HSBC IT set to cut costs by 10% this year


HSBC IT set to cut costs by 10% this year

Christian Annesley

HSBC is on course to beat its target of cutting 10% from per-transaction operating costs across the global group this year, thanks to heavy investment in  IT.

The banking giant expects to cut per-unit processing costs by 11% in 2006, after shaving 8.8% off costs last year as it continues to integrate and globalise its IT infrastructure.

In a briefing last week HSBC said it had stepped up IT investment in application development and innovation for global and regional systems, with more than 40% of this development taking place in low-cost countries such as India.

The bank expects to spend $4.8bn this year and $5bn in 2007 on IT. It is run as a shared service for all of the group’s global businesses and charged to businesses based on usage, giving even smaller operations access to systems that would otherwise be uneconomic.

The bank’s IT agenda has seen it develop 80 global platforms and systems it can now reuse in local markets, with many more in the pipeline.

Ken Harvey, the group’s chief information officer, said, “having a series of core global platforms is fundamental to joining up the company. We have the ability to ‘test and learn’ and export the winners quickly to address the powerful changes in customer behaviour that are transforming how we serve.”

The bank has also successfully consolidated onto four global datacentres, plus two further regional datacentres. Any acquisitions made by the bank are typically integrated into HSBC's global datacentres within 12 to 18 months.

“Without that datacentre consolidation programme, we would now have 126 live datacentres, so it is a crucial part of our ongoing work,” said Harvey.

The bank runs its systems on a global data network it installed itself, which HSBC said costs it just a seventh of what an equivalent public network would cost to run.

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