. It will stipulate that the customer has obtained goods and offers to buy the goods on "as it is" basis on the shipment date. This is again a Shariah requirement.

Promise to Purchase:

It is a binding agreement on the customer to unconditionally and irrevocably purchase the goods from the Bank. It is equivalent to a promissory note.

Shariah:

Refers to the Islamic legal tradition, which is sometimes called Islamic Law (literally it means 'a path to life-giving water')-

Transaction Notice:

It is required by Shariah to have specific notice under each shipment. The MMA will have a general agreement and will assume that transactions will be conducted from time to time; however Transaction Notice will ensure that each party is aware of the details. Without a Transaction notice the DC will not be Shariah compliant. It should be received with the DC application.

Wakala

Islamic term for agency.

Chapter 4: Products & Services

HSBC Bangladesh carries out all traditional functions, which a commercial Bank performs such as mobilization of deposit, disbursement of loan, investment of funds, financing export & import business, trade & commerce & so on. Besides it also offers some specialized services to its customers. Products & services offered by HSBC can be categorized according to the customers they serve. Thus two major groups can be identified. They are – individual customers or consumers & corporate customers or organizations. An in-depth analysis of HSBC’s product and services in Bangladesh is presented in this section. First of all, the liability products of the bank are discussed. After that the various products and services of personal banking division will be presented, followed by a brief discussion of the corporate banking services offered to corporate clients. The summary of all the products and services of HSBC Bangladesh is displayed in the following page.

4.1 Accounts

Savings Accounts:

Maximize wealth with daily interest- • Unlike other banks there is no ledger fee and any interest accrued is not lost • Customers can issue any number of cheque or withdraw any amount • Interest is calculated on daily credit balance (not on average credit balance) and paid half yearly • Only condition to earn interest is maintaining a minimum balance of BDT 25,000/- • Relationship fee is BDT 300/- per quarter if average relationship falls below BDT 50,000/- for three months.

Current Account:
This is also a depository account basically designed for various customers. This is a non- interest bearing accounts and the features of this account are as follows:

• Opening balance TK 25,000 • Average balance that should be maintained: TK 25,000 • No restrictions on number of transactions • No yearly ledger fee • Non interest bearing • Free ATM card and phone banking service • Documentation: various kinds of documents are needed for the companies such as memorandum of association, board resolution, etc. however the requirements for individuals are same as the savings account. • Can be opened only by: ← Individuals (joint or single) ← Proprietorship companies ← Partnership companies ← Limited Companies ← Liaison offices ← NGO’s

4.2 ATM Card

• Can be linked with Savings or Current Account or both • 24 Hours a day from any one of the 11 HSBC ATM outlets – DAK, DMO, DGU, DHA and CHG onsite & 5 offsite. • Maximum limit BDT 20,000/- per day per card. For PVA ATM card the maximum limit is BDT 50,000/- per day. • You can withdraw or deposit money, inquire about your balance, check last 5 transactions, transfer funds between your accounts and make payments to other accounts with HSBC • Minimum BDT 500/- can be withdrawn;

4.3 Power Vantage

For total financial control- • Average deposit balance should be BDT 2,00,000/- • Annual fee BDT 500/- • Penalty charge BDT 500/- half yearly, if the average deposit balance falls below BDT 2,00,000/- • Free personal accident insurance coverage for BDT 1,00,000/- • Free endorsement of foreign currency against travel quota • Special Power Vantage ATM card with enhanced cash withdrawal facility of BDT 50,000/- per day • An all-in-one composite statement of all your accounts under the Power Vantage package • Special loan rages for the Personal Installment Loan • Lower processing fee for Car Loan • Fee waiver for setting up standing instructions at Auto Sweep

4.4 Time Deposit

• Minimum amount to open a TMD is BDT 1,00,000/- (Individual and Joint both) • Interest is paid at maturity • Cumulative Time Deposits (Principal + Interest) is also available • Automatic roll over at prevailing rate • Time deposit is offered in Time Period (Minimum 1 month and Maximum 12 months) • Standing instruction can be given (like credit interest to other accounts) • Personal Secured Loan – a loan facility up to 90% of the value of the LCY and 80% of FCY time deposit for a maximum period of 5 years • Personal Secured Credit – an overdraft facility up to 90% of the value LCY and 80% of the time deposit.

Short Term Deposit (STD):

These accounts are opened mostly by the organizations. Organizations normally maintain current accounts in the banks. They need to transact bulk amount regularly that’s why, current account fits with their requirements. As current accounts do not provide any interests and as the organizations cannot have savings account, they are deprived of earning any interest even though having huge deposit in their accounts. ‘Short-term deposit’ accounts enable them to earn interests from their accounts. These kinds of accounts share some properties of both current and savings accounts. The account provides interests, which are like the savings accounts, and the holder can withdraw any amount any time from his account that is a property of the current account. Individuals especially, businessmen also maintain such accounts.

Fixed Deposit:

It is also known as term deposits. These deposits are made in the bank for a fixed period of time. This period of time should be specified in advance. The bank needs not to maintain cash reserves against these deposits & therefore, it offers interest rates that are higher than the savings accounts.

Monthly Interest Bearing Time Deposit:

The simple, safe, and flexible way to enjoy guaranteed monthly return- • Minimum opening amount is BDT 5,00,000/- (Individual and Joint both) • Tenure: 1-2 years • Interest is paid at a monthly basis and is transferred to another nominated account • Automatic roll over for the 2nd year at prevailing rate.

4.5 Expatriate Account

• Expatriates can open normal BDT current a/c as well as FCY current a/c • Expatriates can open convertible account if entitled to and subject to restrictions such as they can not deposit taka in convertible A/C • Free ATM card is provided to access to their accounts to withdraw Taka from current accounts • Expatriates can not earn interest on their BDT or FCY accounts (Regulations of Bangladesh Bank) • Expatriates can not get any credit facilities (Regulations of Bangladesh Bank)

4.6 Non-Resident Bangladeshi (NRB)

There are some other accounts for non- resident Bangladeshi

Foreign Currency Current Account

Foreign Currency Time Deposit Account

Resident Bangladeshi

Resident Foreign Currency Current Account:

Features- • Accounts opened from funds brought in when returning from abroad • If amount exceeds USD 3,000/- or equivalent then customer must fill up declaration form FMJ at the customs. • To be opened within 30 days of return • Minimum opening balance is USD/GBP/EURO 1,000/- • An International ATM card giving access to their funds from 8,00,000/- ATMs worldwide. Withdrawal in local currencies. • The balance of the account is freely remittable but no inward remittance is allowed. • Non-chequeable account – chequebook will not be issued. • Can take out the money for further traveling without being subject to any regulations.

Foreign Currency Time Deposit Account:

Features- • Accounts opened from funds brought in when returning from abroad or by transferring from resident FCY account • To be opened within 30 days of return • Minimum opening balance is USD/GBP/EURO 1,000/- • Interest bearing time deposit account with maturities of 1, 3, 6 and 12 months • Personal Secured Credit / Personal Secured Loan – an overdraft facility up to 80% of the value of the foreign currency time deposit.

Chapter 5: Loans & Credits

5.1 Personal Installment Loan (PIL)

➢ Any purpose loan – no cash security ➢ Minimum monthly income BDT 15,000/-, 2 years service in a well reputed, stable company, minimum age 25 and maximum 56 ➢ Valid income proof documents must be furnished, unsecured loan, & no personal guarantee required ➢ Minimum loan amount is BDT 50,000/- and maximum loan amount is BDT 20,00,000/- or 4 times of salary ➢ Interest rate will be 18% per annum ➢ Maximum loan tenure is 36 months. If loan amount it BDT 4, 00,000/- or above then maximum tenure is 48 months ➢ Auto Pay customers will get discounted interest rate: 15.5% and loan amount: 6 times of salary or 2 million whichever is lower ➢ CEPS customers will get discounted interest rate: 15.5% and loan amount: 10 times of salary or 2 million whichever is lower ➢ Personal loans will be granted at discounted rates to employees of blue chip companies against assignment of terminal benefits as per agreement with employer. Loan tenure will be up to 5 years. ➢ For salaried individuals additional income including rent will be considered, provided these are substantiated with requisite documentation or evidence. ➢ For businessmen the TIN certificate and CIB (Credit Information Bureau) report will remain a mandatory document for income verification. ➢ A current account needs to be opened by the customer before applying for Personal Installment loan (PIL).

5.2 Travel Loan

Travel Loan is offered within the existing Personal Installment loan structure. The purpose of launching this product is to attract and aid customers with their travel related services. ➢ Loan amount is minimum loan amount is BDT 50,000/- and maximum loan amount is BDT 5,00,000/- ➢ Interest rate: 15% ➢ Tenure: Maximum loan tenure is 36 months. If loan amount is BDT 4,00,000/- or above then maximum tenure is 48 months. ➢ Loan processing fee: 1% of the loan amount or BDT 1,000/- whichever is higher + stamps BDT 170/- ➢ No personal guarantee is required

5.3 Car Loan

➢ Eligibility- minimum monthly income BDT 20,000/-, 2 years service in a well reputed, stable company, minimum age 25 and Maximum 56 ➢ Valid income proof documents must be furnished ➢ No personal guarantee is required ➢ Minimum loan amount is BDT 50,000/, maximum is 4,00,000/- ➢ For both reconditioned car and new car loan amount will be maximum 70% of the car value ➢ Interest rate will be 14.5% per annum ➢ Maximum loan tenure is 60 months ➢ Loan processing fee is 1% of the loan amount or BDT 1,000/- whichever is higher + stamps BDT 170/- ➢ Car will be registered in Bank’s name (no joint registration) ➢ Comprehensive insurance in discounted rate from selected insurance company in Bank’s name is mandatory and automatically debited from customers account every year. ➢ CEPS salaried customers will get 0.5% discount in loan processing fee, i.e. 14%

5.4 Home Loan

It’s easier than ever to own a dream home- ➢ Eligibility- minimum monthly income BDT 40,000/-, 2 years service in a well reputed, stable company, minimum age 25. The loan must end before borrower’s age reaching 57 years or retirement date, which ever is earlier. ➢ This loan is provided for completed flats / apartments – less than 20 years of age ➢ No personal guarantee is required ➢ Minimum loan amount is BDT 7,50,000/- and maximum loan amount is 100,00,000/- ➢ Maximum loan tenure is 15 years, loan must be repaid prior to 57 years of age ➢ A maximum loan amount of 70% of the total value of the apartment costing up to BDT 50,00,000/- and 60% of the total value for the apartments over BDT 50,00,000/-. The total loan value is inclusive of the registration cost. ➢ Interest rate is 14% per annum ➢ Loan processing fee is 1.5% of the loan amount or BDT 20,000/- whichever is higher + stamp charge ➢ Security: Registered mortgage and original title deed ➢ Insurance: Fire, earthquake, flood, cyclone

5.5 Personal Secured Loan

Personal Secured Loan is a simple stand by loan against the Time Deposit and NRB Bonds and the loan is repayable in equal monthly installment. ➢ Standby loan against TMD and NRB bonds (WEDB/USDB) ➢ WEDB (Wage Earners Development Bond) or USDB (US Dollar Bond) issued from HSBC and other multinational banks are considered. ➢ Interest rate 12.5% for loan amount below BDT 5,00,000/- and 12% for loan amount of BDT 5,00,000/- and above ➢ Interest rate against LCY TMD is 13% ➢ Minimum loan amount BDT 90,000/- ➢ Maximum loan amount 90% of LCY TMD amount or WEDB and 80% of FCY TMD or USDB ➢ Processing fee against certificate issued from HSBC is BDT 1,000/- + stamps BDT 170/-

5.6 Personal Secured Credit

Credit facility against the investments-
Personal Secured Credit is a credit facility against Time Deposits and NRB Bonds that enables customers to have the flexibility to meet short-term commitments without unlocking their long-term investments. ➢ Customers can borrow up to 90% of their LCY TMD’s and WEDB value ➢ WEDB and USDBs issued from HSBC and other multinational banks are considered ➢ Minimum loan amount is BDT 90,000/- ➢ Maximum loan amount 90% of LCY TMD amount or WEDB and 80% of FCY TMD or USDBs.

5.7 Credit Card

Increase the spending power-
Product Name: HSBC – Prime Co-branded Master Card Gold Card
Card Type: Local Master Card Gold Card
Card Limit: Staff Card: BDT 15,000/- to 1, 00,000/-
Master Card Gold Normal: BDT 50,000/- to 1, 00,000/-
Master Card VIP: BDT 1, 00,000/- to 2, 00,000/-
Eligibility:
➢ Primary Eligibility: Minimum BDT 25,000/- gross income from regular sources. Bangladeshi Citizen 21-65 years of age and has account with HSBC ➢ For Supplementary card the person has to be at least 18 years of age ➢ Card Life: By default 2 years for all cards new and renewed ➢ Billing Cycle: 7th day of the month ➢ Repayment Period: 26th day of every month. Maximum 50 days interest free period ➢ Minimum Payment Calculation ➢ 8% of the current balance shown on the statement or BDT 500/- which ever is higher. If current balance is less than BDT 500/-, then full payment ➢ For over limit account: 8% of the credit limit plus exceeded amount

5.8 Corporate Banking Services
HSBC offers wide range of cash financing, working capital, short, and medium-term loans, and guarantee facilities to its corporate customers. Its offshore banking Unit (OBU) provides US dollar denominated working capital as well as short tem finance for capital imports to eligible businesses. HSBC is a worldwide leader in banking and financial services whose success is based on its relationships with its clients. Whether locally or around the world, HSBC offers a comprehensive range of services that can be tailored to the company's needs. Some major services provided by HSBC corporate division are Custody services, Global payment & cash management, Trade services, & Hexagon.

5.9 Global Payments & Cash Management (PCM)
HSBC's Global Payments and Cash Management services are designed to help its clients to operate efficiently, profitably and with comprehensive support. The aim is to provide a service that takes full account of the customers’ local needs as well as regional and international requirements using our expertise and global resources of the HSBC Group. PCM provides the following services to its clients: ➢ Accounts & transaction management services: Structuring of bank accounts to optimize the management and flow of funds within or across national borders. ➢ Cash & Liquidity management services: Cash is a company's most volatile asset and HSBC provides the best service to manage its client’s cash efficiently.

5.10 HSBC Trade Services (HTV)
HSBC is the leading provider of trade finance and related services to importers and exporters in Asia. The bank operates a highly automated trade-processing network and offers an electronic data interchange (EDI) capability through Hexagon. Some services provided by HTV are as follows:

5.11 Import Services
A full range of import services handled by experienced staff is available, ensuring that clients import documents are processed without delay. Some import related services are- Import collection services, Import financing services, Import documentary advising, Processing, and advising on shipping guarantees.

5.12 Export Services

HSBC provides advices on any aspect of export document preparation. It also provides working capital finance to help the sourcing of raw materials. Some other export services are- Pre-shipment Financing, Post shipment Financing, Purchase of Export bills, Back-to-Back credit, and LC, Documentary credit advising, Documentary checking.

5.13 Risk management

HSBC has developed a unique range of specialized products aimed specifically to reduce a company’s exposure to international trade risk. The services in this area are-

Trade Collect Service:

A dedicated US dollar export bill collection service from HSBC.

Trade Safe Service:

A major concern for many exporters is the reliability of the LC issuing bank, particularly if shipments are going to less familiar markets. If these banks get into difficulties, the exporter may not get paid. That's where HSBC comes in. Under the Trade Safe Service, HSBC absorb the bank and country risk, allowing clients to concentrate on growing business.

So these are some of the services provided by HSBC trade services.

5.14 Hexagon

Hexagon is the HSBC Group's global electronic banking service, specifically designed for the corporate market. It gives a customer access to one of the largest banking and financial services organizations in the world - 24 hours a day, seven days a week.

Hexagon is one of the most advanced and easy-to-use electronic banking packages on the market today. It has been designed to make life easier for the customers; with Hexagon businesses can become more efficient, increase accuracy, and reduce costs.

Hexagon offers an extensive and growing range of financial services, including global cash management, trade services, foreign exchange, and securities, all from a single PC.
Hexagon uses the HSBC Group's Global Data Network, the largest private system of its kind in the world. Additionally, it has a comprehensive range of system security, and control features together with its use of full data encryption, means the data is totally secure.
Services Provided by Hexagon:
Account information:
Hexagon provides access to all the customers’ accounts. In addition to the latest available balances, Hexagon offers full statement information that can be tailored to customer requirements.
Report Writer
The account information can be quickly and easily printed using the flexible Report Writer Service or the information can be exported to some other formats.

Export
Export allows account details to be exported in variety formats. This enables Hexagon to act as a true financial link between the bank's computer systems and the customer’ own back-office accounting packages.
Reconciliation
This service enables the customer to reconcile his/her bank accounts.

Payments:

Transfers between accounts and payments to third parties are easily achieved in more than 60 currencies anywhere in the world. Both priority payments and low-value automated clearing-house payment options are available in Hexagon.

Exports Documentation:

Hexagon gives the customers the ability to view outstanding documentary credits and bills in summary or a more detailed format, including interest details where financing has been requested. Coupled with account information, companies are able to track the whole export process from the point when the documentary credit is opened or bill is presented through when settlement is made.
Import Documentation:

With the import option, a customer can easily create and amend documentary credit (DC) applications and submit them online.
So these were some of the very important services provided by HSBC’s unique banking software HEXAGON.
Other Facilities Provided to Corporate Customers:

HSBC also offers some other facilities to its customers. They are Factoring, Forfeiting, Guarantees, Hire Purchase Finance, Leasing, Tender Bond, and Performance Bonds. All these services and products are designed to meet the total business needs of the corporate clients of HSBC.
Chapter 6: Credit/Loan Process Assessment

6.1 Credit Cycle

Approaching the bank:

The credit process starts from approaching to the bank. The customer must apply for loan fulfilling the respective loan application form either through coming to the bank or through contacting a mobile sales officer (MSO). The customer should incorporate necessary papers so that all the criteria are fulfilled and it becomes convenient for the approval officers to assess the loan.

Checking by the Customer Service Officers:

After receiving the application the responsibility transfers to the customer service department of HSBC. The customer service officers check the applications carefully. Whether all necessary information is filled in the application and whether all necessary documents are attached with the application becomes prime concern of the customer service officers. They also verify the signature of the customer in the system, or open the customer a/c before forward the applications to the MIS.

MIS Receives the Applications:

HSBC operates centralized credit system. Therefore, all the loan applications along with other cheques and documents are sent to MIS through intransit mails. MIS officers receive these mails and give primary input of the necessary information in the database. Thereafter MIS officers assign the approval officers according the type, amount, and number of application equally.

Applications Assessed by Approval Officers:

The approval officers assess the applications on a priority basis due to meet the SLA (Service Level Agreement). Usually CEPS (Corporate Employment Privilege Scheme) and Autopay loan applications are assessed by the same day. The loan of Existing (customers having banking relationship more than six months with HSBC) customers is assed within 48 hours where the loan of Non-Customers (customers having banking relationship with HSBC less than six months) is assessed within 96 hours. However, secured loans get highest priority to all the sub sections (CEPS, AUTOPAY, and Non-customer) of applications.

Based on various criteria approval officers approve or reject the loans. First of all, they see whether the applicant fulfils the parameters set by HSBC and the central bank. Thereafter, they follow the rules set by the bank to assess the applications. If any document is not provided with the application the approval officers place discrepancy, which is updated in the database, and the MSO’s are informed about the discrepancies through loan update and make proper adjustment. Approval officers recommend the applications to be approved or rejected or dropped after assessment. After that applications are sent to the credit manager for reviewing and signing the documents before forwarded to MIS for update.

Approved Loan:

Applications signed by the credit manager forwarded to MIS for updating loan status in the database. After status is updated the application is forwarded to Operation department. Operation staffs check whether all docs (CIB, TIN, Loan set-off form, undated cheques) are in order. Moreover sign on irrevocable letter of authority and demand promissory note are also checked. If everything is in order then the loan is disbursed means money is transferred to the applicant’s account. As operation officers after disbursement assign a serial number and forward the applications to the MIS to update the disbursement input. If the file lacks in any document then it is kept separately until the discrepancy is updated (special cases).

Rejected / Dropped / Deferred Loan:

Rejected files also get appropriate status. After updating the loan status the applications are assigned a serial number for future references incase of re-visit or if the customer wants to have his submitted documents back. But after a certain period of time these applications are sent to central storage and destroyed later on.

Flow of Credit Assessment Policy:

[pic]

Figure 14: Flow of Credit Assessment Policy

6.2 Factors Determining Loan Assessment
Approval officers in case of assessing the loan must comply with some basic requirements and criteria. The group itself determines these parameters and some of them are implied due to Bangladesh Bank’s regulations. Parameter like security type, bank relationship with HSBC and other banks, age, occupation, address, references, CIB (Credit Information Bureau) and CPV (Contact Point Verification) report, previous experience or employment history, loan repayment trend etc are considered and scrutinized before declaring a customer eligible to avail the loan. Some of the important parameters are discussed briefly to have an idea regarding loan assessment.

A person with high net worth is considered as a good candidate for loan. When a loan is backed by property (Flat, Car) the approval officers find the loan easy and secure to assess. In case of secured loan, mostly the security matters. At HSBC the Personal secured loan securities like “Protirakkha Sanchaypatra”, WEDB (Wage Earners Bond), USDB (US Bond), and TMD (Term Deposits) are needed to be lien with the bank.

Before sanctioning loan the credit officers carefully analyze whether the customer would be able to pay out the credit when due, with a comfortable margin of error. Six aspects of loan application usually determine this. They are character, capacity, cash, collateral, condition and control. All these factors should be taken into consideration before approving a loan.

Character:
The approval officer wants to know about the purpose of the loan first. They must be convinced that the customer has a well-defined purpose for requesting bank credit and serious intention to repay. If the officer is not sure exactly why the customer is applying for the loan, he may ask for the clarification and comfort ness of bank. Once the purpose is known, the approval officers must determine whether it is consistent with the bank’s current loan policy.

Every loan application form of HSBC bank consist a blank area to be filled by the customer/ borrower describing the purpose of the loan. If any kind of inconsistency arises the approval officers have the right to ask for the proper explanation to the MSO or even to the customers.

Capacity:
The approval officers make sure that the customer has the legal eligibility for requesting the loan and the legal standing to sign a binding loan agreement. In HSBC has a parameter like the minors (age below 18 yrs) as well as the people exceeding the age limit 55 yrs would not be eligible for a loan. At the same time in case of corporate clients the approval officers make sure that the representative from a corporation asking for loan has the proper authority from the company’s board of directors to negotiate a loan and sign the loan agreement binding the corporation. In case of partnership business, the approval officer might ask to see the firm’s partnership agreement to determine which individuals are authorized to borrow the firm. A loan agreement signed by unauthorized persons can be stated as uncollectible, insecure and therefore result in substantial losses for the bank.

Cash:
While assessing the loans the approval officers concentrate mainly on the borrower’s ability to generate cash flow either from business or from salary or other income. At HSBC, the bank statements are considered as the proof of income. There is always a high chance that the loan application of a borrower with a strong bank statement (inflow to the bank account) will be approved by the credit department of the Bank. In case of unsecured loan, since no security is kept against the loan taken by the borrowers, their ability to generate cash flow becomes the main consideration of loan assessment.

Collateral: Like cash inflow collateral is also important to support loan request. A person with high net worth is considered as a good candidate for a loan. When a loan is backed by some property the approval officers find the loan easy to make. In case of secured loan, the security matters mostly. At HSBC the Personal secured loans are need to be backed by the government bonds. Other requirements are negligible in this case.

Condition:
The approval officer and credit analyst must be aware of recent trends in the borrower’s line of work or industry and how changing economic conditions might affect the loan. For instance, at HSBC the approval officers are not very interested to entertain the businesspeople from garments industry and buying house business since, both of these interrelated businesses are vulnerable in nature and under uncertainty. Though the papers (bank statement and tax papers) appear to be strong at present these might turn into weak in near future.

Control: The bank wants to have control on the credit they have made to their customers. The bank watches on whether law and regulation could adversely affect the borrower. At the same time the bank sees whether the loan request meets the bank’s and regulatory authorities’ standards for loan quality. For example, previously HSBC bank used to give Investment Loan to the borrowers so that the borrowers can use that money to invest on government bond at a high interest rate. However, Bangladesh government has made the decision that no loan should be made for investing the loan amount to the government bond. Therefore, HSBC stopped the Investment Loan scheme and is making alternative loan products.

Structure of the Loan:
The approval officer is responsible to both the customer and the bank’s depositors and stockholders and must seek to satisfy the demands of all. This requires first drafting of a loan agreement that meets the borrower’s need for funds with a comfortable repayment schedule. The borrower must be able to comfortably handle any required loan payment, because the bank’s success depends fundamentally on the success of its customers. If a major borrower gets into trouble because it is unable to service a loan, the bank may find itself in a serious trouble. Proper accommodation of a customer may involve lending more or less money than asked for over a longer or shorter period than requested. It is because many customers do not know their own financial need and ability. Thus, the bank’s approval officer must be financial counselor to customer.

At HSBC, the approval officers do not sanction the amount applied for in all the cases. What the approval officers do is that, they analyze the financial need and capability of the borrower and carefully determine the amount the customer is capable to repay to the bank. In addition, HSBC has prepared a flexible repayment schedule of three, four and five years in which borrowers repay the loan through equal monthly installment. Therefore, HSBC is not only sanctioning the loan to the potential clients but also it is making sure that the borrowers able to serve the loan easily.

Chapter 7: Critical Functional Issues

7.1 Marketing Issues

Direct Sales (DS):

An executive is assigned to this part of the marketing department. The Direct Sales division co-ordinate & manages the sales activities of all the Mobile sales officers (MSO) of HSBC Bangladesh. The MSO’s basically makes sales of the company various Personal Banking products such as savings accounts, consumer loan, etc outside the banking premises. There are a total of more than 100 mobile sales officers (MSO) employed in the cities of Dhaka and Chittagong. MSO’s are assigned to specific branches for making sales activities more smoothly. The DS executive sets sales strategies & targets for the sales officers and manages the whole team of MSO’s in Bangladesh. The direct sales department also decides upon the commission and remuneration of the mobile sales officers as their salary structure is based on sales performances. Thus this part of the marketing division is very important for the overall growth of the Personal Banking Division.

Promotion:

This part of the marketing department deals with all the promotional activities of HSBC Bangladesh. Prime responsibilities of this department are: Maintaining strong public relations with various media intermediaries, advertising the company’s products, and services, building a strong corporate image of HSBC in Bangladesh.

Public Relations:

The promotion department organizes various environmental and social activities in order to build a strong corporate image of HSBC in the minds of customers as well as in the media. Maintaining strong relationship with news media is another major duty of this department.

Advertising:

The promotion also coordinates all the advertising of HSBC products within Bangladesh. Some of the advertising tools that are frequently used by the company are as follows: • Newspapers Advertising: Regular advertisements of various products and services of HSBC are given in some of the countries most renowned daily newspapers. • Billboards: Huge colourful billboards with HSBC logo are found in various major areas of Dhaka and Chittagong. These billboards emphasize on the needs of customers and shows HSBC logo as solution to their needs. • Road Side Signposts: Medium sized multi colour signposts focusing on various products of HSBC are found on the roadsides of various posh areas such as, Gulshan, Dhanmondi, Baridhara, Motijheel, Banani etc. • Mails: Various product updates and new product information are regularly sent to existing customers of HSBC. • Brochures: Various colourful brochures featuring specific products of HSBC are being displayed and distributed to existing and potential customers via branch offices and Mobile sales officers.
So these are some of the promotional activities managed and coordinated by the promotion department.

Marketing Research Department:

This department formulates & executes various marketing strategies of HSBC Bangladesh. This department also administers various marketing research activities on the existing and potential customers of HSBC. Some research activities are as like mystery shopping, critical incident surveys, customer suggestion surveys etc. The results of these surveys are integrated while formulating various marketing strategies. This department also deals with the billing and invoicing of various marketing & advertising costs of HSBC Bangladesh.

These are the major departments of HSBC Bangladesh. Except the branches all other departments are situated at HSBC Bangladesh head offices located at Anchor Tower, Kawran Bazar. Most of HSBC’s operation and activities are operated centrally from the head office. But to deal with customers more completely, the branches are given considerable authority and they operate in a more decentralized manner but subject to verification of the respective departments.
7.2 HR Issues
Recruitment, Training and Development:

HSBC Bangladesh limited follows a standard procedure for recruitment and selection. However there is no set time period when this recruitment and selection takes place. Each departmental head places the requisition for recruitment to the Human resource officer, if any vacancy is created due to (1) Retirement, (2) Resignation (3) Death, or (4) Extra workload.

The process for the recruitment of personnel for managerial and non-managerial level differs slightly but the basic steps are same in both the cases. Before mentioning the steps of the selection process it is worth mentioning that there is a unique policy in the HR department which states that a person will not be eligible to apply for any vacancy if his or her first-cousin, brother/sister or spouse works in any of the branches of HSBC. The steps are-

ii) Initial screening iii) Screening by departmental heads iv) Filling of the HSBC job application form v) Screening on the basis of SAF vi) Initial Interviewed vii) Selection for written test viii) Written test ix) Evaluation of test papers x) Selection of final interviewees xi) Final interview xii) Documentation Check xiii) Medical examination xiv) Probationary appointment xv) Confirmation

In order to enhance the efficiency of the employees, HSBC gives emphasis on the both theoretical and practical training for its personnel. All the training and development programs are aimed at two basic reasons - (1) Skill development (2) Motivation through counselling and persuasion to change value system. For the top management or senior managers there is provision for overseeing training arranged by HSBC group. For the mid-level manager or other managerial level there is provision for regional training courses. Besides, for non-management level there are training programs arranged in different institution and also with in the organization. For the operatives, various on the job-training program are conducted within the company. Finally, HSBC Bangladesh limited follows a performance based promotion system for all levels of its employees.

Performance Appraisal:

The company follows both rating and descriptive systems for the performance appraisal. Although the appraisal system is non-participative, the employees are annually assessed with a joint consultation with their immediate supervisor and departmental head.

Rating is mainly done on the following factors- ii) Knowledge of work iii) Accuracy and reliability iv) Speed v) General intelligence vi) Sense of responsibility and duty vii) Diligence viii) Initiative and self confidence ix) Readiness to work for and with others.

Welfare Activities:

HSBC has many well-structured welfare policies for its employees. These include well-structured wage & salary policy, medical facility, sports & cultural facilities, provision for loans, free uniform etc. These welfare policies aim at strengthening the relationship of the employees to the organizations and make them more responsible in their respective positions. The brief description of the major welfare policies are stated below:

Wages and Salary Administration:

HSBC follows a well-defined wage structure and fringe benefits for its employees. The wage structure is updated periodically (Two years terms) by the management. The major deciding factors are-
i) Profitability of the company ii) Average cost of living in the country due to year to year basis inflationary trend iii) Status of wage earners in similar organization iv) Restrictive conditions given by the government from time to time
v) Financial benefits status in the company vi) Components of existing wage structure: vii) Base basic structure and conveyance allowance

Chapter 8: Introduction to the Thesis

8.1 Introduction

Thesis program is the systematic gathering, recording and analyzing of data about the subject that a student goes to learn on the program.

As a mandatory requirement of the Bachelor of the Business Administration (BBA) program under Stamford University Bangladesh, this report entitled - “Thesis Paper on Perception and Customer Satisfaction towards Financial Products and Services of HSBC Bank Limited” is a connived depiction of the long thesis program based on the Hongkong and Shanghai Banking Corporation Ltd.

The aim of this thesis program is to connect practical knowledge with theoretical knowledge. Now the world is a competitive world. So everybody has to be expert in both practical knowledge and theoretical knowledge.

8.2 Literature Review

In order to define customer’s satisfaction towards financial products and services, it proves indispensable to speak about quality. The direction of causality between both has been the object of noteworthy discussion in the academic environment. While some advocate that quality precedes satisfaction (e.g., CRONIN and TAYLOR, 1992), others defend satisfaction as being one of quality antecedents (HESKETT et al., 1994; ANDERSON and MITTAL, 2000). In the present study, quality in service is understood as satisfaction antecedent.

Quality in service has been defined as a construct composed of a technical dimension and a functional or relational dimension: the former centers upon what is delivered by the company to the customer - result, whereas the latter refers to the way the service is performed - process (GRONRÖOS, 1984). Besides, empirical researches have indicated a strong relation between these two quality dimensions and customer’s satisfaction. The acknowledgment that quality technical aspects are critical to customers’ satisfaction has made service operations become more and more important so that customers’ satisfaction and loyalty may be achieved (CRONIN and TAYLOR, 1992; LASSAR, MANOLIS and WINSOR, 2000; MADDERN, MAULL, SMART and BAKER, 2007; TONTINI and SILVEIRA, 2007).

Customer’s satisfaction towards financial products and services, in turn, is understood as an emotional reaction, related to specific transactions. Also, it is strongly associated with the corroboration of prior expectations (OLIVER, 1997) and there is sufficient evidence to suggest that customer’s satisfaction may be seen as an attitude (LEVESQUE and MCDOUGALL, 1996). According to service literature, satisfaction is the result of a customer’s perception of the value received in a transaction or relationship, compared with price and acquisition costs. Moreover, it is relative to the value expected from transactions with competitors (REICHHELD and SASSER, 1990; REICHHELD, 1996; HALLOWELL, 1996).

Today, customers are more value oriented in their consumption of services because they have alternative choices (Slater, 1997; Woodruff, 1997). For example, Gale and Wood (1994) explained how customers make purchase decisions between competing providers. The author argued that customers buy on value of financial products; they do not simply buy products. Interestingly, it was observed that customers learn to think objectively about value in the form of preferred attributes, attribute performance, and consequences from using a financial product in a use situation (Woodruff, 1997). Thus, banks must be able to provide “up-close” personal service for customers who come with high expectations. For customers who value convenience most, banks must offer the latest product such as electronic banking, touch-tone phone account access and internet banking.

8.3 Purpose

The purposes of this paper cognates the internship purpose. With the set guidelines and proposal by the Stamford University Bangladesh and with the kind advices of the supervisor, this paper comprise of an organization part and a project part.
The prime objective of organization part is: ➢ To present an overview and brief introduction of HongKong and Shanghai Banking Corporation Ltd.
The prime objectives of project part are: ➢ Give a very brief overview of Financial Products and Services of HSBC Bank Limited. ➢ Perception and Customer Satisfaction towards these products and services ➢ Analysis of the customers’ behavior. ➢ Find out if there is any relationship among customer satisfaction and HSBC’s product and service.

8.4 Scope

The scope of this report is limited to the overall description of the company, its services and its financial performance analysis. The scope of the study is limited to organizational setup, functions, and performances Since HSBC is still in its growth stage in Bangladesh; it has still to go a long way to achieve its destination. The paper will mainly focus on what criteria HSBC Bangladesh is maintaining before offering their products and services. And if there is relationship among the customers who are thinking of switching.

8.5 Methodology

Both the primary as well as the secondary form of information was used to prepare the paper. The details of these sources are highlighted below.

Primary Sources:

➢ Customer database and historical data of HSBC customers. ➢ Interviews with the approval officers as well as the sales and collection teams.

Secondary Sources:

➢ Internal Sources ► HSBC Collection Manual ► HSBC Bank's Annual Report ► Group Business Principal Manual ► Group Instruction Manual (GIM) & Business Instruction Manual (BIM) ➢ External Sources ► Different books and periodicals related to the banking sector ► Bangladesh Bank Circulars ► Newspapers ► Website information

Data collecting instruments:

➢ In-depth interview

► During the exploratory research, in-depth interviews were conducted with managers, approval officers, mobile sales officers (MSO) & collection tea of HSBC.

8.6 Limitations

➢ As per Bank’s compliance, as a researcher I was unable to obtain indispensable experiences of different departments. ➢ Details of many aspects of the services of HSBC Bangladesh Limited have been skipped in this paper due to various constraints, including time and space, security reason.
One of the main barriers in writing this paper was the confidentiality of data. Though I had access to lot of information regarding the performance of the bank, I am unable and not authorized to use this information due to legal restrictions.

Chapter 9: Industry Analysis

9.1 Industry Analysis (Porter’s Five Forces at HSBC)

Industry analysis builds on customer & competitor analysis to make more strategic judgment about a market & its dynamics. One primary objective of industry analysis is to determine the attractiveness of a market to current & potential participants. A second objective of a market analysis is to understand the dynamics of the market.

The need is to identify the key emerging factors, trends & threats, opportunities, & strategic uncertainties that can guide information gathering & analysis. Porter’s approach can be applied to an industry, but it can also be applied to a market or sub-market within the industry. The basic idea is that the attractiveness of an industry or market as measured by the long-term return investment of the average firm depends largely on five factors.

A complete understanding of the competitive area helps to guide strategy design & implementation.

9.1.1 Rivalry among Existing Competitors:

The rivalry among the competitors and the growth in the industry depends upon the intensity of competition. A high intensity of competition is observed in the banking sector of Bangladesh. There are more than 50 commercial banks in Bangladesh that fight for their own share of the market. The national banks have the highest banking network in Bangladesh. They compete against the banks with their low cost of operation and government support. Again, Standard Chartered Bank is the largest multinational banking network in Bangladesh that has its network in many metropolitans of Bangladesh. There are other international banks that also take part in the competition and aggressive in nature. This high intensity of competition makes companies difficult to sustain in the long run.

Figure13: Porter’s Five Forces Model

9.1.2 Threat of New Entrants:
The next force highlights the possibility of new competitors entering the market. Existing firms may try to discourage new completion by aggressive expansion & other types of entry barriers. The banking sector of Bangladesh seriously faces the threat of new entrants. However the threat comes from two directions. The first threat comes with the arrival of the multinational banks and their branch expansion particularly due to the booming energy sector. Secondly, the continuous entries of local banks with lower cost structure also possess a severe threat to this industry.

In the context of HSBC the various new & upcoming Banks pose a significant threat, being new entrants in the banking sector of Bangladesh. But HSBC is aware of these potential competitors. So it is trying to expand countrywide to make the sector unattractive & to create entry barrier.

9.1.3 Threat of Substitute Products:
This force considers the potential impact of substitutes. New products that satisfy the same customer needs are important sources of competition including alternative products in the definition of product market structure identify substitute forms of competition.

HSBC continuously faces the threat of various substitute products launched by its strong competitors in the market place. For example, the launch of premier banking by SCB poses a strong threat on HSBC’s premium customer group and HSBC is at a condition where it should launch an even better product. Moreover the various consumer credit schemes offered by various local banks with lower interest rates and cost also poses a strong threat on the HSBC personal banking products. Again the lower service charges at national banks also discourage a wide group of customers to hold account in HSBC. So these are some of the threats posed by substitute products in the market place.

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

9.1.5 Bargaining Power of Buyers:
Finally, buyers may use their purchasing power to influence the producers or service providers. Understanding which organizations have power & influence in the distribution channel provides important insight into the structure of competition.

In the banking sector of Bangladesh, customers have a strong bargaining power since there are a large number of commercial banks providing similar services. Customers have a wide range of options in deciding either go for the multinationals or turn to new local banks for getting quality service. Others may also consider the national banks for large credit facilities. Therefore banks have to pursue the customers with attractive interest rates and provide them with tailor made customized services in order to attract the customer or hunt depositors.

In the context of HSBC, the firm is more or less free from the cope of the bargaining power of the buyers. HSBC has its own policies to carry out its operations & employees follow those rules to deal with the customers. But too much rigidity of the prevailing policies while dealing with the clients may under cut its client base as well as profitability. To overcome this worst scenario – a positive & personalized approach to the needs of customer - has become HSBC’s motto.

9.2 SWOT Analysis
9.2.1 Strengths: Strong Corporate Identity: HSBC is the leading provider of financial services worldwide. With its strong corporate image and identity it can better position in the minds of customers. This image has helped HSBC grab the personal banking sector of Bangladesh very rapidly.

Distinct Operating Procedures: HSBC in known worldwide for its distinct operating procedure. The company’s managing for value strategy better satisfy customers needs and also keeps the firm profitable.

Distinct Schedule: Everyone in HSBC from the appraiser to the top management has to work to the same schedule toward a different aspect of the same goal, interfacing simultaneously at all level over quite a long period of time.

Strong Employee Bonding and Belongingness: HSBC employees are one of the major assets of the company. The employees of HSBC have a strong sense of commitment towards organization and also feel proud and a sense of belonging towards HSBC. The strong culture of HSBC is the main reason behind this strength.

Efficient Performance: HSBC provides hassle free customer service to its client base comparing to the other financial institutions of Bangladesh. Personalized approach to the needs of customers is its motto.

Young Enthusiastic Workforce: The selection & recruitment of HSBC emphasizes on having the skilled graduates & postgraduates who have little or no previous work experience. The logic behind is that HSBC wants to avoid the problem of ‘garbage in & garbage out’. & this type young & fresh workforce stimulates the whole working environment of HSBC.

Empowered Work force: The human resource of HSBC is extremely well thought & perfectly managed. As from the very first, the top management believed in empowered employees, where they refused to put their finger in every part of the pie. This empowered environment makes HSBC a better place for the employees. The employees are not suffocated with authority but are able to grow as the organization matures.

Companionable Environment: All office walls in HSBC are only shoulder high partitions & there is no executive dining room. Any of the executives is likely to plop down at a table in its cafeteria & join in a lunch chat with whoever is there. One of the employees has said, “It’s exciting to know you may see & talk to the top management at any time. You feel a real part of things”.

No Communication Barriers: Many organizations are trying hard to avoid communication barriers & structural bureaucracies. The little existence of authoritative barriers among the different level of management stimulates a feeling of importance as their work get priority over the position.

Equalization: At HSBC, workshops are conducted periodically. On the workshops, all people participate as equals with new members free to openly challenge top managers.

Free Exchange of Communication: At HSBC the main objective is to setting up workshops are to remove authority from an artificial spot at the top, & place it where the most knowledgeable people are, the people closest to the operations. The free exchange of ideas is reinforced by a policy of “constructive confrontation”. Each employee is expected to challenge ideas openly & aggressively but never attack an individual’s motives for presenting an idea.

MBO: HSBC also has Management by Objectives (MBO) everywhere. Each person has multiple objectives. All the employees must have to get the approval of their bosses on what they are going to do. Later they review as how well they have performed their job with their management as well as the peer group.

“One-to-one” Meeting: The MBO makes the review a communication device among various groups. The key to the system is a “one-to-one” meeting between a supervisor & a subordinate. In the meeting, the problems in dealing with customers are put forward first & every one dug it to solve.

Modern Equipment & Technology: HSBC owns the best banking and information technology equipments in Bangladesh. Its ultra modern banking systems starting from terminal pc’s to HUB’s are based on the international HSBC group standards and are the latest. The Hexagon product is one of the best examples in this context.

Visually Appealing Facilities: HSBC has some of the best visually appealing branches and office premises in Dhaka & Chittagong that highly attracts customer’s attentions and customers also feel the international environment while banking with HSBC.

9.2.2 Weaknesses: Narrow Operating Span: HSBC has a very narrow operating span in Bangladesh. It has only 2 full service branches in Bangladesh situated only at Dhaka and Chittagong. Various geographic segments are currently not availing the services of HSBC due to inconvenient branch location or absence of neighborhood branches.

Absence of Strong Marketing Activities: HSBC currently don’t have any strong marketing activities through mass media e.g. Television. TV ads play a vital role in awareness building. HSBC has no such TV ad campaign.

No Investment Products: Currently, the personal banking division of HSBC does not have investment products for its customers. Banning of investment loan by central bank posses a strong pressure to design new products.

Lack of Customer Confidence: As HSBC is fairly new to the banking industry of Bangladesh average customers lack the confidence in HSBC and judge the bank as an average new bank.

Too Many Contractual Workers: HSBC has contract workers who lack the commitment with superior quality service and also are pretty dissatisfied as being a contractual worker. This hampers the bank’s service quality as a whole.

Low Remuneration Package: The remuneration package for the entry-level officers is considerable low. Since other foreign and local banks offer a more lucrative salary package, it would be difficult for HSBC to attract MBA’s in future with its current salary package.

9.2.3 Opportunities: High demand of Housing loans: Since housing is one of the basic needs of people, there is a high demand of housing loans. HSBC personal banking division can focus on this category of products and grab these segments of customers.

Distinct operating procedures: HSBC is noted for its distinct operating procedures. Repayment capacity as assessed by HSBC of individual client helps to decide how much one can borrow. As the whole lending process is based on a client’s repayment capacity, the recovery rate of HSBC is close to 100%. This provides HSBC financial stability & gears up HSBC to be remaining in the business for the long run.

Countrywide Network: The ultimate goal of HSBC is to expand its operations all over Bangladesh. Nurturing this type of vision & mission & to act as required, will not only increase HSBC’s profitability but also will secure its existence in the log run.

More Experienced & Managerial Know-how: The top management team of HSBC is expert in banking activities. The operating policies established by them are unique & unified. All the members of the team carry out their management roles exhaustively. They equally contributed to HSBC’s superior leadership by carrying out their unique roles. They worked well together, respecting each other’s abilities, and arguing openly without any rancor when they disagree.

Diversification: HSBC can peruse a diversification strategy in expanding its current line of business. The management can consider options of starting merchant banking or diversify in to leasing and insurance. As HSBC is one of the leading providers of all financial services, in Bangladesh it can also offer these services. Credit Cards: This is one of the most popular and emerging products in Bangladesh, which offers customers total financial mobility. Various other banks and institutions are currently offering this product. HSBC can also take advantage of this product and grab the market share.

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

9.2.4 Threats: Upcoming Banks: The upcoming private local & multinational banks posses a serious threat to the existing banking networks of HSBC. It is expected that in the next few years more commercial banks will emerge. If that happens the intensity of competition will rise further and banks will have to develop strategies to compete against and win the battle of banks.

Losing Customers: Absence of various products such as credit card, housing loans is causing various customers to detract from HSBC. This is a serious threat for HSBC Bangladesh.

Moderate Levels of Customer Satisfaction: HSBC should continuously improve its customer service strategies and the overall service quality needs to win the customer satisfaction undoubtedly.

Default Culture: This is a major problem in Bangladesh. As HSBC is a very new organization the problem of non-performing loans or default loans is very minimum or insignificant. However, as the bank becomes older this problem will arise enormously and the bank may find itself in a more threatening environment. Thus HSBC has to remain vigilant about this problem so that proactive strategies are taken to minimize this problem.

Chapter 10: Topic Analysis

Superior service quality is widely acknowledged as a driver of perceived value, which in turn will enhance customer loyalty (Parasuraman and Grewal, 2000) and improve the provider’s image, sales and profitability (Buzzell and Gale, 1987; Gummesson, 1993). Therefore, the notion of service quality has been examined in previous studies of various services offered by HSBC.

10.1 Customer Satisfaction

Customer satisfaction, a business term, is a measure of how products and services supplied by a company meet or surpass customer expectation. It is seen as a key performance indicator within business and is part of the four perspectives of a Balanced Scorecard. In a competitive marketplace where businesses compete for customers, customer satisfaction is seen as a key differentiator and increasingly has become a key element of business strategy.

10.2 Service Quality:

Service quality has been shown to be a significant predictor of behavioral intentions, e.g. likelihood of recommending, repeat purchase, switching, and complaining (Bitner, 1990). Woodside, Frey and Daly (1989) found that there is a significant correlation between service quality and repurchase behavior in the health care industry. Findings from Dabholkar (1996) indicate that customers’ feelings correlate positively with the intention to use. In light of these findings, the present study investigates the relationship between service quality, customer satisfaction and future consumption behavior.

10.3 Customer Satisfaction in the Banking Industry

The demand for 'banking supermalls' offering one-stop integrated financial services is well on the rise. The ability of banks to offer clients access to several markets for different classes of financial instruments has become a valuable competitive edge. Convergence in the industry to cater to the changing demographic expectations is now more than evident. Bank assurance and other forms of cross selling and strategic alliances will soon alter the business dynamics of banks and fuel the process of consolidation for increased scope of business and revenue. The thrust on farm sector, health sector and services offers several investment linkages. In short, the domestic economy is an increasing pie which offers extensive economies of scale that only large banks will be in a position to tap. With the phenomenal increase in the country's population and the increased demand for banking services; speed, service quality and customer satisfaction are going to be key differentiators for each bank's future success. Thus it is imperative for banks to get useful feedback on their actual response time and customer service quality aspects of retail banking, which in turn will help them take positive steps to maintain a competitive edge.

The working of the customer's mind is a mystery which is difficult to solve and understanding the nuances of what customer satisfaction is, a challenging task. This exercise in the context of the banking industry will give us an insight into the parameters of customer satisfaction and their measurement. This vital information will help us to build satisfaction amongst the customers and customer loyalty in the long run which is an integral part of any business. The customer's requirements must be translated and quantified into measurable targets. This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. We can recognize where we need to make changes to create improvements and determine if these changes, after implemented, have led to increased customer satisfaction (Dash, 1991). "If you cannot measure it, you cannot improve it." - Lord William Thomson Kelvin (1824-1907).

10.4 Measuring Customer Satisfaction

Organizations are increasingly interested in retaining existing customers while targeting non-customers; measuring customer satisfaction provides an indication of how successful the organization is at providing products and/or services to the marketplace.

Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement, although a large quantity of research in this area has recently been developed. Work done by Berry, Brodeur between 1990 and 1998 defined ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in 2002 and known as the ten domains of satisfaction. These ten domains of satisfaction include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, and Interdepartmental Teamwork, Front line Service Behaviors, Commitment to the Customer and Innovation. These factors are emphasized for continuous improvement and organizational change measurement and are most often utilized to develop the architecture for satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml and Berry between 1985 and 1988 provides the basis for the measurement of customer satisfaction with a service by using the gap between the customer's expectation of performance and their perceived experience of performance.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the state of satisfaction will vary from person to person and product/service to product/service. The state of satisfaction depends on a number of both psychological and physical variables which correlate with satisfaction behaviors such as return and recommend rate. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization's products.

10.5 Drivers of Satisfaction:

If banks are to improve their satisfaction and loyalty ratings and differentiate themselves from the competition, they need to understand what really drives satisfaction and loyalty. They also need to know which areas have the greatest room for improvements. There is little point in intervening resources in areas that are important but are performing well, or in areas which there is much room for improvement but they are not important in driving satisfaction and loyalty. Thus HSBC managers need to know what levers to push to increase these measures of success.

One useful tool is to search for the most important attributes which allows analyzing those areas that are important and have much room for improvements. In the following section the most important attributes will be discussed.

10.6 Factors Positively Influence Customers Perception

▪ Being on target

▪ Care and Concern

▪ Spontaneity

▪ Problem Solving

▪ Follow up

▪ Recovery

10.7 Most Important Attributes of the Service:
The analysis of various attributes of service quality dimension pointed out some attributes that were highly important to customers. These attributes are listed below according to importance: • Speed of service

• Location of the branches

• Location of the ATM’s

• Friendliness & courtesy of the employees

• Promptness of error correction

• Keeping Promises

• Rates on Loans

• Savings services

• Recognition of needs

• Fees & service charges

These attributes were considered as the drivers of satisfaction for the customers. Satisfaction across these attributes influenced the overall satisfaction towards the banks services. Some other attributes, which were important to customers but not considered as drivers of satisfaction are listed below:

• Individual attention

• Loan or credit services

• Safety of transactions with HSBC

• Reliability and accuracy of the statements

• Clarity of the statements

• Problem solving interest within employees

• Professionalism of the employees

The rest of the attributes administered during the survey were found to moderately important or less important for the customers and were not considered by them while deciding on satisfaction scores.

10.8 Satisfaction Towards The Most Important Attributes:
As mentioned earlier, the major concern of managers is to find out satisfaction of the customers across the various drivers of satisfaction. The results of the study showed that customers were satisfied only across the following drivers of satisfaction:

• Friendliness & courtesy of the employees

• Fees and service charges

• Saving and deposit services

• Promptness error correction

Thus the above attributes were only very few compared to the list of highly important attributes. Again the customers also ranked some of the highly important factors as highly dissatisfactory. These attributes thus damaged the overall satisfaction scores drastically. Some such attributes are as follows:

• Recognition of needs by HSBC

• Location of Branches

Most of the other drivers of satisfaction that were very important to customers showed average satisfaction scores. This depicts that most of the customers are not very satisfied with the attributes and are somewhat indifferent with the attributes. This brought down the overall satisfaction scores to the neutral or average points.

10.9 Cause & Effect for Service & Customers’ Satisfaction
The cause and effect diagram shows the sources of cause of variation. It is used to show whether the sources of cause of variation are in man, machine, method, or in materials. All of the components are essential for retaining customers’ satisfaction. Absence or lacking in any of these variables might lead to customer dissatisfaction. More the variances among the variable more the lead time more the chances towards dissatisfaction. Proper combination of these variable ensure be effective and efficient services that lead to customers satisfaction (Diagram: 1).

10.10 Functional Development for Customers’ Satisfaction:

Customer satisfaction is not only dependable on one variable. It’s a consolidated and continuous process. Providing effective and efficient services is not enough for the present situation. There needs improvement in other field like the organization environment, staff behavior and so on. When all the components act properly then organization can live up to the customers’ satisfaction (Diagram: 2).

Chapter 11: Findings

11.1 Most Satisfied Aspects of HSBC Services:
The respondents showed high satisfaction towards some of the attributes of the service dimensions. Though most of these were not very important to customers they do represent the good side of the services provided by HSBC. Some such satisfied attributes are listed below starting from the most satisfied ones:

• Neatness of Employees • Equipments & Technology • Friendliness and courtesy of employees • Tele Banking services • Safety with HSBC • Cleanliness of the premises • Visually appealing facilities • Reliability and accuracy of statements • Fees and service charges • Cash and remittance services • Sufficiency of parking spaces • Savings services • Promptness of error correction

So these were the attributes that resemble strengths of services provided by HSBC services which were ranked as satisfactory by the respondents.

11.2 Most Dissatisfied Aspects of HSBC Services:

The respondents while expressing their satisfaction viewed toward various attributes some of the aspects of the service quality poorly. The poor remarks depict that customer were dissatisfied with these attributes of service. These dissatisfactory features are the starting points of the attempts for improving the overall customer satisfaction. Such dissatisfied must be taken care as early as possible. Some such poorly ranked dissatisfied attributes are as follows:

• Professionalism of the employees • Willingness to help • Recognition of needs • HSBC has best interest of the customer • Searching for solutions • Location of the branches • Clarity of the statements • Rates on savings • Investment services

Of the above list need recognition location of branches and clarity of statements were very important to customers. Importance of the rest of the dissatisfied features were somewhat moderate.

11.3 Findings of the Service Quality Dimension

The interviewed respondents pointed out various important attributes that they thought were important to customers in assessing service quality and satisfaction. The most common and relevant responses were then selected from the pool of attributes and were. Some such attributes are presented below along with the associated service quality dimension:

11.3.1 Reliability:

Attributes such as keeping service promises, giving appropriate solution, error resolution were categorized in this dimension of service quality. This dimension was the most uniform among the respondents. Customer Support: This is an important service that bank should provide to the customers. Proper support to the customer may lead to the banks generating profit and build customers’ confidence. The study indicates that overall customers’ perception is positive regarding service provided by the bank in the way of customer support. But there are complaints of poor support provided by the bank to the customer. Therefore, HSBC bank should pay more attention to this parameter so that customers’ perceptions are raised.

Good Manners and Hospitality: The banks’ personnel’s manners and hospitality is one of the parts of reliability of service quality that attracts customers. This parameter also is not satisfactory. Sometimes employees do not show their utmost effort to help and solve customers’ problems. Banks need to improve their personnel’s manners to a great extent.

Resolving Customers’ Grievances: This is an important service quality factor. The bank customers expect the bank to resolve their grievances. It seems that customers’ perception in this case is unsatisfactory and banks should give attention to this issue.

11.3.3 Competence

Speed of service, willingness to help, willingness to search for solutions, etc. were the attributes that related to the responsiveness dimension of service quality.

Promptness and Accuracy in Transactions: In the banking transaction, customers seek prompt service and accuracy in transactions. It is understood that customers’ perception in this case is better than for customer support, good manners and hospitality, resolving customer grievances and imposing of service charge.

Safety of Customers’ Investments: The service quality also depends on the safety of customers’ investments. Customer responses indicate that customers are satisfied, as do other parameters such as infrastructure and bank networking.

Confidentiality of Accounts and Transactions: This is an important parameter. Customers want their account and transactions to be kept confidential. The scenario is that customers have moderate confidence in this service.

Various Kinds of Service Offered: In theory, banks are profit-making institutions and offer various types of service to the customers such as car loans, marriage loans, education loans, etc. Customers’ perception in this case is moderate.

11.4 Brand Preference:

Different customers views products and services in different way. The reason for taking services or buying products from organization is different among the customers. Some are influenced by the name of the Company, some by products features and service quality, some for the overall service environment and so on. The brand name & reputation influence the customer to come in the bank, few are influenced by bank’s products and services, very few argued for the friendliness of the personnel and bank environment. Below the graph shows the relationships of customer behaviors.

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(Source: Khadizatul Kobra, 2009).

11.5 Products & Services Fulfillment:

Availability of products or services in a single place is less time consuming and less hassle for the customers. Customers’ will always prefer the organization that can meet their needs at the best level. Banks also provide wide range of services and the line of products and services lead to customers’ satisfaction. Among the respondents most of them said that the HSBC bank is fulfilling their financial needs that are available through other banks.

11.6 Comparison:

The products or services provided by an organization are said to be better when those products and services are comparatively better than the other organizations that are providing same line of products and services. Customers always compare the products and services of one organization with another to find out the best one. By Observing and Judging it reveals that the majority customer responded as highly satisfied comparing to the other banks service.

11.7 Attending Customer Needs

Having more customers is not enough for an organization. Organizations have to be more attentive about customers need on timely. They have to know the current needs of the customers’ as well as assess the future needs. More the quicker response towards customers needs more the satisfaction for the customers. According to the respondents attending customers’ needs by the bank is better.

11.8 Quality of Services:

More the qualified people the organization have more the efficiency and effectiveness in the services provided by those personnel. Efficient and effective work reduces the lead-time of performing job that will satisfy the customers’. The study shows the higher level of efficient services provided by the bank personnel is high most of the time.

11.9 Courteous, Friendliness and Accommodating Relation

In regard to services and products their needs to maintain a well behave relationship with customers. Better the courteous, friendly and accommodating relationship with the customers that convince them better for the company.

In spite of better service and customer support service personnel need to maintain an accommodating relationship with the customers. Only providing better services is not well enough. People have to maintain a pleasant environment so that customers are always attached with the organization. According to the majority respondents the friendliness of service personnel is high.

11.10 Accuracy of Service

Accuracy is most vital while serving the customer’s. More the rate of error more the hassle for the customers’ that might lead to dissatisfaction. The people who are directly related to the customers have to be attentive so that no error takes place. The study shows the accuracy of service is high comparing to average service .

11.11 Improvement Factor:

In the competitive world organization need to offer at least the same line of products comparing to the other organization. More the line of products to serve the customers’ purposes more the customer satisfaction. According to the study many respondents said that it’s not important to increase line of products and others said it’s less important. Current products might have serving the customers purposes but more the precise products and services more the easier for customers.

11.12 Analysis through Variable Control Chart:
Through variable control chart I have find out whether any process mean variation is within the control limit or not as well as I came to know whether there is any assignable cause or un-assignable cause for the variation. Here I have used variable control chart. Here I have considered time as acting variable. For preparing the control chart I have observe some customers from 9:00 am to 12:00 pm and have collected their lead-time. In every half an hour I have observed four persons. The data's are as follows –

Time |1 |2 |3 |4 |Max |Min |Range |X avg | |9:00 |6 |4 |5 |4.5 |6 |4 |2 |4.875 | |9:30 |7 |6 |4.5 |6.5 |7 |4.5 |2.5 |6 | |10:00 |6 |6.5 |6 |7 |7 |6 |1 |6.375 | |10:30 |5 |6 |6 |6.5 |6.5 |5 |1.5 |5.875 | |11:00 |7 |6.5 |5.5 |6 |7 |5.5 |1.5 |6.25 | |11:30 |6 |5 |6.5 |4.5 |6.5 |4.5 |2 |5.5 | |12:00 |5.5 |6 |5.5 |5 |6 |5 |1 |5.5 | | | | | | | | |1.64 |5.77 | |
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Chapter 12: Recommendations

12.1 Recommendations:
The study provided with valuable insights about different attributes of the services delivered by HSBC Bangladesh. There were few weak points in the service dimensions, where improvements were needed. As a result, following are few recommendations for improving the service quality.

❑ Enhancing The Visual Elements

HSBC must enhance the visual attractiveness of its physical items such as cheque books, ATM cards and other physical goodies such as brochures, card holders etc. It can take help of professional designers in this case.

❑ Sincerity In Case Of A Problem

Most of the time when a problem stirred up, HSBC staffs failed to show keen interest in solving it. Hence, the customer service department staffs should be more helpful whenever a customer faces any problem. They must not leave a customer waiting and wondering about how to solve this particular problem. Instead, the staffs have to proactively look for customer who are having problems, and assist them as quickly as possible to solve the issue

❑ Reducing Overall Errors

Employees of HSBC, especially the customer service representatives have to be very serious about one thing, and that is they must reduce the number of errors they make when handling customer queries. HSCB should arrange workshops on clerical procedures, and should establish a checklist for all the procedures to ensure that every clerical check is done without any mistakes. Along with these, CSRs must trim down the number of faults they make in first instance of a service delivery. Here again, they can take help of a checklist.

❑ Exact Time Of Service Delivery

Customer service representatives must communicate a near precise time of a service delivery to the customer. Not just that, the CSRs have to act accordingly to deliver the service within the promised time.

❑ Added Convenience

HSBC should immediately take steps to start adding features like online and SMS banking. There ATM machines should facilitate payment of various bills. Even the average local competitor of HSBC is providing customers with such features. Along with that, HSBC Bangladesh should introduce the option of Evening Banking, as its primary competitor SCB is already providing such facility in some branches.

❑ Employee Behavior And Appearance

The management must ensure that HSBC employees, under all circumstances are making courteous behavior and professional appearance. From the study, few exceptions were found, which effected the overall service quality. Management of HSBC must establish a strong customer feedback system to ensure that, customers are happy with every service dimension, including this one.

❑ Use Of Marketing Research:

The management of HSBC should regularly administer marketing research activities in order to keep a regular track of quality of services. Regular research should also be conducted to find out customer expectations about various service aspects and their satisfaction in terms of these aspects. As customer expectations vary greatly with time, static figures, regular research at sufficient intervals should be conducted.

❑ Clarity Of The Statements:

The bank should redesign the format of its account statement into a clearer and easily understandable format. The survey showed a huge amount of dissatisfaction towards the current format of statements. It should be redesigned with inputs from customers and satisfying their requirements.

❑ Corporate Entrepreneurship

Top level management of HSBC should establish a formal process to acquire inputs from operational staffs. Some day to day activities (e.g., maintaining mail tracker) are unnecessary lengthy or complex, which could be made reasonable if other methods were followed. Lower level employees know such diverse methods, and would love to see them in work but don’t have an established framework to suggest it to the top level management.

12.2 Recommendation (Customer Perception):

❑ Mail Delivery Problem

A large number of the customers did not get statements, ATM cards and other stuffs which were mailed to them. They suggested that the current courier service (I post) that the bank was using should be changed.

❑ A Stronger And Error Free ATM Network

Customer had enormous complains about the usability of the ATM card. There are only a few booths at Bangladesh where they could use it. Added to that, the booths often went out of service. Cards were retained by the machine in many incidents. So, the customers suggested that the number of ATM booths and the quality of the ATM network should be improved.

❑ More Branches

Customers showed a huge dissatisfaction with current locations as HSBC provides services from only a few branches throughout Bangladesh. As convenience of branch location is a very important factor for the customers, HSBC should consider building new branches and ATM’s in Bangladesh.

❑ Faster Delivery Of ATM Cards:

HSBC should reduce the amount of time required to provide new ATM cards. Currently it takes 7-10 working days while some competitors can provide the card within 2 working days. HSBC should make necessary arrangements to produce the new cards locally in order to reduce the customer difficulties faced in the absence of ATM card.

❑ Launch of Credit Cards:

Credit card facilities should be given to customers as early as possible. Though they have been giving dates after dates of launching still they have not launched credit cards for customers though the staffs of HSBC are already using the credit card facility. Many local and foreign banks are currently providing these services and are satisfying customer needs more widely. Thus HSBC should also take advantage of this popular product with no further delay.

Chapter 13: Conclusion

13.1 Conclusion

HSBC is a global banking and financial service organization headquartered in London, and is represented in our country by its subsidiary bank HSBC Bangladesh. Similar to its global position, HSBC Bangladesh has a very strong, diversified and sustainable business model.

Though this study can’t provide conclusive evidence to determine particular courses of action and further research will be required to provide conclusive evidence. But the management of HSBC should consider the findings and take all necessary steps for further research and if they think that the customers of HSBC are homogeneous in their choice and preferences, they may consider the following recommendations to gain more customer base and achieve more customer satisfaction along with maintaining existing customers’ delights.

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