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Finance and Management

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Report on Finance and Management

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1. Introduction

Overview

The topic which is selected for this report is decreasing customer's engagement in banking sector. It is resulting in decreased profits of the industry because clients are getting attracted towards other financial instruments such as shares, debentures, mutual funds, bonds etc. As all of these securities provide better interest rate so the buyers choose them because they want to earn higher returns on their investments. Another reason for selecting these options is taxation because banks charge high TDS on interest if it crosses the limit of 10000 pound. If a customer is not having a Pan id then the rate of TDS will be doubled by the bank. In case of other financial assets if these are kept by the holders for at least three years then the generated return will be considered as long term gain. This will be indexed and then taxable amount is calculated on the same. Nowadays banks are trying to make banking easy for the clients so that their engagement can be enhanced and the issues that are taking place due to this problem. The consequences are reduction in profitability, revenues, number of customers etc. The major thing that they want to acquire is great value from their financial products and services. If their bank is able to fulfil all their requirements then their engagement can be increased. Currently in banking sector all the organisations are facing this problem and for all of them it is very important to find best ways to overcome them. These enterprises are now modifying their customer services in order to make them highly responsive and supportive so that the problems of decreasing engagement can be dealt effectively.

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Background

Hong Kong and Shanghai Banking Corporation (HSBC) Plc is one of the largest banking sector organisations that are operating their business all around the world. There are more then 85000 employees are working in HSBC including its subsidiaries. Thomas Sutherland had founded it in year 1865 in Hong Kong. It has been ranked as the 7thbiggest bank in the world. In year 2017 total revenues of this organisation were 3984.39 Pound Crores. It headquarters are in London and Birmingham, UK. The business is executed in more then 80 countries by HSBC. Customer's engagement is continuously decreasing in this bank because there are various other options available in the market where clients may get good returns on their investments. Now the bank is trying enhance their engagement so that its profitability and number of petronage can be raised. The ways that are adopted by HSBC are communicating with the individuals and assess their problems, providing them good schemes that may increase their interest in banking, increasing visibility for the clients and becoming pragmatic.

Statement of the problem

Currently the main issue which is affecting the banking sector is related to decreasing customer's engagement. It is resulting in reduced revenues and profitability of banks such as HSBC. For all the organisations that are operating business under banking industry it is essential to find the best ways such as enhancing launching attractive schemes that may deal with this issue in appropriate manner. Statement for this problem is “Negative impacts of continuous reduction in clientele's engagement on banking sector.”

Conceptual framework

In current era banking industry is facing various issues such as decreased profitability, reduction in revenues etc. When banks tried to figure out the cause of these problems then they find that customer's engagement in this industry is declining because clients are getting attracted towards other options such as mutual funds, shares, bonds, debentures etc. For banks like HSBC it is very important to implement effective solutions so that such type of consequences can be resolved.

Purpose of the study

Main purpose of this research is to enhance knowledge regarding the issues that are taking place in banking sector and figure out the ways that can be adopted by the organisations in order to respond the problems appropriately. Another purpose is to find the impacts of declining engagement of clients in banking sector so that appropriate solutions for such type of consequences can be provided to HSBC. It may help the organisations to deal with all the problematic situations effectively.

Research Aim

“To determine the impacts of decreasing customers engagement on banking sector.”

Research objectives

  • To understand the concept of customer's engagement in banking industry.
  • To assess the impacts of reducing customer's engagement on banks.
  • To identify the factors and reasons which have resulted in the problem of continuous decrement of client's engagement.
  • To analyse the benefits of customer's engagement for banking sector.
  • To evaluate the ways that may help banks to overcome the issue and enhance customer's engagement.

Research Questions

  • What is engagement of customer's in banking industry?
  • Do lack of client's engagement leave impact on banks?
  • Why decrement of customer's engagement is taking place in banking industry?
  • Is there any benefit of customer's engagement for banks?
  • What are the ways that may help banks to deal with the issue and increase involvement of customers?

Key terms

There are various types of key terms that are going to be discussed by the researcher in this research. All of them are as follows:

  • Customers: These are the individuals who buy goods or services from a particular organisation. In this research customers are the buyers of bank's products such as fixed deposit, saving accounts etc.
  • Customer's engagement: It is a communication connection between customer and an organisation. For banks like HSBC and other financial institutions it is very important to enhance patronage's engagement so that their long as well as short term goals can be achieved.
  • Banking sector: It is a part of the economy which is responsible for rendering financial services to the individuals. Different types of assets such as CASA (Current and Saving Accounts), Fixed deposits etc. HSBC is a part of banking industry which is facing issues regarding lack of customer's engagement.
  • Financial instruments: All the securities that are offered by finance and banking sector are considered as financial instruments. These are shares, debentures, mutual funds, bonds etc. All of them are bought by the customers in order to achieve higher returns on their investments.

Procedure

In order to successfully complete the study different types of procedures and methodologies are going to be used by the researcher. The research design which is used in this report is descriptive. Research philosophy for this assignment is interpretivism and the approach which is used is inductive. The researcher has used primary as well as secondary data for the purpose of appropriate research. Questionnaires are used to collect primary data and different types of websites are used to get secondary information.

Significance

This research will help the readers to enhance their knowledge regarding the issue of decreasing customer's engagement which is faced by banking sector in current era. It will provide detailed information of the solutions that can be used by the banks such as HSBC to overcome the situation.

Limitations

While collecting primary data the researcher have faced various limitations such as the employees of HSBC were not ready to provide them information, the data which is collected can be biased because the workers are not allowed to share private content or internal information.

Organisation of the study

This research is organised in different subsections and all of them are as follows:

Introduction: In this section the researcher has provided basic information regarding the issue which is faced by HSBC Plc. The problem is lack of customer's engagement in banking sector. It is also creating other issues such as reduction in profitability and liquidity of the organisation.

Literature review: Point of views of different persons regarding the topics are considered in this section. It helps the researcher to conduct an appropriate research and provide effective information to the readers. The data which is recorded in literature review is based on current knowledge that includes substantive findings.

Research methodology: In this section information regarding research approach, design, philosophy and methods of data collection is recorded. In this report descriptive design, inductive approach, primary and secondary sources of information are used by the researcher.

Data analysis: It is the process of inspecting, cleansing, modelling and transforming appropriate information which is collected from different sources such as primary or secondary. Primary data is collected from questionnaires, interviews, survey etc. and secondary is received from online sources, websites, books and journals.

Conclusion and recommendations: It is the last section of the research in which research add a summary of the report and the conclusion of the report. Recommendations regarding the solution which should be selected by the organisation in order to deal with the problems are also going to be provided at the end of the report. This section may guide the observers to get brief information of the whole research and the conclusion which is provided by the researcher after completing the report.

2. Literature Review

Literature review includes the current knowledge and findings that are analysed by the researcher. It is the theoretical and methodological contributions to a particular topic chosen to complete the research. In this section answers for the research questions are founded. The answers are provided from the point of view of different authors who have already studied the topic and provided their judgement. It is a method which helps to find out solutions for the research problems. The researcher is going to find the appropriate answers for all the research questions that are formed earlier.

Customer's engagement in banking sector

Customer's engagement is a process of keeping customers engaged in the organisational activities so that all the operational activities can be conducted in appropriate manner. For all the banking sector companies it is vital to keep all the clients engaged in order to generate high revenues. Various authors have presented their views on this subject.

According to Pansari and Kumar, (2017) customer's engagement can be defined as the way of communication and maintaining relations with the clients by providing them such services that may garb their attention. For all the banks like HSBC it is very important to enhance engagement of customers so that other problems such reduction in profits and liquidity that are taking place due to this issue can be controlled. If an organisation which is operating its business under banking sector is not able to manage the involvement of them then it is not possible for that enterprise to sustain in the market. When there are no clients then it is impossible to operate business without them. Customers that are highly engaged, helps to increase revenues as they buy more and also promotes if they are satisfied with the services. In banking sector client's involvement is very important because if there are no clientele then it will become difficult to execute operational activities and generate profits. Needs and demands always changes with time and technology. Patronages always look for something new and interesting and in service sector it is difficult to make changes and launch a innovative services according to their needs. It directly affect their engagement as their satisfaction level decreases. Currently competition in banking and finance sector is increasing and creating challenges for the organisations. For banks like HSBC it is very important to form customer focused strategies so that they can be retained and level of their involvement get enhanced. It will be beneficial for the enterprise as it can help to achieve competitive advantage and deal with competitors appropriately.

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According to Hapsari, Clemes and Dean, (2017) Customer engagement in banking industry can be defined as the interaction between customer and the organisations regarding the services that are offered by it. Currently banks like HSBC are facing the issue of lack of customer's engagement because of other financial instruments that provides them higher returns on their investments. When clients are highly satisfied and get effective responses on their queries by the banks then it results in their engagement in organisational schemes. It is essential for banks to maintain involvement of customers so that operational activities can be executed without any issue. Higher engagement results in good profitability and liquidity because clients will buy more and more services if the organisations are offering them good deals. It describes the means which is used by enterprises to foster relationship with their prospects and customers. As banking business runs on good relations so if banks are willing to enhance customer's engagement then it is very important to maintain them. When there is a positive bond between a client and the bank then it would be beneficial for the entity as it may result in higher profitability. It can be established by interacting with them and taking feedback on regular basis as it is beneficial while trying to know about the requirements of clients. In banking industry maintaining good relations is required because in this sector business runs on relationships.

According to Durkin, Mulholland and McCartan, (2015) in banking industry customer engagement can be defined as an essential element which is required to operate business successfully. It is all about encouraging interaction with client's and try to analyse their experience with the services that are provided by the organisations that are executing business under banking sector. Effective customer engagement fosters loyalty of clients and lead the enterprise towards growth. For banks like HSBC it is a vital substance because when there is no involvement of clients then it will result in inappropriate business operations. Profitability and liquidity will also get decreased because the number of customers will be reduced. To maintain the engagement of them the bank should establish a good connection so that all the queries and issues regarding the banking services can be resolved. Development in emotional relations, sharing of appropriate information, creating informational tour to provide content regarding new schemes, implementing latest technology etc. are the steps that are very helpful while planning to engage customers. Sometimes online engagement is also very important because it helps banks to be aware of activities of clients and their choices. There are various ways that can be adopted by HSBC and other banks for better customer experience which is important to engage them. One of them is being digital in which new applications can be launch, online visibility can be enhanced. With the help of this solution basic requirements and issues of clients can be analysed and identified.

Customer engagement is a tool which is required for successful execution of a business which is a part of banking industry. If a company is not having highly engaged clients then it is not possible to achieve business goals such as customer satisfaction, profit maximisation and development. For all the banks it is vital to make effective strategies that can help to identify requirements of patronage and then try to offer them such services that they are willing to buy. It can help to enhance their engagement and resolve the issues such as decreased profits and liquidity that are taking place due to this situation.

Impact of lack of customer's engagement

Customer's engagement leave positive as well as negative impacts on banks such as HSBC. When it is high then it will be favourable for the organisation and in opposite situation it will be adverse condition for the enterprise. Lack involvement of clients unfavourably affect organisational operations and efficiency to perform them. The major impacts of it are reduced profits, funds, number of customers etc. It s very important for banks to find appropriate ways to overcome this situation otherwise it may lead towards huge losses. When there are no engaged customers then there will be not a single way for companies to generate revenues. It has major financial impacts on banking industry. The main reason behind this is low interest rate and high TDS on the services that are provided by the banks.

According to Kunz and et.al., (2017) currently customer's engagement is continuously decreasing and leaving negative impacts on the banking industry. The major unfavourable effect of it is reduction in revenues and profitability because when there are no clients then banks wont be able to conduct operation and generate incomes. It is very important for all the organisations operating business under banking sector to implement such strategies that may result in higher engagement of the patronage. Involvement of clients can be increased by improving their experience with the services that are offered to them. When it is improved then it may help to engage customers, motivate employees etc. so that all the tasks can be accomplish successfully. When there is lack of client's engagement in banks like HSBC then it leaves negative impact on operations and other activities that are performed by it. The major impact of this issue is continuous decrement in profits and reduced revenues because customers does not take interest in banks and try to find other option that can provide them higher returns on this investments. Lack of engaged patronages is the issue which is faced by most of the banks like HSBC as it is one of the largest banks in the world so it is essential for the directors and managers to find appropriate ways so that solution for this problem can be figured out. Proper concentration is a major requirement which is important to analyse the main point of distraction of clientele from banking activities. When appropriate solutions are identified then the higher authority is required to implement them effectively so that all of them can respond positively and in favour of the organisation.

According to Giannakis-Bompolis and Boutsouki, (2014) customer's engagement is very important for banks and if there is a lack of it then it may affect the whole organisation and its operations. The enterprises needs to find out that they have high involvement of patronages or it is low. When it is observed then the next step which is required to be taken is formulating effective strategies so that the problem can be resolved. Main reason behind this problematic situation is bad customer service which affects all the areas of business and functional departments. In this condition best employees are forced to attract customers and sale products. If the pressure is not bearable for them then they leave the job and it results in employee turnover. This is another negative impact of lack of clients engagement in banks. Banks offer low interest rates and change high TDS on saving accounts and fixed deposits. This issue decreases curiosity of customers in banks and raise their attraction towards other financial instruments such as mutual funds, shares, bonds and debentures. To retain the patronages banks are required to offer them good returns on their investments. Nowadays customers are getting distracted from banking products towards other financial instruments because they get higher returns on them. It is negatively affecting the banking business as clients are not taking interest in opening saving accounts, making fixed or recurring deposit etc.

According to Beckers, Risselada and Verhoef, (2014) lack of customers engagement is a major issue which is affecting banking industry and all the companies that are operating business under this sector. While formulating strategies to overcome this problem the managers and other executives are required to focus on the requirements and choices of customers so that they can be engaged with the banks. When banking companies fails to fulfil the expectations of the patronages then this situation takes place and leave adverse impact on profitability, revenues, rate of employee retention, liquidity etc. To deal with all these challenges the enterprises are required to take appropriate actions and implement attractive strategy. Banks that are highly focused on customer's engagement achieve massive success because they have loyal clients who promotes their services and make contribution in development of organisation. Digital presence is the way of knowing the patronages in more detail, that may guide to make changes in existing policies of the entity so that clientele can be engaged in banking processes. Proper and timely interaction with customers is also very important because it leads through out the way of engaging people in banks. It will also be beneficial to get information of the expectations that are required to be fulfilled by organisation in order to engage customers.

When there is no customer's engagement in banks then it will result negatively for banking industry and the organisations that are operating business under this sector. There are various types of issues that are taking place due to this situation. These are reduction in profitability and liquidity, decreased number of customers, employee turnover etc. When a back deal with such type of situation then the employees are forced to generate revenues and some of them does not bear pressure and eave the jobs. Sometimes bank evict its workers from their jobs due to lack of finance and continuous losses that are taking place due to less interaction of clients with the organisation. Lack of client's involvement in banks is a negative situation which is faced by most of the organisations that are part of banking industry.

Reasons behind the decrement of customer's engagement in banking sector

There are various causes of decreasing customer's engagement in banking sector. For all the banks like HSBC it is essential to form appropriate strategies that can result in resolution of problems. Various authors have presented their own views regarding the reasons of lack of clients engagement in banking industry.

According to Farah, (2017) currently customer's engagement in banking sector is decreasing due to various factors such as lower interest rare, TDS etc. Customers are attracting towards other options such as mutual funds, shares, debentures and other securities because their rate of return is higher as compare to saving account and fixed deposits. While buying any financial instruments from any organisation patronages always figure out its risk and return and choose the alternative which is able to provide higher profits to them on their investments. HSBC is a bank which is also dealing with the same issue because clients are not preferring banks to invest their money due to lower rate of interest. Switching behaviour of customers is troubling the bank and resulting in reduced profitability and revenues because when clients does not make any transaction then it is not possible for a bank to generate income. To overcome all the issues the banks are required to provide attractive schemes to the clients so that their curiosity to buy ASA, fixed and recurring deposits can be enhanced. The banks should firstly find out the causes and then try to implement strategies that can be used to deal with problems. For this purpose appropriate communication session could be conduced by organisations in which employees may interact with clients and try to find out the reasons that are resulting in decreased engagement.

According to Abdou, English and Adewunmi, (2014) decrement in customer's engagement in banking industry is taking place due to various reasons. When banks does not take timely or regular feedbacks from their clients, reputation of the organisation is not good in the market, rate of return on investments is low, transparency is not appropriate, taxation rates are higher as compare to other financial instruments such as shares and mutual funds etc. are the causes of decreased engagement of clients in banking industry. Banks such as HSBC charge TDS at 10% when amount of interest crosses the limit of 10000 pounds and if the customers does not have PAN card then the rate is being doubled. It is reason why patronages try to ignore to make investments in banks. When there is a transparency level between bank and clients then it can help to resolve the issues properly by communication and interacting with them and providing them information regarding the benefits of products that are offered by organisation. When there are end number of loyal customers then it may help to increase revenues and sales of the banks. The main issues of decreasing client's engagement are lower returns on banking services and lack of timely interaction with them. Banks are now trying to resolve the problems by becoming digital and communicating with the patronages on regular basis.

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According to Roy, Devlin and Sekhon, (2015) nowadays most of the organisation under banking industry are facing issues regarding customer's engagement which is taking place due to various reasons and affecting operational efficiency of the banks. Different types of financial instruments such as mutual funds, shares, debentures are grabbing attention of the clients and reducing their interest in the products that are offered by banks. It is resulting in decreased profitability, employee turnover and reducing liquidity because when there are no customers then it is not possible to perform operational activities. Rate of return on other securities is very high as compare to services that are rendered by banks and customers always make investment in such options that may generate higher returns for them. For HSBC it is very important to take effective actions and form appropriate strategies so that the problem of lack of customer's engagement can be resolved. If the banks are willing to overcome the challenges then all of them have to make strategic decision and then form new and attractive policies that can help them to deal with all the challenges that are taking place due to continuous reduction in client's engagement. When number of customers in banks get decreased then higher authority put pressure on the employees to increase number of patronages. Few of them are able to work under highly stressful situations but all of them are not capable for it, which results in employee turnover. Lack of client's engagement is a major problem which results in other more issue and affect the efficiency of organisations to conduct operational activities. In this condition the higher authority should try to deal with the issues in effective manner by implementing such strategies that are able to result positively.

There are various causes that are resulting in decreased customer's engagement in banking sector. These are lower interest rates on bank's products, taxation and higher rate of return on other financial instruments. Clients always choose such securities to invest their money in which they can acquire higher rate of return. When they have to select one from fixed, recurring deposits, saving accounts and mutual funds, shares, debentures etc. In this situation they always go with second option because it provides them higher returns on the investments and enhances their profits. It is essential for the organisation that are operating business under banking sector to find out the causes and then form appropriate strategies that can help to deal with them. The main step that can be taken by the managers of HSBC is that it can offer customers a free PAN registration so that their tax can be saved and customers get retained.

Benefits of customer's engagement for banks

For all the organisations customer's engagement is very important whether it is a part of banking industry or not. But for banks it is essential because when there is a lack of engagement of clients then it is not possible for it to operate business operations in appropriate manner.

According to Goyal and Srivastava, (2015) customer's engagement for banks is very important because it can help to generate good revenues and conduct operation in appropriate manner. It results in higher profits because clients will buy more and more products that are offered by bank. When there are highly engaged patronages then brand loyalty of them will also be high that may help to appropriately operate business and accomplish all the predetermined goals that are formed previously. For large banks such as HSBC it is very beneficial as it can help them to be position where it is willing to reach. If organisations provide good experience to the clients then it results in higher satisfaction level of them which is important for customer's engagement. Another benefits of it are good market image, high rate of employee retention, low employee turnover, good profits, satisfied clients etc. Banks like HSBC should maintain customer's engagement as it is required to operate business in appropriate manner. As profits get declined when clients are not taking interest in banking so it is very important for all the banking sector organisations to offer such financial products to the clientele that can increase their satisfaction level. Brand loyal customers always help on mouth publicity because they refer the services to their friends, family, collogues and other people they know. It helps to increase profits that can be used for successful business execution.

According to Islam and Rahman, (2017) customer's engagement is advantageous for banks as it enhances loyalty of clients, raise profits, liquidity etc. by increasing number of customers. Improvement in experience of patronages is vital for all the organisations that are part of banking industry because it is very difficult to retain customers by rendering them services as these are intangible in nature. When an enterprise such as HSBC understands the needs and expectations of clients, encourages their involvement, figure out issues that are resulting in decreased engagement of them then it can help to successfully operate business. Other benefits of it are good mouth marketing, bank's reputation, reduce churn, increase retention of patronages and new development opportunity. Fully engaged customers can help to make huge increment in revenues than average. If banks like HSBC does not have any a good strategy for client's involvement then it is possible that the organisation may loose a chance to interact with clientele and build a good relationship with them. It is a type of long term investment for an organisation because it is helps to build relations with clients. Maintaining engagement of clients is a time consuming process but it always results positively. All the expenses that are made by an organisation to enhance engagement of clientele are going to be recovered because when it is increased then revenues get higher. The right steps that are taken to maintain relationship with clients can mean long lasting ties that continue to be profitable even year down the road.

According to Pick, (2014), customer's engagement is beneficial for the organisations that are related to banking industry because it helps to make loyal clients, healthy relations and it also creates natural evangelists. All these elements can help to achieve higher profits and execute business in appropriate manner. The main benefit of it is that it provides real and lasting returns for the banks. Proper investment in an engagement program strengthen the market position, increases organic referrals and ultimately life the bottom line. Highly engaged and satisfied customers works as mouth marketers and refer the services to other individuals. Banks such as HSBC should try to invest in involvement of clientele so that the problems that are affecting its operational efficiency can be resolved in effective way. Best solution for the issue of lack of customer's engagement is bank is offering attractive deals with higher rate of return on investment to them and grab their attention. Continuous modification in policies is essential for HSBC because it can help to win trust of clients and retain them for a long period by increasing their involvement. Two unexpected benefits of it are stronger brand image and mouth publicity. When the image of the bank is good and powerful then it is to possible for competitors and substitutes to capture the market share because customers will never switch to other services or financial products if they are satisfied. In mouth publicity clientele promote banks because they are highly satisfied with the services and the deals that are acquired by them from financial institutions.

For all the banking sector organisations customer's engagement is beneficial because it can help them to increase their profits, liquidity and brand loyalty. When there are highly satisfied clients then it will also result in enhanced operational efficiency which is required to successfully conduct operational activities. The managers of HSBC are required to pay attention on the issues that are taking place due to low client's engagement because it is required for the betterment of the organisation. The main benefit of customer's engagement is higher incomes because the engaged clients will buy more and promote more because their satisfaction level is very high and they are happy with the services that are rendered by bank to them. If a bank like HSBC achieve success in engaging customers then it can help to attain long term business goals such as profit maximisation, customer satisfaction etc. When there are end number of clients then it becomes easy to operate business activities because in this situation the organisation have appropriate funds that can be used to conduct all the operations. There are various benefits of customer's engagement for banking industry. These are mouth publicity, satisfied customers, high profitability, increased revenues as compare to average etc.

The ways in which the issue can be dealt and customer's involvement can be increased

For banks it is very important to increase involvement of customers so that all the issues such as decreased profits, liquidity, number of customers and increased employee turnover etc. There are various ways to resolve the problems and overcome the challenges that are taking place due to this problematic situation. Various authors has suggested different types of ways that can be adopted by banks in order to appropriately run business operations.

According to Khan, Rahman and Fatma, (2016), customer's engagement is very important for all the banking sector organisation because if they do not have sufficient number of clients then all of them won't be able to conduct operational and executional activities. Banks should identify the basic requirements and the issues that are making changes in choices of clients and then form appropriate strategies co that all of them can be resolved. Banks like HSBC should conduct market survey and then find the best sources that can help increase engagement of patronages which can contribute in the development of the organisation. Another way which can be chosen by banks is direct interaction with clientele in which their issues and problems can be examined and better modified services can be rendered to them. Timely feedback and conversation is the key of finding solutions for the problems that are continuously affecting profitability and position. Mapping is also a good technique which can be adopted while trying to dealing with challenges. It helps to map out everything which is affecting the processes and influencing the steps that are by banks to increase its revenues. When there is no connection between bank and the clientele then it results in lack of their engagement. To achieve all the business goals the organisations like HSBC are required to form impressive policies and deal that attract customers and contribute in the betterment.

According to Karatepe and Aga, (2016) development in the customer's focused strategy is an effective way to overcome the issue of decreased engagement of clients. By implementing such type of schemes banking industry can fight with this problem. Currently involvement of patronages is declining due to other impressive options and main reason behind it is rate of return. On banking products it is very low as compare to financial assets such as mutual funds, shares, debentures and bonds. To overcome this situation banks should conduct awareness programs so that information regarding positive points of their services is supplied to the clients. For example there is high risk involved in securities but there is no risk with banking products so the agents of banks can communicate with the customers and make them engaged in banks. In current era banking is becoming more democratised by technology and it is changing the thoughts regarding services. Massive growth in digitalisation is also been recorded and it is a big opportunity for banks to take advantage of it. Organisations that are not using technological factors in its services, does not have highly satisfied clients. To achieve high level of customer's engagement the banking companies are required to take advantage of new tech tools in order to reach maximum number of individuals. Focus on experience of patronage is also very important to increase their involvement and deal with problems such as reduction in profits and finance that are taking place due to this issue. Banks should go beyond customer's service and make plans to give them good experience because buyers can pay more if they are getting qualitative services and better treatment.

According to Nysveen and Pedersen, (2014) customer's engagement is essential for banking sector companies which begins before a new client even opens an account. If a bank is not having satisfied patronages and their involvement is also not good then the step which can be taken by it is improving the acquisition targeting. It looks at the usage, profitability and potential of financial products that are sold to the clientele. Making changes in conversation method is also a good solution for the problem of lack of customer's engagement in banks. Regular interaction with them can help to maintain healthy relations in which they will be more comfortable to share their issues that are reducing their involvement in banks. To build a trustworthy relationship, the interaction must focus on making sure that customer believes, the banks is genuinely interested in knowing them and resolving their issues. Banks should stay consistent across all touch points so that targeted clients can be convinced to buy the financial products such as CASA, fixed and recurring deposits. It is also very important to stay agonistic in finance and banking sector because if banks like HSBC are not competitive then their market share can be captured by other organisations. In this situation the enterprise can retain its patronages if they are brand loyal and engaged with the organisation. Conducting financial literacy program is also a way to enhance customer's engagement in banking sector. When they are educated about the concept of risk and return then they will be capable to take appropriate decision to investment their money in different sources. Individuals always try to invest their money in such financial instruments which can provide them good returns. If banks are willing to increase their profits then they have to communicate with their clientele and aware them about the benefits such as compound interest rate and no risk of banking products.

Banks like HSBC are required to aware their customers about the services and their benefits so that they can be engaged and solution for organisational problems can be figured out. Uses of latest technology is also an attractive way to enhance clients involvement because it helps to grab their attention and increase their interest in buying products that are offered by bank. Offering them new and modified services can also help to win their trust and provide them better experience which is very important to increase revenues and profitability.

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3. Research Methodology

Research methodology is a procedure which is used to analyse, assess, select and process information or data which is collected by a researcher in order to conduct a research. It allows the observers to critically evaluate the validity and reliability of a particular investigation. While formulating business decisions it is also used to collect appropriate content that may guide to form effective strategies for the betterment of the organisation. It includes interviews, publication research, surveys etc. The researcher has conducted a research in which a major issue is going to be analysed. The topic is continuous decrement in customer's engagement in banking industry. For this purpose the researcher is required to identify the suitable techniques and methodologies that can be used in the whole research. It is very important to conduct it in an appropriate manner so that the readers get exact and accurate information for which they are looking. In opposite situation it can lead towards misconceptions regarding the topic. In this report effective and best suitable methods for research are used in order to provide better understanding of the issue which is lack of client's engagement in banking sector. Different types of investigations, research designs, philosophies, methods of data collection etc. have been described by the researcher. It is very important to follow the appropriate guidelines while conducting an investigation because it is required to complete it successfully.

Type of investigation: There are various types of investigations that could be used by the researcher in order to gather accurate information and conduct a research. Before adopting the methods and techniques for research it is essential to identify the nature of work so that best suitable option can be selected for the investigation. There are two different types of it both of them described below:

Qualitative: It is primarily exploratory research which is used to gain understanding of underlying reasons, opinions and motivations. Insight in to the problems can be ached with the help of this type of investigation. It facilitates to develop ideas and hypothesis which is beneficial for potential qualitative research. This method is adopted for the purpose of deep analysis of a particular issue or topic. It is the best technique if field of study deals with human perceptions and their feelings. Looking in depth at non numerical data is the main function of this approach. There are various sources that can be used to collect information. These are archival records, observation of participant, interviews, artifacts and focus groups. It is a scientific method which is advantageous when researcher is looking for non numerical data.

Quantitative: It is a systematic empirical investigation which is used for research when researcher is willing to ad statistical data in the whole project. It is based on mathematical or computational techniques. This technique is used to measure heights, age, distance or other numerical data. In this method only numeric results can be gathered because the input for this approach is statistical. Experiments and clinical trials are the examples of quantitative strategy. Information in this technique is usually gathered by using structured research instruments. All the outcomes that are received in quantitative approach are based on larger sample sizes. It provides high reliability which is capable to render the accurate data to the observer.

From both the above described methods the qualitative method is going to be used by the researcher for analysing decreasing customer's engagement in banking sector. The reason behind the selection is that it helps to discover new thoughts and views. This technique guides to understand the perception of different people who have discovered various aspects regarding the issue. It will help the researcher to study the problematic situation in depth and use it to enhance knowledge.

Research design: It refers to the strategy which is chosen by a researcher in order to integrate different elements of the study in a logical and coherent manner. It ensures that all the research problems have been addressed effectively and a proper way. Research design is also considered as a blue print of an investigation which is required to measure, collect and analyse the data. This study is mainly based on the assessment of decreasing customer's engagement in banking sector and the research designs that can be used by the researcher to complete it are described below:

Descriptive: Such type of research design is used to define features of a phenomenon or population being studied. It is based on observation which is the most effective way to analyse specific issues that are affecting banks such as HSBC in UK. It is not possible for the researcher to make appropriate predictions with the help of this method because is a theoretical method which cannot estimate figures that are related to future.

Exploratory: It is a type of research which is conducted mainly for a specific problem which has not been studied. Such methods help to determine the best research designs, data collection methods and sampling. The main function of this research is to understand the study in a preliminary way. Goal of this approach is to discover the ideas and insights that can help to overcome critical situations.

Experimental: It is a scientific research design which strictly based on new experiments. Different types of hypothesis are formulated under this method that are used by researcher in whole study. Controlled environment is the main requirement to complete such type of study. One or more variable are manipulated by the researcher under this technique and then control or measure the changes in other variables. There is a major disadvantage of this method which is that it can produce artificial results that can be applied on one situation only.

From all the above described research designs descriptive method is used by the researcher for present research because it helps in qualitative investigation by providing detailed information regarding the issue or the research topic. It will guide the researcher to analyse detailed information regarding the problems that are taking place in banking sector and affecting banks like HSBC.

Research philosophy: It is a type of belief about the way in which data should be selected by the researcher for the study. In research philosophy the topic is not discussed in detail. There are two different types of philosophies that are described below:

Interpretivism: It is a form of qualitative research methodology. It relies upon both trained investigator and the human susceptible as the tool which is used to monitor some phenomena and typically pertain both observation and interrogation. It looks at the culturally derived and historically placed interpretations.

Positivism: All the scientific quantitative methods are preferred by this philosophy. It states certain knowledge which is based on earthy phenomena and its properties and associates. In this approach society which relies specifically on scientific evidence are being studied.

From both the above described interpretivism philosophy is used by the researcher for the study because it is supported by qualitative investigation. It will help the observers to analyse the appropriate information and data which assessed while conducting the researcher while formulating research. Literature review is also being supported by this method because it helps to gather secondary data from books, journals and articles.

Research approach: It can be defined as a plan or process in which all the steps of broad assumptions and detailed mode of data collection are included. The basis of research approach is nature of research. It can be divided in to two sub parts that are described below:

Inductive: It is also known as inductive reasoning which starts with observation and theories that are proposed towards the end of of the research. This is the best suitable approach for qualitative investigation because it provides an effective and convenient manner to analyse the collected information.

Deductive: It is based on the development of hypothesis for a quantitative investigation. It works from the general to the specific. Sometimes it is also called top down approach because it goes up from unspecific to a particular content.

In present study the researcher has used the inductive approach because suits to the qualitative investigation which is selected for this research. It is advantageous as it helps to generate a new theory which is based upon the data which is collected for the purpose of analysis and complete the research.

Data collection: All the processes such as collecting, measuring, processing and analysing the information can be defined as a part of data collection. It is a systematic approach which is implemented by all the researcher as it is required to complete the research effectively and appropriately. There are two different methods that are used to collect data from various sources. Both of them are described below in detail:

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Primary: Such information which is collected for the first time and used in a research is called primary data. It is also known as first hand source of generating content for the purpose of study. It is collected by investigator himself for specific purposes.

Secondary: It is the information which has already been collected by someone else for their research. It is mainly used for the part of literature review in which views of different authors are considered by the researcher in order to answer the research questions.

Both the methods are used this research. For primary sources questionnaires are formulated in which the researcher has interacted with different people in order to analyse their point of views regarding the problem. Secondary sources have also been used to complete the literature review part in which answers of research questions are being provided.

Data sampling: It is a statistical analysis technique which is used by researchers to select, manipulate and assess representative subset of data points to identify patterns and trends in the larger set of information being examined. While conducting a research which is based on primary data the researcher select a sample size that is used to gather information to complete the study. It indicates at the quantity of data and the way it is going to be used in the whole investigation. When a research is based on fresh data and the researcher is using questionnaires then it is required to select a sample so that appropriate results can be analysed. The present report is based on both type of information, primary and secondary. To gather information the researcher can use both the below described methods for sampling:

Probabilistic: Base of this type of sampling is theory of probability which is related to involving chance variation. There are multiple possible outcomes in this type of model and all of them have varying degree of certainty of the occurrence. All the actions under this approach are based upon the idea that researcher or observer cannot be certain about future vents or results. The sample size which is taken in this technique is based on estimation.

Non-probabilistic: In this type of sampling technique the samples are gathered in a process which does not give all the individuals in the collection, equivalent opportunity of being selected. It can be explained in a manner that for some examinations it is not executable to draw a ergodic chance which is based on the sample of population.

From both the above described techniques non probabilistic is being selected by the researcher for present study because it will help to collect primary data for the research. Random sampling is going to be used under this approach in which 40 respondents have been selected to fill questionnaire. These are the employees of HSBC bank who provided their response on the issue of decreasing customer's engagement in banking sector and affecting large banks like HSBC.

Ethical considerations: These are considered as the major components for completing an research successfully and properly. The researcher is responsible to ensure the care of the information which is collected from different respondents. The data which is being collected should not be shared with other parties. For a study there are various considerations and the researcher should distinguish between the right and wrong. For example, asking information by offering money is not the correct way to gather it. Another thing which is also required to be focused is regarding personal information which should not be asked from the people who are going to fill the questionnaire. It is also very important to make sure that the research is conducted according to the objectives. Further, the other elements that should be focused by researcher is to ensure the personal interest of respondents does not get affected due to research. The information which is used to complete the study should be authentic and also collected from reliable sources. All the guidelines and principles that are mainly established for research are required to be followed by the researcher in order to complete research in appropriate manner. At last it is also needs to be focused that the research is conducted by considering all the ethical considerations and norms. While completing present study the writer has followed the principles and guidelines in order to make an appropriate research.

Reliability and Validity: It is very important for a researcher to make sure that the research is reliable and validate. It can be assured by analysing that the results are dependable or not. Another element which is also very beneficial for it is assessing that the study can help the observers to enhance their knowledge regarding the issue or topic which is discussed under the research. If the information is extracted from authentic sources then it can be assured by the researcher that the study is reliable and can used by others for a long period in future to enhance their knowledge. When the content in the research is relevant and reliable then its soundness can be assured and it can be used by the students or individuals to enhance their knowledge. Reliability and validity of present study is high because authentic sources are used by the researcher in order to collect information.

Strengths of research: the present research is highly reliable because appropriate sources whether it is primary or secondary are used for the study. All the results are authentic because information which is used to get them was accurate and appropriate. All the ethical considerations are being followed while conducting the research that strengthen the authenticity of the study. This research is able to provide appropriate information regarding the negative impacts that are taking place due to continuous decrement of customer's engagement in banking sector. Readers can enhance their knowledge with the help of this research because appropriate and relevant content is being is used to to complete it. As primary and secondary both type of sources are being used to conduct the study so actual and appropriate information from respondents is collected that helps to enhance accuracy of the study. Quantitative investigation method is being used in this research and non numeric content is being used which is easy for individuals who belongs to finance or any other field. As the relevancy is high that helps to enhance its validity in which it can be used for a long period in future.

4. Data Analysis And Findings

Data analysis is the process of collecting, cleansing, analysing, processing and interpreting information which is collected by the researcher in order to complete the research in appropriate manner. It guides the researcher to reach at the conclusion for the issue or the topic which is selected for a particular study. It is the most important part of a whole research because it helps to reach at a conclusion and result for the issue. All the objectives that are set earlier by the researcher are being achieved in this section. It is conducted with the help of information which is gathered from different sources. The researcher is required to make sure that the data that is going to be analysed is authentic and accurate. If it is biased then it is not possible get appropriate and faithful results. The process of in depth assessment of different information is known as data analysis. Analytical and logical reasoning being used in the process in order to examine each and every component of gathered data. Main purpose of this stage is to achieve all the predetermined objectives.

In present study the researcher is going to use primary as well as secondary data for the purpose of analysis and reach to a result. For the purpose of getting primary information the researcher has used questionnaires that are provided to 40 respondents and their answer is being used to reach to a conclusion. In secondary sources different types of books, journals and articles are being used to complete the literature review part. All the gathered information is going to be discussed under this section. The sample of 40 employees if HSBC is being selected to gather information which is required for primary sources. The questions that are asked from the respondents are mainly based on the objectives. When all the questionnaires are filled by them then graphical representation of them is being created so that the information can be understood easily. The part of whole research provides in depth assessment of the study.

5. Conclusions And Recommendations

Recommendations

From the overall research, it has been summarised that customer engagement refers to a way by which companies foster their relationship with its loyal clients and prospects. By encouraging customers to make interaction with organisation and give their feedback for increasing brand experience, a company can drive more loyalty and awareness. In this regard, for banking sectors, properly engagement of clients aid in improving relationship of business with customers. This would also consider as a great way for differentiating a brand of a company from others. In context with HSBC, as it is one of the largest bank of UK that operates its various branches in many countries. But due to private financial institutions which provide impressive financial schemes at marketplace to attract customers for making investment, within their business. This would arise difficulties for banks including HSBC to increase customer engagement. Due to this issue, respective bank also face issues to cover return on investment and generate revenues. In this regard, to improve customer engagement, it is recommended to HSBC to concern on following four main ways:-

Personalised customer journey: Customers are generally demanding to get better experience which are relevant and more personalised. This would lead to create a high personalised gap between what users are demanding and what bank deliver them. Therefore, to decrease this gap, it is essential for HSBC to work on its personalised strategy first. This would help in retaining customers and creating repeat sales as well. Since due to intense competition and available of various options where, people get more benefits from their investment, increase chance of consumer defection (How to overcome customer experience challenges in the Banking Industry, 2019). Therefore, leaders of respective bank need to concern on building more effective strategies which focus more on increasing customer experience journey. Along with this, while developing such strategies, they have to emphasis more on leveraging data, digital technologies, real-time analytics and more, for delivering highly personalised schemes to improve customer engagement.

Develop more interaction with customers: In order to remove personalised gap and delivering better offerings, it is essential for HSBC to interact more to its customers. For this purpose, by taking timely surveys and interviews, its managers can take reviews and feedback of users for increasing experience of customer journey while taking banking services. In this regard, keeping transparency in business and provide equal opportunity to employees to work, also give opportunity to HSBC to build its ethical brand image at marketplace. It also helps in bringing and retaining talented employees within workplace. They would give their support in getting fully-engaged customers by resolving queries of clients within short period of interval.

Innovative Technology: As banking sectors are constantly innovating their techniques and plans to improve efficiency of work as well as minimise operational overheads. Therefore, to innovate customer experience HSBC need to deliver high communications, which must be powerful enough for self-servicing a customer. Hereby, a future-proof related to customer communication strategy give chance to HSBC to leverage a new channel, for increasing its sales i.e. cross sell and up-sell opportunities by existing communications. Along with this, customer on-boarding that was considered as one of the major hassle in giving out an impeccable customer experience, will now be done within lesser time via a robust CCM software.

Develop more financial schemes: Due to increasing private financial institutions that offer investment plan on more interest, people get attract more towards them. They used to get engaged with their plans such as shares, debentures, mutual funds, bonds and more, in order to gain heavy return on investment. Therefore, this would lead to arise issues for HSBC and other banking sectors to gain retention of their customers. To overcome this issue, respective organisation must develop effective plans to users and increase interest rate. Its managers must concern on finding the right metrics for this purpose, by increasing offerings related to number of specific account type such as savings and checking, lending, retirement or investment plan and more. These initiatives help in improving customer engagement and retain them for longer period.

Real-time information: Improving and increasing customer experience is considered as one of the most important goals for companies dealing in banking industry. Therefore, HSBC must have revived its outmoded business model as well as shifted its focus towards being customer-centric. This would help in developing transparency among business by making proper interaction with users on regular manner, to take their feedbacks related to banking experience. Hereby, due to some legal implications, operating regulations and other legislations, it may create difficulties for HSBC to provide distinguished experience. Henceforth, under such a condition, real-time information will act as a saviour. In this regard, while interacting with a responsive document and a self-serviceable, customer get chance to input certain feedback and service requests to bank. Such informations can be further recorded in real-time then implemented through various channels for future communications across as well. In this regard, information which is gathered via different digital channels can be leveraged and analysed to deliver effective outcomes. This would enable leaders of HSBC to harness customer information as well as proactively deliver experiences on-time.

References

  • Pansari, A. and Kumar, V., 2017. Customer engagement: the construct, antecedents, and consequences.Journal of the Academy of Marketing Science. 45(3). pp.294-311.
  • Hapsari, R., Clemes, M. D. and Dean, D., 2017. The impact of service quality, customer engagement and selected marketing constructs on airline passenger loyalty. International Journal of Quality and Service Sciences. 9(1). pp.21-40.
  • Durkin, M., Mulholland, G. and McCartan, A., 2015. A socio-technical perspective on social media adoption: a case from retail banking. International Journal of Bank Marketing. 33(7). pp.944-962.
  • Kunz, W. and et.al., 2017. Customer engagement in a big data world. Journal of Services Marketing. 31(2). pp.161-171.
  • Giannakis-Bompolis, C. and Boutsouki, C., 2014. Customer relationship management in the era of social web and social customer: an investigation of customer engagement in the Greek retail banking sector. Procedia-Social and Behavioral Sciences. 148. pp.67-78.
  • Beckers, S. F., Risselada, H. and Verhoef, P. C., 2014. Customer engagement: A new frontier in customer value management. Handbook of service marketing research. 2(6). pp.97-120.
  • Farah, M. F., 2017. Consumers’ switching motivations and intention in the case of bank mergers: A cross-cultural study.International Journal of Bank marketing. 35(2). pp.254-274.
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