Challenges Faced by HSBC Bank - Case Study Example

Possible recommendations to the challenges faced by HSBC The following are recommendations to the challenges faced by HSBC in the use of information technology. Recommendations to the Challenge of Breach of Security in Internet Banking The introduction of internet banking, most commonly known as E-banking, has been a huge step in improving the efficiency and effectiveness of banking services. Clients are able to access services in all possible locations and make transactions without their physical presence needed in the bank. Along with the technology however has come the challenge of security breaches which hampers with clientele information. Internet banking operates on a system where client data is accessible over the web. The continuous cyber crimes have however affected the privacy of such information. Threat intelligence is needed to address the challenge of security breaches in the HSBC banking system. The management of the company would be required to anticipate the likely forms of security breaches based on an assessment of their system (Rakes et al., 2012). The thorough authentication of access processes by the bank would assists to improve security as clients would need to verify their identification more than once to ensure that the correct person is accessing the services. Tracing of client location is additionally vital in confirming the identity of the client and thus preventing the possible occurrence of a security breach. Recommendations to the Challenge of Outdated Technologies The technical management of HSBC faces the challenge of outdated technologies and the absence of personnel with updated skills. Furthermore the culture of the organization has made it difficult for the easy implementation of change. HSBC has over time experienced system failures which have affected performance thus leading to customer dissatisfaction. The nature of technology is very dynamic and as such the bank systems need frequent updates and installation of new software that is concurrent with the banking services in the market (Setia et al., 2013). The use of current technology is an advantage in competition as it increases consumer trust on the security of their possessions and privacy in the bank. Along with updating their software and obtaining new technological services to be used, the bank needs to clear the older versions of the application that can provide a loophole into a possible breach. The use of a service side filter can be adopted to check for the presence of any versions of the application that have been blacklisted. Should there be an attempt to access the blacklisted version, the user will be asked to update their application in order to access the services needed from the bank. Recommendations to the Challenge of the Traditional Operation Model As a result of technological input, the operational model of banks is bound to be affected. The business value of technology is essential as various approved standards of operation necessitate that banks adopt the use of technology all round. As mentioned earlier, technology is dynamic. The previous systems of operation are best suited for the generation that is gone. HSBC faces the challenge of still using the old model of operation with regards to office processes and execution of certain banking functions. With the integration of several technological banking systems into the establishment, some operations may be unnecessary. The bank therefore needs to intelligently eliminate processes and staff presence that can be efficiently managed by a technological system. The elimination process balances bank activities and is bound to save on costs thus enhancing the business value of technological systems in cost management and process management of companies by the use of information technology. Recommendations to the Challenge of Adoption of New Technology Inasmuch as new technology has improved business processes in HSBC through its effectiveness, the aspect of new technology in itself is a challenge to the bank. The change from manual systems to technological systems is a times difficult and takes time getting used to especially if the same personnel are in the company. Furthermore adoption and implementation of new technology is expensive (Christensen, 2013). The initial costs are quite high since purchase of new equipment and software is required. The aspect of training is additionally an expense and the hiring of new qualified staff contributes to the elevated costs. The presence of numerous and diversified technological products is an additional challenge faced in the decision to purchase an application for use by HSBC. The expenditure on new technology is necessary but to cope with arising expenses the bank needs to have an expert technical team that has the capability to advice and deal with arising situations in the systems without the need to outsource and incur extra costs. Software needs to be updated regularly to prevent system collapse and ensure the correct functioning of all system processes. Information Technology function The use of information technology has become an imperative and essential part in the operations of businesses worldwide. Use if information technology has particularly increased due to the evolution of technology and technological practices. Companies are additionally using information technology to gain competitive edge and furthermore acquire new markets. Outlined below are the specific functions of information technology. To begin with, information technology is heavily relied upon for communication (Staab & Studer, 2013). Since the introduction of electronic communication, written communication almost ceased to exist. Messages in companies are communicated through emails to both employees and customers. The introduction of social media communication has in addition revolutionized the whole of the electronic communication platform (Staab & Studer, 2013). The effectiveness is instantaneous with the speed of communication platforms. The banking sector has particularly benefited from this service and the improvement can be witnessed in terms of online services where clients do not have to queue for services transactions anymore as they can access services through their mobile phones or other internet enabled gadgets like tablets and laptops. HSBC has employed the use of information technology in most of its services such as mobile and internet banking. The breach of internet security in the bank however has caused lowered consumer loyalty. The need to obtain and update current software is therefore important in the keeping up of the communication function in IT. Secondly, information technology comes in very handy in the management of data. Information that is important to the organization is stored in soft form in computers and all is managed in one system (Staab & Studer, 2013). Data can be input, processed, altered, stored and retrieved from one system. As such the tedious traditional practice of filing and searching for client information from physical destinations has reduced. In HSBC, manual filing is still done as some of the client and company information is still processed manually. There is dire need to improve on this so as to reduce the risk of files getting lost, stolen or damaged. Inasmuch as the use of IT poses a risk through the possible breach in security, the company can invest in versions of systems that are impregnable and employ competent staff to keep the systems safe. IT has played a significant role in managing of customers. Systems such as customer relationship management systems help to manage the interaction of the customer with the bank. HSBC has a customer management system which has effectively dealt with customer services enquiries, actual services and feedback. Strategic alignment With the use of information technology, businesses have great expectations that their investment in IT will bear fruit. The alignment of IT with business strategies is important in reducing costs that are incurred through use of manual systems or repetitive processes (Simons, 2013). Productivity is enhanced through IT as various tasks can be performed simultaneously. Processes under IT are standardized thus there is a particular expectation and a particular result anticipated for. The use of IT in business alignment strategically improves workflow and communication both within and without the environment of the organization. Ultimately use of IT is a perfect way to gain competitive advantage due to its numerous benefits. HSBC thus needs to work implementation of its objectives in order to strategically position its business strategies with information technology. Information Technology Strategy The strategy of information technology is fundamentally a plan that companies use to guide their organizations (Shapiro & Varian, 2013). An IT strategy basically has to cover all the aspects of technological management in the company. The IT strategy of HSBC relied strongly on the performance of the organization in recent past years. The need and call for improvements fueled by developments in the technological world and consumer demands necessitated the strategic use of information technology (Quinton, 2013). In the strategic planning of the use of information technology to guide companies, short term, medium term and long term strategies should be created, evaluated, duly implemented and reviewed. IT strategies are achievable through the setting of objectives within the company that assist in the running of the company (Shapiro & Varian, 2013). The vision, mission and the core values of the organization need to be wired towards the meeting of these strategies. The model below shows an example of long term IT strategies that are applicable to HSBC in the formulation and implementation of its services. Information Technology organization The organization of information technology largely depends on the type of establishment. The infrastructure of information technology consists of its components, services and personnel that support the running of the entire organization. The platform of IT constitutes hardware, software and communication networks that altogether assist in the functioning of IT systems (Patterson & Hennessy, 2013). The services under IT are numerous and among them are customer management, data management and general management of systems. A basic IT organization system has informational systems that are functional such as HR, finance and marketing. The transaction processing systems support the collection, storage and retrieval of information. Additionally there are the enterprise resource planning systems which integrate all the functions associated with IT. The following structure shows the organization of information technology in an establishment. Information Technology governance Information technology has an essential role to play in the governance of corporate systems. The use of information technology has made businesses efficient and reduced costs related to too any processes in the bank sector. IT governance enables accountability and clarity of processes. The value of IT governance has gone high due to the knowledge of customers on technological processes which have necessitated companies to apply the use of IT governance (De Haes, 2015). With the reliance on IT, organizations like HSBC need to have IT intelligence that balances technology, people and processes to ensure that technology only promotes productivity in the business. Scope of Information Technology Information technology practically covers all aspects of the business. The ever evolving innovations have created functions so close to human functioning which if allowed would render the input of manpower in businesses useless (Zikmund, 2012). Processes such as storing and retrieving of clientele data are handled through information technology. The feedback system, though possessing human control is governed through information technology. The innovative processes have become so diverse that banking like in HSBC is done via mobiles and other devices and simple functions such as queuing are currently automated. Business value of information technology The complexity of IT systems has in some ways made it difficult to determine the real business value of information technology. It is however evident that the use of IT has improved business processes and accentuated customer loyalty thus positively affecting businesses. Current standards of operation such as the ISO certification require implementation of information technology to certify business and this goes to show what value IT adds to the business. Customers also prefer automated systems as the chances of failure are low and there is no need to deal with human emotion or feeling in the process of transacting business. This strongly proves the added value to business that IT possesses. Performance of Information Technology The measurement of performance by IT is vital in the verification of the objectives that have been set strategically with the use of IT. The contribution of IT to the business is additionally determined through the measurement of performance (Yang et al,. 2012). Furthermore, the performance measurement assesses the capabilities of the system and is able to determine whether the system should be operational or needs to be discontinued. The transparency of IT systems is a plus factor that shows the accuracy of the results as there exists the impossibility of bias. Critical Analysis Critical Analysis Security Breaching The significance of internet banking at HSBC cannot be overlooked. The efficiency and effectiveness it brings to the user equivalently exposes the bank and its customers to a pool of security risks. The bank is consequently obliged to ensure protection of information during transmissions and processing of information online. It is the bank’s duty to ensure classified information does not fall into the hands of third parties. However, the bank is not entirely responsible for access or modification by such third parties (Ciampa, 2013). This is congruent with the fact that the bank has limited influence on the device or application used by a customer for online banking. Most of the security breaches occurring are customer-related and are out of the bank’s control. The bank will always have adequate measures to protect information being processed by its server as opposed to customers who face the risk of viruses and worms, hackers, phishing, Trojans, pharming and rootkits (Mcaughey et.al). As much as the bank cannot control how customers protect their information, it can educate them on the possible security risks and how to take the right precautionary measures in order to protect their money.It is therefore valid to argue that the role of the bank does not end at providing a secure internet-banking infrastructure but extends to educating customers with respect to risk awareness and checking their browsing habits. Outdated Technologies A bank that uses obsolete technology is undoubtedly at the verge of extinction. Many banks would want to keep a masterpiece technology that was the best previously. They fail to realize that new players in the banking industry use technology as their main tool to overtake existing banking giants. IT failure due to such reasons as cumbersome or outdated infrastructure will surely lead to customer dissatisfaction. Customers always require easy and timely access to their funds; which should be the main priority of the bank to its customers. The disaster does not cease at customer dissatisfaction but spreads out to high employee turnover rates (Kaur, 2013). Employees will definitely be sucked in by other organizations that are up to date with regard to banking technology. The bank will further be subjected to compensating the employees for losses caused by delay or withholding them from accessing their accounts.This menace starts as banks are blinded by other prioritized activities such as money lending. They under-invest in IT which is viewed to be less productive in real terms compared to such profitable deals (Moro et.al, 2015). However, in the long run, the bank risks system failures and lockdowns which would be costly.In the 21st century, it would be undisputedly erroneous to be overthrown due to lack of the necessary technology. Traditional Models The impact of traditional banking models on banking has been meaningful over the years. Banking has now come to a genesis of curtailed human interventions in the transmission of money and its equivalents. It is now an era of straight-through processing, settlement networks and paperless securities. A rich dose of technology should be injected in processing of information and data. With respect to reference data for example, gone are the times when different files had to be stored for each business line. It is now possible to have a master client account connecting multiple business lines (Weil & Vitale, 2013). New banking models are efficient in reducing operational costs. In the traditional dimension, engaging in highly integrated business procedures would require labor intensity. With the new models, only an extra hardware would be required in the system in place of employing masses of people. Adoption of New Technology Evolution of technology has had its impact on banking. Application of computerized networks in the sector has led to reduced transaction costs while increasing the speed of service delivery. Product distribution has been the main variable in improved production technology (Mitropoulos & Tatum, 2000). Banks have moved from over-the-counter service delivery to Automated Teller Machines, telebanking, mobile banking and currently Internet Banking commonly known as IB. Adoption of the technology and implementation in organizations is a topic of discussion. The best approach to handle this adoption would be to develop a theoretical framework to help mainly the employees to move from certain organizational cultures that are inhibitive to adoption of new technology. This would assist the employees to unfreeze from traditional models, to move and refreeze in a new model (Batillana, 2013). By doing so, the bank will have engaged in organizational change to adopt a new, better and cost-effective approach to service and product delivery and distribution. Business Value of Information Technology Within many organizations, the information technology department is gradually developing into a business partner within the organization. The department has moved away from its previous position of being a cost center to collaborating with the business in cost-effective ways. Maturation of IT processes and procedures has led to valuable services congruent to organizational objectives (Melville et.al, 2004). This has been made possible by evolutions such as Information Technology Infrastructure Library and quality enhancement. The IT department is conforming to the needs of the business through improved reliability and fulfilling the business requirements.The bank should refrain from the previous assumptions that IT has no notable influence of performance of the business. Scope of Information Technology The 21st century has brought about an all-encompassing convergence of knowledge, communications, computing, and information. This has fundamentally changed the way people li work, live and think. The development of super-fast networks, paired with the decreasing cost of computing power, has made applications undreamed of previously a reality (Schoenmaker, 2013). Voice, sound, information and data, images, and video are now transferrable around the planetin microseconds. This boom of technology has evolved the banking sector from paper and branch banking to digitally networked banking operations. It has already transformed the in-house accounting and management systems of banks. It is currently ultimately changing the banks’ delivery systems employed in customer interaction. Worldwide, banks are still toiling to establish a technological solution to confront the challenges of a fast-changing environment. 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