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Presented by
Pulkit Goenka
Prashant Joshi
Danish Khan
 jutline
ë Key points of the Case Study
ë Questions for Discussion
ë Relevant Theory
ë First Direct
ë jur Views
ë Questions?

ë http://www.youtube.com/watch?v=HFma_Viuif8&feature=player_embedded
Case study: First Direct͛s Innovative
Banking Channels

ë Traditional Banking Structure and Channels

ë Branches being the only point of contact
ë Establishment of First Direct in 1989
ë No Branches!!
ë Personal response to calls 24x7x365
ë Products offered are the same as competitors͛
ë Target Customers ʹ Financially aware and independent
income earners
ë Birth of a new breed of marketing channel ʹ Telephone,
jnline and Mobile Banking
 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 have

reservations about the innovative nature of the service?
  
  
Alleviating
Creating Producer Discrepancies
Utility

Standardising
Wholesalers Transactions

Facilitating
Exchange
Efficiencies
Retailers

Providing
Customer
Service
Consumers
 Factors Influencing Distribution Channels

ë jrganisational jbjectives and Resources

ë Market Characteristics
ë Product Attributes
ë Buying Behaviour
ë Environmental Forces
ß       
  
     

Producer͛s
Perspective
ß       
  
     

Competitor͛s
Perspective
First Direct͛s Marketing Channel:
Direct Marketing
Producer

Providing
Customer
Service

Consumers
 History
ë First Direct was formed on 1st jctober, 1989 by Midland Bank
ë Became a part of HSBC after it acquired Midland Bank
ë Within five years of existence bank was serving to more than 500,000 customers
ë The bank launched Internet Banking in 1998 and went on to launched Mobile
Banking a year later

Current Situation
ë First Direct has 1.16mn customers, 0.9mn of them use Internet Banking and 0.4mn
customers use SMS Message Banking
ë 44% of First Direct͛s sales is via e-channels
ë First Direct handles around 157,760 calls every week including 29,000 calls a day
outside working hours
 2. Why was First Direct different from its rivals? What
gave it differentiation when it first launched?

ë Market research by Mike Harvis identified the jpportunity!!!

ë FD as UK͛s first branchless bank in 1989
ë First 24x7x365 Retail Telephone Banking Service
ë A bank FjR the Customers instead of FjR the bank!
ë Strict Core Values: Responsiveness, jpenness, Right First
Time, Respect, Contribution and Kaizen
ë Economies of Scale due to HSBC merger
ë Use of Customer Information Systems
 2. Why was First Direct different from its rivals? What
gave it differentiation when it first launched?...Contd

ë Employees from Social Professions: Fast, Efficient and

Empathetic
ë Low Cost: Wages & Rents in Leeds
ë ͚Hot Desking͛
ë 641,000 customers in 1996: Employees ʹ 2400.... A Branch
would have reqd 4000!!!
ë Niche Marketing ʹ Target Customers: Affluent and Regular
Depositors
ë Technological Advancements: Internet Banking, IPhone
Banking, Weekly statements by Text.
 3. Why might some potential customers of First Direct
have reservations about the innovative nature of
service?
ë Traditional Banks offer real-world people-to-people
interaction. Customers still prefer personalized service that
they receive at branches
ë Patrons of Traditional Banks mostly prefer using checks and
cash as the primary modes of transactions
ë Customers get an increasing feeling of security of their
financial assets inside the brick-and-mortar branches of banks
ë Despite robust security practices and secure transaction
technologies the threat of identity theft and hacking of bank
accounts is constant and real