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Introduction

An information system is a combination of any forms of information technology and


activities which are carried out by the people in the organization in order to support the management,
operations and decision-making process in the organization. HSBC is organized within four business
groups as Commercial Banking, Global Banking and Markets (investment banking), Retail Banking
and Wealth Management and Global Private Banking. The HSBC Group, one of the world’s largest
banking and financial services organization headquartered in the United Kingdom, had its
beginnings in Asia more than 130 years ago. The Group has some 9,500 offices in 79 countries and
territories in Europe, The Asia-Pacific region, The Americas, the Middle-East and Africa. In
Bangladesh, its head office in Dhaka, a full-service branch in Chittagong and three full-branches in
Gulshan, Mothijheel and Dhanmondi Two sub-branches (booth) in Uttara and Sylhet represent
HSBC group. HSBC is the first bank to receive the ISO9002 accreditation in Bangladesh.

The bank has around thirty-one thousand and two hundred employees and almost one
hundred twenty five million customers around the world. HSBC has many areas such as:
environment, community, education, and project to support volunteer programs and charities. HSBC
has a wide-ranging international network through advanced technology, HSBC network includes a
providing financial services, personal financial services, rapidly growing e-commerce capability,
commercial banking, investment banking and markets, private banking, and other corporate services.
It is a network of computers which has connected the distance of financial transactions and has
limited the time of transfer into seconds rather than days, months or years.

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A. Firm Profile

The role of HSBC Operations, Services and Technology is to:

1) Run and deliver customer operations and help manage change in the bank.
2) Develop software and applications that underpin HSBC’s banking systems.
3) Manage IT systems, infrastructure and support.
4) Implement major strategic change programmers.
5) Provide professional services such as procurement and real estate management.

Global Operations is responsible for activities including:

1) Managing the day-to-day transactions of our Retail Banking and Wealth Management
business.
2) Running operations for our Commercial Banking business and supporting our Global Private
Banking and Global Banking and Markets businesses to serve customers across their global
networks.
3) Simplifying the way we run HSBC, introducing automation to reduce workload and costs and
improve the experience of customers.
4) Helping to drive change for the bank’s global businesses and functions, for the benefit of
HSBC and our customers.

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B. Business Start-up

HSBC’s founders started out in 1865 with a clear and simple aim to establish a bank in
Hong Kong and Shanghai for the support of local and foreign trade ‘which has become So much
more extensive and varied than in former and today they serve around 38 million customers
worldwide in 67 countries and territories. The inspiration behind the founding of the bank was
Thomas Sutherland, a Scot who was then working for the Peninsular and Oriental Steam Navigation
Company. He realized that there was considerable demand for local banking facilities in Hong Kong
and on the China coast, and he helped to establish the bank which opened in Hong Kong in March
1865 and in Shanghai a month later.

Soon after its formation, the bank began opening branches to expand the services it could
offer customers. Although that network reached as far as Europe and North America, the emphasis
was on building up representation in China and the rest of the Asia-Pacific region. HSBC was a
pioneer of modern banking practices in a number of countries for instance, in 1888 it was the first
bank to be established in Thailand, where it printed the country's first banknotes. From the outset
trade finance was a strong feature of the local and international business of the bank, an expertise
that has been recognized throughout its history. Bullion, exchange, merchant banking and note
issuing also played an important part. In 1874, the bank handled China's first public loan and
thereafter issued most of China's public loans.

By the end of the century, after a strong period of growth and success under the leadership of
Thomas Jackson (chief manager for most of that period from 1876 to 1902), the bank was the
foremost financial institution in Asia. The experiences of the past 150 years have formed the
character of HSBC. A glance at our history explains why we believe in capital strength, in strict cost
control and in building long-term relationships with customers. HSBC has weathered change in all
forms revolutions, economic crises, new technologies and adapted to survive. The resulting
corporate character enables HSBC to meet the challenges of the 21st century.
Major key milestones of its development and achievements.

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Years Achievements 2012 for HSBC Bank Malaysia Berhad

1) Best Bank in Malaysia – The Asset Triple A Country Awards (10th consecutive year)
2) Best Debt House – The Asset Triple A Country Awards (6th consecutive year)
3) Best Domestic Cash Management Bank – Euromoney (Euromoney Cash Management Poll
4) Best Foreign Commercial Bank – Finance Asia
5) Best Foreign Bank – Alpha Southeast Asia
6) Best Sub-Custodian (HSBC Bank Malaysia Berhad) – The Asset Triple A Securities and
Fund Services Awards (5th consecutive year)

Years Achievements 2011 for HSBC Bank Malaysia Berhad

1) Best Bank – The Asset Triple A Country Awards (9th consecutive year)
2) Best Debt House – The Asset Triple A Country Awards (5th consecutive year)
3) Best Sovereign Sukuk (Government of Malaysia’s USD1.25 Billion Sukuk Ijara Trust
Certificates. HSBC was Joint Lead Manager and Bookrunner) – The Asset Triple A Asian
Awards.
4) Best Islamic Commodity-Linked Murabaha (Cagamas RM230 million variable Sukuk
Commodity Murabaha. HSBC was Joint Lead Manager) - The Asset Triple A Asian Awards
5) Best Islamic Deal Thailand (Trans Thai-Malaysia (Thailand) RM600 million Sukuk. HSBC
was Joint Lead Manager/Bookrunner and Shariah Adviser) - The Asset Triple A Asian
Awards

Years Achievements 2010 for HSBC Bank Malaysia Berhad

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1) Sovereign Deal of the Year (HSBC Amanah Malaysia) (Government of Malaysia US$1.25
billion global Sukuk Al-Ijara issue) – Islamic Finance News Awards
2) Cross Border Deal of the Year (HSBC Amanah Malaysia) (TTM RM600 million Sukuk
Murabahah) – Islamic Finance News Awards
3) Tawarruq Deal of the Year (HSBC Amanah Malaysia) (Cagamas 3 variable rate) – Islamic
Finance News Awards
4) Best Islamic Finance Deal Of The Year In Southeast Asia (Trans-Thai Malaysia (TTM)
RM600 million Sukuk) – Alpha Southeast Asia
5) Best Reit Deal Of The Year In Southeast Asia (Sunway REIT RM1.5 billion IPO) – Alpha
Southeast Asia

Years Achievements 2009 for HSBC Bank Malaysia Berhad

1) Best Bank - The Asset Triple A (Country Awards)


2) Best Debt House Malaysia– The Asset Triple A
3) Best Domestic Cash Manager – Euromoney
4) Best Foreign Exchange Provider – Global Finance
5) Best Foreign Commercial Bank – FinaneAsia
6) Blueprint Award (RAM Award of distinction 2008) (MRCB Southern Link Berhad Sukuk
Transaction) – RAM League Awards 2009

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C. Business Problem

The 4 challenges facing HSBC banks and financial institutions

1) Not making enough money. Despite all of the headlines about banking profitability, banks
and financial institutions still are not making enough return on investment, or the return on
equity, that shareholders require.

2) Consumer expectations. These days it’s all about the customer experience, and many banks
are feeling pressure because they are not delivering the level of service that consumers are
demanding, especially in regard to technology.

3) Increasing competition from financial technology companies. Financial technology


(FinTech) companies are usually start-up companies based on using software to provide
financial services. The increasing popularity of FinTech companies is disrupting the way
traditional banking has been done. This creates a big challenge for traditional banks because
they are not able to adjust quickly to the changes not just in technology, but also in
operations, culture, and other facets of the industry.

4) Regulatory pressure. Regulatory requirements continue to increase, and banks need to


spend a large part of their discretionary budget on being compliant, and on building systems
and processes to keep up with the escalating requirements.

Business Problem, Opportunity/Challenges which required an IS solution

Competition from other operators.

OCBC Bank is one of the organization competitor of HSBC Bank.

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1) Good FLEX scheme to pay for health, insurance and other expenses

2) Staff reimbursements are relatively fast

3) Human Resource policies and benefits are often refreshed and enhanced

4) Well-stocked pantry

Dependency on a few major customers.

Wide ranges of services are offered to the customers who hold these accounts. Some such services
for customer are:

1) Free ATM Card, check book & phone banking service

2) Cheques/cash deposits

3) Standing instruction

4) Quarterly/monthly statement of account

5) Foreign currency Endorsement against travel quota and sale of Travelers cheques (Thomas
Cook).

6) Issue of Solvency/Bank certificate

7) Payment orders, demand drafts, Telegraphic transfers.

8) Inward and outward funds transfer and receiving.

Majority of material business contracts are in the form of frame agreements.

This Agreement governs the principles and procedures pertaining to the capital markets
services and products that will be offered by the Bank to the Customer along with any associated

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rights and obligations of the parties designated in compliance with Capital Markets Law No. 6362,
Communique No. III-37.1 on Investment Services and Auxiliary Services, Communique No. III.39.1
on the Establishment and Operating Principles of Investment Institutions, Communique No. III.45-1
on Communiqué on Principles Regarding Investment & Ancillary Services Documentation and
Record Keeping that have been published by the Capital Markets Board as well as other associated
regulations. The Agreement is a framework agreement detailing the general terms and conditions
applicable to the Transactions to be executed by and between the Bank and the Customer, with
reference to the special terms established in the Annexes and the Transaction Receipts issued for
each Transaction type.

In this context, transactions executed with the Customer, for mutual fund, treasury bond,
government bond, repurchase or reverse repurchase, Eurobond trading, account transactions, over-
the-counter derivatives, private sector debt instruments, asset-based securities, asset-backed
securities, lease certificates, gold and other precious metals compliant with the standards set by the
Under secretariat of Treasury, and other capital market instruments to be approved by the CMB, are
governed by the provisions of this Agreement. In principle, a separate agreement is executed in line
with the provisions of the Capital Markets Law and relevant regulations for brokerage activities to
be performed for capital markets instruments that are not included in the capital markets instruments
(investment products) listed.

However, in case a separate agreement is not signed or even if such an agreement is signed,
there being no provision in such an contract that has been signed, the provisions of this Agreement
shall be applied by comparison in a manner befitting the nature of the transactions.

Subject to liquidated damages claims or service level penalties.

In the event that the property or personal goods are stolen, willfully damaged or accidentally
lost, are port must be made to the Police or to the nearest government agency or authority and must
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do this within 24 hours of learning of the theft, loss or damage and the report must list and describe
the missing or damaged items or personal goods. If the loss or willful damage occurs overseas a
copy of this report must be obtained, and the authority must sign the copy and write on it that it is a
true and accurate copy of the original.

In the event that an item is damaged, lost or stolen

May choose to:

1) repair the item

2) replace the item, less an amount which takes into consideration its age as shown below; or

3) pay you the amount it would cost us to replace the item less an amount which takes into
consideration its age as shown below. However, for the under no circumstances will pay the
customer more than it originally cost you to buy the item and where the item is part of a pair
or set, you will receive no more than the value of the particular part or parts lost, stolen or
damaged, regardless of any special value that the item may have by way of being part of
such pair or set; and where we choose, we may require proof of ownership or purchase from
you. In instances where you are not able to supply proof of ownership or purchase or other
evidence which we deem satisfactory for the purpose of proving ownership or purchase, we
may be unable to properly assess or approve your claim and the last one is property or
personal goods left unattended in a motor vehicle are only covered for A$150 per item to a
maximum of A$1,000 per event.

Humanistic factors

i. The lack of information of the managers and users as they don’t know exactly what they want
and what their information needs are.

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ii. The lack of information of the managers, users and staff team.
iii. The lack of participation of the managers and staff.
iv. The lack of acceptance of the system executers and resistance against the change.
v. The lack of accuracy in the data collected.
vi. The lack customer attitude

Organizational factors

i. The lack of good conditions for participation and collaboration of the managers, users and
system directors.
ii. The lack of consistency and complexity of the existing manual systems.
iii. The lack of evaluation of the existing power.
iv. Bad condition of educating the specialized forces.
v. The lack of human resources with management and computer fields and other required
specializations (the problems of absorbing human resources)
vi. Inadequate education of the users
vii. Inadequate and incomplete documentation

Environmental factors

i. The lack of quality criterion of the existing information systems.


ii. The lack of suitable consultants of the system and software.
iii. The lack of procedures and methodology and stages of creating the system.
iv. The lack of evaluation of environmental aspects in management information systems.
v. The lack of suitable use of mass media to develop the culture of using computer and
information systems.

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D. Technology-based solution

An installation and commissioning project is initiated when a company receives an order


from the customers. This ordering has been made through a system called HSBC. It enables utilities
to easily and effectively handle service order requests and manage critical information related to
installation and commissioning work. The system captures every order outlines including the overall
scope of work, location of the site and type of equipment to be installed. A project team will be set
up to focus on fulfilling the customer’s order. The company used modern computers and advanced
servers connected to an advanced network. All application systems are connected to the main server
so that the date is stored and filed on a central server. As such, it easy to retrieve data when it
needed. Apart from HSBC, the company has also built data system infrastructure and service
network to navigate competitive, operational, environment and regulatory demand. The system has
centralized data from real-time process automation system, it creates visibility across all HSBC
business segment. As a result, it provides more reliable and better-performing assets, streamlined
compliance and optimized human capital-leading to greater profitability and operational excellence.

The major reason of acquiring the information system application is to effectively and
efficiently support one or more business process involved within the company. Prior to the
acquisition process, the details requirement of the process should have already been identified by a
team in HSBC. More importantly, the business objectives of HSBC were identified for the solution
being sought and the management decision whether building, leasing, or buying the application
system should consider a value-versus-risk matrix to determine which options can be applied. Both
IT auditors and corporate management of the company evaluated offerings over the long term and
compare the “trickling” investment over time to the one-time cost of buying and implementing the
system. Moreover, this technology acquisition process requires an extensive evaluation considering
the system requirements, feasibility analysis, and risk management assessment. Therefore, HSBC’s
management team has experienced tough situation in decision making process for the acquisition of
information system. It requires the management to understand the fundamentals of how acquisition
of information system decisions related to management information system. Other important things
should be considered such as what are the expectations of the application system and how they will
be achieved.

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E. Addressing the challenges

A formal IT internal governance structure is in place in HSBC. The company is adopting a strategic
approach to governing IS in that will complement current MIS practices. Key issues are governed by
framework and the management team is responsible to make strategic decisions for IT, the
availability of an IT vision and a comprehensive IT plan. The accessibility to a comprehensive set of
IT policies, the setting of service targets to measure IS performance, rigorous risk management
practices.

As IT becomes increasingly crucial to the support, sustainability and growth of business, it is


imperative for HSBC management team to understand how to effectively measure IT performance.
The responsibility to control the formulation and implementation of IT strategy to ensure the fusion
of business and IT is called IT governance. The purpose of IT governance is to direct IT endeavors
to ensure that MIS’s performance of HSBC meets the following objectives:

i. IT is aligned with the Council’s businesses and realizes the expected benefit
All of the application systems used by the company have been aligned with the objective of
the company. None of the application system used by the company is fail to deliver its
functions in supporting the efficiency of the business. Business gains the expected benefits
from the application system that has been invested by the company. For example, the
ordering system from customers is very informative database that register every details of
ordering and custom request made by the customers.

ii. IT exploits opportunities and maximizes benefits


User friendly ordering system provided by the company led the customers to place work
orders and their requests reached the operations team. The system helps the operations team
to effectively response to the potential customer with the quotations and service agreement
and contract.

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The data of customers will be transferred to Customer Relationship Management System
(CRM) as its objective to acquire and retain customers. CRM recognizes that customers are
the core of a business and that a company’s success depends on effectively managing its
relationship with them. CRM focuses on building long-term and sustainable customer
relationship that add value for both the customer and the company.

iii. IT risks are managed appropriately


Internet fraud has grown even faster than internet use itself. Every company is exposed with
the downstream liability where innocent and unsuspecting organizations that have their
networked computers hijacked for use as pawns in attacks against other companies’ network.
Therefore, the company has taken into account its legal obligation to keep the system secure.
The company ensure with the laws governing statutory requirements, liability avoidance and
legal facilitation of prosecution for unauthorized access and use. HSBC has put its greatest
effort to protect themselves against such liability with using appropriate antivirus defenses.
The company always aware and ensuring the systems must be kept secure, not only from a
legal standpoint, but for its commercial dealings as well.

There are some views from stakeholders concerned including managers, employees, clients, partners
or customers concerning the new solution or service provided.

Clients

Managing production tasks, material handling, and inventories in short time intervals, at a low cost
and with high quality is critical for competitiveness. All of these activities are carried out by the IT
system in the company. Clients were satisfied with all the efficient jobs required by them. Besides
that, it greatly enhanced the interaction with other functional areas, especially sales.

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Staff

The IT system in HSBC enabled the managers increase their efficiency and effectiveness by using
the system for some of their routine functions. Every department managed to communicate well in
delivering the information within the business group. The integration of functional areas via ERP
system has a major impact on the skills requirements and scarcity of the employees. HRM managers
is usually actively involved in setting up the CRM program, which may serve employees as well.

Management team

The business environment is the combination of social, legal, economic, physical and political
factors that affect business activities. Significant changes in any of these factors are likely to create
business pressures. HSBC has IT support systems that enables the management team to respond to
these pressures. The system in place such as strategic systems and customer-focus are developed for
this purpose. The management team has satisfied with the functional of the systems. It would lead
the management team make right decision as their respond to the business environment pressures.

F. Lesson for Manager


a. Discuss three key lessons which managers in organization can learn from this case.

i. Managers acknowledge the need of IT system to be continuously enhance from time to time

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In this regard, IT systems have become critical for every companies, given the rapid change of
the global business. There are large numbers of companies have been investing in the IT systems
for their companies in ensuring the robustness and sustainability of the business. It also become a
platform for HSBC to gain competitive edge over competitors in the same industry.

ii. The system provide a solution to a supply chain problem

Supply chain problem can be very costly to companies. Therefore, organizations are motivated to
find innovative solutions. HSBC found a solution to solve the issue by building inventories as
insurance against supply chain uncertainties. The managers realized that this system may have a
problem to correctly determine inventory levels for each product and part. Therefore, the
managers would like to introduce another approach by the IT system. By monitoring the
inventory levels, HSBC know when inventory fall below the threshold for each product when
there are job orders.

iii. Effective communication is important to the managers within the company.

Currently HSBC is using a system called, the Electronic Data Interchange (EDI). EDI is
communication standard that enables business partners to exchange routine documents, such as
purchasing orders, electronically. EDI formats these documents, such as purchasing according to
agreed-upon standards and then transmits message using a converter, called translator. EDI
provide many the message travels over either a value-added network (VAN) of the internet. EDI
provides many benefits compared with a manual delivery system. It minimizes the data entry
errors because each entry is checked by the computer.

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Conclusion

HSBC is a global company with a huge turnover and many offices round the world. The
company had suffered terribly because of lacking a good information system which would be able to
cater for the processes, tools, data and people in the organization. The company had to deal with
many different applications which did not offer reliability, scalability and efficiency. There were
also certain security concerns that came about in the company. All these issues needed to be
addressed if the company was to continue growing and to make the company systems efficient and
effective.

On realizing this, the company embarked on activities to change their information system.
The new information system was a solution from Microsoft which is the company that designed
Microsoft Windows operating systems. The information system was known as the Common Desktop
Initiative. It also incorporates monitoring tools which ensured the company was able to monitor their
server and other network tools which made the company gain a lot of advantages as a result of the
introduction of this new information system. Some of these advantages include savings on cost and
savings in terms of not losing time and productivity of the company.

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Reference

Website

1. https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=3689&context=sol_research
2. https://www.hsbc.com.my/1/2/
3. http://www.about.hsbc.com.my/
4. http://www.about.hsbc.com.my/hsbc-in-malaysia
5. http://www.about.hsbc.com.my/news-and-media

Book

1. Introduction to information systems: Enabling and transforming, By Rainer and Turban

2. Information Technology Project Management, Kathy Schwalbe

3. Essentials of MIS, Kenneth C. Laudon

4. Management Information Systems: for the information age, Stephen Haag

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