• Español – América Latina
  • Português – Brasil

HSBC: Using Google Cloud to improve customer service at call centers

HSBC logo

HSBC Holdings PLC, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 64 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of $2,956B as of September, 30, 2020, HSBC is one of the world’s largest banking and financial services organizations. Read posts from HSBC technologists at the HSBC Tech Blog .

Tell us your challenge. We're here to help.

Working with google cloud, hsbc is automating the review of its contact center sales calls from a quality perspective, significantly reducing the time required to do so and enabling it to improve customer experience. the bank is also working on providing faster access to cloud resources, fostering innovation and product development., google cloud results.

  • Significantly speeds up the time to review the quality of sales calls, helping to highlight any opportunities to improve the quality of conversations and compliance with customer needs
  • Helps to improve the overall customer call center experience and service by quickly feeding back opportunities to improve quality at an agent and center level
  • Reduces the time needed to run machine learning models from one week to one hour

Using Google Cloud, HSBC has developed an NLP solution to review Cantonese-English contact center conversations

HSBC is a digital bank, with over 90% of its retail transactions globally and in Hong Kong being conducted through digital platforms.

However, while digital banking is increasingly popular, call centers remain an important service and business channel. The Hong Kong Contact Centre for HSBC, which celebrated its 30th anniversary in 2020, serves over 1.5 million customers through over 20 million annual interactions.

“Digital banking is increasingly a preference for our customers but they do continue to appreciate a personal touch in their service experience across multiple touch points. Our Contact Centre Business handles over 14 million calls a year. The Automated Quality Management review system can significantly speed up the review of sales calls, helping to identify areas of improvement in our customer conversation. These insights not only enable us to help our sales agents improve on a timely basis, they will also become valuable resources for us when we work on staff training and reinforcement or design our future customer journey.”

Customers continue to appreciate the “human touch” of call center services, especially when they seek assistance. But handling high call volumes efficiently and effectively is challenging, particularly in a market like Hong Kong where many people speak a mix of Cantonese and English (often incorporating literal translations) that requires a high degree of experience to handle. Quality assurance for this style of speech tends to be a particularly cumbersome and manual process.

This was one of the challenges the HSBC’s contact center teams faced, and a particularly challenging AI problem, because there were no existing open source data or machine learning models to work with.

“Google is one of our strategic partners. We’re investing in machine learning and data capabilities with them because their cloud solution is approved to handle personal information securely and reliably.”

Enter HSBC’s Intelligence Hub

The HSBC Intelligence Hub is a team of data scientists, engineers, and architects dedicated to migrating HSBC data and analytics workflows onto Google Cloud and looking for ways to leverage the data using AI and machine learning. This team works closely with different departments and business units within HSBC to design and build end-to-end data and AI solutions.

“People in the team come from a broad range of disciplines and backgrounds, from mathematics, business, computer science, behavioral economics, and engineering. You don’t necessarily have to be an expert in statistics. The most important thing is for our people to stay curious and have a drive to learn new things,” says Richard Bates, Global Head of HSBC’s Intelligence Hub.

“As we continue to build a customer-centric culture, data empowers us to conduct a more scientific and quantifiable assessment of our services. We see AI as an opportunity to better understand customers’ needs, hear their voices, and alleviate the risks for customers and our bank.”

“Google is one of our strategic partners,” continues Richard. “We’re investing in machine learning and data capabilities with them because their cloud solution is approved to handle personal information securely and reliably.”

“As we continue to build a customer-centric culture, data empowers us to conduct a more scientific and quantifiable assessment of our services,” adds Yusuf Demiral, Head of Data and Analytics, Asia Pacific at HSBC. “We see AI as an opportunity to better understand customers’ needs, hear their voices, and alleviate the risks for customers and our bank.”

An Automatic Quality Management system

Within the Intelligence Hub is the Data Science Squad, led by Mary Chu, Senior Analytic Architect, who took on the Contact Centre Language processing challenge.

“We turned to AutoML Natural Language and Speech-to-Text to train machine learning models to classify, extract, and detect customer sentiment,” says Mary. “Using Google Cloud computing resources and BigQuery as a data analytics warehouse, we applied Speech-to-Text powered by Google’s AI technologies to the data, which accurately converted spoken combinations of Cantonese and English.”

The result was an Automatic Quality Management system (AQM), the first in-house voice-processing solution powered by AI that helps to identify areas of improvement in customer conversations, a key milestone for HSBC’s Hong Kong Call Centre.

Better agent service

The HSBC Intelligence Hub Data Science Squad completed this development in just three months, and, working closely with 10+ HSBC teams, launched the solution in September 2020.

“With Google Cloud, we could run a machine learning model in an hour, rather than a full week as would have been required in an on-premises environment, which considerably shortened our rollout time,” says Mary.

HSBC now processes through this solution every Cantonese-English call into the contact center that involves presentation of information on terms and conditions.

The solution helps the institution quickly identify sales agents with room for coaching and improvement. The monitoring team automatically receives alerts to such calls, which enables them to follow up with agents in a timely manner. It also allows HSBC to capture more insights to sharpen the way the bank serves its customers. “These insights also become valuable resources for us when we design our future customer journeys or work on staff training and reinforcement. Theoretically, it will involve 1,200 man-hours to monitor 100% of our sales calls. It is now unnecessary to spend this amount of time for monitoring,” says Richard.

HSBC plans to extend AQM to other calls within Hong Kong and eventually, globally. “We want to cover service calls as well, so we can track customer sentiment and their experience of the service,” says Mary. “In addition, we expect to cover languages such as Mandarin Chinese, English (including accented versions), and Spanish.”

“Automated Quality Management is the first in-house deep-learning AI solution on Speech-To-Text and Natural Language Processing and Hong Kong is the first HSBC market to use it. HSBC is at the forefront of the RegTech space. This AI solution has paved the way for more risk-management-related technology within the banking industry in the future.”

Optimizing ATM cash stocks

Over the last six months, the HSBC Intelligence Hub has used its Data Science Workbench to develop capabilities in addition to AQMs. For example, HSBC has launched an internal tool, known as iCash , that predicts the stock of cash in ATMs and enables optimization to ensure they never run out of cash. iCash also provides strategic solutions for cash forecasting and planning for further development and rollout.

  • Bahasa Indonesia
  • Sign out of AWS Builder ID
  • AWS Management Console
  • Account Settings
  • Billing & Cost Management
  • Security Credentials
  • AWS Personal Health Dashboard
  • Support Center
  • Expert Help
  • Knowledge Center
  • AWS Support Overview
  • AWS re:Post

HSBC logo

HSBC on AWS

One of the largest banking and financial services firms in the world, HSBC builds on Amazon Web Services (AWS) to provide the global footprint, elasticity, and rigorous security its customers expect — and regulators require. HSBC first engaged AWS in 2017 for the creation of its open-banking channel, completing the project within the mandated regulatory timeline of just 6 months. Building on this success, in 2020 HSBC engaged AWS as a long-term, strategic cloud provider to help execute its global plan for digital transformation. The bank has enhanced automation, operational efficiency, and security across its retail and commercial financial offerings as a result of its migration to AWS. Working with AWS is facilitating HSBC’s vision of opening up a world of opportunity for its customers — through continuous cloud-based innovation using blockchain, containers, and serverless technologies.

HSBC's Cloud Journey on AWS

  • Enterprise Transformation

Cloud adoption to accelerate digital transformation and realize greater business value  

  • Continuous Innovation

Ongoing improvements built to support transformation

  • Security and Compliance

Protecting customer data in a regulated industry

HSBC's Wealth and Personal Banking Cloud-First Strategy to Deliver Value and Innovation at Scale on AWS

HSBC’s Wealth and Personal Banking (WPB) goals are to deliver value across all touchpoints of customer interaction, reduce operational costs, remove complexity, and improve efficiency across its engineering departments to enable long-term and sustainable growth. HSBC WPB built on AWS to establish a cloud-first engineering and deployment platform that provides the agility needed to discover the right solutions to solve its business challenges. Watch the three-part video series to learn more about HSBC's WPB innovation journey.   Watch series »

HSBC’s Digital Transformation on AWS Brings Innovation to Wealth & Personal Banking Business

By migrating to AWS, HSBC’s Wealth & Personal Banking business can run and scale applications around the world with the highest availability and reliability. Hear Gavin Munroe, global CIO for Wealth & Personal Banking at HSBC, discuss the strategy behind HSBC’s collaboration with AWS, including the need for application modernization, increased innovation, and accelerated deployment of new services.

Explore the story »

AWS and HSBC Reach Long-term Strategic Cloud Agreement

HSBC Holdings plc selected AWS as a key, long-term strategic cloud provider to drive its digital transformation and deliver new and personalized banking services. As part of a multi-year, global agreement, HSBC will make AWS technology available across the bank’s lines of business, starting with customer-facing applications and application modernization in its Global Wealth & Personal Banking business. Read the press release »

AWS and HSBC Reach Long-term Strategic Cloud Agreement image

HSBC’s Wealth & Personal Banking Innovates Digital Messaging Strategy Using Serverless on AWS

Christopher Bird, global platform CTO of messaging for HSBC’s Wealth & Personal Banking business, shares how the company innovates faster and provides easier, highly secure digital banking on AWS to meet its customers’ changing needs.

HSBC Wealth and Personal Banking innovates digital messaging strategy using Serverless on AWS

Meeting Requirements for Open Banking With Serverless

Learn how HSBC addressed new requirements to share customer data with third-party service providers. This session explores how HSBC embraced APIs and built its open banking solution using AWS Lambda, Amazon API Gateway, and other Serverless on AWS services.

Watch the session »

How the Cloud Adds Value to Open Banking Business Models and Strategy

Move beyond the regulatory requirements of Second Payments Services Directive (PSD2) to learn how banks can leverage open APIs to cater to customer needs and innovate open banking business models.

Read the article »

How the cloud adds value to open banking business models and strategy

When you look at the Wealth & Personal Banking strategy around scale, resiliency, security, and innovation on the cloud — to enable our business objectives, we had to find the right organization that could partner with us, with the scale and global footprint.”  

Gavin Munroe Global CIO, Wealth & Personal Banking, HSBC

Centralized Governance Through Global Cloud Services at HSBC

In the past, organizations had to choose between innovating faster and maintaining control over cost, compliance, and security. Using AWS Management and Governance services, HSBC built a centralized governance unit called Global Cloud Services to innovate and control costs simultaneously. Now, HSBC can power, provision, and operate its environment for both business agility and governance control.

Centralized governance through Global Cloud Services at HSBC

Best Practices for AWS PrivateLink

AWS PrivateLink is a networking service that helps businesses increase the security, scale, and resiliency of their services. This session covers how to set up both the consumer and provider sides of AWS PrivateLink, use cases, and its interoperability with other AWS services. Businesses that want to consume services in a more scalable and private way, or have services they want to share with others, will gain an understanding of best practices for AWS PrivateLink.

Watch the video »

Running High-security Workloads on Amazon EKS

This session explores how HSBC’s cloud services team built a secure multi-tenant platform for application teams to run mission-critical containerized applications on Amazon Elastic Kubernetes Service (Amazon EKS). AWS and HSBC engineers discuss security features, best practices, and lessons learned from operating highly secure Amazon EKS clusters. Topics include network security, Linux host security, AWS Identity and Access Management (IAM) integrations, IAM for service accounts, and integrating logging and monitoring of the Kubernetes control-plane and worker nodes.

The participating teams loved the customer-centric approach and felt great about working in a collaborative environment. This initiative is a key intervention in our culture/mindset shift journey towards customer-centric innovation. In the Amazonian language 'working backwards' we have taken a big step forward towards our end goal. Thanks AWS.”  

Jai Pawani COO, HSBC India

HSBC Bank uses its global and local expertise to bring people, ideas, and capital together to serve its 40+ million international customers. It employs AWS to develop and deploy some of the industry’s most advanced and dynamic technology to help its customers manage, protect, and grow their wealth.

Hear inspiring customer innovation stories from AWS re:Invent

Watch now »

deprecated-browser pixel tag

Ending Support for Internet Explorer

subscribe to tearsheet newsletters

Case Study: HSBC’S transformation as a bank for small business

  • HSBC Kinetic is a bold move by the 6th largest bank in the world.
  • It’s an app-only digital bank servicing small businesses and a chance for the 160 year old bank to remake itself.

Email a Friend

Case Study: HSBC’S transformation as a bank for small business

The past few years have shown that business banking customers no longer have to wait days or weeks to apply and receive loans to open bank accounts and transact. Many new options are being offered by fintech firms that don’t have to deal with large legacy technology stacks and legacy thinking. This frees them up to focus on servicing small business needs and delivering good banking experiences. Large incumbent banks don’t have this luxury.

HSBC Kinetic is a bold move by the 6th largest bank in the world. It’s an app-only digital bank servicing small businesses, but for the financial institution established in the 1860s, it’s much more than that. With Kinetic, HSBC is building experience in agile development environments, in the cloud, and with a branchless app that offers automated onboarding, in-app overdrafts, a controllable debit card and a range of personal financial management budgeting and cashflow tools.

The following was produced by Tearsheet Studios. We worked with fintech software provider Strands to create a visual and audio case study about HSBC’s transformation as a bank for small businesses.

Working with Strands, Kinetic built a powerful transaction categorization engine within HSBC that is aligned to the UK’s tax office. By categorizing those transactions, the business bank saves its customers days every month trying to manually reconcile what category spending should fall under.

Customers get a cleaner view of where they spend their money. With some additional analytics, Kinetic gives customers a monthly breakdown of the changes in their spending per category.

Additionally, Kinetic uses Strands to take business finance management up a level by building personalized insights for customers. The bank’s smart engine analyzes spending trends to understand all the bills a small business has coming up in the next few weeks to tell it whether it’s likely to hit zero or go into my overdraft. From here, the app gives business customers options to take relevant actions.

A customer can top up his account from another bank or can cancel a payment, amend the payment, or reschedule it for a later date. Or if you need funding, HSBC has options which customers can access straight through the app.

Download the case study to learn

  • Why HSBC created a new brand -- Kinetic -- to service small and medium businesses
  • What HSBC learned about small businesses' needs after speaking to 3000 of them
  • What Kinetic, a digital bank without branches, says about the future of the 170 year old banking institution
  • How the bank offers services not traditionally offered by financial institutions to best serve its clients

Download the Case Study: HSBC'S transformation as a bank for small business

0 comments on “Case Study: HSBC’S transformation as a bank for small business”

You must be logged in the post a comment.

  • Sort by Newest

‘Since the Diners Card, it’s just been a distribution game’: Exploring the future of credit with Marqeta’s Simon Khalaf

  • Credit card technology hasn't matured much over the past few decades as consumers are becoming increasingly savvy about using credit to further their financial goals.
  • This is fueling the growth of credit for brands seeking a new “homepage” of their digital experience. Marqeta CEO Simon Khalaf joins us on the podcast to discuss.

Retailers: We have a holiday gift for you. Unwrap the new loyalty and digital engagement tool

  • Consumers spent $38 billion online during Thanksgiving weekend, an almost 8% jump year-over-year, far outstripping expectations.
  • Now, by offering personalized rewards and flexible payment options, brands can reap the benefits of greater customer loyalty without impacting their bottom line.

For US banks, the question of modernization is no longer when, but how

  • 90% of North American banks consider technology to be the biggest trend impacting their industry.
  • But modernization is easier said than done. Payments is a good place for banks to start.

Why ‘know your business’ is critical for FIs everywhere — and how banks, fintechs, and marketplaces can benefit from emerging solutions

  • Bad actors are continuing to improve their technology and tactics to commit financial fraud.
  • FIs can use Know Your Business (KYB) compliance as a competitive advantage if they're willing to invest in business verification data.

PayPal & Paxos execs talk to the future of finance via stablecoins

  • The shift towards digital currency adoption led to the the recent launch of PayPal USD, or “PYUSD,” marking a seminal moment in the finance industry’s evolution.
  • On December 6th, executives from PayPal and Paxos will discuss the rise of stablecoins, the growth of PayPal USD, and the future of money.

a case study of hsbc

Seven Pillars Institute

HSBC Money Laundering Case: “Too Big To Fail” does not mean “Too Big to Jail”

The problem.

Some banking institutions have become so large criminal prosecutions resulting in revocation of banking charters may negatively affect the national, and perhaps the global, economy. The U.S. Attorney General and other prosecutors are thus left with a moral dilemma : ensure justice through prosecution or forego criminal proceedings to protect the economy and society at large.

HSBC and Money Laundering

In December 2012, multinational banking institution HSBC was penalized a record $1.92 billion by the United States for violating laws designed to prevent money laundering and other illegal financial activity. HSBC was under consistent suspicion and twice given warnings and orders to strengthen its anti-money laundering programs by the U.S. between 2003 and 2010 but failed to make the proper adjustments. The $1.92 billion penalty, issued under the Bank Secrecy Act, was handed down after a report and subsequent investigation that confirmed the bank had set up offshore accounts for drug cartels and suspected criminals in Jersey. HSBC banking executives admitted to laundering as much as $881 billion dollars.

HSBC North American Holdings, Inc.: parent company of HSBC Group, one of the world’s largest banking and financial services groups. HSBC has more than 6900 offices in over 80 countries.

HSBC Bank USA : federally chartered subsidiary of HSBC North American Holdings, Inc.; headquartered in McLean, Virginia with its principal offices in New York City. HSBC  Bank USA is the specific entity charged with violating the Bank Secrecy Act.

Eric Holder : United States Attorney General; publicly defended the decision not to criminally prosecute HSBC Bank USA executives.

HSBC Bank USA Executives : Specifically those responsible for the lax monitoring programs and other negligence that violated the Bank Secrecy Act.

HSBC Bank USA Employees : would lose their jobs if HSBC were forced to cease banking operations in the United States.

The United States’ (and possibly the global) economy : As stated by Attorney General Eric Holder, the national economy will suffer greatly if HSBC’s U.S. banking charter is revoked.

United States Department of the Treasury : As one of the regulators of HSBC Bank USA’s financial affairs the Treasury is tasked with advising the Department of Justice on the economic effects of prosecuting HSBC.

Office of the Comptroller : As the regulator of HSBC Bank USA’s banking charter, the   Comptroller can revoke HSBC Bank USA’s banking privileges in the U.S. if its executives are prosecuted and convicted.

Instruments

Bank Secrecy Act (31 USC §5311): enacted by Congress to require banks and other financial institutions to create and maintain anti-money laundering programs and other practices to prevent terrorist financing and other financial crimes. In addition to internal programs and monitoring, the Bank Secrecy Act (BSA) also requires ongoing employee training and due diligence for foreign correspondent accounts.

Deferred Prosecution Agreement : To avoid criminal prosecution for violations of the BSA, HSBC executives agreed to pay a $1.92 billion fine and comply with elevated monitoring standards for a probationary period of five years.

Events            

From 2003-2006, HSBC Bank USA was under heavy suspicion by United States regulators and operated under a written agreement to correct the deficiencies of their operational practices. HSBC Bank USA specifically agreed to enhance its anti-money laundering program to achieve adequate compliance with the Bank Secrecy Act.

Between 2006 and 2010, HSBC Bank USA violated several components of the BSA: Money laundering risks associated with doing business with certain Mexican customers were ignored, compliance issues at HSBC Mexico were overlooked, and a BSA-adequate anti-money laundering program was not implemented. The Court notes four significant HSBC Bank USA failures:

  • HSBC failed to obtain and maintain due diligence on HSBC Group Affiliates.
  • HSBC failed to adequately monitor over $200 trillion in wire transfers between 2006 and 2009 from customers in nations classified as “standard” or “medium” risk ($670 billion in wire transfers specifically from HSBC Mexico).
  • HSBC Bank USA failed to adequately monitor billions of dollars in U.S. banknote purchases.
  • HSBC Bank USA failed to provide proper staffing and resources necessary to maintain an effective anti-money laundering program.

As part of the Deferred Prosecution Agreement, HSBC Bank USA admitted to gross violations of the Bank Secrecy Act, including failure to establish and maintain an effective anti-money laundering program, failure to establish due diligence, and involvement in the laundering of over $881 billion.

The Penalty

The record-setting fine, comprised of $1.256 billion in forfeiture and $665 million in civil penalties, allows HSBC to temporarily thwart criminal prosecution pending a probationary period of compliance with anti-money laundering standards. The probationary period consists of a five-year agreement with the U.S. DOJ that includes an independent monitor of HSBC’s internal anti-money laundering programs, bonus deference by the bank’s top executives, and retraction of bonuses from some current and former executives who had particular involvement in the willful breach of U.S. regulations.

Public Controversy

In March of 2013, Attorney General Eric Holder defended the U.S. government’s decision not to pursue criminal prosecution of HSBC by claiming that prosecution of such large institutions has a negative impact on the national economy. His statement stirred some outrage. The notion that the largest corporations, deemed equal to people under the law by the U.S. Supreme Court in the Citizens United case in 2010, are now afforded freedom from criminal prosecution as well.

At the forefront of prosecution advocates is Senator Elizabeth Warren, who voiced publicly her disdain for the decision not to prosecute HSBC for money laundering. She posed this question to the Department of Justice (DOJ): “How many billions of dollars of drug money do you have to launder…before someone will consider shutting down a bank?” Not one Treasury or Justice Department official offered her a direct answer. One thing is evident: The Justice Department seems to hold all the cards in deciding the fate of HSBC’s ability to continue operating in the U.S. The Comptroller cannot revoke its charter without a criminal conviction and the role of the Treasury is simply to advise the DOJ on an institution’s impact on the economy. Regardless of the economic reasons, the decision not to prosecute questions the integrity of the entire justice system. Can we justify deferring prosecution for willful criminal activity in the name of protecting the national economy? The debate presents an ethical dilemma between justice and utilitarianism .

Utilitarian Approach

Utilitarianism, also known as the “greatest happiness principle” holds that decisions and actions are proper as long as they promote proportional utility, and by the same accord improper as they produce an overall negative utility. A utilitarian view, then, would advocate an act if a greater benefit would be afforded to a larger number of individuals in society. This principle supports the Department of Justice decision not to prosecute HSBC, because not prosecuting HSBC benefits a greater number of individuals in society through protecting the economy from harm , even at the expense of letting criminal activity go largely unpunished.

Under a traditional utilitarian view, then, the Justice Department’s decision not to criminally prosecute HSBC officials seems sound, as a larger portion of society benefits from HSBC maintaining operations (not to mention the number of saved jobs) and keeping the economy from further suffering in already difficult financial times. The record-setting monetary penalty and the probationary monitoring period are presumably aimed at deterring future wrongdoing by HSBC and other large financial institutions. However, in spite of $1.92 billion being the largest fine imposed on any banking institution in history, it does not reflect an amount that could effectively deter a financial institution the size of HSBC. According to Bankers Almanac, HSBC’s annual before-taxes profit totals more than $23 billion.

The $1.92 billion fine handed down by the U.S. represents roughly a month’s profit.

If HSBC and other large banks are not effectively deterred from continuing illegal and unethical financial practices, at some point in time the utilitarian outcome of laundering money for illegal organizations becomes adverse to the greatest number of people in society.

In fact, a deeper analysis shows that pursuing criminal prosecution of HSBC’s executives likely yields a greater utilitarian outcome in the long run. While the immediate effect of prosecution may adversely affect a great number of individuals in society by means of a blow to the economy and the loss of jobs, the long term effects of allowing a banking institution like HSBC to engage in criminal activity with no risk of criminal prosecution, jail time, or even the loss of its banking license, presents a moral hazard. A $1.92 billion fine for laundering upwards of $881 billion hardly seems like incentive to exercise due diligence in future practices. In fact, the outcome of HSBC’s case can actually provide incentive for other banks to be more lax with their anti-money laundering practices.

Among the most alarming effects the non-prosecution decision produces is the harm done to the large number of individuals affected by drug trade. That being the case, both justice and utility seem best served by criminal prosecution of HSBC executives.

Justice Approach: Retribution and Deterrence

Society has always had a keen interest in providing justice for the wrongdoings of individuals. As for the intentional breaking of U.S. laws and sanctions by HSBC executives, justice can be readily sought in the forms of retribution and deterrence. Retributive justice is simply providing adequate punishment to lawbreakers in accordance with their offenses. Retribution provides two important results: disincentive for the offender to recommit the wrongful act and a general deterrence to the rest of society who may contemplate acting wrongfully. While retribution is generally served as a calculated punishment proportional to the wrongful act, deterrence is most often pursued by a punishment that outweighs the wrongful act, to ensure avoidance of future wrongdoing in general. Often, these punishments come in the form of large fines.

The conduct of HSBC’s executives in knowingly failing to adhere to U.S. sanctions and regulations is certainly unjust. In making the decision to defer prosecution of HSBC Bank USA executives, the primary consideration of the United States government was to prevent harm to an already struggling economy. While instances may exist when other consequences may mitigate an application of justice, the long-term effects of avoiding prosecution for the criminal acts of HSBC are too great. When government allows big financial institutions to go largely unpunished for laundering vast sums of money for criminal organizations such as drug cartels, it is essentially endorsing the immeasurable amount of harm associated with the day-to-day activities of global drug trade. Justice for perpetuating such criminal enterprises cannot be adequately administered by a mere financial penalty.

Deontological Aspect: Prosecutorial Duty

A deontological approach asserts individuals are morally obligated to act according to a set of principles regardless of outcome. Rational people have a duty to act ethically, no matter the consequences. The criminal justice system of the United States is based largely on deontological ideals. Prosecutors have a duty to carry out justice.

Prosecutors and Attorneys General, like all government officials, are elected or appointed under the promise to uphold the laws. Prosecutors, by design, are charged with the responsibility to fairly and appropriately pursue punishment for wrongdoers in society. While all human beings have the same general obligation to act morally, prosecutors take on a special obligation, or duty, when taking office. Prosecutors assume an elevated duty to make certain decisions as a part of their role in the justice system. As prosecutors accept taking on the role of pursuing justice for illegal behavior, they assume an ethical duty to do so fairly and diligently no matter the offender.

The Attorney General and the DOJ failed in their prosecutorial duties. They did not prosecute HSBC officials because of an uncertain forecast outcome (economic harm). Ultimately, they failed to provide justice for gross wrongdoing. The decision not to prosecute also prevents other regulators from punishing HSBC. The Court, in upholding the financial penalty and the Justice Department’s decision not to prosecute, stated its need to give broad prosecutorial discretion to the Executive Branch in matters like these. Hence, the Comptroller is unable to completely revoke HSBC’s U.S. banking privileges without some form of conviction by the Justice Department. The Deferred Prosecution Agreement essentially lets HSBC off the hook with a $1.92 billion pass for laundering more than $880 billion.

The ethical analysis above applies theories of justice, utilitarianism, and deontology to the Department of Justice decision not to pursue prosecution of HSBC executives. The analysis suggests that criminal prosecution is probably the right move, rather than the deferred prosecution agreement currently in place. The reasons are:

  • The $1.92 billion fine and 5-year probationary monitoring period is unlikely to deter future misconduct.
  • The long-term consequences of the Deferred Prosecution Agreement may outweigh its immediate utility.
  • The DOJ is not fulfilling its prosecutorial duty to pursue punishment for those who violate the law.

While some may believe the Deferred Prosecution Agreement promotes the best interests of the United States, its long-term effects may ultimately pose a greater danger.

 BY: SAM STORRS

Works Cited

1. HSBC’s Deferred Prosecution Agreement, Statement of Facts. Case 1:12-cr-00763-ILG     Document 3-3, December 11, 2012.

Accessed online: http://www.justice.gov/opa/documents/hsbc/dpa-attachment-     a.pdf

2. 31 U.S.C. §5311 (Bank Secrecy Act), Declaration of Purpose.

Accessed online: http://www.law.cornell.edu/uscode/text/31/5311

3. Mill, John Stuart. Utilitarianism . Edited by Oskar Piest. Prentice-Hall, Inc. 1957.

4. Stempel, Jonathan. HSBC Wins OK of Record $1.92 Billion Money Laundering Settlement.       Reuters. Tue. July 2, 2013.

Accessed online: http://www.reuters.com/article/2013/07/02/us-hsbc-       settlement-laundering-idUSBRE9611B220130702

5. DeGeorge, Richard T. Business Ethics , Seventh Edition. Pearson Education, Inc. 2010.

6. Lopez, Linette. Elizabeth Warren Savaged A Treasury Official During A Hearing On HSBC’s    International Money Laundering Scandal . Business Insider. March 7, 2013.

Accessed online: http://www.businessinsider.com/elizabeth-warren-hsbc-money-   laundering-2013-3

  • Utilitarianism
  • Responsibility
  • Moral Dilemma
  • Name First Last
  • Your Message

Cookies on FT Sites

We use cookies and other data for a number of reasons, such as keeping FT Sites reliable and secure, personalising content and ads, providing social media features and to analyse how our Sites are used.

  • Work & Careers
  • Life & Arts

Case study: HSBC

  • Case study: HSBC on x (opens in a new window)
  • Case study: HSBC on facebook (opens in a new window)
  • Case study: HSBC on linkedin (opens in a new window)
  • Case study: HSBC on whatsapp (opens in a new window)

By Geoff Nairn

Simply sign up to the UK banks myFT Digest -- delivered directly to your inbox.

Like it or not, banking is moving online in a big way. But as the number of online banking customers grows, so too do the security risks, particularly for high-value commercial banking transactions which make a tempting target for cybercriminals.

HSBC , the global banking group, wants to encourage more commercial customers to use internet banking. But it has long recognised that the security measures used on its personal banking website – a combination of PIN and challenge phrase – were insufficient for business accounts.

To allay widespread fears about internet security among its personal banking customers, HSBC promises to refund the amount of any unauthorised transaction conducted online.

But for commercial customers, the value of transactions can be quite high – HSBC’s UK commercial customers have a £100,000 daily transaction limit – and the risk to the bank is consequently much greater.

To reduce the risk, HSBC recognised it needed a way to better authenticate its commercial users.

“Most banks just re-badge their personal internet banking offering for commercial customers but we recognised that businesses need greater functionality and also better security,” says Trevor Oney, Senior Manager, HSBC’s senior manager for e-commercial banking in the UK.

In 2002, HSBC began to use digital certificates to authenticate its UK commercial banking customers.

“It was spectacularly successful and the fraud levels we got using digital certificates were truly minuscule,” says Mr Oney.

Nevertheless, the use of digital certificates created support headaches for the bank. As the certificate – a small piece of software code – is installed on a specific PC, the customer must always use the same computer to access their bank account.

In addition, certificates periodically expire, obliging customers to download new ones. Sometimes, the certificate was deleted by accident – when a new operating system was installed, for example.

According to Mr Oney, these issues led HSBC to look at a less “intimidating” way to protect its commercial banking customers.

Security experts have long argued that the best way to prove that people really are who they claim to be is using “two factor” strong authentication and this is the approach HSBC chose. With two-factor authentication, the user can only access the site if they successfully pass two separate challenges: one based on something they know, such as a PIN or mother’s maiden name; and the other based on something they own.

In the case of the HSBC, the object of desire is a small electronic device called a “token” which generates a fresh password each time a button is pressed.

The tokens are supplied by Vasco , a Belgium-based company specialised in authentication technologies.

Tokens have been used for security applications for some time– one common application is to authenticate remote users trying to access a corporate intranet –but most deployments to date have been limited in scale.

Nevertheless, for HSBC’s internet banking initiative, the bank ultimately wants to distribute the devices to all its commercial banking customers that have registered to use online banking. That is around 400,000 users or half the total number of business customers that HSBC has in the UK.

The high penetration rates might surprise those critics who once argued that internet banking would never be as popular as branch-based banking.

Mr Oney says customers are today more inclined to use internet banking, particularly for mundane transactions, and the banks actively encourage this by charging lower fees on transactions conducted online.

With such a high number of internet banking users, HSBC realised that it needed a device that was low-cost and, equally important, easy to use if the bank was not to be once again swamped with customer support issues.

Some of the Vasco tokens incorporate keypads for higher security, but for reasons of cost and usability, HSBC ultimately opted for a simple low-end model, the Digipass GO3, which has just a single button and a small LCD screen. The device costs around £2 in large quantities.

Once the user has typed in their user ID and PIN on the internet banking login screen, the system asks for a second password, called a one-time password (OTP). To generate the OTP, the user presses the button on the Digipass device and a unique number is displayed on its LCD screen. The user then types the OTP into the appropriate box on the online banking screen and gains access to the account.

The OTP is valid for 16 seconds, so even if an enterprising hacker had discovered a way to intercept the user ID, PIN and OTP as they pass to the bank’s website – highly unlikely as communications are encrypted using SSL technology – then the hacker would have just 16 seconds to attempt to enter the site. Once the 16 seconds expires, the OTP expires and another one has to be generated.

The tokens have to be physically sent to the users, which creates a potential weak link. Nevertheless, Mr Oney says that even if token is intercepted it will be useless to a would-be hacker because an activation code is needed before it can be used. The activation code is sent separately via internet to the registered user.

Since the initiative started in April 2006, the bank has sent out 27,000 tokens, starting first with new customers.

According to Mr Oney, there have been no complaints about the system and the bank now wants to migrate all its online commercial customers to the new system.

The same token technology has already bee used on a smaller scale with HSBC customers in the US and Hong Kong, and ultimately HSBC plans to roll it out to all the countries where it operates.

Mr Oney says that the token adds an extra layer of security to HSBC’s existing security measures. Even if it is breached, the bank has other security cards up its sleeve. He is reluctant to give too many details, but one measure is to monitor atypical behaviour – sending a high-value transfer to an account in a foreign country that is not on a list of regular payees, for example.

“Technology is important but we adopt a layered approach to security so the OTP is by no means our last line of defence,” says Mr Oney.

Promoted Content

Follow the topics in this article.

  • UK banks Add to myFT
  • HSBC Holdings PLC Add to myFT
  • UK Add to myFT
  • Financial Times Add to myFT

Comments have not been enabled for this article.

International Edition

IMAGES

  1. Case study on hsbc bank limited system analysis by Md Papon

    a case study of hsbc

  2. Hsbc case study: The Role That Personality and Motivation Play in Con…

    a case study of hsbc

  3. Mini Case Study

    a case study of hsbc

  4. Case Study

    a case study of hsbc

  5. Case study HSBC

    a case study of hsbc

  6. HSBC CASE STUDY presentation

    a case study of hsbc

COMMENTS

  1. HSBC Case Study

    HSBC Case Study | Google Cloud HSBC: Using Google Cloud to improve customer service at call centers About HSBC HSBC Holdings PLC, the parent company of HSBC, is headquartered in...

  2. AWS Innovator: HSBC

    2020 AWS and HSBC Reach Long-term Strategic Cloud Agreement HSBC Holdings plc selected AWS as a key, long-term strategic cloud provider to drive its digital transformation and deliver new and personalized banking services.

  3. Case Study: HSBC'S transformation as a bank for small

    Case Study: HSBC’S transformation as a bank for small business HSBC Kinetic is a bold move by the 6th largest bank in the world. It’s an app-only digital bank servicing small businesses and a chance for the 160 year old bank to remake itself. Tearsheet Editors | November 13, 2020

  4. Case study: HSBC

    Case study: HSBC on linkedin (opens in a new window) Case study: HSBC on whatsapp (opens in a new window) Save. By Geoff Nairn. Jump to comments section Print this page. Stay informed with free ...