03 November 2008 Features

 

Interview: Ken Harvey talks about the One HSBC project

David Bannister

Describing One HSBC as an ambitious project is wrong - it is the culmination of several large projects across the bank, each one of which is ambitious in its own right.

The chart on the opposite page shows the overall effect of the One HSBC programme on the bank's international systems, including a reduction in the number of core systems it uses from 55 five years ago, down to 17 currently and a final move to a single platform in 2010/11.

Already, HSBC retail customers who have been in a branch recently will have noticed a difference - the staff use the same screens as the customers, so transactions are conducted in a collaborative manner, rather than the confrontational, "computer says no" style.

In its trading rooms, there is a similar change: it has implemented a single global trading platform, and similar changes are happening across the business.

In charge of all this is Ken Harvey, who took up the newly created position of chief technology and services officer of the HSBC Group at the beginning of last month. Reporting to group chief executive Michael Geoghegan, the new position combines the roles of chief information officer and group chief operating officer.

The CTSO function has also been replicated in the regions, of which there are five, and two globally-managed customer groups, Global Banking and Markets and Private Banking, all of which report to Harvey.

This puts him in charge of a project that saw 200 One HSBC implementations this year so far and has more than double that scheduled for 2009. It is not something that seems to faze him, though he recognises that it is on constantly shifting ground. "We do keep acquiring things, so it could run away from me, but if it was a steady-state we'd be looking pretty good already, so we feel pretty good about it," he says.

There is another reason that he can feel good about it, despite calling it the "the relatively mundane business of running the bank". It has been two years since the bank announced One HSBC, though internally working on it for about three years, and he can say "One HSBC is now more than paying for itself. Two years ago it was a significant investment on our part in capital and in people: it is now paying dividends in excess of its cost to deploy."

From a purely IT & operations point of view, it could be seen as similar to other large scale integration and consolidation, if at the very large end.

"It is run as a shared services organisation, and the services are, if you will, sold to all of our legal entities worldwide at a consistent rate - so a small country gets as much leverage as a larger one," he says. "That's how we are able to move into some of these smaller countries at very good price points - we don't replicate the infrastructure, we don't build new data centres, we don't hire additional operations people; we simply leverage the large operations centres we've built."

This has been the focus of a lot of the foundation work over the past few years, but the approach has been to develop and deploy the systems in appropriate regions and then migrate local systems to the single platform.

"After consolidating the platforms, we also consolidate the data centres, and reproduce them in very large and robust ones. In those large, robust ones we are able to provide a greater level of service than anyone was able to provide on a regional basis, so your quality steps up when HSBC converts you," Harvey says. "We run one global network and we have four pairs of Tier 4 data centres in the world, and that powers all of our world. We have a significant Latin America data centre presence that is up, on-line and built; we have a North American presence, we have a European presence, we have an Asian presence, and we have a small Swiss presence that caters specifically to the Swiss private banking market."

Some 30 data centres worldwide have been consolidated into these four pairs, one of which is still under construction in the UK, which will take on the loads of some of the French and German operations when it goes live.

The IT organisation is also now globally dispersed. "We now have 52% of our IT development workforce in China, India and Brazil ... probably 30% of the global operations workforce is in China, Malaysia, The Philippines and India," he says, adding that he does not anticipate further changes to the structure. "The plants are built, we have the arbitrage in hand, and it is now a question of driving additional volumes through those platforms."

And here is where One HSBC starts to be more than just a large-scale IT integration and consolidation project, because the business is as much of a driver as anything else, if not more.

"A lot of people look at it as a cost play, and what I want to make clear is that it is a customer proposition as well," says Harvey. "We have global customer propositions here that are unique in the market that none of our competitors, I can safely say, have and that are attracting good amounts of new business from exactly the kind of customers HSBC wants. It is about customer propositions and customer experience - it happens to have a significant cost advantage to it as well, but it not purely a cost exercise."

He points to the recent migration of the bank's Indonesian operation to a common chargecard platform, bring the total number of territories on that platform to 80. "We believe we can drop the unit cost of running a chargecard well below our competitors' levels - in fact, we currently have a scale grater than any service bureau, so HSBC runs for itself more chargecards than any service bureau runs for all of our competitors in total. This is a big operation."

A central goal of One HSBC is the removal of barriers to the bank entering new markets and territories. Here Harvey points to expansion in Central and Eastern Europe as examples of the success of the programme. "With full service banking we can go into new countries, from a technology and operations standpoint, for millions of dollars as opposed to tens of millions of dollars," he says. "We can launch a new credit card business in a new country for between $1 million and $2 million, depending on the size and complexity of the country, whereas our competitors would be running at three or for times that."

The global scale, local services, ethos that the bank aims to promote is also a factor here too.

"In some markets we also do general retail, and if you are from the UK you probably always think of us as a full service retail bank - that would also be true in Hong Kong and Bermuda, and possibly in New York," he says. "But in most places we do business we are an international bank that appeals to multinationals and small and mid-sized businesses that have cross-border needs. As long as you have international and cross-border needs, our target is that we be your bank."

Commercial banking is clearly a target market, and under One HSBC it has introduced Global Links, a common platform for streamlined account opening and cross-border referrals. "It lets a domestic firm open up its international banking accounts from just one country and extend their credit from their home country without having to set up banking relationships in a new country." Since going live in 2006, the Global Links platform has doubled the number of cross-border referrals to more than 3,000 - and in the first half of 2008 it saw them continue to grow, and to increase 83% in value to $5.6 billion.

This growth is also reflected in the large scale corporate world. "There are very few banks that can afford to play in this space - and there is no-one that has more reach than us, no-one that goes to more countries," says Harvey.

Back down at the operational level, the fact that all of the One HSBC systems use the same customer interface, whether you're a staff member or customer serving yourself may be nice for the customer, but it is also more efficient for the bank, in the form of reduced training costs. "If the customer can learn to use it themselves, so can the staff," says Harvey, though he is also keen to point out the customer relationship benefits. "It has an interesting subliminal message: the banker is not looking at the screen and you're looking at a desk, you collaborate on perfecting the transaction - it is a migration from staff-assisted customer service to self-service."

This passes on through to call centre staff too. He points to the processes through which a customer's lost or broken card might be replaced. Previously this involved several days of training for staff on the 13 steps in the process - five of which were questions for the customer - and took six minutes. The streamlined process automates the customer quiz, involves five steps and takes four minutes.

So how far can it go? One interesting development is a commoditisation of internally-developed applications on a scale that is probably unprecedented. "In some countries instead of taking a One HSBC call centre, a One HSBC internet system or a One HSBC core banking system, they take it all at once, in much the same way as you would upgrade your Microsoft Office," Harvey says. "We call it Gold Suite - in smaller countries, we package them all and convert everything in one weekend. That has cut our cost of doing it by greater than 20% and it will allow us to upgrade the entire network every three years."