Brand Health Check... HSBC Direct faltering on poor brand recognition

HSBC Direct has sought to attract customers through high-interest savings account, no service charges and no requirements of a minimum account balance, thus setting it apart from HSBC Premier, which is focused on higher nett-worth individuals.

Over the last two years, HSBC Direct has been launched in the US, Taiwan, Canada and Korea. While it has been hugely successful in the US, it has foundered in Korea and Taiwan. Brand recognition is clearly a stumbling block, as most sources contacted for this article didn’t know of HSBC Direct, or confused it with HSBC Premier.

This ought to be of concern for ‘the world’s local bank’ for a few reasons. HSBC’s consumer bank has been seeking to weather the lowered profit margins it has suffered through its exposure to delinquencies related to the US subprime mortgage crisis. Expanding its Asian consumer banking operations has been a vital part of this strategy. One of the main difficulties faced by HSBC is the restrictions on opening branches. Its neglible branch network in many other Asian countries has put a damper on attempts to bring in more consumer clients. In countries such as China, where lengthy review processes are required for the setting up of each individual branch, this situation does not look set to improve.

Despite the lukewarm response from Korea and Taiwan, HSBC is said to be planning a major roll-out of HSBC Direct in developed Asian markets, as part of a re-tooling of the bank’s CRM strategy. The Asian developments are now spear-headed by the North America SVP Mike Prebenda, following a re-organisation of the personal financial services unit, split between Hong Kong and “the rest”, and naming Andrew Chua as the regional HSBC Direct head.

Chua has said that “HSBC Direct is now very much a global proposition, in the same way as HSBC Premier is”; it remains to be seen whether HSBC Direct’s North American success story can be replicated in Asia. 

Rachel Catanach, SVP and GM, Fleishman-Hillard Hong Kong  
 

Despite high broadband and mobile penetration and extremely active online com - munities in this region, there is still an inherent mistrust among many Asian internet users of online transactions. HSBC needs to spend time and effort educating Asian consumers about the security of its offering if it wants to mirror the success it has experienced with Direct in other parts of the world.

Banking, in particular, is still all about trust and credibility. While in the US, the prospect of high-yield online savings accounts and super low fees may be incentive enough for consumers to take the Direct plunge, in Asia it isn’t.

In this region, many banking consumers want to be reassured that they have a person to talk to if they need one and that somewhere in the equation, bricks and mortar are involved. It’s like an insurance policy - it doesn’t matter if you never need to use it, having one gives you a certain peace of mind.

HSBC should consider giving its Direct customers in Asia an opportunity to make a few branch visits, say four to six times a year, as part of their package. Yes, HSBC’s offering here would no longer be a pure Direct play. But these limited visiting rights could make all the difference.

John Kerr, director, Edelman Digital Asia-Pacific  
 

Online is one of HSBC Direct’s key differentiators. However, a quick scan of the internet seems to shows the bank has yet to fully integrate online to complement its traditional marketing efforts. Blogpulse shows that HSBC Direct hasn’t generated much online chatter, while Yahoo Knowledge, one of Taiwan’s biggest discussion forums, contains only 1,159 posts on HSBC.

A simple online search for the word ‘bank’ in Taiwan shows that HSBC Direct fails the ‘first two pages’ test. There seems to be an opportunity to create more compelling online content and make it easier for customers to find.

In Korea, HSBC Direct built brand awareness quickly on the back of a compelling high-interest offer.
 

However, local competitors were quick to match and without physical branches, HSBC Direct needs to consider initiatives that turn consumers from brand supporters to hard-core advocates. If the bank wants to position itself as a premium offer for 25- to 35-year-olds, then it should consider online community-building or aggregating information of interest for this heavily-wired group.
 

If HSBC Direct is innovative with online CRM, this can help multiply the impact of traditional marketing.