HSBC plans to invest heavily in data analytics and cyber security capabilities this year to avoid regulatory penalties and damage to its public image.
In its latest financial results, the bank – beset by reputational damage in the wake of the revelations that it helped customers avoid tax through Swiss bank accounts – said it is “prioritising” investment in systems that can prevent repetition of regulatory failings in the past.
HSBC was one of the banks fined heavily last year for foreign exchange rigging and mis-selling payment protection insurance. In 2012, it paid £1.2bn to US regulators in a settlement or over money laundering.
The better use of analytics and monitoring technology can help the bank avoid these kinds of breaches.
It has also emerged that HSBC's IT systems were unable to give auditors sufficient oversight to identify tax avoidance in its Swiss private banking business, following its banking practices coming under intense criticism this month.
Big data technologies will be used to try to prevent a repeat of this kind of incident. “Further customer redress costs and regulatory penalties around past failings reinforced the board’s continuing commitment to prioritise whatever further investment in systems and controls is necessary to mitigate future repetition,” said a statement from group chairman Douglas Flint.
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“Technological advancements around data analytics, including big data, are providing much more sophisticated tools to enhance our capabilities to protect the financial system from bad actors,” he added.
Flint said the bank must make considerable investments: “Reconfiguring customer and transactional data to the digital age is no small endeavour, given legacy systems and a multiplicity of historical data standards globally.”
The bank is also prioritising IT security in response to a growing number of customers who bank digitally. “As more and more customers choose to transact online and through mobile devices, we are making the necessary investment to protect ourselves and our customers from cyber threats,” said Flint.
HSBC, which is the UK's biggest bank, reported $18,680m profit in 2014, a 17% drop compared with 2013.