Epgp term v its group assignment may 2010

Information Technology Strategy

IT Strategy of HSBC Bank
EPGP 2009-10 - Term V- Group Submission
7-May-2010

Instructor: Prof. S. Ramanathan

Submitted by:
Alok Joshi
Kapil Wadhwa
Mohammed Jaipuri
Prateek Narula
Rajendra Inani

Table of Contents
1 Long-term IT strategy for bank’s core system renewal .................................................................. 3
1.1 Challenge................................................................................................................................. 3
1.2 Approach ................................................................................................................................. 3
1.3 Results ..................................................................................................................................... 3
2 Development Strategy of HSBC ...................................................................................................... 4
2.1 Introduction - Hong Kong and Shanghai Banking Corporation (HSBC) ................................... 4
2.2 Global Development Strategy - Plan ....................................................................................... 4
2.3 Global Developmental Strategies – IT Strategy and Initiatives............................................... 5
2.4 Global Centre of Excellence .................................................................................................... 6
3 Some Important IT Strategy initiatives at HSBC.............................................................................. 7
3.1 Creating Virtual Office using Virtual Machines ....................................................................... 7
3.1.1 The Technology and POC ............................................................................................... 7
3.1.2 The Implementation ....................................................................................................... 7
3.1.3 The Results ...................................................................................................................... 8
3.1.4 Plans forward .................................................................................................................. 9
3.2 The CRM Strategies of HSBC in Personal Banking................................................................... 9
3.2.1 Existing Banking .............................................................................................................. 9
3.2.2 e-Banking ........................................................................................................................ 9
3.3 HSBC’s Common Windows Desktop Exercise and the Microsoft Server Investment ........... 11
3.3.1 The Challenges .............................................................................................................. 11
3.3.2 The Objectives............................................................................................................... 11
3.3.3 The Implementation ..................................................................................................... 11
3.3.4 The Benefits - Gaining from the Microsoft – Novell collaboration ............................... 12
3.4 Deployment of Swift in HSBC ................................................................................................ 13
3.4.1 About SWIFT.................................................................................................................. 13
3.4.3 Benefits of deployment of SWIFT at HSBC.................................................................... 13
3.4.4 HSBC - SWIFT proposition ............................................................................................. 13
3.5 HSBC and VeriSign ................................................................................................................. 14
3.5.1 The Objectives............................................................................................................... 15
3.5.3 The Benefits - Reduced cost and complexity ................................................................ 15
4 Conclusion .....................................................................................................................................16

ITS – Group Assignment P a g e |2

1 Long-term IT strategy for bank’s core system renewal

An Example - A large Australian bank was adversely impacted by its complex IT environment. IT
projects were costing more and delivering much less than packages – plus delays added further high
costs.
The bank‘s in-house solution had been developed over the past 30 years, comprising 30 core
applications to support the retail and business banking environment. Overall, IT applications
numbered over 2000.

1.1 Challenge

While it was increasingly apparent that the core legacy environment needed to be replaced to meet
current IT requirements, the bank also wanted to build the best infrastructure for its future business
needs.
But a simple replacement strategy didn't exist. The current environment was extremely complex, with
a high level of integration and custom developments. A consulting firm was engaged to work with the
IT team to develop the bank‘s long-term IT strategy for replacing the core banking system and
channels environment.

1.2 Approach

The joint project team employed a structured approach to assess and plan for the core system
upgrade:
 Assessed current issues with the core platform (functionally, architecture, economic
perspective), investment and operating aspects, and organizational implications
 Determined future requirements – next 10 to15 years – and distilled them into a set of
capabilities that the core system must provide to ensure longevity of the platform
 Developed a future state architecture to meet long-term strategic requirements and deliver
strategic capabilities
 Undertook vendor evaluation against key strategic capabilities and technical architectural
considerations
 Developed flexible migration options, along with economic modeling to establish the most
viable future strategy

1.3 Results

The project provided the bank a long-term IT strategy with a robust roadmap for replacing the new
core system – allowing the bank to gradually renew the legacy environment with limited customer or
operational impact. The strategy will enable the bank to manufacture and distribute new products in
compressed timeframes, including bundled and third-party products. Perhaps more importantly,
despite a likely multi-year technology investment in the hundreds of millions of dollars, the investment
will result in positive business benefits and payback.
Key deliverables for attaining the renewed core system include:
 Future-state conceptual architecture, allowing for de-coupling of manufacturing, processing,
and distribution functions, so they could be renewed independently with the optimal solutions
 Supporting services architecture for core banking requirements, with mapping from the
current state to future-state requirements and vendor capabilities
 Incremental and phased migration path for minimal disruptions


2 Development Strategy of HSBC
2.1 Introduction - Hong Kong and Shanghai Banking Corporation (HSBC)

The HSBC Group was established in 1865 to finance the growing trade between China and Europe,
and is one of the largest banking and financial services organizations in the world. Its international
network comprises over 9,500 offices in 76 countries and territories in Europe, the Asia-Pacific region,
the Americas, the Middle East, and Africa. Through an international network linked by advanced
technology, including a rapidly growing e-commerce capability, HSBC provides a comprehensive
range of financial services, including personal financial services, commercial banking corporate,
investment banking and markets, private banking, and other activities.

This company has been developed successfully to become a true global bank, being the largest bank
in Hong Kong and the largest foreign bank in China. It emphasizes the importance of building
shareholders' value, and believes in the values and talents of its own employees, which are employed
and spread all over the world. HSBC wishes to stay ahead in a very competitive global financial
market, and by maintaining a great brand name, an established customer base, good and loyal
employees, tight control over operating costs and constant adjustment of business strategy to cater to
customers' needs, it maintains its success in its leadership position in Hong Kong's highly competitive
banking industry. With this success, it is useful to evaluate the global development strategy of HSBC
from the strategic marketing perspective. This is to examine the marketing strategies of HSBC, to
become aware of their mission and vision, and in turn, be able to apply these global development
strategies to other business organizations.

2.2 Global Development Strategy - Plan
At the end of 2003, HSBC launched the ‗Managing for Growth‘ program, which is a strategic plan that
provides the company with a blueprint for growth and development from 2003 to 2008. This strategy
builds on the company‘s strengths and addresses the areas where further improvement is considered
both desirable and attainable. HSBC‘s core values are integral to its strategy, in communicating them
to customers, shareholders and employees, and comprise an emphasis on long-term, ethical client
relationships, high productivity through teamwork, a confident and ambitious sense of excellence,
being international in outlook and character, prudence, creativity and customer-focused marketing (‗‘
2006). In addition, there are several key elements in achieving HSBC‘s global development
objectives, and these include accelerating the rate of growth of revenue, developing the brand
strategy further, improving productivity, and maintaining the company‘s prudent risk management and
strong financial position. Developing the skills of their employees is also given emphasis to ensure
that all employees understand how they can contribute to the successful achievement of HSBC‘s
objectives.

There are eight strategic imperatives included in the plan of HSBC in accordance to their global
development strategy.

1. Brand - by making HSBC and its hexagon symbol one of the world‘s leading brands for
customer experience and corporate social responsibility.
2. Personal Financial Services - which drive growth in key markets and through appropriate
channels, HSBC can be the strongest global player in personal financial services.
3. Consumer Finance - which is extending the reach of this business to existing customers
through a wider product range to penetrate new markets.
4. Commercial Banking - making the most of HSBC‘s international customer base by creating
an effective relationship management and improved product offerings in all their markets (‗‘
2006).


5. Corporate Investment Banking and Markets - which accelerates growth by enhancing
capital markets and advisory capabilities, by being focused on client service in sectors where
the company has critical relevance and strength.
6. Private Banking - which aims to serve the company‘s highest value personal clients around
the world.
7. People - for attracting, developing and motivating the employees of HSBC, leads to
rewarding success and rejecting mediocrity,
8. Total Shareholder Return (TSR) - which is fulfilled by achieving a strong competitive
performance in earnings per share growth and efficiency.

These imperatives are essential for they serve as basis for the company in conceptualizing their
projects and implementing their plans for the improvement of their service.

2.3 Global Developmental Strategies – IT Strategy and Initiatives
The global development strategies of HSBC indicate the changes and success in the market. Some
of the major initiates were as following.

1. HSBC spends more than 2.5 billion Euros a year on IT systems and in-house application
development, and set itself a target of cutting per-unit processing costs by 10% every year.
2. In year 2009, HSBC expects to make an 11% saving on transaction processing after cutting
8.8% off costs in previous years, after 370 successful system deployments in the past three
years, and the continued expansion of its pool of global platforms.
3. In addition, the bank has also set up a single, self-managed global network and consolidated
on four global datacenters and two regional ones.
4. Moving application development work to low-cost centers such as India is another key part of
the company‘s strategy, leading the bank to estimate that 4.2% of its technology development
work takes place in low-cost locations, such as India and the Philippines.
5. HSBC‘s offshore IT operations enjoyed higher employee retention rates than those run by
major outsourcing suppliers, and added that lower staff turnover had brought greater
continuity and efficiency to projects.
6. HSBC.com - The direct banking side of the business, painted a similar picture of
development with a global focus. This is in relation to the company‘s launched program, the
HSBC.com. (2006) reports that HSBC.com has a single global center of excellence for e-
commerce IT, made up of co-located businesses and employees. The main offices are in
New Jersey and Chicago, with functional reporting units in Canada, Hong Kong, and London,
plus a 740-strong team of application developers in Canada and India. HSBC.com was able
to develop a key global platform, the HSBCnet, which is designed for commercial customers,
covers 60 countries and offers some account functionality across 115 countries. This program
includes services for global markets, global cash management and investment banking.
7. Security - was added to a system with such global reach and extended functionality, so the
bank has recently put in place two-factor authentication security where appropriate, including
password generators and smartcards that are available to all business customers.
8. Other attribute of HSBC.com‘s IT strategy is the development of the second-generation
internet technologies. The company and online bank is already exposing customers to
intelligent, personalized content and better-targeted marketing, which allowed the company to
develop a sales campaign management tool to test the effectiveness of its web marketing
strategies. This real time tool allows the bank to react to customer preferences and change
content on the site within two hours.
9. HSBC‘s most successful global technology roll-outs is its Whirl/eChamps credit card
authorization and accounting platform, consisting of 17 linked applications, including credit
assessment, risk-based pricing, card ordering and transaction processing and reporting. The
use of this program has reduced transaction-processing costs, generating an estimated


annualized saving 23 million Euros, and allowed the bank to handle a 25% growth in credit
cards at no incremental cost ( 2006).
10. Fair Isaac Corporation, the leading provider of analytics and decision management
technology, announced that HSBC would utilize Fair Isaac‘s proven software technologies,
analytic models and development processes for Enterprise Decision Management, and this
integrated solution will help HSBC grow its ability to optimize profitability across the bank‘s
consumer lending portfolios, and support its long-term growth objectives in the Asia-Pacific
region (‗‘ 2006).

It is evident that the HSBC invests on software programs and applications, in response to the fast-
paced technological changes today. With the use of the Internet and other web-based applications, it
is easier for the company to reach their customers globally and serve them better and faster. With the
pleasant response of consumers to the efficient use of the World Wide Web, HSBC will not have a
hard time relating to their customers globally, and even implementing projects and new programs to
serve and relate to their customers effectively.

2.4 Global Centre of Excellence

Self-styled "world's local bank" HSBC is at the vanguard of globalisation. As well as leading the way in
offshoring IT support and customer service, it has also built a global centre of excellence. The
centralized development model allows the bank to build new e-commerce software rapidly, but deploy
the systems with a local look and feel.

HSBC has a single global centre of excellence for e-commerce IT, made up of co-located businesses
and staff. The main offices are in New Jersey and Chicago in the US, with functional reporting units in
Canada, Hong Kong and London, plus a 740-strong team of application developers in Canada and
India.

HSBCnet is the key global platform developed by HSBC. Designed for commercial customers, the
platform spans 60 countries and offers some account functionality across 115 countries. HSBCnet
includes services for global markets, global cash management and investment banking. The bank
said 89% of its corporate customers are regular users. A single sign-on gives customers access to
more than 100 applications, many of which overlap intuitively for the end-user.

First Direct, a division of HSBC, has moved to a new e-commerce platform. As per head of e-futures
at the bank, it gave customers additional functionality and offered an improved business development
environment for controlling workflow. This would allow technically competent business managers to
introduce customer programmes in hours rather than days. This would allow each brand to have its
own look and feel, but the technology will be the same.


3 Some Important IT Strategy initiatives at HSBC
3.1 Creating Virtual Office using Virtual Machines

HSBC Bank recently completed a consolidation exercise that's seen almost 1,000 new VMs
commissioned, of which almost 300 were converted from physical to virtual (P2V) machines. The
bank's enterprise systems support manager John Gibson who was the man responsible for successful
execution said that HSBC's consolidation exercise had seen almost 600 servers demised and thrown
away, 330 re-used and a mighty 900 machines whose purchase was avoided. It's also saved a shed
load of money.

Traditionally, HSBC had always operated a one-to-one policy of application to server. However, the
resulting server sprawl was costly in terms of consumption, server under-utilisation, capital
expenditure and staff. So, recently, the bank decided to investigate virtualisation as a means of
consolidating its server sprawl.

3.1.1 The Technology and POC

The revolution in telecommunication and internet has brought the concept of virtual office to forefront.
The VO concept is replacing the traditional office. Given the dynamic business environment the
modern day workforce and management desires a more ―mobile‖ definition of an office. The new
generation of entrepreneurs is embracing the virtual office instead of the traditional on a global scale.
Many companies are incorporating the flexibility of a virtual office into their culture.

The IT staff's evaluations and proof of concept work found that, at the time, VMware's ESX Server
was the only viable option and so it embarked on a virtualisation migration project to get 1,300
physical servers down to 150.

The bank engaged VMware's professional services division to help with the project and put in place a
development framework. It took a year from the decision being taken to the first contingency servers
being deployed, followed by the first trial production machines. "The time taken wasn't because of
technology but because of getting management buy-in," said Gibson. "We also used VMware's
professional services to help with negotiations with management."

3.1.2 The Implementation

Having verified the concept in the real world, the next step was to identify which servers could be
migrated to VMs. Migration tools used include PlateSpin's PowerConvert and VMware P2V Assistant.
The systems were divided into tiers one and two, with the mission- and performance-critical
applications in the first tier. Tier 1 consists of about 120 four-way clustered servers connected to
SANs. About 10 hosts live in each cluster or farm, sharing 6TB of disk and supporting 250 VM guests
per farm, for an average VM to Gigabit-connected host ratio of about 20:1.

The second tier consists of two-way blade servers with about five to 10 VMs per blade. These are
good for single CPU VMs. What's perhaps surprising is the small amount of memory each VM
receives. Less than 512MB is standard, with most running in 384MB. Utilisation rates in both tiers
runs at between 50 to 80 per cent.


In terms of management and issues such as naming, HSBC treated VMs as if they were physical
devices. This means that each VM is logically separate from the others and has its own IP address
and name, and they all have BMC Patrol, anti-virus and backup agents installed locally. When a
business unit asks for a server, that's treated just as it was before since there's still a requirement for
physical resource under each VM. Requestors are required to complete a form to ensure that all
required build and billing information is captured. The IT team validates it and passes to the team in
India to implement the VM. The difference comes in the time it takes the IT organisation to respond.

3.1.3 The Results

On the lessons learned, HSBC‘s biggest challenge was getting buy-in from management, along with
high levels of communications and tailored training. The biggest challenge was the pressure to adopt
more of the new technology, which places demands on the VI team to scale up the systems. In terms
of benefits, HSBC is now able to save 141kW power saving from server demise and from avoiding the
installation of new servers, minus a spend of 80kW in ESX infrastructure. The new VI has provided
capacity for 2,500 additional VMs and provided 51 racks of space. Capital cost avoidance includes
£1.65 million in re-use of physical servers and updating, £3.22 million saved on the purchase of new
servers and £160,000 shaved off hardware maintenance costs from demised servers. In addition,
there's a reduced time to market and lower rates of Window server recharge to the business. Gibson
said the bank had gained improved physical server utilisation, operability, automation and
manageability. And the VI also meant that the IT team in India was able to shoulder some of the load
and enable the release of expensive UK-based contract staff. The use of VM is helping them reduce
operating cost, able to create a better and healthier environment and a fast turn around on the
request received from the customers.

Virtual machines allowed HSBC isolation of applications from each other. Virtual machines allow
isolate each application (or group of applications) in its own sandbox environment. The virtual
machines can run on the same physical machine (simplifying IT hardware management), yet appear
as independent machines to the software you are running. For all intents and purposes—except
performance, the virtual machines are independent machines. If one virtual machine goes down due
to application or operating system error, the others continue running, providing services your business
needs to function smoothly.


Virtual machines allowed HSBC to conduct test scenarios easily. Most virtual machine software today
provides snapshot and rollback capabilities. This means they can stop a virtual machine, create a
snapshot, perform more operations in the virtual machine, and then roll back again and again until the
testing is finished.

Virtual machines allowed HSBC to move between physical machines. Most of the virtual machine
software on the market today stores a whole disk in the guest environment as a single file in the host
environment. Multiple deployments of a single virtual machine are much easier to achieve than
multiple deployments of an operating system on a physical machine.

3.1.4 Plans forward

Realizing the success of Virtual machines, HSBC now plans to expand this strategy to Asia pacific
operations so as to add thousands of virtual servers to its data centres by the end of 2009. This will
enable it to save 500kW of power - equivalent to the consumption of 500 electric fires running
simultaneously. It will also help them to reduce CO2 emissions, for which it has set global, regional
and local targets. It plans to set up 35% of the Windows server central processing units (CPU) as
virtual CPUs. The increase of 2,000 virtual servers will prevent the consumption of 250W of power per
server, giving a saving of 500kW.This is on top of 425kW of power and 425kW of cooling already
saved by the virtualisation of CPUs. Moreover it will help reduce electricity consumption which also
brings in major monetary savings.

3.2 The CRM Strategies of HSBC in Personal Banking

Focusing on external customer needs - HSBC adopted the CRM system in order to maximize
customer convenience and provide anytime, anywhere and anyhow banking. Moreover, it is
revolutionizing customer empowerment and beating its competitors in market place.

3.2.1 Existing Banking
 Traditional Banking - In traditional banking, customers need to wait in a long queue to do
simple transactions such as money transfers, remittances, deposits, withdrawals, paying bills
etc. This entails face to face interaction between tellers and customers in the bank itself.

 Automatic Machine / Phone Banking - Later developments were ATM and phone banking,
which are used via electronic technology to save the bank manpower, and also to save
customers time by eliminating queuing.

3.2.2 e-Banking

Today, HSBC supplies a cost- effective and user-friendly e-banking service via the Internet. Personal
services provided by e-banking comprise check account balances, the payment of bills, transferring
money to local or overseas HSBC accounts, and the updating of personal details. Apart from the
personal services of e-banking, HSBC also concerns itself with business clients and so therefore
promotes its business services, corporate services and institutional services via the Internet to
increase customer retention. e-Banking provides a streamlined service that lets customers easily
purchase products such as insurance and shares.

3.2.2.1 Customer Centered
HSBC knows her customers are busy, want everything quickly and do not have time to go to the bank
during banking hours. Therefore, it has converted some of the branches into Day & Night Banking
centers were customers can handle their accounts at their own convenience and in their own free
time. Also, HSBC has set up phone banking and e-banking services which can help clients to access


their accounts and do transactions through the phone and internet at anytime and any place at their
convenience.

Nowadays, people looking for banking services are demanding more than what traditional banking
services have offered in the past. They would like their banks to provide financial advice to meet their
needs. They prefer their banks to provide one-stop financial services to meet their investment,
insurance and savings needs. HSBC knows these kinds of services are more profitable than
traditional banking services, thus it is starting to consolidate services and products in these areas. It
has started to look for professionals and at providing training for its staff in investment, personal
financial planning and insurance aspects. It also promotes related products to the market such as
Power Vantage Banking Services and Business Vantage Banking Services.

Through the CRM system, HSBC can also know who her main customers are. HSBC has provided a
special banking service for her VIP customers, called HSBC Premier. The VIP customers will be able
to obtain premium financial services wherever they are in the world. The VIP customers have their
own Relationship Manager or dedicated executive team, ready to help suggest financial solutions to
meet their needs.

3.2.2.2 Efficient Resource allocation and utilization
After the implementation of the CRM system, HSBC can get more information about the preferences
and habits of its clients, the demand for different kinds of products, services and portfolios of her main
customers. After analyzed the data retrieved from data mining, the company can improve technology
where needed; provide training for its staff and invent new products to meet its customers? needs.

3.2.2.3 Streamlining the Collection of Data
Customer relationship management in e-banking has many advantages when it comes to enhancing
effectiveness and efficiency for customers, because of its consolidation of all customer information,
such as their accounts and their portfolios, and how their investment performance is becoming
increasingly valuable. Lowering the administrative workload and streamlining the collection of data,
makes it easier to have things tailor made to the customer‘s needs and enables the bank employees
to research the useful customer data.

3.2.2.4 Segmentation and Targeting of Potential Customers
Besides, CRM is able to expedite the process of model and segmentation development. It could help
the bank to optimize its strategy in cross-selling, up-selling and retention initiatives and create a list of
those customers most likely to purchase a product in order to conduct a highly targeted marketing
campaign. The results demonstrated an improvement in customer targeting and set the basis for
further exploration.

Moreover, CRM helps HSBC to find out what her customers‘ needs and who her main customers are,
thus the company can use 20% of its resources to generate 80% of her profit.

3.2.2.5 Offer Flexibility to Customers
Different customers have different needs and preferences; it is possible to let customers have more
options, as does HSBC, which allows customers to choose their own designated documentation
receiving method, payment method, purchasing method and delivery method. For example:
customers may want to receive a monthly statement via e-mail; they may also want to receive the gift
by courier.

ITS – Group Assignment P a g e | 10

3.2.2.6 Data Mining Service
HSBC is able to acquire the useful data and analyze it for internal use. However, this data could also
be generated as a financial report for customer use, it provides insight into and advice about
customers‘ financial status and investment choices.

3.2.2.7 Instant Communication Service on the Web
As customers are innovative and demanding to drive on organizational change, online interactive
communication service provides real time services and one-stop-shop in e-personal banking so that
customers could be able to handle their financial issues at anyplace, anytime.

3.3 HSBC’s Common Windows Desktop Exercise and the Microsoft Server
Investment

3.3.1 The Challenges
HSBC, with more than 250000 employees worldwide, has an IT infrastructure that includes more than
300000 desktops and 15000+ windows based servers. This led to the following challenges:

 Decisions on which technology and infrastructure to use were made at local level, with each
of the hundreds of companies in HSBC group having their own data centers, windows
software deployment tools, monitoring and alert solutions
 The infrastructural set-up could not support a unified global environment as there were issues
concerning the reliability, scalability and integration of such complex web of systems and
processes
 In spite of automation, some deployment of software and updates were made physically with
technicians visiting each PC. This led to huge costs and duplication of efforts. For e.g.
Microsoft Office was packaged for distribution more than a hundred times which led to costs
in excess of $ 200000 USD. There were potential savings in this area. The biggest expense
was in terms of maintenance which swelled upto USD 500 million annually
 HSBC also wanted to be able associate software with individual users instead with desktop
computers and wanted automation
 The organization wanted to ensure that its active directory service on which its business users
depend would be continually running congruently with its vision for a global unified
environment.

3.3.2 The Objectives
In 2004 HSBC launched its common windows desktop initiative with the following objectives:

 Reduction in the USD 500 Million annual costs of maintaining and supporting the 300000
desktops and 15000 + servers by more than 20 % through a rigorous standardization process
 It also focused on a single worldwide desktop image based upon the Windows XP
Professional OS
 Creation of a single worldwide directory forest based on the Active Directory service in the
Windows server 2003 OS. The purpose was to have a variety of network capabilities including
centralization, scalability, data integrity through central storage, synchronization of directory
updates among servers

In order to achieve these objectives, the company went into a partnership with Microsoft. It deployed
the Microsoft System centre solutions as an integral part of its IT environment. It also invested in the
desktop management and operations management software for monitoring of its critical Windows
servers. The System centre solution equipped the company with the necessary tools to manage a


globally distributed IT infrastructure. It also provided added security measures and incorporation of
processes that ensured strong reliability and integration capabilities. The following benefits were
achieved through the implementation which lasted for more than a year including process re-
engineering:

 Deployment of new software: Automation of software deployment across the globe. Users
simply requested for a software and post approval, the server would automatically install the
same.
 Distribution of software updates: Common windows desktop environment made it possible for
a centralized deployment of software to all computers.
 Support for roaming users: With systems management server, software were tied to users
rather than desktops. Hence, a user would simply log onto a computer managed by the
systems management server which would automatically install/ change software and desktop
applications for that user
 Streamlining of Billing of IT assets: The Systems management server also assisted in
streamline of billing processes of IT assets to Business Units for use.
 Comprehensive Server Monitoring: Microsoft‘s Operations manager solution constantly
monitors 100 + critical services enabling HSBC IT teams to detect potential problems before
they affect end users – Internal and external
 Predefined monitoring rules provided as part of the management solution enables a global
view of system health and trouble shooting capabilities.
 Improved Customer Service: Faster resolution of IT conflicts ensuring internal customers
have a smooth experience and improved productivity.
 12% + reduction in TCO: The company estimated that its annual savings had improved by
12% as a result of this exercise in 2006. Automation, elimination of duplication and integration
has resulted in optimization. The potential was greater as in 2007 due to continuous process
improvements and standardization of practices across the globe.

3.3.4 The Benefits - Gaining from the Microsoft – Novell collaboration
HSBC also took advantage of the collaboration between Microsoft and Novell Inc with the objective of
reducing its total cost of ownership for Linux and improvement of interoperability with its newly
implemented Microsoft Infrastructure.

In 2006, Novell and Microsoft announced a series of agreements to jointly build market and support
new solutions to improve interoperability, deliver powerful new virtualization capabilities, make
Microsoft and Novell products work better together, and give customers peace of mind that both
companies stand behind the products they deliver.

Under the agreement with HSBC, Microsoft would deliver to HSBC, certificates for three-year priority
support subscriptions to SUSE Linux Enterprise Server from Novell, as HSBC moved to standardize
its Linux deployments on one distribution.

The Microsoft-Novell agreement became a great catalyst in helping HSBC reduce the complexity of
its Linux environment as it focused on standardization of Linux infrastructure with SUSE Linux
enterprise and extend usage of Microsoft active directory.

Its Windows environment had achieved a lower total cost of ownership than its then Linux
environment. Hence, the company decided to simplify its mixed-source environment with Microsoft
and Novell which allowed for reduction in costs as well complexity. This was the reason it selected
Novell as its partner for Linux applications.

The following benefits were realized due to this realignment:


 It improved HSBC‘s ability to reduce complexity, simplify support and increase its IT agility
through seamless interaction of its Linux environment with its Windows environment
 It helped the company leverage the best practices from its Windows infrastructure exercise to
lower the TCO for its Linux environment

3.4 Deployment of Swift in HSBC
3.4.1 About SWIFT

SWIFT is a member-owned cooperative that provides the communications platform, products and
services to connect over 8,300 banking organizations, securities institutions and corporate customers
in more than 208 countries. SWIFT enables its users to exchange automated, standardized financial
information securely and reliably, thereby lowering costs, reducing operational risk and eliminating
operational inefficiencies. SWIFT also brings the financial community together to work collaboratively
to shape market practice, define standards and debate issues of mutual interest.


HSBC deployed SWIFT as Industry standard connectivity infrastructure for corporate world and
deployed it as an integral part of its client connectivity strategy. Swift deployment improved corporate
to bank communication by providing HSBC Corporate clients with a single multi-bank gateway
through which they benefited from same set of protocols and the same levels of security for different
areas of treasury and cash management. Below are some of key benefits which clients get through
HSBC‘s Swift
 Support for international standards as well as domestic formats
 Standardization of multi-bank connectivity
 Local entry point to global offering, consistent across HSBC group
 In-depth SWIFT knowledge within HSBC‘s sales and support teams
 Assurance of an evolving service through HSBC‘s continued investment

Further HSBC believed in compatible rather than proprietary systems and banks could differentiate
by creating value added services that used industry standards like SWIFT.

3.4.3 Benefits of deployment of SWIFT at HSBC

 HSBC saw the opportunity to promote global banking via HSBC‘s local footprint
 Maintenance of the bank lead in innovation
 Attraction of new business and volumes
 Reduction of costs through the use of industry standards and solutions rather than proprietary
developments

3.4.4 HSBC - SWIFT proposition

SWIFT is part of HSBC‘s client access channels, connecting clients to HSBC‘s global footprint and
depth of capability as a top tier global cash management bank. HSBC uses SWIFT's Standardized
Corporate Environment (SCORE) to connect its corporate customers and maintains a SCORE-
compliant Member-Administered Closed User Group (MA-CUG). Corporate customers can exchange
treasury confirmations, payments, collections and statement data with HSBC globally using SWIFT's
FIN and FileAct messaging services.

Various Stages of Deployment of SWIFT at HSBC


 Opportunity Analysis in Environment: HSBC considered SWIFT for corporate in 2003, when
French corporate started to adopt it. The rapid take up of Swift across Europe convinced HSBC to
embrace it as part of its global client access strategy.
 Definition of offering: Relying on extensive existing capabilities in treasury & cash management
services HSBC designed its SWIFT offering to be global while retaining domestic links.
 Enabling the Organization: HSBC follows a standard product lifecycle methodology to achieve a
harmonized development and deployment of offerings across all locations. The roll-out process
involved awareness sessions, training of implementation and support teams, and development of
internal guidelines, collaterals and legal contracts. After Europe, North America, the Middle East
and Asia, HSBC is now rolling out SWIFT for corporate in Latin America.
 Preparing Marketing and Sales: Regional commercialization work was supported by global
product champions and an intranet site was set up for internal communication. For external
collateral, a guide describing SWIFT's value proposition, HSBC's offering and case studies,
launched in Asia as an addendum to HSBC Cash & Treasury manager's handbook will be
expanded globally.
 Active Promotion: HSBC actively promoted its SWIFT offering for corporate. In June 2007 HSBC
hosted the first SWIFT for Corporate day in London. In 2008 various SWIFT for Corporate events
were offered in Asia, Middle East and the USA. The Sibos Corporate Forum was one of the
valuable events for HSBC to showcase its offering. HSBC worked closely with SWIFT on a joint
Go to Market programme, and sales teams in various countries to hold client visits with SWIFT
staff.

Building Next Generation Capabilities: As a leader in innovation, HSBC has been focusing on a
number of initiatives related to SWIFT for corporate

 A new ‗light‘ connectivity option
 SWIFT digital identity initiative
 Development of new standards to dematerialize the management of bank account mandate and
account opening
 ISO 20022 and roll-out of a worldwide XML capability for corporate

HSBC has a rich SWIFT offering for corporate, fully integrated into its product lifecycle, client
channels and worldwide bank organization. Now, HSBC sees more and more interest from corporate
with less than EUR one billion turnover per annum. For them, SWIFT can be a real enabler. For
HSBC, SWIFT has the potential to connect this mid market using an easy and standardized channel
allowing them to expand the commercialization of their services to a wider set of customers.

3.5 HSBC and VeriSign

With the growing use of advanced technology, including a rapidly growing e-commerce capability, that
supports HSBC‘s international network delivering a comprehensive range of financial services that
includes personal financial services, commercial banking, corporate, investment banking and
Markets, private banking, and other activities, HSBC had to strengthen its web security. Moreover,
with more than 80 million customers worldwide accessing 2,000 HSBC Web sites and a rapidly
growing demand on internet banking services, there is a need to have a constant focus on
accessibility, usability and deliverability and increasing risk of fraud and global phishing

HSBC was keen to centralize the control of its Web site SSL security, facilitating standardized
management and reducing costs. To accomplish this HSBC considered investment in Enhanced
Global Web Site Security with VeriSign® Extended Validation (EV) SSL Certificates.


VeriSign is the trusted provider of Internet infrastructure services for the networked world. It is the
leading Secure Sockets Layer (SSL) Certificate Authority enabling secure e-commerce and
communications for Web sites, intranets and extranets.

In addition to VeriSign‘s Extended Validation SSL Certificates, HSBC also implemented the VeriSign
Fraud Detection Service. This service provides additional online authentication and fraud monitoring,
which will enhance the measures the bank already employs to safeguard customer information and
assets when banking over the Internet. VIP FDS includes a state-of-the art risk engine that offers
layered, risk-based authentication and fraud prevention capabilities. VIP FDS runs behind the scenes,
utilizing advanced anomaly detection technology, which flags potentially fraudulent activity while
continuing to ensure a favorable user experience and timely delivery of services.

3.5.1 The Objectives

While considering investment in web site security, HSBC had the following objective in mind:
 Combating global fraud and phishing threats
 Increasing customer confidence and supporting HSBC‘s on-line security strategy


HSBC was already using strong encryption in the form of VeriSign Server Gated Cryptography (SGC)
Certificates. Used on HSBC‘s Web sites around the world, they protect sensitive personal and
financial data by enabling information to be transmitted over the internet securely.
VeriSign SGC-SSL Certificates enable 128- or 256 bit encryption to over 99.9% of Web site visitors,
permitting virtually every HSBC customer worldwide to experience the strongest SSL encryption
available to them regardless of browser type or operating system. The launch of VeriSign® Extended
Validation (EV) SSL Certificates has taken HSBC‘s Web site security to a new level.

EV SSL is a new standard for authentication. Like traditional SSL Certificates, an EV SSL Certificate
facilitates secure encrypted communication between a Web site and a consumer‘s browser. However,
it also authenticates the genuine nature of the Web site so all visitors know they have indeed reached
the site they intended to visit and not a counterfeit site.

Extended Validation refers to a rigorous process of Web site authentication that validates the identity
of a business and the authority of the individual requesting a certificate before issuance. EV SSL
contains a number of user interface enhancements aimed at making the identification of an
authenticated site immediately more noticeable to the end user. These user interfaces are designed
to offer the end user a highly endorsed and widely recognized level of protection from increasingly
sophisticated Internet spoofing scams.

New high-security browsers (such as Internet Explorer 7) display EV SSL Certificates differently to
traditional SSL Certificates. Rather than the subtle padlock symbol displayed by traditional SSL
Certificates, EV SSL Certificates trigger the browser address bar in high-security browsers to change
to an eye-catching green color. This change is immediately evident to an end user and helps to
further increase their confidence in transacting with HSBC. In addition to the noticeable green color, a
security status bar prominently displays the name of the owner of that Web site and the Certificates
Authority who has issued that EV SSL Certificate. This field reveals both names in turn when a visitor
first arrives on the Web site.

3.5.3 The Benefits - Reduced cost and complexity

Finally, in order to reduce complexity and costs, HSBC also decided to manage all types of SSL
Certificates from one Web-based control centre with VeriSign® Managed PKI for SSL.


When public and private keys are copied and spread across the enterprise, their protective value can
be diminished. To ensure the highest standard of security and continuous protection, VeriSign
recommended that HSBC use Managed PKI for SSL. Central control, reporting, customisable
certificate validity periods and rapid turnaround make it as easy to support 5,000 certificates as it is to
support 5. There was no need for HSBC to invest in hardware and software to maintain its own SSL
Certificate Authority. The MPKI for SSL Control Center is an easy-to-use, simple Web-based
application for issuing, renewing, revoking and managing access privileges. Administrators can
customize enrolment pages for their enterprise, and VeriSign manages the back-end services in its
state-of-the-art facilities. Having a single replicable process for the issue of SSL certificates is in
alignment with HSBC‘s global approach to common IT infrastructure.
The benefits to the adopting business include:
 Clear visible demonstration that the site is highly authenticated
 Reassurance to visitors that the ownership of the domain has been validated
 Increased user confidence in online applications
 Increased protection against phishing attacks
 Clear commitment to online security to customers
 Enabling the ability to differentiate the domain and brands from copycat and competitor sites.

4 Conclusion
HSBC is obsessed with customer value and strives to be an "all-weather umbrella" to its customers,
by adopting different strategies for different situations. It had to diversify in order to balance revenue
and expenditure, minimize risk and stay profitable, with an equal importance in its ability to anticipate
change. The investment banking business of HSBC has begun a strategy of significant expansion and
development with one clear objective, which is to establish themselves as one of the world‘s top three
investment banks, and these strategies are based around a philosophy of organic growth and a
transition towards becoming a client-oriented investment bank.

With this information, the company must continue to find innovative software programs and relate
effectively to other companies that produce these software programs to become updated with the
latest improvement in the World Wide Web. The company must efficiently and effectively create a
good relationship with their customers and shareholders, to continually operate. HSBC must
continually conceptualize and implement good projects to be able to set trends in the banking
industry. Aside from developing marketing strategies, the company must focus on building employee
and customer relationships, in accordance to strategic marketing concepts, for it is essential to
determine and focus on the needs of the customers, as customers are the reason for being alive in
the business and marketing industry.


Epgp term v its group assignment may 2010

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