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A REPORT ON WEALTH MANAGEMAENT APPROACH OF STANDARD CHARTERED BANK IN INDIA
SUBMITTED BY: (VIDUSHI DORA) (PGB1042)
STANDARD CHARTERED BANK DEHRADUN
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A REPORTON
WEALTH MANAGEMENT APPROACH OF SCB IN
INDIA
SUBMITTED BY: (VIDUSHI DORA) (PGFB1042)
A report submitted in the partial fulfillment of the requirement of MBA program of Jaipuria Institute of Management)
COMPANY GUIDE: FACULTY GUIDE:Mr. NITIN AVASTHI Dr. SWATI AGARWALBranch Manager Faculty MemberDEHRADUN JIM, Noida.
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A C K N O W L E D G E M E N T
The summer project at Standard Chartered Bank offered both a learning
experience, as well as, a glimpse into the daily management functions of an
organization. During the tenure of this project, I was fortunate to have
interacted with people, who in their own capacities have encouraged and
guided me. For their unstinted and invaluable guidance, I wish to express my
heartfelt gratitude to my guides Mr. Nitin Avasthi, StanC Bank without
whom this project could not have been completed successfully. For sharing
his insights and knowledge, derived from the years of experience in
particular areas of expertise, I would like to express my deepest gratitude
towards Mr. Vikas Mohan (Branch Manager, Dehradun) who has shared
his experience to increase my knowledge and encouraged me at every stage.
I am also highly grateful to my faculty guide Dr. Swati Agarwal, for her
valuable inputs kind support and encouragement throughout this time.
Besides I am grateful to my seniors and all members of the HRD, sales and
office team for their co-operation and good wishes.
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Executive Summary
Standard Chartered Bank was formed in 1969 through a merger of two
banks: The Standard Bank of British South Africa, founded in 1863, and the
Chartered bank of India, Australia and China, founded in 1853.
This project deals with the analyzing the wealth management business for
Standard Chartered Bank, Dehradun.
I have started off with brief introduction of StanC, its history, & its
operation in India. This constitutes as major part of literature survey of this
project.
Thereafter, I have discussed an overview of wealth management process and
strategic asset allocation. I classified different types of investor, as per their
risk-return profile & prepared ideal investment mix.
(Psychological analysis of investors mind) in this I have classified the
decision making into six sequential points.
After study on investor decision making, I have done analysis of “consumer
banking & finding potential in Dehradun and nearby region” In this I have
surveyed through in various elite clubs, hospital etc. along with their contact
and details.
In the end I have made some conclusions & recommendations.
Sample design: Stratified random sampling.
Data collection: Survey Method
Questionnaire
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Table of content1. Certificate from the Mentor 2. Summer Internship Completion Certificate from the Organization3. Acknowledgement4. Executive summary5. Contents: these are as follows:
Chapter-1 Bank
1.1. History.1.2. Definition.1.3. Banking.1.4. Risk and Capital1.5. Banks in the Economy.1.6. Regulation1.7. Types of banks
Chapter-2 About of SCB:2.1. About the bank2.2. History of the bank
2.3. Values of the bank 2.4. Key milestones in development 2.5. Board of SCB
Chapter-3 SCB in INDIA:3.1. Investment Advisory Services
Chapter-4 Research Design:4.1. Research Topic.4.2. Sampling Used.4.3. Data Used In Study.4.4. Tools And Techniques Used In Study
Chapter-5 Literature Review:5.1. Wealth Management.5.2. Strategic asset allocation.5.3. Types of investor.5.4. Ideal investment mix.
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5.5. Fund selection process.5.6. Investor decision making process.5.7. Criterion for evaluation of SCB.
Chapter-6 Data Analysis and Interpretation: 6.1. Diagrammatical Representation of Data.
Chapter-7 Research Findings and Recommendations.
References:
Bibliography
Appendices:Questionnaire
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Chapter 1:About banks
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History
A bank is a financial institution that serves as a financial intermediary. The term "bank"
may refer to one of several related types of entities:
A central bank circulates money on behalf of a government and acts as its
monetary authority by implementing monetary policy, which regulates the money
supply.
A commercial bank accepts deposits and pools those funds to provide credit,
either directly by lending, or indirectly by investing through the capital markets.
Within the global financial markets, these institutions connect market participants
with capital deficits (borrowers) to market participants with capital surpluses
(investors and lenders) by transferring funds from those parties who have surplus
funds to invest (financial assets) to those parties who borrow funds to invest in real
assets.
A savings bank (known as a "building society" in the United Kingdom) is similar
to a savings and loan association (S&L). They can either be stockholder owned or
mutually owned, in which case they are permitted to only borrow from members of
the financial cooperative. The asset structure of savings banks and savings and loan
associations is similar, with residential mortgage loans providing the principal assets
of the institution's portfolio.
Because of the important role depository institutions play in the financial system, the
banking industry is highly regulated, and government restrictions on financial activities
by banks have varied over time and by location. Current global bank capital requirements
are referred to as Basel II. In some countries, such as Germany, banks have historically
owned major stakes in industrial companies, while in other countries, such as the United
States, banks have traditionally been prohibited from owning non-financial companies.
In Japan, banks are usually the nexus of a cross-share holding entity known as the
"keiretsu". In Iceland, banks followed international standards of regulation prior to the
recent global financial crisis that began in 2007.
The oldest bank still in existence is Monte dei Paschi di Siena, headquartered
in Siena, Italy, which has been operating continuously since 1472.
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Definition Under English common law, a banker is defined as a person who carries on the
business of banking, which is specified as:
conducting current accounts for his customers
paying cheques drawn on him, and collecting cheques for his customers
"Banking business" means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).
"Banking business" means the business of either or both of the following:
1. receiving from the general public money on current, deposit, savings or other
similar account repayable on demand or within less than [3 months] ... or with a
period of call or notice of less than that period;
2. paying or collecting cheques drawn by or paid in by customers
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Banking
Standard activities
Banks act as payment agents by conducting checking or current accounts for customers,
paying cheques drawn by customers on the bank, and collecting cheques deposited to
customers' current accounts. Banks also enable customer payments via other payment
methods such as telegraphic transfer, EFTPOS, and automated teller machine (ATM).
Banks borrow money by accepting funds deposited on current accounts, by accepting
term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend
money by making advances to customers on current accounts, by making installment
loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered
indispensable by most businesses, individuals and governments. Non-banks that provide
payment services such as remittance companies are not normally considered an adequate
substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most
funds to households and non-financial businesses, but non-bank lenders provide a
significant and in many cases adequate substitute for bank loans, and money market
funds, cash management trusts and other non-bank financial institutions in many cases
provide an adequate substitute to banks for lending savings too
Channels
Banks offer many different channels to access their banking and other services:
ATM is a machine that dispenses cash and sometimes takes deposits without the
need for a human bank teller. Some ATMs provide additional services.
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A branch is a retail location
Call center
Mail: most banks accept check deposits via mail and use mail to communicate to
their customers, e.g. by sending out statements
Mobile banking is a method of using one's mobile phone to conduct banking
transactions
Online banking is a term used for performing transactions, payments etc. over the
Internet
Relationship Managers , mostly for private banking or business banking, often
visiting customers at their homes or businesses
Telephone banking is a service which allows its customers to perform transactions
over the telephone without speaking to a human
Video banking is a term used for performing banking transactions or professional
banking consultations via a remote video and audio connection. Video banking can be
performed via purpose built banking transaction machines (similar to an Automated
teller machine), or via a videoconference enabled bank branch.
Products
Retail
Business loan
Cheque account
Credit card
Home loan
Insurance advisor
Mutual fund
Personal loan
Savings account
Wholesale
Capital raising (Equity / Debt / Hybrids)
Mezzanine finance
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Project finance
Revolving credit
Risk management (FX, interest rates, commodities, derivatives)
Term loan
Risk and capital
Banks face a number of risks in order to conduct their business, and how well these risks
are managed and understood is a key driver behind profitability, and how much capital a
bank is required to hold. Some of the main risks faced by banks include:
Credit risk : risk of loss arising from a borrower who does not make payments as
promised.
Liquidity risk : risk that a given security or asset cannot be traded quickly enough
in the market to prevent a loss (or make the required profit).
Market risk : risk that the value of a portfolio, either an investment portfolio or a
trading portfolio, will decrease due to the change in value of the market risk factors.
Operational risk : risk arising from execution of a company's business functions.
The capital requirement is a bank regulation, which sets a framework on how banks and
depository institutions must handle their capital. The categorization of assets and capital
is highly standardized so that it can be risk weighted.
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Banks in the economy
Economic functions
The economic functions of banks include:
1. Issue of money, in the form of banknotes and current accounts subject
to Cheque or payment at the customer's order. These claims on banks can act as
money because they are negotiable or repayable on demand, and hence valued at
par. They are effectively transferable by mere delivery, in the case of banknotes,
or by drawing a cheque that the payee may bank or cash.
2. Netting and settlement of payments – banks act as both collection and paying
agents for customers, participating in inter bank clearing and settlement systems
to collect, present, be presented with, and pay payment instruments. This enables
banks to economize on reserves held for settlement of payments, since inward
and outward payments offset each other. It also enables the offsetting of payment
flows between geographical areas, reducing the cost of settlement between them.
3. Credit intermediation – banks borrow and lend back-to-back on their own account
as middle men.
4. Credit quality improvement – banks lend money to ordinary commercial and
personal borrowers (ordinary credit quality), but are high quality borrowers. The
improvement comes from diversification of the bank's assets and capital which
provides a buffer to absorb losses without defaulting on its obligations. However,
banknotes and deposits are generally unsecured; if the bank gets into difficulty
and pledges assets as security, to raise the funding it needs to continue to operate,
this puts the note holders and depositors in an economically subordinated
position.
5. Maturity transformation – banks borrow more on demand debt and short term
debt, but provide more long term loans. In other words, they borrow short and
lend long. With a stronger credit quality than most other borrowers, banks can do
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this by aggregating issues (e.g. accepting deposits and issuing banknotes) and
redemptions (e.g. withdrawals and redemptions of banknotes), maintaining
reserves of cash, investing in marketable securities that can be readily converted
to cash if needed, and raising replacement funding as needed from various
sources (e.g. wholesale cash markets and securities markets).
Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to high net worth individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profit organizations.
Types of retail banks
Commercial bank : the term used for a normal bank to distinguish it from an
investment bank. After the Great Depression, the U.S. Congress required that
banks only engage in banking activities, whereas investment banks were limited
to capital market activities. Since the two no longer have to be under separate
ownership, some use the term "commercial bank" to refer to a bank or a division
of a bank that mostly deals with deposits and loans from corporations or large
businesses.
Community banks : locally operated financial institutions that empower employees
to make local decisions to serve their customers and the partners.
Community development banks : regulated banks that provide financial services
and credit to under-served markets or populations.
Credit unions : not-for-profit cooperatives owned by the depositors and often
offering rates more favorable than for-profit banks. Typically, membership is
restricted to employees of a particular company, residents of a defined
neighborhood, members of a certain labor union or religious organizations, and
their immediate families.
Postal savings banks : savings banks associated with national postal systems.
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Private banks : banks that manage the assets of high net worth individuals.
Historically a minimum of USD 1 million was required to open an account;
however, over the last years many private banks have lowered their entry hurdles
to USD 250,000 for private investors.
Offshore banks : banks located in jurisdictions with low taxation and regulation.
Many offshore banks are essentially private banks.
Savings bank : in Europe, savings banks took their roots in the 19th or sometimes
even in the 18th century. Their original objective was to provide easily accessible
savings products to all strata of the population. In some countries, savings banks
were created on public initiative; in others, socially committed individuals created
foundations to put in place the necessary infrastructure. Nowadays, European
savings banks have kept their focus on retail banking: payments, savings
products, credits and insurances for individuals or small and medium-sized
enterprises. Apart from this retail focus, they also differ from commercial banks
by their broadly decentralized distribution network, providing local and regional
outreach—and by their socially responsible approach to business and society.
Building societies and Landesbanks: institutions that conduct retail banking.
Ethical banks : banks that prioritize the transparency of all operations and make
only what they consider to be socially-responsible investments.
A Direct or Internet-Only bank is a banking operation without any physical bank
branches, conceived and implemented wholly with networked computers.
Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues,
trade for their own accounts, make markets, and advise corporations on capital
market activities such as mergers and acquisitions.
Merchant banks were traditionally banks which engaged in trade finance. The
modern definition, however, refers to banks which provide capital to firms in the
form of shares rather than loans. Unlike venture capital firms, they tend not to
invest in new companies.
Both combined
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Universal banks , more commonly known as financial services companies, engage
in several of these activities. These big banks are very diversified groups that,
among other services, also distribute insurance— hence the term bancassurance,
a portmanteau word combining "banque or bank" and "assurance", signifying that
both banking and insurance are provided by the same corporate entity.
Other types of banks
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the
cash interest rate. They generally provide liquidity to the banking system and act
as the lender of last resort in event of a crisis.
Islamic banks adhere to the concepts of Islamic law. This form of banking
revolves around several well-established principles based on Islamic canons. All
banking activities must avoid interest, a concept that is forbidden in Islam.
Instead, the bank earns profit (markup) and fees on the financing facilities that it
extends to customers.
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Chapter 2:About standard chartered bank
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About the bank
Standard Chartered’s principal activity is providing banking and other financial services.
The Group’s operation are carried out through two divisions, Consumer banking provides
credit cards, personal loans, mortgages, deposit taking and wealth management services
to individuals and small and medium-sized enterprises. Wholesale Banking provides
corporate and institutional clients with services in trade finance, cash management,
lending, custody, foreign exchange, debt capital markets and corporate finance.
Standard faces different changes in the political, economic, social and technological
spheres that affect its businesses. In the political arena, Standard Chartered face changes
in government regulations and policies in countries where it operates. The economic
downturn that was experienced worldwide also affects the company. Changing consumer
demands because of changes in demography and lifestyle affect the organization.
Technological developments make business operations more efficient.
Standard Chartered PLC, listed in both the London and Hong Kong stock exchanges, ranks among the top 25 companies in the FTSE 100 by market capitalization. The Bank has grown substantially in recent years, primarily as a result of organic growth, supplemented by acquisitions. Standard Chartered aspires to be the best international bank for its customers. The Bank derives more than 90 percent of its operating income and profits from Asia, Africa and the Middle East, generated from its Wholesale and Consumer Banking Business. The Group has over 1,600 branches and outlets located in over 70 countries.
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History
Standard Chartered was formed in 1969 through a merger of two banks: The Standard
Bank of British South Africa, founded in 1863, and the Chartered Bank of India,
Australia and China, founded in 1853.
Both companies were keen to capitalize on the huge expansion of trade and to earn the
handsome profits to be made from financing the movement of goods between Europe,
Asia and Africa.
The Chartered Bank
Founded by James Wilson following the grant of a Royal Charter by Queen
Victoria in 1853.
Chartered opened its first branches in Mumbai (Bombay), Kolkata and Shanghai
in 1858, followed by Hong Kong and Singapore in 1859.
Traditional trade was in cotton from Mumbai (Bombay), indigo and tea from
Kolkata, rice from Burma, sugar from Java, tobacco from Sumatra, hemp from Manila
and silk from Yokohama.
Played a major role in the development of trade with the East which followed the
opening of the Suez Canal in 1869 and the extension of the telegraph to China in 1871.
In 1957 Chartered Bank bought the Eastern Bank together with the Ionian Bank's
Cyprus Branches. This established a presence in the Gulf.
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The Standard Bank
Founded in the Cape Province of South Africa in 1862 by John Paterson.
Commenced business in Port Elizabeth, in January 1863.
Was prominent in financing the development of the diamond fields of Kimberley
from 1867 and later extended its network further north to the new town of
Johannesburg when gold was discovered there in 1885.
Expanded in Southern, Central and Eastern Africa and, by 1953, had 600 offices.
In 1965, it merged with the Bank of West Africa, expanding its operations into
Cameroon, Gambia, Ghana, Nigeria and Sierra Leone.
From the early 1990s, Standard Chartered has focused on developing its strong
franchises in Asia, Africa and the Middle East. It has concentrated on consumer,
corporate and institutional banking and on the provision of treasury services - areas in
which the Group had particular strength and expertise.
Since 2000 the Bank has achieved several milestones with a number of strategic
alliances and acquisitions, which have extended the customer and geographic reach
and broadened the product range that Standard Chartered offers.
Principles and values
Leading by example to be the right partner for its stakeholders, the Group is committed to building a sustainable business over the long term that is trusted worldwide for upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity. It employs over 75,000 people, nearly half of whom are women, The Group's employees are of 125 nationalities, of which about 70 are represented among senior management.
Standard chartered stands for
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Strategic intent
To be the world's best international bank
Leading the way in Asia, Africa and the Middle East
Brand promise
Here for good
Values
Courageous
Responsive
International
Creative
Trustworthy
Approach
Participation
Focusing on attractive, growing markets where we can leverage our relationships and
expertise
Competitive positioning
Combining global capability, deep local knowledge and creativity to outperform our
competitors
Management Discipline
Continuously improving the way we work, balancing the pursuit of growth with firm
control of costs and risks
Commitment to stakeholders
Customers
Passionate about our customers' success, delighting them with the quality of our
service
Our People
Helping our people to grow, enabling individuals to make a difference and teams to
win
Communities
Trusted and caring, dedicated to making a difference
Investors
A distinctive investment delivering outstanding performance and superior returns
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Regulators
Exemplary governance and ethics wherever we are
Key milestones in development
Date Location
Jun 2010 China The Bank becomes an investor in Agricultural Bank of China, one of the top commercial banks in China
May 2010 India We launched our first ever Indian Depository, allowing investors in India to participate in our growth
Jul 2009 Africa Standard Chartered completes acquisition of First Africa Holdings Limited
Feb 2009 Asia Standard Chartered completes acquisition of Casenove Asia
Dec 2008 India Standard Chartered increases its investment in UTI Securities to 74.9%
Dec 2008 Taiwan Standard Chartered acquires the 'good bank' portion of Asia Trust and Investment Corporation
Nov 2008 Brazil Standard Chartered announces plans to acquire Lehman Brothers team in Brazil
May 2008 Vietnam Standard Chartered announces raising strategic stake in Vietnam's Asia Commercial Bank to 15%
Feb 2008 South Korea
Standard Chartered to acquires South Korea's Yeahreum Mutual Savings Bank
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Feb 2008 Global Standard Chartered completes acquisition of American Express Bank, a wholly owned subsidiary of American Express Company, with operations in 47 countries
Jan 2008 South Korea
Standard Chartered First Bank Korea Ltd acquires an 80% stake in South Korea's A Brain, a funds administration company
Jan 2008 India Standard Chartered acquires a 49% strategic stake in India's UTI Securities, a leading local broking firm.
Dec 2007 Global Standard Chartered completes acquisition of Harrison Lovegrove, a leading global oil and gas M&A advisory boutique
Oct 2007 Global Standard Chartered acquires Pembroke, an aircraft leasing, financing and management firm
End 2006 Taiwan Launched tender offer for 100% in Hsinchu International Bank (USD1.2bn)
Sep 2006 Pakistan Acquisition of 95.37% Union Bank (USD487m)
Sep 2006 Indonesia Acquisition of 26% stake in PermataBank by the consortium of Standard Chartered Bank & PT Astra International Tbk (USD193m). Total stake held in PermataBank by consortium today is 89%.
Jun 2006 Africa Acquisition of 25% in First Africa Group Holdings Ltd
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Board of SCB
Chairman
John PeaceChairman
In 2002 John was appointed Chairman of Burberry in advance of its successful flotation. GUS demerged its remaining businesses in 2006 and he became Chairman of Experian.
Executive Directors
Peter SandsGroup Chief Executive Officer (CEO)
Peter Sands was appointed Group Chief Executive of Standard Chartered PLC in November 2006. Immediately prior to this Peter had been Group Finance Director of Standard Chartered PLC since his appointment as a Group Executive Director in May 2002.
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Richard MeddingsGroup Finance Director
Richard Meddings was appointed as Group Finance Director of Standard Chartered PLC in November 2006, having joined the Board as a Group Executive Director in November 2002. He is based in London and is responsible for Finance, Group Corporate Treasury, Risk and Group Corporate Development.
Steve BertaminiGroup Executive Director and CEO, Consumer Banking
Steve Bertamini joined Standard Chartered as Group Executive Director & Chief Executive Officer, Consumer Banking on 19 May 2008 and was appointed to the Board of Standard Chartered PLC on 1 June 2008.
Mike ReesGroup Executive Director and CEO, Wholesale Banking
Mike Rees was appointed to the Board of Standard Chartered PLC on 4 August 2009. He is based in London and is Chief Executive Officer, Wholesale Banking.
Jaspal Singh BindraGroup Executive Director and CEO, Asia
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Jaspal Singh Bindra, Group Executive Director and a member of the Board of Standard Chartered PLC, is based in Hong Kong as Chief Executive Officer, Asia. He was appointed to the Board of Standard Chartered PLC on 1 January 2010.
Independent Non-Executive Directors
Richard DelbridgeIndependent Non-Executive Director
Richard Delbridge joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 January 2010.
Jamie DundasIndependent Non-Executive Director
Jamie Dundas joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 15 March 2004.
Val GoodingIndependent Non-Executive Director
Val Gooding was appointed as an Independent Non-Executive Director of Standard Chartered PLC on 1 January 2005.
Rudy MarkhamIndependent Non-Executive Director
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Rudy Markham joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 19 February 2001. He is also Senior Independent Director.
Ruth MarklandIndependent Non-Executive Director
Ruth Markland joined the Board of Standard Chartered PLC as a Non-Executive Director on 3 November 2003.
John PaynterIndependent Non-Executive Director
John Paynter joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 October 2008.
Dr Han Seung-sooIndependent Non-Executive Director
Dr Han Seung-soo, KBE, former Prime Minister of the Republic of Korea joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 January 2010.
Paul SkinnerIndependent Non-Executive Director
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Paul Skinner joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 3 November 2003.
Oliver StockenIndependent Non-Executive Director
Oliver Stocken joined the Board of Standard Chartered PLC as a Non-Executive Director on 1 June 2004.
Simon LowthIndependent Non-Executive Director
Simon Lowth joined the Board of Standard Chartered PLC as an Independent Non-Executive Director on 1 May 2010.
Group Company Secretary
Annemarie DurbinGroup Company Secretary
Annemarie was appointed Group Company Secretary in September 2007 and is a non-executive director of Fleming Family and Partners Ltd.
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Chapter 3:Investment advisory services by scb
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Investment advisory services
Investment Advisory Services are offered by many institutions which include
banks as well. These services are provided to their respective clients after analysing the
client's financial health, which includes various kinds of analysis of the person. Basically
the client's actual net worth is calculated by deducting al\ his liabilities and major
expenses. Then the person's till date investments are looked into plus the yield they'll be
giving. After all these calculations, and looking at the amount of investment, the motive
of the investment, what kind of returns the person wants and the age of the person, the
client is accordingly advised where to invest how much amount of money.
Different Types of Investments
DEBENTURES A debenture is a document that either creates a debt or acknowledges it. The term
is used in corporate finance for a medium to long-term debt instrument used by large
companies to borrow money. In some countries the term is used interchangeably with
bond, loan, stock or note.
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Debentures are generally freely transferable by the debenture holder. Debenture
holders have no voting rights and the interest paid to them is a charge against profit in the
company's financial statements.
Different types of debentures are as follows:
Convertible debentures can be converted into equity shares of the issuing
company after a predetermined period of time. "Convertibility" is a feature that
corporations may add to the bonds they issue to make them more attractive to
buyers. In other words, it is a special feature that a corporate bond may carry. As
a result of the advantage a buyer gets from the ability to convert; convertible
bonds typically have lower interest rates than non-convertible corporate bonds.
Non-convertible debentures , which are simply regular debentures, cannot be
converted into equity shares of the liable company. They are debentures without
the convertibility feature attached to them. As a result, they usually carry higher
interest rates than their convertible counterparts.
BONDS
A bond is a debt security, in which the authorized issuer owes the holders a debt
and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to
repay the principal at a later date, termed maturity. A bond is a formal contract to repay
borrowed money with interest at fixed intervals.
Thus a bond is like a loan: the issuer is the borrower (debtor), the holder is the
lender (creditor), and the coupon is the interest. Bonds provide the borrower with external
funds to finance long-term investments, or, in the case of government bonds, to finance
current expenditure. Certificates of deposit (CDs) or commercial paper are considered to
be money market instruments and not bonds. Bonds must be repaid at fixed intervals over
a period of time.
Different types of bonds are as follows:
Government Bonds
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Municipal Bonds Corporate bonds
Zero Coupon Bonds
EQUITY Equity investments generally refers to the buying and holding of shares of stock
on a stock market by individuals and firms in anticipation of income from dividends and
capital gain as the value of the stock rises. It also sometimes refers to the acquisition of
equity (ownership) participation in a private (unlisted) company or a startup (a company
being created or newly created). When the investment is in infant companies, it is
referred to as venture capital investing and is generally understood to be higher risk than
investment in listed going concern situations.
DEBT Debt is that which is owed; usually referencing assets owed, but the term can also
cover moral obligations and other interactions not requiring money. In the case of assets,
debt is a means of using future purchasing power in the present before a summation has
been earned. Some companies and corporations use debt as a part of their overall
corporate finance strategy.
Equity v/s Debt
Debt Equity
Must be repaid or refinanced Can usually be kept permanently
Requires regular interest payments. Company must generate cash flow to pay.
No payment requirements. May receive dividends, but only out of retained earnings.
Collateral assets must usually be available.
No collateral required.
Debt providers are conservative. They cannot share any upside or profits. Therefore, they want to eliminate all possible loss or downside risks.
Equity providers are aggressive. They can accept downside risks because they fully share the upside as well.
Interest payments are tax deductible. Dividend payments are not tax deductible.
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Debt has little or no impact on control of the company.
Equity requires shared control of the company and may impose restrictions.
Debt allows leverage of company profits. Shareholders share the company profits.
Right Mix of debt and equityThe optimal mix of debt and equity has to be tailored for each situation. This
requires some sophistication in financial modeling. The trick is to prepare financial
projections under different scenarios and with different assumptions. The goal is to find
the debt/equity mix that provides the highest expected long-term shareholder value.
Investments into companies usually require both debt and equity. The optimal
ratio needs to be carefully determined for each individual situation. It is unlikely that this
ratio will consist of 100% equity. If the long-term prospects are so poor that a company
can never make sufficient profits to benefit from leverage then the opportunity is
probably not worth pursuing. Conversely, relying on 100% debt financing often places a
heavy cash drain on companies and leads to sub-optimal growth.
Debt and equity financing should not be seen as substitutes for each other.
Instead, they are very different in nature and complement each other. Debt needs to be
repaid in cash. Equity needs to be rewarded with long-term profits. Depending on
individual circumstances and opportunities the trick for each investment is to find the-
best mix of both.
When a banker, venture capitalist, or angel investor is considering giving you
money, they will look at your debt to equity ratio. This is the amount of debt you have
compared to the amount of equity you have. To lenders, this ratio is important because it
tells the amount of money available for repayment in the case of default. It also shows if
your business is being run in a sensible way, without too much dependence on anyone
source.
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MUTUAL FUNDS A mutual fund is a professionally managed type of collective investment scheme that
pools money from many investors and invests typically in investment securities (stocks,
bonds, short-term money market instruments, other mutual funds, other securities, and/or
commodities such as precious metals). The mutual fund will have a fund manager that
trades (buys and sells) the fund's investments in accordance with the fund's investment
objective.
Types of mutual funds
Open-ended fund
The term mutual fund is the common name for what is classified as an open-end
investment. Being open-ended means that, at the end of every day, the fund continually
issues new shares to investors buying into the fund and must stand ready to buy back
shares from investors redeeming their shares at the then current net asset value per share .
Closed-end funds are like open end except they are more like a company which
sells its shares a single time to the public under an initial public offering or "IPO.
Exchange-traded funds
A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an
open-end investment company. ETFs combine characteristics of both mutual funds and
closed-end funds. ETFs are traded throughout the day on a stock exchange, just like
closed end funds, but at prices generally approximating the ETF's net asset value.
Exchange-traded funds are also valuable for foreign investors who are often able to buy
and sell securities traded on a stock market, but who, for regulatory reasons, are limited
in their ability to participate in traditional U.S. mutual funds.
Equity funds
Equity funds, which consist mainly of stock investments, are the most common type of
mutual fund. Equity funds hold 50 percent of all amounts invested in mutual funds in the
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United States. Often equity funds focus investments on particular strategies and certain
types of issuers.
Growth vs. value Funds
Another distinction is made between growth funds, which invest in stocks of companies
that have the potential for large capital gains, and value funds, which concentrate on
stocks that are undervalued. Value stocks have historically produced higher returns;
however, financial theory states this is compensation for their greater risk. Growth funds
tend not to pay regular dividends.
Index funds versus Actively managed funds
An index fund maintains investments in companies that are part of major stock (or bond)
indexes, such as the S&P 500, while an actively managed fund attempts to outperform a
relevant index through superior stock-picking techniques. The assets of an index fund are
managed to closely approximate the performance of a particular published index.
Bond funds
Bond funds account for 18% of mutual fund assets. Types of bond funds include term
funds, which have a fixed set of time (short-, medium-, or long-term) before they mature.
Municipal bond funds generally have lower returns, but have tax advantages and lower
risk. High-yield bond funds invest in corporate bonds, including high-yield or junk
bonds. With the potential for high yield, these bonds also come with greater risk.
Money market funds
Money market funds hold 26% of mutual fund assets in the United States. Money market
funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit
(CDs), money market shares are liquid and redeemable at any time.
Savings
Saving is income not spent, or deferred consumption. Methods of saving include putting
money aside in a bank or pension plan. Saving also includes reducing expenditures, such
35
as recurring costs. In terms of personal finance, saving specifies low-risk preservation of
money, as in a deposit account, versus investment, wherein risk is higher.
Chapter 4:Research design
36
Research design
What is research design?
The description of research procedure is called research design. It is simply a
framework for a study that is used as a guide in collecting and analyzing the
data. It consists of three parts:
1. Exploratory Research
2. Descriptive Research
3. Casual Research
EXPLORATORY RESEARCH:
An exploratory research focuses on the discovery of idea and is generally
based on secondary data. It is preliminary investigation that does not have a
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rigid design. This is because a researcher engaged in an exploratory study
that may have to change his focus as a result of new ideas and relationship
among the variables.
DESCRIPTIVE RESEARCH
A descriptive study is undertaken when the researcher wants to know the
characteristics of certain group such as age, sex, educational level, income,
and occupation etc.
CAUSAL RESEARCH:
A casual research is undertaken when the researcher is interested in knowing
the cause and effect relationship between two or more variables. Such
studies are based on reasoning along well-tested lines. This project is based
on descriptive research because questionnaire is filled by the respondent of
different education and age group people.
Research topic
As a part of the project a comparative analysis as well as a survey on the
customer’s investing behavior has been conducted. For Customer’s
Investing Behavior a survey was conducted for the same. Questions have
been asked from the target respondents.
DATA COLLECTION
What is data collection?
The task of data collection begins after a research problem has been defined
and research design/plan chalked out.
Data is generally of two types:
1. Primary data
2. Secondary data
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Primary Data:
Primary data are those data specially collection for problem in hand. In this
study data were collection from primary source in personal interview of
employee and interaction with employee by survey method.
These methods of data collection are quite popular. These are the major
methods data collection in the research study. I have used the questionnaire
to find out the customers investing behavior.
Secondary Data:
Secondary data are those data, which are collected for some purpose other
than helping and solving the problem in hand.
Source of secondary data are:
Old reports
Company records
Company web site
Sampling used: Convenience sampling has been used for this project.
Sample size: 50
Data used in study
In this study data has been collected from primary source from personal
interview of customers and interaction with customers by survey method.
39
These methods of data collection are quite popular. These are the major
methods of data collection in the research study. The questionnaire was used
to find out the customers investing behavior.
Also the secondary data is used from company website, books and from
other secondary sources.
TOOLS AND TECHNIQUES USED IN RESEARCH
SURVEY METHOD:
The term survey is used for the technique of investigation by direct
observation of phenomena or systematic gathering of data from population
by applying personal contact and interviews when adequate information
about a certain problem is not available in records files and other sources. It
is currently being used in those investigations also where published data is
used.
A survey is conducted for collecting general information of any population
institution or phenomena without any hypothesis while specific surveys are
conducted for specific problem or testing the validity of some theory or
hypothesis.
Survey deals with the investigation of entire population. Under this the
information is collected from each and every unit of the universe. Money
material time and labor required for carrying out a census survey are
bounded to be extremely large but its results are more accurate and reliable.
The researcher has to come in close and direct contact of the people whom
he wants to study. A survey brings the researcher in a position to come with
the realities of life and see things personally. Thus the inferences drawn
40
under this are not based upon any theory or principle but upon the actual
facts of life.
In this method we use questionnaire and with this questionnaire we used to
go in the market. The main purpose of the analysis is to summaries the
complete observation in such a way that they yield specific answers to the
research questions.
OBSERVATION
Different locations were visited for conducting the research. Different age
group consumers were selected so that the overall finding and preference of
each and every individual can be ascertained.
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Chapter 5:
Literature design
42
Wealth management It is an investment advisory discipline that incorporates financial planning,
investment portfolio management and a number of aggregated financial services. High
net worth individuals, small business owners and families who desire the assistance of a
credentialed financial advisory specialist call upon wealth managers to coordinate retail
banking, estate planning, legal resources, tax professionals and investment management.
Wealth managers can be independent certified financial planners, MBAs, CFA Charter
holders or any credentialed professional money manager who works to enhance the
income, growth and tax favored treatment of long-term investors.
Wealth management helps people determine their monetary goals and develop
actionable strategies that could help them realize their goals. It also defends their finances
against risks. Wealth management is a service designed specifically for high net worth
individuals.
Need of Wealth Management
Wealth management helps people determine their monetary goals and develop
actionable strategies that could help them realize their goals. It also defends their finances
against risks. Wealth management is a service designed specifically for high net worth
individuals. The threshold for high net worth varies by country and institution, but the
most common definition is individuals who have more than US $ l million in assets, not
including their home. Some high net worth individuals have done well in growing their
assets from a low base to their current levels, and may feel that they can continue to
manage their own portfolios. However, as a person's wealth grows and/or the markets get
more challenging, it becomes increasingly difficult to realize the expected returns.
With greater wealth comes greater investment options as well as more complex
risks and threats in terms of legal regulations, taxation issues and opportunities for loss.
The level of fear or even outright panic that can be experienced grows with the size of the
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investment involves. Greater diversification is needed than in earlier stages of investing.
This is where independent financial advisers or large corporate entities help their clients
through professional wealth management.
Wealth management offers the following services:
Investment planning: assists you in investing your money into various investment
markets, keeping in mind your investment goals.
Insurance planning: assists you in selecting from various types of insurances, self
insurance options and captive insurance companies.
Retirement planning: is critical to understand how much funds you require in your
old age.
Asset protection: begins with your financial advisor trying to understand your
preferred lifestyle and then helping you deal with threats, such as taxes, volatility,
inflation, creditors and lawsuits, to maintaining this lifestyle.
Tax planning: helps in minimizing tax returns. This might include planning for
charity, supporting your favorite causes while also receiving tax benefits.
Estate planning: helps in protecting you and your estate from creditors, lawsuits
and taxes. This service is critical for every person whose net worth is high.
Business planning: This service aims at optimizing the tax free advantages of
running your own business.
Business succession planning: assists in planning for the inevitable to maximize
returns.
Wealth transfer: helps you pass on your wealth to your dependents
.
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Benefits of Wealth ManagementWealth management helps in:
Reducing taxes associated with income, capital gains and estate.
Protecting assets from misjudgments and creditors.
Improving yields with more diversification and less risk.
Managing liabilities such as mortgages and college funding.
Finical wealth management solution is a modular, fully scalable, integrated core
banking and investment management system designed for the specific needs of retail and
private banks. It offers a unique combination of an extensive portfolio of functions with
impressive flexibility that enables end-to-end processing of investment products from
diverse asset classes including structured deposits, structures notes, equities, mutual
funds and insurance.
Financial institutions can leverage the solution's rule-based definitions to launch
new products - such as dual currency deposits, principal protected deposits, and range
accrual deposits - with a distinct time-to-market advantage. Integrated with Finacle core
banking and CRM solutions, the wealth management solution ensures unique customer
definition, a single, unified view of the customer's portfolio across asset classes and
seamless flow of transactions. This helps banks capitalize on their customer base to create
additional revenue streams, by offering the mass affluent extended products and services.
Business Benefits
Leverage the Opportunity
Finical wealth management solution enables financial institutions to derive rich
integrated insights about the client's investment portfolio. Sophisticated analytics,
relevant financial planning and asset allocation tools can be deployed, to leverage the
opportunities presented by hot listed clients to explore prospects for cross-selling and fee-
based personalized advice.
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Ease of Enhancing Product Portfolio
The user-friendly solution provides never-before flexibility to tailor solutions and
create new product flavors for emerging customer segments. It enables business users at
the bank to add innovative functionalities and features to their offerings, without
changing the source code of the application. The solution also interfaces seamlessly with
satellite and specialized systems, easily supporting faster roll out of new products at the
bank.
Higher Operational Efficiency
Finical wealth management solution provides complete Straight Through
Processing (STP) and is fortified with a powerful integration framework to interface with
the bank's core banking solution and external data sources. This plays a crucial role in
minimizing operational delays and ensuring seamless transaction flows at the bank.
Every financial operation is processed identically. Execution either ensures a
successful update of all related data or a complete rollback in case of a technical problem.
Consistency and reliability are guaranteed. Fully integrated and component - based, the
solution also ensures consistency of data.
Access rights are rigorously managed, every transaction request is checked and
systematic records are maintained as audit trails, ensuring robust security. The solution
allows users belonging to different legal entities to work on a single system and database.
This directly results in significantly lower implementation costs and ease of centralized
reporting for the bank.
Lower TCO
The solution allows users, belonging to different legal entities, to work on a single
system and database. This directly results in significantly lower implementation costs and
ease of centralized reporting for the bank.
Some of these typical services include:
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Investment portfolio management,
Tax management and advisory
Cash flow management and budgeting
Multigenerational wealth transfers
Family business and financial advisory
Donations to nonprofits and major gift plans
Political donations
Family offices also offer superior expertise on constructing or selecting
alternative investment portfolios and products. Many have invested heavily in systems,
reporting and institutional consultants to help select the most appropriate alternative
investment managers and products for their high-net-worth clients.
.
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Objectives of wealth management in scb
To build a strategic asset allocation
What is it?
48
A strategic asset allocation is the appropriate response to
the need for both long term capital growth and preservation. It
serves as the key building block of one’s investment strategy
emphasizing a long term investment horizon.
5.2.Why is Strategic Asset Allocation is so important ?
According to the ground-breaking research study by Brinson, hood &
beebower, asset allocation accounts for 91.5% of the variation in portfolio
returns. Significantly more than security selection or market timing.
Following is the pie-diagram which reflects the significance of strategic
asset allocation.
Source: investment advisory, standard chartered bank.
49
5.3. Types of investors in wealth management (How SCB classifies them).
A self directors: They have their own ideas about the market &
require little information or ideas. They make most active investment
decisions on their own, but leave passive decision making to the
professionals.
A participator: They like to be kept in touch with the market with the
views and pro-active sharing of ideas. They also likes to retain some
decision making powers of their investments.
A delegator: They leave most of the decisions regarding their
investment to professionals and not are too concern about pricing.
However, they expect good performance & confidentiality.
5.4.Ideal investment mix:
Self directors Participator Delegators
Investor typePercentage in
Core
Acceptable
Range
Percentage in
Satellites
Acceptable
Range
Self-Directors 60% +/- 10% 40% +/- 10%
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Participators 75% +/- 15% 25% +/- 15%
Delegators 90% +/- 10% 10% +/- 10%
Source: investment advisory, standard chartered bank
DIVERSIFICATION OF WEALTH MANAGMENT
(HOW RBS BANK DIVERSIFIES ITS WEALTH MANAGMENT
FUNDS)
1. Geographical diversifications
Indian funds: in Indian funds RBS invests in the different mutual
funds of Indian companies.
International funds: these funds prove to be feeder funds & RBS
BANK cannot directly invest in the international funds.
2. Asset allocation
Gold: RBS diversifies & invests its funds in gold, due to its
speculative nature & good returns.
Properties: RBS BANK invests its customer’s funds in real estate
& properties. Investment in Indian properties has always proven to
be fruitful
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Art: wealth of customers is invested in various arts like paintings,
antiques etc.
Equity: RBS invests in the listed companies in India through share
trading, mutual funds etc.
Private equity: equity is the investment in the companies which
are not listed.
3. Market capitalisation:
Market capitalisation= market value of shares* number of shares
Large-cap : if the market capitalisation of a company is high, then
company is called as large-cap Company. It is a relative concept.
Large Cap Company can be defined as a company whose market
capitalisation is more than the market capitalisation of the highest
valued stock on the mid cap index or lowest valued stock of a large
cap index. Higher the market capitalisation, greater the liquidity in
the stock.
Mid-cap : These can be understood as mid-sized companies. It can
be defined as a company having a value between the highest
valued company and the lowest valued company of a mid- cap
index.
Small - cap : These are relatively smaller companies. It can be
defined as having a market capitalisation lower than the least
valued company of a mid-cap index.
5.INVESTOR DECISION MAKING PROCESS FOR WEALTH MANAGMENT
(PSYCHOLOGICAL ANALYSIS OF INVESTOR’S MIND)
52
Investor Decision
Making Process
NEED RECOGNITION
INFORMATION SEARCH
ALTERNATIVE EVALUATION
PURCHASE DECISION
POST PURCHASE
DISPOSITION
The investor decision making process is a road map of investor’s
mind that marketer & manager can use to help guide product mix,
communication & sales strategies.
THE PROCESS
Investor decision making process for wealth management in SCB India:
1. Need Recognition :
Needs can be defined as “result of imbalance between actual &
desired states”
Basic needs of wealth management services are:
Professional Management of wealth of the investor.
Growing per capita income in India.
Lack of time with Investor to manage his own wealth.
Lack of product and market knowledge with the Investor.
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Dedicated Wealth Relationship Manager for managing wealth
providing customized wealth solutions to the investor.
Research based advisory.
“Marketing helps costumers recognize an Imbalance between present state &
desired state’’
Preferred State
Present state
Present state:
Still large per cent age of domestic savings in India is invested in
traditional investment products like
o Bank Deposits 47.40 Per Cent
o PF & Pensions 10.00 Per Cent
o Insurance 14.20 Per Cent
o Claim on Government 14.70 Per Cent
o Currency 08.80 Per Cent
o Shares & Debentures 04.90 Per Cent
Source : BSE, Kotak Instt. Equities RBI
Annual Report 2005 - 06
54
Preferred state: if something new being offered triggers the decision
making process, the offering that SCB can give to its customers are:
Personalised Services, Dedicated Wealth Relationship manager
Team of Specialists for Wealth Advisory
Experience and Expertise in managing wealth
Wide range of Wealth management products
Customer Delight and satisfaction through meeting the
expectations of the customer.
2. INFORMATION SEARCH: information search begins when an
investor perceives a need that might be satisfied by purchase or usage of the
product.
INTERNAL SEARCH: process of recalling past information based on
past experiences stored in memory.
In case of SCB the decision to choose the branch & purchasing the bank
product is based on past need satisfying experience of the customer.
If any customer wants sophisticated, expertise, experienced wealth
management services they would choose SCB or if in the past the need
has been satisfied by going to SCB.
EXTERNAL SEARCH: process of seeking information in the outside
environment. Outside environment marketing & non-commercial
information.
55
Many consumers decision are based on a combination of past
experience (internal source) & marketing & non-commercial
information (external source)
In case of banking external source of information for customer can be
information from the relatives, friends, co-workers, newspaper, TV,
radio, advertisement.
3. ALTERNATIVE EVALUATION: when evaluating potential
alternatives, consumer tends to use two types of information.
a) A list of Banks from which they plan to make their selection
(evoked set).
b) The criterion they will use to evaluate each bank.
EVOKED SET: Group of brands resulting from an information
search from which a buyer can choose.
Other competitor’s consumers consider for wealth management can
be:
Banks:
CITI Bank
HSBC
BARCLAYS Bank
ICICI Bank
HDFC Bank
KOTAK MAHINDRA Bank
Private Banks
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5.9. CRITERION FOR EVALUATION OF SCB
Customer approach
Customer charter
Location
Complaint data
Easy accessibility
Three factors create credibility of brand.
Perceived quality of brand: some people consider services & quality
of SCB to be excellent, some consider it to be very good but very few
in fact negligible people knows about SCB & its services.
(Based upon questions asked from 50 people)
Perceived risk associated with brand: Strong compliance and
stringent group policies help the Bank to minimise the financial / legal
risk to the bank. Each and every investor is required to complete client
investment profiler for better understanding of client’s expectations /
risk appetite.
There is less financial risk involved risk because of good services &
value for money invested aspect, as well less time & effort cost
because SCB has a wide network of managers & experts & has branch
at a very convenient location.
Information cost saved with that brand (time + effort)
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PURCHASE: TO BUY OR NOT TO BUY
Once the customer have evaluated the alternatives to RBS bank
(HDFC, SBI, ICICI) on the basis
Of various evaluative criterions mentioned above the consumer makes
the purchase decision.
Customer may prefer SCB because of their sophistication in banking,
dedicated team of relationship managers (RM’s) and investment
counsellor suit of privileges for their clients, phone banking etc.
The branch also plays an important role in purchase decision.
It makes it a branch/outlet based purchase
a) Branch image: cheerful, friendly warm place that reminds
customers of good times, & it ambience gives youthful & warm
feeling.
b) Branch advertising: Branch managers may also take initiative of
advertising branch separately & offers something different from
other bank branches.
c) Branch location & size: branch should be located at easily
accessible & convenient location. Branch size should be enough so
that normal operations can take place easily.
d) Branch atmosphere: when it comes to banking in India, banks
atmosphere are always messy (take e.g. of SBI, PNB etc.) but now
customers expects clean, good environment in the bank.
5) POST PURCHASE- SATISFACTION OR DISSATISFACTION:
58
Post purchase is a stage where client has already invested his money into
different wealth solutions through the Bank and has started expecting
returns.
Reasons of customer satisfaction.
a) Profitable returns
b) Excellent service
c) Suite of privileges
d) Invitation to exclusive events, concerts
e) Banking by phone, door banking
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Chapter 6:Data analysis and interpretation
DATA ANALYSIS
60
Investment decision
Sr. NO. PARTICULARS RESPONDENT
1 SELF 20%
2 PROFESSIONAL WEALTH MANAGER 40%
3 JOINT ADVICE OF PROFESSIONAL AND SELF 40%
RESPONDENT
20%
40%
40%1 SELF
2 PROFESSIONAL WEALTHMANAGER
3 JOINT ADVICE OFPROFESSIONAL AND SELF
Concept: Everybody wants to invest the money in a safe place so that they
take advice of Professional managers or joint advice of professional and
self.
Analysis: From the above pie chart it is clear that before investing the
money people take the advice of professional managers and the joint
advice of professional and self to invest the money in the best place so that
they can get a better return at low risk.
Bank preferred by customers for wealth management
61
Sr.
NO. PARTICULAR RESPONDENT
1 HDFC 30%
2 ICICI 25%
3 STANDARD CHARTED BANK 20%
4 OTHERS 25%
Concept: With which bank people want to do their investment or they
already have invested.
Analysis: This pie chart shows that most of the investors (25%) invest in
HDFC Bank then (25%) in ICICI and standard charted bank (20%) rest of the
people invest in other banks. So HDFC and ICICI are the main competitors
of SCB bank.
62
Investment service preferred by customer
Sr. NO. PARTICULAR RESPONDENT
1 Mutual Fund Schemes 17%
2 Portfolio Management Services 13%
3 Direct Equities 26%
4 Structured Investment Products 30%
5 Real Estate Funds 14%
RESPONDENT
17%
13%
26%
30%
14%
1 Mutual Fund Schemes
2 Portfolio ManagementServices
3 Direct Equities
4 Structured InvestmentProducts
5 Real Estate Funds
Concept: The customer invests the money in such a scheme so that they
can earn a better return on minimum risk.
Analysis: This pie chart shows that most of the customers (30%) invest in
structured investment products, 26% of the investor invest in direct
equities they can take high risk the lowest investment service is portfolio
management (13%). The high income people invest in portfolio
management services
The information for deciding the financial institution for wealth management
63
SR.NO. PARTICULAR RESPONDENT
1 Newspaper 7%
2 Magazine 16%
3 Internet 25%
4 Direct marketing 34%
5 Any other, please specify 18%
RESPONDENT
7%16%
25%34%
18% Newspaper
Magazine
Internet
Direct marketing
Any other, please specify
Concept: Customer gets the information from different sources to choose
the institution for investing money.
Analysis: Most of the customers get the information through direct
marketing i.e. 34% after that 25% customer give preference to the internet,
18% of the customer get the information from word of mouth rest of the
people get information from newspaper and magazines. So direct
marketing is the best way to provide information to the customers. The left
18% of the customers get the information from television and word of
mouth.
Basis of evaluating various Banks for wealth management
64
SR.NO. PARTICULAR RESPONDENT
1 Risk 27%
2 Services 23%
3 Past return 25%
4 Location 14%
5 Other 11%
RESPONDENT
27%
23%25%
14%
11%
1 Risk
2 Services
3 Past return
4 Location
5 Other
Concept: Customers choose the different bank on the basis of different
parameters like risk, services, returns, and location.
Analysis: From the above pie chart it is clearly defined that most of the
customers (27%) are invest on the basis of risk, customer wants low risk
high return and also 25% customers look at the past return of the bank,
they would like to invest in such a place where the past return is too high
also 23% customer invests on the basis of services provided by the bank
Mutual fund you would like to invest
65
SR.NO. PARTICULAR RESPONDENT
1 Money market funds 21%
2 Debt funds 19%
3 Fixed maturity plans 25%
4 Equity funds 26%
5 Any other 9%
RESPONDENT
21%
19%
25%
26%
9%
1 Money market funds
2 Arbitrage funds
3 Fixed maturity plans
4 Equity funds
5 Any other
Concept: Different customer invests in different type of funds.
Analysis: 26% of the customers invest in equity funds. These types of
customers take more risk and high potential. 25% of the customers invest
in fixed maturity plans; they do not want to take risk.
How do you keep yourself updated on market events?
66
SR.NO. PARTICULAR RESPONDENT
1 Daily market flash 37%
2 Weekly market newsletter 24%
3 Monthly newsletter 15%
4 Market event report 11%
5 Any other 13%
RESPONDENT
37%
24%
15%
11%
13%1 Daily market flash
2 Weekly market newsletter
3 Monthly newsletter
4 Market event report
5 Any other
Concept: The customers keep themselves updated from different ways.
Analysis: Above chart is showing that majority of the customers updated
themselves from daily market flash so the bank should provide the
information on daily basis and also provide information on weekly
newsletter.
Return with the past year investment
67
SR.NO. PARTICULAR RESPONDENT
1 5% to 10% 37%
2 10% to 20% 24%
3 20% to 30% 15%
4 More than 30% 13%
5 negative returns 0%
RESPONDENT
37%
24%
15%
13% 0%
1 5% to 10%
2 10% to 20%
3 20% to 30%
4 more than 30%
5 negative returns
Concept: Different types of customer invest in different services and
accordingly get the returns.
Analysis: Above chart shows that most of the customers invest in low risk
low return service because they do not want to take risk and invest the
money in structured investment plan. There is not a service which gives
negative returns.
Why do you want your wealth managed?
68
SR.NO. PARTICULAR RESPONDENT
1 Return potential 43%
2 Tax benefits 27%
3 Diversification 12%
4 Professional management 18%
RESPONDENT
43%
27%
12%
18%
1 Return potential
2 Tax benefits
3 Diversification
4 Professional management
Concept: Everyone has a purpose of investing money. It depends on the
customer where he wants to invest.
Analysis: The main objective of the customer of investment is to get the
maximum return on investment. This graph shows that the customer’s
second objective is to save tax.
The best wealth management services
69
SR.NO. PARTICULAR RESPONDENT
1 HDFC 28%
2 Standard Chartered 19%
3 ICICI 23%
4 Citi Bank 18%
5 Others 12%
Concept: All banks have their images in customers mind for their services.
Analysis: According to this chart most of the customers feel that HDFC
bank provides the best services rather than others, and on the third
position comes SCB where 19% of the customers say that RBS provides
the best service.
Percentage of invested income
70
SR.NO. PARTICULAR RESPONDENT
1 5% to 10% 14%
2 10% to 20% 26%
3 20% to 30% 27%
4 more than 30% 33%
Concept: How much percentage of the income customers invest or how
much savings they do.
Analysis: This pie chart shows that investment is very much important in
everyone’s life so that most of the customer invest more than 30% of their
income then 10% to 30% income is invested by customers. Only 14%
people invest 5%-10% part of their income.
71
Chapter 7:
Research findingsand
recommendations
72
Findings
After analyzing all the data given by potential existing and non existing
consumer I found certain key findings that are very important for my project.
I have divided findings into two parts
1. Findings from data analysis and
2. General findings. General findings are basically an overlook of the
markets.
Findings from data analysis:
1. HDFC is the prime competitor of SCB.
2. For investing the money customer takes the advice of professional
managers.
3. Most of the respondent wanted to invest in low risk investment plan.
4. Direct marketing is the most popular way to provide information to
the customer.
5. Risk is the most important factor which is considered while investing.
6. Return potential and Tax benefits are two main purpose of investment.
7. Most of the customers invest more than 30% of their income, so they
want a good return at low risk.
8. The service provided by the bank is also very important to attract the
customers.
9. Many of the respondents wanted to invest in equity funds because
they wanted high return.
General findings:
1. HDFC was at the top of the player and SCB was at third Position
2. There were few people who wanted to take high risk and high return.
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3. Most of the customers are not aware of the different types of mutual fund.
recommendations
SCB needs to expand its branch network in Dehradun & nearby areas
as it has only 1 branch compared to others banks.
Most of the individuals were not the customer of SCB bank but were
showing interest while asking about either for Account or investment.
Company should contact them so that they may become the potential
customer.
SCB bank should design more attractive “promotional schemes” to
attract the attention of consumers.
On asking have you been contacted by any of the respective agent or
person regarding Investment or for account opening or for any service
apart from few people mostly told that they had not been contacted by
RBS bank but by other player. If market developers and agent having
daily visit in the market and has to contact the new people then it
become their responsibility to contact these people to ask what is their
need and want. If not possible, then company should do monthly basis
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survey to find out such people and try to make them company’s
potential customer.
Also company should provide daily market flash and the different
types of schemes so the customer may keep themselves updated.
limitations
The study limits to some part of the Delhi.
Due to unavailability of proper conveyance facility, it was really hard to
cover the market under a scorching sun.
In many areas it was really tough to get respondent as they were lacking
of time and was not willing to support or share their view.
The time duration of two months was short for the completion of all
activities.
The sample size is 50 because of time constraints.
Conclusion
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It was a pleasant experience to have a summer project in a big company
like Standard Chartered Bank. It has given me an opportunity to know all
dimensions of the market and how to tackle problems of it .I have learned
various functions carried out at all the level of organization especially of
middle level and lower level. After a rigorous period of my project I
come to know that how practical knowledge is different from the
theoretical concepts.
I was supposed to do project in Dehradun where Standard Chartered
Bank is operating its business and playing a major role for providing
financial product and services. Other players are HDFC and ICICI Bank
has a large market size and it is increasing day by day.
Bibliography
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1. BOOKS.
Private Banking, Investment Decisions and Structured Financial
Products
Author(s): Dimitris N.Chorafas
Published by : Elsevier Ltd.
2. INTERNET.
www.standardchartered.co.in
www.google.com
www.msnsearch.com
www.wikipedia.com
Appendix
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Questionnaire
Sample size: 50
1. Do you know about the wealth management?o Yeso No
2. Have you ever done your wealth management through any financial institution?
o Yeso No
3. How you take your investment decisiono Selfo Professional wealth managero Joint advice of professional and self
4. In which bank have you done your wealth management?o HDFCo Standard Charteredo ICICIo Citi Banko Others
5. In which investment service you invest more?o Mutual Fund Schemeso Portfolio Management Serviceso Direct Equitieso Structured Investment Productso Real Estate Funds
6. From where you got the information for deciding on the financial institution for wealth management?
o Newspapero Magazineo Internet
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o Televisiono Direct marketingo Any other, please specify
7. On what basis you evaluate various Banks for wealth management?o Risko Serviceso Past returno Locationo Other
8. In which type of Mutual fund you would like to invest?o Money market fundso Arbitrage fundso Fixed maturity planso Equity fundso Any other
9. You get the information and reports from:o Daily market flasho Weekly market newslettero Monthly newslettero Market event reporto Any other
10. How much return have you got with the past year investment?o 5% to 10%o 10% to 20%o 20% to 30%o more than 30%
11. Why do you want your wealth managed?o Return potentialo Tax benefitso Diversification o Professional management
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