HSBC advances on the mid-market
HSBC has begun one of the year’s biggest product
roll-outs and bank marketing campaigns, HSBC Advance, to promote
the launch of a new all-in-one account targeted at the mid-market
segment. As Farah Halime reports, HSBC is banking on the Advance
product repeating the success of its popular Premier
account.
HSBC, the largest bank in
Europe by market capitalisation, has launched HSBC Advance, an
all-in-one packaged account targeted at current account customers
in the mid-market segment across 39 countries worldwide.
In the UK, the new account debuted
at the start of February, replacing its existing HSBC ‘Plus’
packaged current account.
The account combines the features
of the ‘Plus’ account with preferential rates and prices on a range
of HSBC loans, overdrafts and mortgages, in addition to a range of
services including roadside breakdown assistance and family
insurance.
It is available across multiple
channels, including priority counters in-branch, 24/7 phone
banking, self-service and a dedicated website at
www.hsbcadvance.com.
Around 800,000 HSBC Plus customers
in the UK, who currently pay around £12 ($17.90) per month for the
service, will now be transferred to the HSBC Advance account.
HSBC spokesman Mark Hemingway told
BPA that the mid-market segment includes customers with a
higher than average salary for their age who tended to travel
abroad frequently.
HSBC Advance incorporates deposit,
investment, insurance and credit card products and will cost new
and upgrading customers £6 for an initial three-month introductory
period and £12.95 per month thereafter, or 6% more than the £146.40
annual fee for the outgoing Plus account.
Hemingway told BPA:
"Packaged current accounts are not right for everybody. We’ve had
customer feedback on the Plus account – they love what they’ve got
but they want a bit more as well.
"It is about creating a halfway
house or a stepping stone as they progress to the Premier
account."
Although free banking is prevalent
in the UK, fee-based packaged accounts make up around 14% of all
current accounts in the country. According to BPA
estimates, the market was worth around £1.6bn in fees in 2009 and
is predicted to be worth a further £2bn over the next five
years.
HSBC is banking on the Advance
product emulating the success of its Premier account. The Premier
account has typically been marketed towards customers with around
$100,000 of savings, though the limits vary from country to
country, and is widely regarded as the most successful
mass-affluent segment product in global banking.
In 2009, Premier customer numbers
grew for the 10th consecutive year to around 3m, up from 1.9m in
2007, and has played a major role in helping HSBC to penetrate
emerging wealth markets.
Such has been the success of
Premier that HSBC has estimated it can achieve average revenue per
Premier customer of over $1,000 by 2011.
US launch
HSBC Advance launched in the US on
30 January, replacing the bank’s existing HSBC Direct brand.
Although the US is not officially
launching the full suite of Advance products until later this
summer, Neil Brazil, vice-president for public affairs at HSBC
North America told BPA that the bank had, to date, only
rebranded its HSBC Direct online offering to HSBC Advance.
He said: "The name change has not
affected existing customers’ banking activities in any way. The
change was implemented as part of an ongoing HSBC initiative to
offer a core suite of instantly recognisable products across major
global markets."
Customers in Hong Kong, Indonesia,
Panama, Sri Lanka, Taiwan and Turkey also received access to the
Advance account at the beginning of the year.
The bank will continue rolling out
HSBC Advance to more than 30 other countries where it has a retail
banking presence during the year.
For UK customers, HSBC calculate
that the Advance account will give customers savings of up to £500
based on the total cost of a variety of services.
It said that a typical worldwide
travel insurance policy would cost £215 based on the price of an
annual family travel insurance policy from Aviva Insurance, while
roadside assistance from motoring organisation the RAC, included as
part of the Advance package, was worth £99.50 before any
discounts.
The HSBC Advance account includes
the following features:
• A lifetime tracker mortgage,
2.49% (1.99% over bank base rate) with a maximum loan-to-valuation
of 75% and a fee of £999;
• 8% interest in a Regular Saver
account fixed for 12 months;
• A 12-month fixed rate cash ISA
paying up to 2.85%;
• UK roadside breakdown assistance
with a HomeStart upgrade available;
• Worldwide family travel
insurance;
• Fee-free ATM access abroad;
• Global customer recognition and
emergency cash facility;
• International account opening
assistance;
• A discounted overdraft rate of
17.9% EAR (typical) compared to the bank’s standard rate of
19.9%;
• £3,000 of life insurance cover
and 50 percent discount on LifeChoices premiums;
• 10% cash back on personal loan
interest costs, and
• Identity theft assistance and advice.