IBS Journal September 2015
HSBC reports fresh profits from new digital technology focus, sheds jobs and locations
HSBC has seen a ten per cent increase in profits for the first half of 2015, in the wake of a restructuring of the bank’s digital business model. The bank’s pre-tax profits hit £8.78
billion for the first six months of the year, an increase of £840 million from the £7.94 billion it reported during the same time period in 2014. The news comes in the wake of the
company reorganising its focus towards digital technology. This refocus has occurred as HSBC looks to achieve its multi-billion dollar savings targets – set by the banking group’s chairman, Douglas Flint. Investment in end-to-end digitisation,
the use of ever-popular cloud comput- ing and a reworking of the bank’s main- frames have gone some way to realigning the business with its new goals. Alongside these changes HSBC claims to have elim- inated more than 700 legacy systems as well as introducing new technologies to the back office. Its private banking division, for
instance, is rolling out a new core banking system, Avaloq Banking Suite, from a Swiss supplier, Avaloq. The project has global coverage.
Job cuts This restructure has not been without its costs, however. Earlier this week the bank- ing group announced plans to axe 25,000 jobs in preparation for its new digital focus. As could be expected, this displeased trade unions. ‘You can’t cut this many jobs and not affect customer service,’ Dominic Hook, national officer of the UK’s trade union, Unite, commented. ‘This is just going to make it worse for them.’
Exiting locations
HSBC has also taken other actions to meet its savings targets. It is handing over its Brazilian assets to South American financial group, Banco Bradesco, in a $5.2 billion all- cash deal. This is Banco Bradesco’s largest acquisition to date. HSBC is the seventh largest bank in
© IBS Intelligence 2015
Brazil, with around three per cent of the market share of banking assets. According to its latest results, it generated a pre-tax profit of $191 million in the first half of the year. HSBC says it will keep a small corporate banking unit in Brazil following the sale. On the IT side, the merger means the unbundling of the HSBC unit from the group’s largely in-house built software and moving it onto Bradesco’s core platform, Flexcube from Oracle FSS. Bradesco signed to implement the
Flexcube core in early 2011, to replace the legacy IBS solution from regional vendor, Datapro. On the corporate banking side, Misys claims Bradesco as its long-standing user of the Midas solution. Elsewhere, HSBC is in the process of
shedding its Pakistani operations by sell- ing them to Meezan Bank, Pakistan’s largest bank. HSBC has been operating in Pakistan under the HSBC Oman brand. Last year, HSBC Oman exited India by selling its local operations to Doha Bank.
Alex Hamilton
www.ibsintelligence.com 17
ibs news
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