Global ambition

By Julian Rogers

Andrew Armishaw is a man on a mission. From his base in Prospect Heights, Illinois, this CIO is orchestrating an overhaul of both back and front office IT infrastructures as the North American arm of the business gets to grips with the needs of today’s four million customers. Gone are the days when the customer’s only option was to endure the tedious task of queuing in a branch to see a teller. In the 21st century 24/7 multi-channel banking is all the rage; customers can get hold of their hard-earned cash at ATMs, pay bills online, transfer money via a call center, check their balance through a cell phone, and more.

And when it comes to HSBC’s business channels, especially the internet, straightforwardness is key. “When we build systems for the internet we try and make them as simple and easy to use as possible,” Armishaw acknowledges. “People don’t have the patience to spend hours on the internet trying to work out what they are asking for and what they are going to get. No one is going to send me on a training course on how to use a DVD that I may buy; I just want to plug it in and it works. So banking systems need to be intuitive, quick and simple to use – our customers are not asking us to make it complicated.”

Armishaw, who hails from England (Yorkshire to be precise) but has been plying his trade in the US for the past four years, explains how this philosophy of simplicity is mirrored in HSBC’s internal infrastructure. “Once you have built a platform to support an end customer on the internet why on earth should we make our internal systems any different or more difficult for the people who work for us internally? Our job is to take the global infrastructure that has been built and deliver that, not just to customers, but to our internal staff as well and effectively make it the same.” He continues: “This is quite a big shift because traditionally systems would be built for staff, which they would then struggle to use or explain to customers. But it is quite the reverse now; we are building systems like Apple or Sony builds for its end customers.”

Out with the old, in with the new

Looking at HSBC from an IT perspective globally, this critical business function has undergone a radical transformation recently. This has included the development of a global card platform and internet banking platform, as well as the consolidation of the company’s data centers from more than 100 different locations into four global hubs; some achievement indeed. Late last year the US side of the business was the first large site in the HSBC group to take delivery of the new internet platform which Armishaw describes as being “superior” for nurturing relationships with customers. And it should be too, having cost around an eye-watering $200 million. However, this was made easier to swallow by spreading the cost across the business in 83 countries. The company sees this as a significant improvement over the 50 or so regionally developed systems that it replaces.

While many companies, especially the CFO, might wince if the IT department proposed this sort spend, HSBC is the fortunate position of having an annual IT budget of around $5 billion for its global operations. However, Armishaw is quick to stress that HSBC’s history in this area has stood it in good stead for the recent systems overhauls. “I’m not saying that the technology is easy; after all you are supporting multiple countries. However, HSBC has 50 to 60 years experience in building systems for different countries.” The UK-based giant can also count on its 28,000 in-house IT staff (the North American operation is supported by 3000 in-house staff and 2000 contractors in India) to keep operations running smoothly. In fact, 42 percent of the company’s global programming is carried out in India, China and Brazil – a high watermark in the financial services sector.

One thing that emerges from our talk is how the human element (especially when they aren’t situated in the same place) plays a huge part in the bank’s IT operations. “Most of the challenges with rolling out global systems are human rather than technical,” he muses. “It is getting people in different countries, time zones, backgrounds and cultures, to agree what’s different and what’s the same. Getting people to do that across some 80 geographies is a very significant challenge.”

As well as this, staff need to have faith in the fact that systems and co-workers on the other side of the globe will get the job done. Armishaw illustrates this point: “If you have something that you need help in the office it is much easier to tap somebody on the shoulder and ask them about it, rather than relying on somebody who is several time zones or countries away. So you need to get people to accept and trust that other countries and other parts of the world will deliver on their behalf.”

Access on the go

In terms of HSBC’s outward facing offerings, mobile banking is one channel that exudes enormous growth potential. Indeed, with the next generation of handsets and other wireless devices now on the shelves, banks have been quick to cater for the need of a more tech-savvy customer who craves 24/7 banking on the move. Before he made the leap across the pond Armishaw was involved in the launch of a mobile banking platform at First Direct, a division of HSBC, in the late nineties. Back then the mechanics and design were “rudimentary”, says Armishaw when casting his mind back, but the evolution of technology was always going to make it an exciting prospect for the banks.

At the moment the platform is still developing but the banks are looking at the long-term gain. “I think in the end it will be huge,” Armishaw exclaims. “The difference in quality and resolution between what I can get on the screen of my BlackBerry versus what I used to get on the standard SMS-enabled cell phone is hugely different. As long as you have got reasonable eyesight, you can access much of the same information. It also tends to be much more immediate because you have got it switched on and available, and you are probably going to take it everywhere with you.”

The challenge ahead for the banks and the mobile device manufacturers is to converge the functionality of your mobile devices (cell phone, laptop, PDA) into one small, light and practical unit. In the mean time however, this IT aficionado sees the cell phone providing customers with simple inquiries and information. “With very simple, crisp and clear messages it could well be the device that we communicate most with in terms of routine information, balance transactions, account notification, new offers, and so on. This could be the new version of direct mail, which tends not to be quite so targeted.”

One significant stumbling block to mobile banking taking off is the fear ingrained in some customers’ minds that the platform is vulnerable to the prying eyes of fraudsters and thieves. But while no system is ever 100 percent secure, the same concerns were levelled at the internet three or four years ago, Armishaw suggests. “I think security is always an issue. Those of us in banking must never forget that trust is probably the biggest and most precious asset that we have with our customers – they expect and believe us to be secure. You must never take that for granted.”

So does he believe that new devices will emerge that will help tighten security? “I suspect that phones will come out that can recognize me as an individual, whether it is my voice, thumbprint, or whatever else. My belief is that technology will cure that [security concerns] but I don’t think that my phone is any less secure that my laptop.”

Slashing emissions

Steering the conversation away from IT for a minute, I was keen to find out about HSBC’s green credentials and how it impinges on Armishaw’s work. Today, climate change is an issue that affects all global businesses, and HSBC is no different in that regard. After all, in the corporate jungle being seen to be reducing your carbon footprint does no harm to your company’s global image. To hammer home this point HSBC recently unveiled plans to be the world’s first carbon neutral bank. A bold statement indeed but one that HSBC’s bosses are confident that they can achieve.

When it comes to purchasing equipment, especially for his data centers, Armishaw pays just as much close attention to the product’s energy efficiency as its cost, as he explains: “We are very, very conscious about that when we are making purchases because the energy consumption of our technologies is becoming a very significant issue. It is also a financial issue because it is becoming more and more expensive to power the equipment.”

HSBC is currently building a new data center in the Chicago area that has a whole host of energy saving features, including a roof system that cuts internal heat, fuel efficient generators and lighting that only comes on when someone enters the room. But it doesn’t stop there – a new HQ for HSBC-America is also in the pipeline too. “We are going for a particular specification in terms of leadership in environmental design. We are trying to use a lot of natural light and use a lot of fresh air in the cooling systems. Even with simple things like the carpet and paint we are trying to make sure that there are fewer pollutants.”

So it seems that HSBC has all bases covered on when it comes to carbon emissions but what about the staff travelling to and from work five days a week, as well as jetting all over the world to meetings? Armishaw says that the company allows some staff to work from home to cut down on travel, while the provision for web cameras for home-workers has also been piloted. The company has also recently installed the next generation of video conferencing to cut down on air travel to meetings. Telepresence, as it is known, allows people in different locations to communicate with each other as though they are holding a meeting the same room. Armishaw says it all adds up to a better working environment: “Not only is this environmentally a good thing to do because there will be less people on the roads, but it is about quality of life as well. If you are going to be an employer of choice you have got to provide people with more balance.”

Looking forward

With the interview drawing to a close I quiz Armishaw on what the next 12 months hold for him and his department. He touches on how the business keep striving to be more “in touch” with how its customers us technology before the conversation swings back to those all-important business channels. “We have a multi-channel focus,” he reinforces. “We are really trying to step up our level of design and architecture so that we really are building systems that are the same across multiple channels. It’s real customers using these systems – not someone who you can train and is quite frankly being paid to use the system. Customers are not being paid, so they will vote with their feet, or fingertips, and go elsewhere.” He concludes: “The other big push is making sure that we really leverage systems and capabilities for the rest of HSBC. A lot of what we do is common so we need to leverage our technology, not just within North America but across HSBC because that is the promise of the world’s local bank.”