Marcus Treacher of HSBC tells Dan Barnes about the rationale for its technology strategy and why banks that can think like treasurers and CFOs will beat the competition.
The tech vision of Marcus Treacher, head of global transaction banking e-Strategy at HSBC, is firmly rooted in using the SWIFT network and the ‘value added’ services that can be provided to customers.
Although he will not be drawn on the possible leadership of SWIFT following CEO Leonard Shranck’s recent announcement that he will retire in 2007, Mr Treacher has faith in the organisation for the future. Any moves by corporates to break away from existing bank-led initiatives are, he believes, a “desperate cry for help rather than a meaningful shift in the industry”.
The development of technologies in the cash management area can be slow, often addressing automation of processes, the straight-through processing concept applied to the high levels of manual processes that are still prevalent in treasury departments worldwide. This is a logical situation, says Mr Treacher.
“The software industry develops very rapidly; it does drive established organisations to develop new ways to do business, how they change and how they innovate. In banks, particularly, the difficulty is ensuring the absolute quality of delivery and the absolute reliability of service as well as driving innovation. These drivers are almost diametrically opposed.”
AvantGard approach
The most recent HSBC announcement in this area was that it has joined Sungard’s AvantGard e-Treasury eXchange network (AvantGard-ETX) to give customers that use the SunGard treasury workstation (Quantum) a single route to the bank’s provision of batch payment execution, account balance information and transaction reporting. The provision of data and information is key to the HSBC strategy. “The challenge really is to demonstrate true value,” says Mr Treacher.
The bank has noted a high level of movement towards automation in treasury departments and is stepping up its solution provision to match. “Because we work with so many organisations around the world, we don’t place bets on any particular connectivity but where we see a credible technology, then we will deal with it. In Sungard’s case, Quantum is used by a number of our customers,” Mr Treacher says.
Getting the edge
The integration proved fairly rapid with HSBC’s host-to-host solution, HSBC Connect, and gives the bank an edge, he says. “It gave a stronger proposition for high-end multinational user groups.”
The ability to connect is crucial and standardisation is key to this. Mr Treacher says that when he joined the bank from Citigroup in May 2004, he was encouraged by the level of standardisation he saw and the collective drive to get this right. “Technology doesn’t work without the people,” he says.
Where commonalities are found, technology can follow. In the e-commerce area, for example, online global banking channel HSBCnet was originally developed for the Asian markets and then applied to other geographies.
“The common denominator was the way that they bank, the level of efficiency in the economy,” explains Mr Treacher. “HSBCnet is really catering for countries where there’s heavy paper usage and heavy cheque usage. We built this in Asia and replicated it in parts of Europe, and we’ve just opened up the work to replicate it in Canada.”
He believes that, because cash processes are similar across 80% of the world, intelligent usage of the ‘engine’ centres, such as Mumbai and Bangalore, combined with careful management of the outstanding 20%, can yield good results.
Mr Treacher is not overly concerned by the claims that technology can level the playing field for corporates by giving them the ability to understand their position before the banks can. “I think the enterprise resource planning systems of this world are limited because they are only an attempt to automate the administration of larger organisations. I’m speaking to a number of treasurers who feel that [ERP systems] don’t really contain the level of intelligence, of sophistication that they need.”
For this reason, he sees treasurers turning to systems with added functionality (he notes Trema and Sungard) and, far from being threatened by these investments, he sees opportunity once again.
“In this space, there’s a lot less clarity [than with ERP systems]. These [systems] are expensive and to feed them you need good quality data from the banks. I see these new technologies as exciting ways to change how we deliver our banking services. There are fantastic ways to innovate and do good things.” This is particularly true on the analytical side, where treasury workstations are pushing for richer or real-time information.
Corporate frustration
Mr Treacher does acknowledge that many corporates, particularly multinationals, have been frustrated by the banking industry as a whole, believing that the banks were “not with them” and that the pressure they can exert may well affect the industry. “At the end of the day, I think they’ll achieve enough pressure to move some of these banking practices, maybe increase standardisation on TWIST [the Treasury Workstation Standards Team], for example, maybe force open SWIFT a bit more,” he says.
But he believes that such action is not going to result in a shift away from the banking industry because the same pressures that affect the financial business currently would also be applied to any corporate group operating similar activities.
Understanding is vital
There is a lot of noise in the cash and payments business and understanding this is vital, he says. “Banks that can think like the treasurers and CFOs will come out top. It’s about trying to read the need behind some of the demands. The ability to see through the plethora of potential initiatives is valuable – it is very easy to jump on bandwagons.”
The progress of SWIFT in satisfying the banking and corporate world has been criticised but the demands are paying off, partly thanks to the rise of XML.
“Banks have a unique strength in that we have a very strong standards body in SWIFT, which is anchored in a real network; even though it can move slowly at times compared with the standalone initiatives run within industry groups.”
He contrasts SWIFT with the electronic data interchange initiative of the late 1980s, in which proprietary software and hardware were required to exchange data with large corporates. He says that the difference is that “SWIFT having both the standards body and the execution capability means that for banks the standards world is really about building on SWIFT, using it to grow the range of services that we can deliver”.
To maintain this will require SWIFT to become as open as possible for the banks’ customers, allowing the banks to focus on adding value to the financial supply chain. The level and speed of change driven by SWIFT’s stakeholders will be seen next month at SIBOS.
In the meantime, Mr Treacher is continuing to develop the bank’s online offering. “You can see a time when the proprietary systems such as HSBCnet work closely with the vendor offerings. You can see that with the use of SWIFTnet Browse [the system that allows users to browse remote web servers using SWIFTAlliance WebStation].
“I see a future in which banks differentiate themselves through the internet banking proposition and these will connect and integrate with myriad propositions, whether they are banking propositions or other companies’ web offerings.”
