HSBC Takes First Cloud Steps To Support Digital Banking Ambitions

Financial institutions have long been one of the final frontiers for cloud providers. As a heavily regulated industry, reassuringly so, vendors have had to prove their platforms are secure enough to handle highly sensitive information.

The advent of hybrid cloud has made it easier for banks to move some workloads to the cloud and benefit from the flexibility and scalability it affords, and many are making their first steps to the world of off-premise computing.

HSBC started its own cloud journey last year in response to the growing trend of mobile and digital banking. As a global bank it has to negotiate different languages, cultures, products and regulations as well as shifting political landscapes.

Digital banking

Marco Pera is HSBC’s global head of platform management and told Silicon that the group had no choice but to respond to customer demand: “Digital is disrupting banking and customer expectations are changing fast.”

The most obvious shift in focus is the transition from a static website to a dynamic, multi-channel one. Bank customers are used to app-based banking, mobile payments and biometric security to make their lives easier.

This has seen HSBC bring some development back in-house, rather than relying on a creative agency, and the creation of HSBC Digital Solutions (HDS). The idea with HDS is for it to work across the various departments that comprise HSBC to deliver the best outcomes.

Global business

“I think it’s very important to have an engineering-first culture,” added Pera. “In most businesses, you have the business team, the client team, the IT team, the risk team [etc.]. When everyone has such different priorities and different silos, then the interaction between individuals are different and priorities aren’t aligned.

“By putting people together, we’ve created the conditions to succeed.”

Working across so many different countries inevitably presents challenges, but HSBC is confident it can overcome these by applying local knowledge. If anything, it sees the global nature of its business as an advantage when it comes to digital.

“We could be better at simplifying things. You don’t have to accept the complexity. You have to be very much in-tune with each market and we have experts you keep on top of that.”

“As an advantage, we can attract talent around the world. In China, we there is a huge amount of talent and we want to be listening to that.”

This was evident in 2016 when HSBC axed 840 IT jobs in the UK, transferring the positions to India, China and Poland, as part of wider cost-cutting measures.

Cloud steps

The next step is the creation of more personalised services that make use of Big Data analytics and this has provided the motivation for HSBC’s foray into the cloud.

Amazon Web Services (AWS) is now an integral part of HSBC’s development operations and Pera said the use of the cloud platform allowed it to build an application in six weeks. At the moment AWS is used internally, but could eventually result in consumer facing services.

“We’re moving away from long IT projects and moving towards small teams that have production ready code,” Pera continued. “This gives us speed to market, control and our quality is going up.”

Security was never far from HSBC’s thoughts and Pera said it was one of the first things the bank brought up with AWS.  It was this level of control, along with the variety of services, that convinced HSBC to opt for Amazon over other public cloud services.

“If you look at the way AWS has developed; it has a sizeable company behind it and it is investing in security and constantly raising the bar,” he explained. “We can have private clouds, isolate services or have direct connectivity. This is important. Once in the ecosystem you have a lot of PaaS components. We might not use these now but in the future [we might].

“It’s hugely important they invest in security. It’s true they take away some of the pains, but it’s not like the cloud is magic. You still have to invest in security of your applications because it’s your service at the end of the day.”

But despite the trend towards in-house development, Pera said it would not blindly develop its own tools for ideological reasons.

“The reason you invest in this or any other technology is because you have a need for it, it’s not because it’s cool,” he said. “As the need arises, we will consider the best tools for the job.”

This includes startups. The UK has spawned a number of young fintech companies, some of which could eventually be competitors to more established names like HSBC. But Pera sees the sector’s growth in only positive terms.

“I’m energised by this, because competition is good, and it’s good for the customer,” he said. “We look at all the startups.”

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