IT and outsourcing costs went up at HSBC last year, as work progressed on a new phase of the bank’s global standardisation plan.
The SAP-based bank, which is standardising products, processes and technology under the One HSBC programme, said global general and administrative expenses for the six months to 30 June rose 17 percent to $4.9 billion (£3.1 billion), compared with the same period the year before. This was attributed largely to a growth in outsourcing and marketing spending.
In Europe, where the bulk of these expenses were incurred, general and administrative spending grew 13 percent to $3.1 billion (£2 billion). In a statement to investors, the bank said that the rise was “driven by higher services contracted out and IT costs”. Increased rental expenses following the sale and leaseback of the bank’s head offices in Canary Wharf also played a part.
The programme is aimed at ultimately cutting costs and improving processes, but is expected to incur substantial costs in the short term as a result of the large changes being made.
As the bank reported profits had more than doubled to $11 billion, it said it was making progress with One HSBC. It added that it “continued to invest in infrastructure and process redesign in order to contribute to progress through the better use of direct channels, increased automation of manual processes, enhanced utilisation of Global Service Centres and elimination of redundant systems over time”.
As part of efforts to improve direct channels, the number of large businesses using HSBC online banking was grown by 17 percent to 55,000. A million small to medium sized businesses use the platform.
HSBC said it was continuing to work to use its “global scale and technology platforms to re-engineer the business and make sustainable reductions in its cost base”. Business would be overhauled by using common operating systems and business processes, offering common products and using shared services “centres of excellence”.
In the group’s annual results in March, it said it had completed the first stage of the One HSBC programme. This involved moving to regional shared services centres to help it standardise its processes.