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21. HSBC

• Quarter: Q4 2009
• Screens: 59,500
• Employees: 58,000
• Head of IT: John Armstrong, Global Head of IT Operations
• Industry: Financial services
• Website: www.hsbc.co.uk

The chaos in banking markets has led participants into some unusual manoeuvres in the last 18 months so HSBC's decision in September 2008 to combine the CIO and group COO positions - CIO Ken Harvey assumed both roles to become chief technology and services officer -- seems pretty mild by the standard of the times. Merging technology and operations posts seems a logical way forward as banks seek a fast track to reduced cost bases and make the back office more flexible.

Harvey won his spurs in a 20-year career at HSBC by leading development of banking applications, payment processing, e-commerce, purchasing and accounts payable. Much of his work has been in boiling down a disparate set of resources to a more smaller, more manageable number of software platforms and datacentres. The company has also been bullish on innovations such as videoconferencing as a means of reducing travel budget.

HSBC ended 2008 by acknowledging exposure of about $1bn in the wake of the Bernie Madoff scandal and in 2009 suffered an embarrassing reverse when the FSA fined it £3.2m for losing customer data. However, it has generally steered a course well away from the disastrous routes taken by rivals and did not have to seek governmental capital support. Indeed, in August 2009 it announced pre-tax profits of about $7.5bn, in line with the previous year, and achieved revenues 10 per cent higher. In global banking and markets it reported record profits and overall cut costs by three per cent. HSBC has in total about $2,547bn in assets (as of June 2008), 9500 offices and 335,000 staff, about 25,000 of which work in IT.

Group chairman Stephen Green said: "In this unprecedented economic environment, every financial institution has had to consider carefully what level of risk is appropriate for its business model in light of mixed economic and financial market indicators. We have continued to position HSBC's balance sheet conservatively, while focusing on enhancing the capabilities which will enable us to deliver sustainable long-term growth once the current global downturn has ended. Michael Geoghegan highlights these actions in his statement. Our performance proves our ability to deliver profit, generate capital and make distributions to our shareholders throughout the business cycle - even in challenging market conditions."

While many rivals survey the ruins and focus on governance and de-risking, HSBC will be able to go ahead and fund expansion. Harvey has about $6nbn a year to spend on IT and has said that launching a credit card offer in a new country can now cost as little as $1m. A chunk of budget will go on supporting the One HSBC integration standardisation project and there will be ongoing work to reduce steps from processes such as what happens when a customer loses a card. The rewriting of the HSBC Universal Banking System core set of applications will also continue and an unfashionable tendency to rely on in-house development will also consume budget but the bank has high hopes for Gold Suite, an attempt to assemble a set of tools and processes as an out-of-the-box solution for new businesses or geographies.

Acquisitions could well be the major integration challenge for Harvey and HSBC's IT and ops teams although the enduring appetite for reducing exposure to risk will also keep the bank busy. Despite its general success, HSBC showed it is keeping a close eye on cost when it announced layoffs of over 1000 IT and operations staff in March 2009.

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