London School of Commerce: IT in HSBC and Banking Industry Report

This report provides a comprehensive analysis of the impact of Information Technology (IT) on the banking industry, with a specific focus on HSBC. It begins with an introduction highlighting the competitive landscape of the modern banking sector and the crucial role of technology in providing efficient services and reducing costs. The report then delves into a literature review, examining how IT has transformed banking service delivery and quality, emphasizing the adoption of technology by banks and the resulting improvements in their competitive positions. It also addresses the technological challenges, including security and privacy issues, and the need for continuous vigilance. The report explores the role of IT in HSBC's success, discussing cost reduction, globalization, accessibility, and time efficiency. It further examines the different stages of the System Development Lifecycle in the banking sector, including branch banking, mobile banking, ATM channel banking, and tele-banking. The analysis and discussion section focuses on the importance of Intranet and Internet to HSBC. The report concludes with recommendations and a reference list, providing a detailed overview of the subject matter.

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INTRODUCTION TO INFORMATION TECHNOLOGY
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Abstract
The advent of information technology in the banking sectors has changed the way in which
banks provides services to clients. In particular the progression of information system in the
banking sector such as online transactions has significantly improved access to services. At the
same time, the birth of information technology in the banking industry has also led to privacy
issue where the banking systems have failed to function as expected leaving consumers stranded
such as an incidence of the Royal Bank of Scotland technological failure in 2012 where
customers could not access their accounts for days. This paper analyzes ways in which
information technology has transformed the banking industry in practical HSBC Holding plc and
the banking industry as a whole. While IT has brought a lot of benefits to the banks and their
customers, it has also resulted in privacy and security issues.
Keywords: Information technology, online banking, Automated Teller Machine, banking
industry, Intranet, Internet, and World Wide Web.

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Table of Contents
Introduction.................................................................................................................................................4
Literature review.........................................................................................................................................5
The role of Information Technology on Banking Service delivery and Quality......................................5
Technological Challenges in the Banking Sector....................................................................................5
Security at HSBC....................................................................................................................................6
The Role of IT in the Success of HSBC..................................................................................................7
System Development Lifecycle in the Banking Sector................................................................................8
Analysis and discussion.............................................................................................................................10
Importance of Intranet and Internet to HSBC........................................................................................10
Recommendation.......................................................................................................................................11
Conclusion.................................................................................................................................................11
Reference List...........................................................................................................................................12

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Introduction
The banking sectors has developed into a highly competitive environment in the modern world.
In order to survive as well as grow in the changing marketplace banks are seeking the help of the
most advanced technologies that are being alleged as ‘empowering resource’ which can aid in
developing learner and more elastic framework that can respond promptly to the dynamics of the
fast changing market scenario (Baabdullah et al., 2019, p.3). On the same note, technology is
seen as an instrument that provide effective communication with individuals and organizations
related with the banking business and a instruments for reducing cost (Askoul, Khan, and
Lalitha, 2016, p.59). Indeed, a business that does not embrace technology in the contemporary
world is most likely to fail and be faced out of the market. In this regard, this paper discuss the
role of information technology in Hong Kong Shanghai Corporation (HSBC’s) place of work.
Nearly all HSBC’s dealings, and loan processing with the assistance of information technology
and computer systems that not only make the service more productive but also efficient
(Tchamyou, 2019, p.4). In addition the report talks about HSBC internet website and the manner
in which it has made its customer’s life stress-free with the aid of this site. This paper therefore
evaluate the scenario of information technology in HSBC workplace under the following
headings: role of IT in the success of HSBC, the ethical and social issues that pertain to running

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the business, the different types of networking technologies, importance of intranet and internet
to HSBC and the different stages of system development life cycle in the banking sector.
Literature review
The role of Information Technology on Banking Service delivery and Quality
It is imperative for the banking industry to ensure that there a more active way to proving
technology on banking facilities to aid advance the usage of technology in the industry. In
accordance to a study conducted by (Thakur, 2018, p.833) approximately all banks have
embraced technology in their service delivery. As such, this technology has enabled both small
and big banks to benefit from the arrival of the technology on banking. The technology has
enabled banks to reinforce their competitive positions. Nevertheless, Sedighi et al. (2017, p.440)
argue that security and privacy issues are the main sources of dissatisfaction that have
significantly impacted client’s satisfaction. For the time being, design, convenience, accessibility
as well as content are the basis of satisfaction (Cham, Lim, Cheng, and Lee, 2016, p.20). In
addition, availability of product features, speed, and realistic service charges and fees and bank’s
processes management factors are the momentous towards the success of electronic banking
services.
Technological Challenges in the Banking Sector
While technology is an opening for new heights of scope as well as effectiveness, it fashions a
leeway for criminalities to be easily committed. Indeed, technology delivers advantages to the
banks but it deteriorates traditional banking threats. With the volume of services and products
provided by technology swiftly increasing, customers becomes more worried about their privacy
and security matters. Recent studies have shown that information privacy and security is a key
challenge facing the banking industry in the advancement of customer electronic commerce

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(Kiliç, 2016, p.551). As a result, continued vigilance as well as revisions are necessary as the
scope of expertise in the banking sectors expands. With the ease at which money can be possibly
transferred between banks transverse restrictions in the technological setting pose a major
thoughtfulness to financial policy management. Greenaway, Chan, and Crossler (2015, p.580)
argue that when banks talk about security two major issue comes into play that is privacy and
security. As a result of technological failure in the recent past such as the Royal Bank of
Scotland technological failure in 2012 it has raised eyebrows regarding technology on banking.
Consequently, researchers have examined the obstacles facing the banking industry technology
such as lack of privacy, security and trust of Web systems. This studies have indicated that lack
of security and privacy are major challenges to the acceptance of high-tech on banking services
(Ullah, Ahmad, Akbar, and Kodwani, 2019, p.670). Certainly, challenges related to technology
are inevitable, thus care has to be taken into consideration when dealing with technology because
its negative impact could severely cost a bank billion of money. In addition, security breaches as
well as interruptions to the system’s accessibility can damage a bank’s name, which can possibly
shake other technological banking services as well as its usage (Paulet, Parnaudeau, and Relano,
2015, p.200).
Security at HSBC
The internet offers a range of services as well as benefits for banks. At the same time it provides
opportunities for viruses and hackers. HSBC holding continuously strive to discover solutions to
safeguard the confidentiality its customer’s information that they keep from viruses and
malicious users. Currently, HSBC is among the famously known banks globally, hence it
continuously strive to offer high-quality services to ensure satisfaction by its customers through
online and offline services (Shanmugam, Wang, Bugshan, and Hajli, 2015, p.662). Online

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financial transactions is one of the most critical services in HSBC Holding Plc. Through this
service customers are capable of accessing their financial records from anyplace in the world at
any time. However, this services can be at time dangerous since it involves issues such as viruses
and hackers, which could impact the security of client’s and customers’ accounts and
information. Therefore, HSBC provide solid security systems to safeguard the site and
information related to the banks and its customer’s information.
The Role of IT in the Success of HSBC
Reduced costs: The advent of information technology has enabled the computerization of
business processes and also reformed business which has led to tremendously cost effective cash
making technologies. Technology has enabled HSBC online financial transactions services to
save the charge related to transnational transactions which can now be done through faxes,
phones among other online services (Singh and Brar, 2016, p.530). As a result, this helps the
bank to save costs personnel and paper which leads to increased efficiency as well as
productiveness that in return results to increased profitability and creation of better wage rate
allowances for the staff.
Globalization: Information technology as whole did not emanate into the world close together,
by reducing the distance besides linking individuals across the globe together via a complex
system of computers, and internet applications (Mocetti, Pagnini, and Sette, 2017, p. 313). In this
sense, IT has made the whole world integrated and increased the financial prudence production.
In addition, IT has paved way for novel forms of sales, business transfer and purchase
transactions. The world has been transformed into a global community through information
technology permitting countries such as Japan and Chile that have dissimilar languages to share
information, thoughts and skills. In regard to HSBC, information technology has enabled the

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banking organization to perform its financial transactions with its clients from across the world
through the World Wide Web as well as online banking services (Kaura, Durga, and Sharma,
2015, p.407).
Accessibility to the usage of high-tech: In a corporate likes HSBC the accessibility to technology
has become stress-free to information as well as data from any parts of the globe via the Internet.
In this sense, technology has provided an easier and more proficient ways for HSBC to serve its
customers.
Time effective: IT has become probable for organizations to work 24 hours a day, seven days a
week round the year. As a result, it is an indication that HSBC is able to operate anywhere as
well as anytime, hence making withdrawals, making purchases, money transfer from ATMs
stress-free and more convenient for its customers. Thus, this has made it faster and safer to
transfer cash from one financial account to a different one without physically presence of the
bank itself or travelling to the bank.
System Development Lifecycle in the Banking Sector
The banking systems has gone through a number of networking technological channels in its
service delivery such as branch banking, mobile banking, ATM channel of banking, tele-banking
or mobile phone banking, self-service banking and internet banking (e-banking).
Channel banking: This is a type of banking where all the banking activities and operations are
carried out under a single roof. Therefore customers travel to the brand for their banking
requirements. Branch banking is the oldest form of banking where customers could physically
visit and use different types of services and banking products in one place (Singh, and Brar,

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2016, p. 529). In case of any difficulty the customer is capable of seeking advice of the bank
staff, get rid of all doubts and receive all clarifications regarding their banking operations.
Mobile banking: With the stiff competition brought use of technology each bank would want to
reach out to maximum people to improve their customer base. In the process banks turned to
Mobile banking services, where a mobile van could be equipped with all the necessary
equipment and several staff members are assigned duty on a van (Cham et al., 2016, p.3). These
van could move around the local area providing door to door services to customers. However,
this form of banking system delivers services to a small number of people.
ATM channel banking: Before the introduction of the Automated Teller Machine in the 1980s,
people only knew of one teller as a human being sited behind the cash counter to make cash
payments and receiving cash from clients. The invention of ATM transformed the entire
scenario. Currently, it possible to withdraw and deposit money any time of the day without
travelling to bank through ATM installed in the nearby location. The ATM has provided
consumers with the option to access banking services past the regular banking hours (Thakur,
2018, p.835). Initially, the ATM could only dispense money but with the progressive
technological advancements the ATM has been equipped with the ability to perform multiple
tasks such as money transfer, balance inquiry, providing mini statements, cash deposit and
withdrawal and deposit cheques.
Tele-banking/Mobile phone banking: Tele-banking is another electronic banking channel that
provides round the clock banking services to customers. It is possible for an individual to deposit
money or cheques and an SMS will flash on their cellphone informing them that a given amount
has been credited to their account. The same applies when withdrawing money form one’s
account. Banks are using the phone banking to ensure that their clients are updated about the

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transactions of their accounts (Nawaz, 2017, p.192). Indeed, banks are increasing shifting to
Interactive Voice Response (IVR) to cut down the cost of support calls, inquiry and services.
With the introduction of IVR phone banking services have increased since it is possible for one
to access their bank services at the comfort of their house, workplace, offices or any other place.
PC banking, self-service banking: The internet banking as known presently has underwent
several development stages with each phase identified a different name. In its early stage in the
1980s it was referred to as Home Banking mean banking transactions that could be performed
while sited at home. In the contemporary age it was known as self-service banking. Initially
customers were capable of performing certain routine banking factions from home and to avail
the home banking services telephones cable connection was required with the transaction
conducted with the help of a terminal, PC monitor and keyboard (Shanmugam et al., 2015, p.
630). Through these facilities customers managed to access banking services such as transfer of
funds, account balance inquiry, paying bills and selling and buying investments.
Online banking/e-banking: The internet commonly known as online banking has completely
transformed the banking sector world over. Online banking has moved from being a luxury to a
necessity where banks are no longer confined to branches but have become a global
phenomenon. However, this system require high level of security controls because it consists of
technology covering networking, computerization, legal infrastructure, inter-bank payment
gateway and security.

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Analysis and discussion
Importance of Intranet and Internet to HSBC
The use of IT and the internet has become a necessity in the modern banking industry. With the
World Wide Web and the Internet, communication becomes effective, efficient and easier.
Therefore, HSBC is using the World Wide Web and the internet to cover a wide area in the
banking industry. Accordingly, all this has been possible for HSBC bank because it having a
remote internet domain on the World Wide Web, which allows its clienteles to access their
accounts at any time (Larsson, and Viitaoja, 2017, p.859). With the help of the private domain,
HSBC is able to keep in touch with its staff throughout through its internal network integrated by
HSBC intranet. For HSBC to ensure it maintain touch with its customers, it developed an
intranet as well as a website to offer internet banking services to consumers from all parts of the
world. The website for HSBC bank contain all information required for both local and
international customers. To secure a banks online services legal compliance is paramount
(Gupta, Kumar, and Bharadwaj, 2017, p.28). Therefore, legal compliance is essential for
successful online banking of any bank as well as for the reputation of the bank.
Recommendation
For the banking sector and HSBC holding use of online transactions it is recommended that it
should continuously seek for better solutions to protect the confidentiality of their customer’s
information from hackers.
HSBC should ensure it offer solid security systems and continuously keep on updating its
systems to avoid falling victims to cybercriminals.

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Conclusion
The use of information technology is vital in ensuring smooth banking operations of any
business. However, there is need for the banking industry to assure customers of their security
and privacy since almost all banking services have shifted to online. Banks involved in online
banking such as HSBC among many others should work in legal compliance with online banking
services to reduce possibility of fraudulent practices over the internet.
Reference List
Askoul, R., Khan, H.U. and Lalitha, V.M., 2016. Cross-functional integration of marketing and
information services in banking: a cross-industry comparison. International Journal of Process
Management and Benchmarking, 6(1), pp.57-78.