HSBC is one of the largest banks in the world. It serves more than 39 million customers through four global businesses - retail, wealth management, commercial and global - and operates in over 60 countries. Not only this, but it’s origin story goes back more than 100 years.
This history, however, also translates to an awful lot of technological legacy. Much like many of the other traditional high street banks, HSBC is having to rethink the way that it operates and interacts with customers because of the opportunities presented by digital.
Mobile, internet-banking and the rapidly changing expectations of consumers means that the old way of doing business is no longer satisfactory. We’ve seen recent examples of how HSBC is attempting to go paperless with Adobe and how it has set up a digital hub to tackle these opportunities.
I got the chance to sit down with HSBC’s Global Head of Digital, Josh Bottomley, to discuss the bank’s broader approach to digital and how its thinking has evolved over recent years. Notably, Bottomley explained that whilst HSBC began working on the front-end digital experience for customers, it is now looking to take on more complex challenges with the bank-end too. Bottomley said:
I think there is a big shift in the focus of digital. When I joined, the focus was mostly on the mobile experience, creating mobile apps that could do things like, how do I easily open an account? How do I service the account? Change address? We’ve made great progress there, which you can see.
But there’s a shift now towards the back-end processes of banking. How do we redo how we manage fraud? How we assess credit risk? How we work out servicing underlying technologies that support customers? There’s a shift to what I call the bowels of the organisation.
It's certainly a big challenge. We have over 115 petabytes of data. We’re managing $1.5 trillion of payments a day that goes through the system. The answer is that you approach it with care. Because the trust in how we operate is critical.
Bottomley said that at the more complicated end of the spectrum, HSBC has now introduced a cloud first policy, which he believes will not only introduce more flexibility into the bank and the way that it serves customers, but also present opportunities for the re-use of data via an API strategy. He said:
It will impact the applications that have existed in the on-premise world and that’s a more complicated process.
It’s driven by us, it’s our choice. Certainly, when we are building a new service, the default plan is cloud. Now, that’s not always possible given the regulatory issues in different countries. But it is the default choice.
Better use of data
In addition to cloud, HSBC now has a “very clear data agenda”, according to Bottomley. He said that the bank is focused on using data to support the customer experience, as well as improve its risk management areas. However, the key theme is using data to make the HSBC-customer relationship more personal and relevant. Bottomley said:
Previously, the data requirement would have sat application by application. We now have a common strategy of how we use data. A lot of that is driven by the customer experience. If we want to send you a notification to you that your salary has gone into your bank account, or that a certain transaction has happened, that requires us to have access to that data in real time and feed it back to the customer.
Within that there are certain areas that are more discrete that can be addressed. One is that we provide and make use of the new data sources that are being made available to us. Customers that are using mobile phones, how do we use that behavioural data to assess particular risks of fraud or information security breaches?
Secondly, there are some third party software providers that can help us understand possible new types of threat that come in and how we respond to that. And what we can do now that we couldn’t do before is, if we are worried about a particular transaction, we can send the customer a push notification and ask for some more information. You couldn’t do that in real-time, previously.
Challenger banks and future challenges
As noted above, a lot of the traditional banks have been forced into thinking about technology differently as a result of a group of new, digital-first challenger banks entering the market - such as Monzo, Revolut and Metro Bank.
I was keen to get Bottomley’s thoughts on the impact these new entrants are having on the investment decisions at HSBC. Interestingly, HSBC does take inspiration from these banks. However, Bottomley argues that a bank with HSBC’s breadth and scale is hard to compete with in the long run. He said:
Most of the challenger banks have picked a particular segment and created a great experience for those users. Actually, I often use it for inspiration. If they provide a better form of customer experience for a particular journey, we are now set up to be able to respond to that and go further. But there are services we offer as a bank, whether it’s moving money internationally, or the level of checks we do on a customer that we are onboarding, that are a differentiator.
The other area that will differentiate us is technology supported by people. If you’re dealing with an emotional topic, say a bereavement, it’s a very complicated topic about how you access the data. And in most cases you want access to a real person. Managing that human-technology interface that works well for the customer, that’s something that we think we can do better. It’s something that’s very difficult for a purely digital player to do, because as soon as you start bringing in frontline staff, you encounter a whole bunch of training and regulatory requirements that need to be met.
In terms of broader challenges for HSBC and digital, Bottomley said that they include getting access to data safely and ensuring that the bank remains operational whilst new technology investments are ongoing. He said:
There is a challenge around, how do we make the data safely accessible? In a way that is both transparent to our customers. And then we can’t break the machine as we do that. Secondly, there are so many ways in which we want to give customers new and improved experiences.
But it's about making sure we pick the right packages of those experiences. And remember this is within the context of ongoing requirements to managing the existing technology estate.