Impact of IT Investment on HSBC's Business Development: A Report

This report provides a comprehensive analysis of HSBC's investment in information technology. It begins with a literature review that explores the role of IT in business success and failure, ethical and social issues related to technology, and the differences between various networking technologies (WAN, LAN, MAN). The review also examines the value of the internet and intranet for businesses and the stages of the System Development Life Cycle (SDLC). The report then analyzes the potential advantages and limitations of HSBC's IT investments, focusing on areas like cybersecurity, digitization, and digital platforms. It highlights specific investments, such as the Connected Money app and partnerships with companies like WeChat, and their impact on customer service, revenue growth, and market share. The report concludes with recommendations for overcoming potential drawbacks and maximizing the benefits of IT investment for HSBC's business development. The report is contributed to Desklib, a platform offering AI-powered study tools and resources for students.

Report

ABSTRACT
The Report has described literature review that includes how information technology
leads to success or failure of business, social and ethical issues incidental to technology, how
networking technologies are different with each other. Further, it has explained value of intranet
and internet for business, different stages of system development life cycle. Moreover, the report
has explained potential advantage and limitations for HSBC investing in information technology.

Table of Contents
ABSTRACT.....................................................................................................................................2
INTRODUCTION ..........................................................................................................................4
Literature Review.........................................................................................................................4
Analysis........................................................................................................................................7
RECOMMENDATIONS ................................................................................................................9
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Information technology refers to the use of any type of storage, computers, networking
devices, processes and infrastructure to develop, secure or store electronic data in all the forms.
There are four basic elements of information technology such as database, computer technical
support, network management, software development etc (Huda, 2019). The Report is based on
HSBC Holdings Plc. It belongs to the industry of financial services, banking. It was founded in
year 1865 by Sr Thomas Sutherland. The headquarter of HSBC is located in London, UK. The
Report will outline literature review that contains role of IT in success or failure of business,
issues related to IT, difference between networking technologies, value of internet and intranet to
the business, stages of SDLC. It will also provide an analysis of prospective drawbacks and
benefits of IT to HSBC, recommendations to overcome drawbacks etc.
Literature Review
Theme 1: Role of IT in success or failure of the organisation.
According to Singh (2015) information technology plays an important role in success of
the business. IT helps to improve the level of innovation in business. Innovation helps to
improve data storage, processing of data, smarter apps, distribution of information. As a result,
innovation leads to improvement in quality of services, productivity, value of business etc.
Further, Information technology helps to bring radical changes in the business. Such as digital
marketing is more efficient as compared to other methods, cloud computing has become efficient
as compared with private computer network. IT tools like google analytics, CRM Dynamics etc.
assist business like banks, insurance companies to take better decisions. Boarcăs (2017) critics
that, advancement in technology provides benefits to society like checking bank balance online
etc. But, in case technology goes wrong it will create negative impact on business and
customer's. Example- There are businesses that has suffered loss of market share or brand equity
due to failure of technology.
Companies are fighting with the problems on weekly or daily basis and it may also
damage the long term health of business. Other than this, development of cloud and mobile has
added links to applications thus, it has created more difficulties for IT departments to identify the
reason of bottlenecks in performance. Therefore, it has become great challenge for companies
when it comes to online services like mobile banking etc. In case business is having outdated
servers then it may leads to various problems like operational problems through lost of

information and data records etc. Despite all these things, organisations are not taking the
problems seriously.
Theme 2: Ethical and social issues related with technology.
As per the view of Ronchi (2018)ethics refers to the rules related with right or wrong that
guide the behaviour of people and they use these rules to make choices. Ethics in information
technology seek to safeguard and defend individuals that are living in the society by using
information system in a responsible manner. In some areas applications used by the business
start infringing the rights of people. Companies should consider that technology will not harm
individuals. There are various ethical issues related with technology. Such as business should
maintain privacy by tracking internet usage etc. Ethical issues also arises from continuous
monitoring of activities of staff. Example- Companies that are using communication
technologies should consider ethical implications.
Reamer (2017) said that, there are various social issues that has crop up due to
information technology. Such as fraud is an spurious activity that has evolve due to easy
accessibility to internet and computers. It includes performing online transactions and other
activities that may lead to serious ramifications. Further, technology has made easy for malicious
people to attack other people who they know personally with the help of available platforms. It
has lead to cyber bullying that create tragic consequences for adults as well as for children's.
Other than this, computers have removed the need to carry out physical activities. This has lead
to epidemic of adult and childhood obesity throughout the world. UK has worst records in
respect of heath and fitness issues of technology in any of the western neighbours. Moreover,
technology has been a positive force that allows global movement in different forms but, on the
other side terrorist also exploit internet for nefarious purposes.
Theme 3: Differentiate between various types of networking technologies.
According to Edwards and Bramante (2015) network technology refers to the technology
that helps to connect two or more than two computers and also support in effective
communication between them. There are three major types of networking technologies such as
WAN, LAN and MAN. Local Area Network (LAN) means a group of devices that helps in easy
communication. The ownership of LAN is private rather than public ownership. The propagation
delay of this network is slow as compared to MAN and WAN. The speed of transmission of

LAN is very high . Further, this type of networking technology covers small distance like it is
suitable for school etc.
Nguyen, Newby and Macaulay (2015) has pointed out in their paper that,
Metropolitan Area Network (MAN) helps to connect users with the assistance of computer
resources in a region large than LAN and smaller than WAN like small city etc. The ownership
of this type of network can be private or public. The transmission speed of this network
technology is moderate that means not too high and not too low. The propagation delay in case
of MAN is moderate as compared to LAN and WAN. Maintenance and design of the network is
more difficult than LAN. Marchewka (2016 ) said that, wide area network (WAN) is a type of
network which is extended over large geographical area. It covers large area as compared to
LAN and MAN. For example- country, continent etc. It may be possible that, such type of
network are not own by a single organisation. The speed of transmission is very slow as
compared to other networks.
Theme 4: Importance of Intranet and Internet in business.
According to Boarcăs (2017 )intranet is a type of private network that is reachable only to
staff of the organisation. Intranet is considered as a focal point for internal collaboration and
communication and also help to access the resources inside and outside the company. One of the
major benefit of intranet is that, it helps business to distribute information to workers in case of
requirement. Further, web browser interface supports employees to access data anytime as a
result they are able to perform their job in better way. Example- Intranet will improve the level
of confidence of employees working in HSBC when they have right information. As per the view
of Majchrzak, Markus and Wareham (2016 ) internet is a system that interconnects various
computer systems and uses protocols like Internet protocol suite (TCP/IP )to link different
devices across the world.
Internet plays an important role in growth and success of the business. Tools like Skype
chats, google hangouts, social media platforms etc helps to improve return on investment (ROI)
of the business. Internet helps the company to perform marketing of the products and services.
For example – With the help of internet,. HSBC will easily provide services to customers
through internet banking, mobile banking etc. Further, it also assist the firms to conduct market
surveys for determining the demands of clients that will help to improve profitability of the
business. Moreover, internet assist business to provide online and web based training programs

so that, workers can execute their tasks in effective way. Therefore, internet plays an important
role in developing creativity and analytical thinking of employees.
Theme 5 : Various stages of system development life cycle.
According to Lemke (2018 )System development life cycle (SDLC) is a multistep and
structured process. It provides a framework for non technical and technical activities that meet
out the expectations of the firm. There are seven stages in SDLC. First stage is planning. Under
this stage, company will consider cost, resources, time that will de required to develop the
system. Second phase is system analysis in which firm will determine functional requirements of
the solution. Next stage is systems design. It describes features, specifications that will help to
satisfy requirements of the new system. Next is system development stage. At this stage, actual
production starts. After this, next phase is integration and testing. Testing of the system is
performed by Quality Assurance Professional (QA) to ensure whether system will meet out goals
or not. Next is stage of implementation. Now, project is implemented by moving all components
from old system to new system. Last stage is operations and maintenance. At last, management
will take steps to maintain new system (Mustaquim and Nyström, 2015).
Analysis
Information technology has played a major role in the success of operations of HSBC at
global level. The main concern of the bank is regarding centralized technology to protect the
organisation in terms of cybersecurity. A key focus of HSBC is on digitization because it helps
to make the business more efficient. Tools and techniques used by the bank plays an important
role in improving the connectivity with clients, maintaining safety of information. Technology
has become paramount in the bank in relation with automated processing, volume of
transactions, low latency trading etc. Further, HSBC is having new delivery mechanism that
helps to deliver incrementally in a secure way.
HSBC has launched a new app for management of money known as Connected Money
that helps to reflect other user bank accounts of the bank and competitors like Barclays etc. The
efforts of management of the bank for bringing an improvement in digital offerings for
commercial clients plays a major role in reaching customers at international level and also helps
to gain competitive advantage over competitors. To improve the declining revenue chief
executive of HSBC has planned to invest $ 17 billion in technology. Investment plan will focus
on improving anti-money laundering, digitisation, technology, cyber security system etc. This

will help the bank to increase current level of growth particularly in Asia. Investment in
technology has help HSBC to expand the operations of wealth and insurance management in
Asia. Further, it will also help to improve performance in France, US and increase in market
share in UK mortgage (HSBC plan for investment of $ 17 billion in technology, 2018).
Moreover, investment in technology will help HSBC to increase return on tangible equity
by more than 11 % up to year 2020, single digit growth in gross revenue. Other than this, HSBC
has entered into partnership with WeChat for effectively communicating with customers through
app. HSBC has spent total $ 2.3 billion for improving digital capabilities at global level. From
year 2015 to 2018, bank has developed platforms and also entered into strategic partnership with
other firms like Tencent etc. It has help to serve the clients in better way, promotes growth and
innovation in global commercial banking of HSBC. Further, it has resulted in increase in total
number of customer's (Investment of HSBC on digital platforms, 2018.). Example- Clients are
using new technology for performing banking transactions in more transparent and secure way.
Further, the bank has invested funds in artificial intelligence, digital platforms as well as other
technologies to satisfy the demands of customer's both retail and commercial in better way.
Since 2016, HSBC is the first foreign bank that has provide facility to retail clients to access
services through WeChat and help them to make transfers, payments and deposits.
HSBC has implemented intranet in UK that helps more than 55,000 workers to check
procedures, learn about new events, accessing tools that are relevant for their job. This has bring
various advantage to the bank such as reduction in operating cost, employees remain up to date
with latest information. Employees of HSBC are using intranet in three different modes and it
helps to achieve individual and organisational objectives.
Information technology may also create some disadvantage for the organisation. For
Example - In year 2015, the bank has apologised to customer's for failure in payment software
that prevents more than 1000's of people in UK from receiving the payment of cheque before
holiday in bank. It is the sign that banks like HSBC is struggling to maintain their old computer
systems to run smoothly and it has become an increasing regulatory concern. This has cause
various problems for the clients and prevented them from completing their payments and
affected the processing of wages to staff members or settle the invoice (System failure of HSBC ,
2015.). Further, management of the bank has realised that, there has been some fault in the
system that has been used to make payment to the clients of HSBC bank. Therefore, company

has realised that, it should make investment in information technology systems. Further,
government should take actions to ensure that, banks are maintaining their payment systems in
proper manner. Other than this, HSBC has also apologise the customer's for issues they have
faced related with mobile and online banking. Mobile banking app of the bank is working but,
due to high demand customer's have faced delay in payment. These type of failures have
suggested weakness in IT infrastructure of the bank. Therefore, management should focus on
improving IT system so that, it will not lead to business failure (HSBC apologize for online and
mobile banking, 2016).
Technology that bank is using may have social and ethical issues such as HSBC should take
efforts to ensure privacy of information of the clients so that, unauthorized users will not be able
to misuse it. Banks are having legal responsibility to ensure the privacy of existing and potential
customer's. It should comply various acts like data protection act, privacy act etc.
The management of HSBC should make efforts for developing a new system by
following the process of system development life cycle. The advantage of this model is that
problems in system will be identified by bank in early stages. Therefore, it will help to control
losses. Limitation is that the process includes various stages due to which it is hard to manage.
RECOMMENDATIONS
Every organisation should take efforts to maintain information technology systems for
dealing with customer's in effective way. The failures in IT is a major problem for banks and it
should develop plans to deal with these issues. It is recommended that, HSBC should use system
development life cycle for developing and implementing new system that will help clients in
making payment, transfers etc. in more effective way. Further, bank should implement cloud
based infrastructure that will support the transactions, documents and also help to manage the
devices. Moreover, HSBC should take initiatives for monitoring systems this will help to identify
any type of problem at initial stage. Bank should also follow the process of risk management for
identifying, prioritizing and assessing the risk.
CONCLUSION
The above Report has outlined that technology plays a major role in growth and success
of the business. But, firms may have to face various problems related with IT that can lead to
failure of business. It is the responsibility of IT department to take measures for identifying any
bottlenecks in information system, digital technology etc. Further, it has been concluded that

HSBC should ensure that privacy of clients will be maintained in effective way and they should
not be harm in any manner. Moreover, the Report has described that internet help organisation to
perform marketing of services, market research etc.

REFERENCES
Books and Journals -
Boarcăs, C., 2017. BUSINESS COMMUNICATION IN THE INTERNET AGE. Economics,
Management & Financial Markets. 12(2).
Edwards, J. and Bramante, R., 2015. Networking self-teaching guide: OSI, TCP/IP, LANs,
MANs, WANs, implementation, management, and maintenance. John Wiley & Sons.
Huda, M., 2019. Empowering application strategy in the technology adoption: insights from
professional and ethical engagement. Journal of Science and Technology Policy
Management. 10(1). pp.172-192.
Lemke, G., 2018. The Software Development Life Cycle and Its Application.
Majchrzak, A., Markus, M.L. and Wareham, J., 2016. Designing for digital transformation:
Lessons for information systems research from the study of ICT and societal challenges. MIS
quarterly. 40(2). pp.267-277.
Marchewka, J.T., 2016. Information technology project management: Providing measurable
organizational value. John Wiley & Sons.
Mustaquim, M.M. and Nyström, T., 2015, June. A system development life cycle for persuasive
design for sustainability. In International Conference on Persuasive Technology (pp. 217-228).
Springer, Cham.
Nguyen, T.H., Newby, M. and Macaulay, M.J., 2015. Information technology adoption in small
business: Confirmation of a proposed framework. Journal of Small Business Management. 53(1).
pp.207-227.
Reamer, F.G., 2017. Evolving ethical standards in the digital age. Australian Social Work. 70(2).
pp.148-159.
Ronchi, S., 2018. The Internet and the customer-supplier relationship. Routledge.
Singh, P.K., 2015. INTRODUCTION TO COMPUTER NETWORKS. Vk Global Publications.
Online-
HSBC apologize for online and mobile banking. 2016. [Online] Available Through :
<https://www.reuters.com/article/us-hsbc-it/hsbc-apologizes-for-online-banking-outage-says-
customers-will-not-lose-out-idUSKBN0UJ0ZB20160105>
System failure of HSBC . 2015. [Online] Available Through :
<https://www.ft.com/content/9657d306-4d7c-11e5-b558-8a9722977189>

Investment of HSBC on digital platforms. 2018. [Online] Available Through :
<https://www.scmp.com/business/banking-finance/article/2140428/hsbc-spends-us23b-digital-
platforms-ai-and-new-technology>
HSBC plan for investment of $ 17 billion in technology. 2018. [Online] Available Through :
<https://www.globalcustodian.com/hsbc-outlines-17-billion-technology-investment-plans/>