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Commercial banks

HSBC Unveils $2bn Global Online Rollout and Shifts Processing Offshore

Strategic Insights

— 2 min read

HSBC, a UK-based banking giant, is embarking on a massive online expansion, investing $2 billion in a global rollout that will see it leveraging its strong brand and improving service levels through the internet. The bank plans to shift an increasing amount of processing offshore to low-cost centers in India and China, taking advantage of the internet to cut costs and reengineer its business. The initiative aims to not only attract new customers but also improve service levels and reduce costs, with the bank recruiting a new head to oversee a three-pronged strategy involving beefing up its online products, improving internal efficiency, and forming strategic partnerships.

Key Takeaways:

  • HSBC plans to invest $2 billion in a global online rollout, aiming to leverage its strong brand and improve service levels through the internet.
  • The bank will shift an increasing amount of processing offshore to low-cost centers in India and China, taking advantage of the internet to cut costs.
  • HSBC has recruited Roberta Arena from Citigroup to head up a three-pronged strategy involving beefing up its online products, improving internal efficiency, and forming strategic partnerships.
  • The bank is already a significant backer of several e-commerce ventures, including Identrus, an electronic signature business, and iBusinessCorporation.com, a Hong Kong e-commerce venture.
  • HSBC's First Direct branchless bank will unveil its own internet strategy tomorrow, with customers in Hong Kong and Singapore following later in the year.
  • The bank has 400,000 customers on the net, with 55,000 registered for its TV banking operation in the UK on the Sky-backed Open platform.
  • HSBC's share price has fallen sharply due to concerns that the internet will erode earnings, but analysts see the increased emphasis on the internet as welcome and "all pretty solid."
  • The profit growth at HSBC came despite lower growth in customer loans, reflecting both higher fee income and lower bad-debt provisions against an improved economic backdrop.

Statistics:

  • $2 billion: The amount HSBC is investing in its global online rollout.
  • 400,000: The number of customers HSBC has on the net.
  • 55,000: The number of customers registered for HSBC's TV banking operation in the UK on the Sky-backed Open platform.
  • $2.98 billion: UK banking profits, which rose 12 percent compared to the previous year.
  • $21 billion: HSBC's revenue base.
  • $7.89 billion: HSBC's 1999 pre-tax profits, a 21 percent rise from the previous year.
  • $2 billion: The overall write-offs at HSBC, a 21 percent decrease from the previous year.

Sources:

  • "HSBC Unveils Plans for Global Internet Rollout" (no date provided)
  • "HSBC to Move Back Office Processing Offshore" (no date provided)
  • "HSBC Profits Rise 21 Per Cent" (no date provided)
  • "HSBC Expands E-Commerce Backing" (no date provided)
  • "HSBC to Reveal Internet Strategy" (no date provided)
  • "Analysts Welcome HSBC's Increased Emphasis on Internet" (no date provided)
  • "HSBC's Share Price Falls Sharply" (no date provided)
  • "HSBC Reports Strong UK Banking Profits" (no date provided)

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