Banking on progress through IT

Harvey consolidated HSBC's datacentres and introduced videoconferencing

HSBC recently united the roles of chief operating officer and chief information officer (CIO) into a single chief technology and services officer role. The move was the decision of chief executive Michael Geoghegan, and had the aim of putting technology at the forefront of the banking giant’s offering.

The man who got the job was former CIO Ken Harvey. Here he talks about how HSBC is using IT to improve its business.

What is the One HSBC project and how is it progressing?

One HSBC is a scheme that aims to move 55 core banking systems, 24 credit card systems, 41 internet banking systems, 40 desktop standards and five unique trading rooms on to one global platform by 2011.

We are about three years into the project and it is now paying for itself ­ the dividends are in excess of the cost to deploy. In total, the IT spend on the project is about $1bn (£610m), and we expect it to generate hundreds of millions of dollars of cost savings by the time it is implemented.

How will the project benefit the bank?

It has a number of benefits and is a customer play as well as a cost play. It will allow us to be a truly international bank.

For example, we are now offering a service in the global premier sector that allows customers to move money between international accounts for no fee in real time, so they can pay bills in multiple countries in multiple currencies. This brings down operating costs on our side because there are no phone calls, wiring confirmations or assessing fees. On large hedge funds it gives us a real-time vision of everything contained in the portfolio.

It also allows us to enter new markets quickly and more cheaply and it enables us to bring new products to market all over the world at once.

What other innovations can customers expect?

If you have cross-border needs, we want to be your bank. And we want to offer the best online product in the world. We are trying to migrate from staff-assisted customer service to self service for those who want it.

We now have the same interface whether accounts are being accessed over the phone, online or in branches by staff or customers ­and it can be available in multiple languages chosen at the customer level rather than the country level.

In many countries you now no longer need a wet signature to open an account with us. We use keyfob-based two-factor authentication in most countries to improve the security of online banking and we are considering it in the UK.

So are you moving away from traditional branch-based retail banking?

It depends on the market. In California the branch retail market is well established so we would look to get into that market through other routes. In the UK we have a fairly strong retail brand presence.

But you do not necessarily need physical centres to get into a market ­ if I can prove I can get in with 30 of my own branches rather than buying 150, that is what we will do. And we want to provide better, more high-tech services in the branches that we have.

How are you using IT to improve your environmental footprint?

As well as improving energy efficiency in our desktop IT systems, we have consolidated 130
datacentres down to four pairs of datacentres around the world.

We are also widely using telepresence technology to reduce the amount of business travel we require. We run it over our own network and although it costs £200,000 to build a conference room, that is only the same as the cost of 10 round-trip business tickets to the US. We have managed to cut travel expenses by 15 per cent thanks to the system.

It has a concierge panel that books the room and automatically reminds people when meetings are due. The technology is amazing ­ after two minutes it feels as if you are in the same room.

Do you build your own software or do you work with vendors?

Sometimes we work with vendors, but because a lot of our software has to be transferable to multiple languages and currencies in multiple countries, we build a lot of our own software with these functions included from the start.

If you asked HSBC’s chief executive, Mike Geoghegan, he would probably say that some of my biggest mistakes have been to partner with vendors rather than build from scratch. We now have an academy in India where much of our software is built for us.