HSBC, like its competitors, is searching for the Holy Grail of digital banking, Google Bank

The search for the Holy Grail that is Google bank, has been going on ever since digital banking took hold.

It makes sense: a company that processes millions of transactions on a daily basis whose bread and butter is making online services user friendly. And it seems consumers want it too. The Google’s and Amazon’s of this world have great reputations. In fact a fifth of European consumers said they would buy insurance and banking services from technology companies such as Facebook and Google, according to a survey of 7,000 people carried out last year by Fujitsu.

Consumers also want online and mobile banking services that offer similar service levels to the apps they use in their everyday lives. Easy to use, reliable with built in ability to personalise services.

A few years ago in its Why Google Bank Won’t Happen report, Forrester said the high costs and strict regulation of setting up a traditional bank – alongside advertising revenue coming from banks – will push internet firms into roles that support the relationship between banks and their customers. These include transactional payment services, financial advice, money management and product comparisons. “[Google] will be by integrating digital assets such as its search engine, Google Maps, Gmail, Google Play, and Google Now that Google could redefine financial services. Thanks to these capabilities, Google is well positioned to disrupt four interlinked areas, disintermediating incumbents in the process,” said the research.

There are different ways of fighting competition and avoiding the disruption experienced by companies in other sectors and one of those is to become like your competitors so their advantages reduce. If Google can design more reliable and user friendly apps and web services, find out how. One way of doing this is poaching its staff.

HSBC has just recruited a Google engineer as CIO of retail banking and wealth management. Mark Warriner has joined HSBC retail from Google UK, where he worked for almost six years reaching the role of director of engineering. He was also chairman of Google Payments. Although he is not the head of IT at HSBC, that role remains with Darryl West as the overall CIO. Then there is Ganesh Balasubramanian, global retail banking and wealth management CIO, who Warriner reports to. Yes lots of CIOs at banks, and for good reason.

A contact of mine who has spent time in HSBC’s IT department told me HSBC’s overall CIO Darryl West has been attending lots of Google events recently. “The firm has been learning from Google in the last couple of years,” he said.

It looks like they are going beyond learning from them to acquiring there talent.

Through Warriner HSBC will have access to experience in creating the kind of digital services that consumers want.

Beyond the internet giants the other competition to banks comes in the form of digital challengers. Unlike Google these companies are banks first and foremost but are also tech startups. They are gradually building customer bases and unless banks improve their digital services they will take more ground. II met up with the CIO at one of these challengers recently. John Mountain CIO at Starling Bank, who has a software development background told me that the company makes sure that all department have tech savvy people in them. It doesn’t even have an IT department, but rather integrates technology into everything it does. “We don’t run a technology function here because the whole business is a tech function,” he told me. So a bit like the perception Google Bank then?

Banks need to up their game in digital. Competition to traditional banks will also increase when the latest EU Payment Services Directive (PSD2) becomes law. It will enable third parties to access the customer data held by banks via application programming interfaces, if given permission, and offer services using this information. Payments could be initiated by third party supplier and account information viewed via them, or both. This will mean a third-party can build services on top of an account and allow the consumer to use these rather than those offered by the bank. Banks would still hold the money but would not be the main banking interface. A consumer could have multiple accounts from various banks put together in a single mobile app for example.