HSBC's group chief technology officer, Ken Harvey, has led a bank-wide project to create a single, centralised IT services hub that is expected to achieve major cost savings. The project underpins the bank's broader One HSBC business re-engineering programme.
The creation of a single IT hub from which an organisation can share standardised IT services globally with little or no replication is something of a nirvana when it comes to corporate technology. But this has not deterred HSBC from pursuing such a course, despite being one of the largest banking and financial services organisations in the world with about 8000 offices in 88 countries and territories.
In order to manage operating expenses more effectively, the bank has spent the past two years creating a single point of accountability in the shape of an internal organisation known as HSBC Technology and Services, which is led by group chief technology and services officer Ken Harvey.
"This combined organisation supports all back-office activities and IT, and allows our common systems to be used in a common way," he says. "As a result, we expect to achieve an improved cost-efficiency ratio [CER] and a more consistent customer experience."
Business re-engineering
The bank's IT transformation project underpins its broader 'One HSBC' programme, a mammoth business re-engineering project that will ultimately lead to the bank's global operations using a single standardised set of IT systems.
The One HSBC project, in which the bank invested more than $450m last year, aims to drive better use of direct channels, increase automation of manual processes, enhance the use of global service centres and eliminate redundant systems. "We recognised that our existing model of allowing inconsistencies in processes and products would not support our view that our global scale could be leveraged; it also fragmented the global customer experience," says Mr Harvey.
"Having consistent processes/systems and implementing our solutions with a common operating model has been our strategy for the past few years. This strategy has been maintained unchanged even during these difficult financial times.
"We are confident that we have established a strategy and framework that will allow for revenue growth as the economy improves, without a commensurate growth in expense."
According to Mr Harvey, HSBC's IT project will drive sufficient efficiencies to fund its One HSBC initiative while still improving CER. "We have already exceeded this goal in the first three years of our five-year programme and the transformation is being funded out of the savings it is generating," he says.
Implementation challenges
Undertaking a massive IT transformation programme is not for the faint-hearted and there have been challenges along the way. "In the past, HSBC had allowed more autonomy to individual entities than [is envisaged in] our integrated strategy," says Mr Harvey.
"In some cases, we needed to change management to ensure that our principle of building processes and systems at the centre and deploying them consistently in the regions was supported. We needed to ensure that our 'standardise and leverage' mentality was supported, and supported quickly. This also required a consistent management structure across all entities. In addition, we needed to ensure that our own internal organisation promoted sound commercial thinking, was transparent and was consistent in its pricing and service propositions."
To achieve these goals, the bank created a shared services organisation, which provides unit prices for internal and external benchmarking.
Having overcome the initial challenges of transformation, HSBC says it has experienced significant business benefits as a result. "Our internal business partners value the transparency of our services highly," says Mr Harvey. "We have been able to prioritise our discretionary activities better, and have provided services at a lower unit cost. Our customers are also benefiting from a much more consistent experience."
HSBC says it has devised a system that is seamless regardless of the distribution channel - something automatically expected by the younger 'Generation Y' customer segment. "Even customer discussions that have traditionally been carried out in private, such as wealth planning in retail or treasury management in large corporates, are shifting to online channels," says Mr Harvey.
He adds: "Financial services firms rely heavily on IT... Our product tends to be our systems and processes. The integration of IT and operations [in our project] has allowed IT to ensure consistency and high standards. We expect to be viewed as both cost-effective, because of our global scale, and state of the art, because of the demands of our target customer base."
Career history
Ken Harvey
2008 - Group managing director and chief technology and services officer, HSBC
2004 - Group general manager and group CIO, HSBC
1997 - CIO, HSBC
1989 - Joins HSBC as assistant vice-president of Canadian operations
