HSBC 2002 Annual Report Download - page 18

HSBC HOLDINGS PLC
Description of Business (continued)
16
In 2002, HSBC Bank increased its market share
of net new mortgage lending, in the United
Kingdom, to 5.8 per cent compared with 4.4 per cent
in 2001. Over the last 5 years mortgage balances
have almost doubled. This has been achieved via
competitive pricing and attractive product design.
For example, the development of ‘HomeStart’ in
2001, an innovative mortgage appealing to first time
buyers and allowing the customer to pay only the
interest costs during the first three years, has been a
major contributor to growth. In July 2001, First
Direct launched ‘smartmortgage’ which links
customer savings, cheque and home loan accounts.
Mortgage balances at First Direct grew from US$2.2
billion in June 2001 to US$5.8 billion by the end of
2002. ‘Buying a Home in France’ was launched in
April in conjunction with CCF.
HSBC Bank also issues a comprehensive range
of credit cards to develop high value customer
relationships by providing more tailored, personal
credit card solutions to customers as an integral part
of the bank’s customer relationship strategy. Nearly
30 per cent of new customers are now offered
premium card products.
Again with the objective of building customer
loyalty, in 2002, HSBC Bank was the first major
bank in the UK to reduce overdraft interest rates
significantly for unauthorised borrowing.
Success in building stronger customer
relationships is evidenced in the broadening product
range delivered to customers, in particular wealth
management products. The bank’s combined market
share for its principal investment products, Open
Ended Investment Companies (OEICs) and ISAs,
was maintained at over 5 per cent during 2002,
despite the difficult investment market conditions.
Private client services offer discretionary portfolio
management services and independent financial
advice to high net worth individuals. Despite the
impact of adverse stock markets, new funds
increased by 8 per cent over 2001. Within general
insurance, HSBC Bank launched home emergency
and legal assistance products in 2002.
First Direct, which was launched by HSBC
Bank in 1989 as the UK’s first full banking service
by telephone, 24 hours a day, 365 days a year,
continued to grow in 2002, attracting 88,900 new
customers and maintaining its position as the UK’s
most recommended bank. Its e-channel services
attracted around 54 per cent of First Direct’s
customers online by the end of 2002. Increasingly
customer contacts with First Direct are now made
electronically. Sales from internet banking and
mobile phone banking sources have increased, with
12 per cent of First Direct’s product sales now
attributable to e-channels. The first part of HSBC in
the UK to adopt ‘open architecture’ for product
selection, First Direct continued to develop its
independent life, pensions and investments business,
offering products from leading providers supported
by a telephone based advice service.
HSBC Bank offers a full range of commercial
banking services, remaining committed to serving its
commercial customers through the branch network,
complemented by internet and telephone banking.
This commitment was strengthened in January 2002,
when a number of specialist sales forces were
integrated into the branch network. Working
alongside relationship managers, they provide a
‘one-stop-shop’ for business financial services.
By increasingly employing product specialists,
investing in new sales channels and through effective
marketing, HSBC Bank demonstrated its customer
focus and thereby increased its share of the business
start-up market in 2002. During the year, over 87,000
new start-up business accounts were opened, an
increase of more than one third over the same period
last year. The number of customers moving accounts
from competitors to the bank also grew, helping to
achieve more than 6 per cent overall growth in
customer base in a stable market.
HSBC Bank’ s commercial banking operations
have access to the full range of personal and other
financial services products allowing business owners
and directors to manage their business and personal
wealth efficiently through to retirement. HSBC Bank
also offers business protection products such as ‘key
man’ insurance and partnership protection. Sales of
such products during 2002 grew significantly, up by
11 per cent on 2001. For example, HSBC Bank is
now one of the top providers of regular premium
stakeholder pensions in the UK market, with a 6.3
per cent market share.
During 2002, the bank continued to invest in the
development of alternative sales channels to increase
customer choice. Dedicated Business Telephone
Banking centres now operate from Swansea,
Edinburgh and Hyderabad handling inbound calls
from a total of 134,000 registered users. A business
outbound telephone centre was established in