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First Direct Case Study

Presented by

Pulkit Goenka

Prashant Joshi

Danish Khan

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Outline

Key points of the Case Study

Questions for Discussion

Relevant Theory First Direct

Our Views

Questions?

http://www.youtube.com/watch?v=HFma_Viuif8&feature=player_embedded

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Case study: First Directs Innovative

Banking Channels

Traditional Banking Structure and Channels

Branches being the only point of contact

Establishment of First Direct in 1989

No Branches!!

Personal response to calls 24x7x365

Products offered are the same as competitors

Target Customers Financially aware and independent

income earners

Birth of a new breed of marketing channel Telephone,

Online and Mobile Banking

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Questions for Discussion

1. Why is innovation in the marketing channels generally

difficult to achieve?

2. Why was First Direct different from its rivals? What gave it

differentiation when it first launched?

3. Why might some potential customers of First Direct havereservations about the innovative nature of the service?

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Producer

Retailers

Wholesalers

Consumers

Conventional Marketing Channel

CreatingUtility

Facilitating

Exchange

Efficiencies

Alleviating

Discrepancies

Providing

Customer

Service

Standardising

Transactions

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Factors Influencing Distribution Channels

Organisational Objectives and Resources

Market Characteristics

Product Attributes

Buying Behaviour

Environmental Forces

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1. Why is innovation in marketing channels generally difficult to achieve?

Producers

Perspective

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CompetitorsPerspective

1. Why is innovation in marketing channels generally difficult to achieve?

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Producer

Consumers

Providing

Customer

Service

First Directs Marketing Channel:

Direct Marketing

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History First Direct was formed on 1st October, 1989 by Midland Bank

Became a part of HSBC after it acquired Midland Bank

Within five years of existence bank was serving to more than 500,000 customers

The bank launched Internet Banking in 1998 and went on to launched Mobile

Banking a year later

Current Situation First Direct has 1.16mn customers, 0.9mn of them use Internet Banking and 0.4mn

customers use SMS Message Banking

44% of First Directs sales is via e-channels First Direct handles around 157,760 calls every week including 29,000 calls a day

outside working hours

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2. Why was First Direct different from its rivals? What

gave it differentiation when it first launched?

Market research by Mike Harvis identified the Opportunity!!!

FD as UKs first branchless bank in 1989

First 24x7x365 Retail Telephone Banking Service

A bank FOR the Customers instead of FOR the bank!

Strict Core Values: Responsiveness, Openness, Right First

Time, Respect, Contribution and Kaizen

Economies of Scale due to HSBC merger

Use of Customer Information Systems

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2. Why was First Direct different from its rivals? What

gave it differentiation when it first launched?...Contd

Employees from Social Professions: Fast, Efficient and

Empathetic

Low Cost: Wages & Rents in Leeds

Hot Desking

641,000 customers in 1996: Employees 2400.... A Branch

would have reqd 4000!!!

Niche Marketing Target Customers: Affluent and Regular

Depositors Technological Advancements: Internet Banking, IPhone

Banking, Weekly statements by Text.

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3. Why might some potential customers of First Direct

have reservations about the innovative nature of

service? Traditional Banks offer real-world people-to-people

interaction. Customers still prefer personalized service that

they receive at branches

Patrons of Traditional Banks mostly prefer using checks andcash as the primary modes of transactions

Customers get an increasing feeling of security of their

financial assets inside the brick-and-mortar branches of banks

Despite robust security practices and secure transaction

technologies the threat of identity theft and hacking of bank

accounts is constant and real