Kathy Gibson reports from Huawei Connect in Shanghai – HSBC is a 15-year old bank, with aspirations to be a world-leading financial services institution. But it needs to offer new and innovative services through new channels if it wants to survive and thrive.
“Going forward our intention is to deliver more amazing innovations through digital transformation,” says Darryl West, chief information officer of HSBC.
Technology pervasiveness is changing the way people play and work, West says, and this is driving the need for companies like HSBC to look for new ways to deliver services.
Digital adoption trends show that technology which is easy to acquire and use tend to be more successful; and if they are available on a mobile channel they also tend to take off.
“Of course, this is also completely changing the way in how we deliver our banking products,” West says. “Banking needs to become a more seamless part of people’s lives.”
For modern users, mobile banking and contactless payments have taken off, along with a decline in both cash and cheque transactions.
“Plus, the ability to analyse customers’ data lets us offer better options to customers. We can analyse their behaviour, look at their propensity to buy various products and channel products and services to them on their mobile device.”
Biometrics have also seen a big shift, says West, with customers becoming more comfortable to allow banks to record their identities in a digital form, which lets them interact with the bank in a much more natural way.
“It’s all very well to adopt these new technologies, but there are risks,” West says, adding that there has been a 150% increase in cybercrime over the last year.
HSBC wants to be part of the banking industry transformation and is aiming to restructure the cost base of the bank by digitalising every process and transaction.
“We will eliminate paper,” West promises. “There will no longer be piles of paper and disjointed processes. It’s going to be a straight-through process.”
HSBC is investing almost $2-billion to do this, intending to completely redesign its customers’ experience through mobile channels.
“If we don’t respond to customer demands we will have non-banks coming in and taking our market share. The fintechs are already biting at our heels and we have to respond.”
HSBC began its digital transformation in June this year and has already achieved some important milestones.
The bank has already opened up mobile channels. “We have adopted a mobile-first strategy,” West says. HSBC has launched Apple Pay and Android Pay and has a WeChat integration underway to address the Chinese market.
It has also got a big data and realtime analytics cognitive technology project underway and aims to integrate artificial intelligence in realtime communication.
The bank has also introduced a voice login that is available for its more than 20-million customer in the call centre and is piloting touch ID across major markets as well as other new identity verification projects.
A key strategic imperative that HSBC has set is to be more innovative as a company.
“We have all the fantastic values you expect from a bank, but tend to be slow in the adoption of new technology.” West says.
To counter this, HSBC has created a technology advisory board that is tasked with driving new technology experiences. This board has money to invest and is setting up technology centre.
“What will HSBC look like in five years’ time?” West asks. “You can tell it will be very different.
“We are introducing robotics, we have machine learning; and there will be no paper there will be passwords.
“There will be fantastic experiences for customers through valuable messaging. We will enable customers to run their lives in a much more interesting way.”
This complete change in the business won’t happen without fundamental technology re-engineering, West adds.
He explains that the bank’s core systems are 40 or 50 years old and have been developed over many years to be functionally rich. “They do a good job and they are data rich
“But the challenge is to build the right architecture that will let us take our core systems but deliver them through an integration layer that can consumed through a cloud infrastructure and out to the mobile devices”
This is an evolutionary process, West adds. With more than 70 000 applications, there has to be a vision of how to connect the core systems back through the customers. “So we have to re-architect, adopt new technologies and deliver new services across new devices.”
Cloud is at the heart of this transformation, but the bank has to negotiate some specific challenges relating to cloud technology.
“Of course, HSBC, as a bank, is highly regulated so there is concern about where data sits,” West says. “There is also an expectation of service availability.”
The bank has its own private cloud; but also has relationships with pubic cloud suppliers as well as software providers about consuming software through a SaaS model.
Software development has also had to change in the new era of digital transformation, West says.
“We are transforming the way we deliver IT, from traditional processes where teams work in silos to DevOps where accountability is shared.
“One of the concerns was whether we have the skills and resources to deliver end to end services and we found that it is evolving into a micro-services world
“It may sound very obvious, but the idea of DevOps with developers and operations people working together to deliver software in a much quicker cycle.”
Perhaps the most important change, though, is that IT needs to become a business enabler. “I don’t want to be the impediment to the business,” West says. “We need to get to where the business is complaining about my team being too pushy.
“To do this we need highly collaborative innovation tools. This is a major shift and a lot of banks are going through the same journey.”
HSBC has reinforced the partnership between business and IT by creating a new team that is co-located in the business, driving collaboration between IT and lines of business.