HSBC hikes tech spend, scales up AI projects

HSBC has increased its spend on technology initiatives by 12.8% over the past year to roughly $3.6 billion in the first six months of 2023 as it attempts to enhance its capabilities and future-proof its business lines. Tech spend accounted for 23% of the bank’s $15.46 billion operating expenses during the first half of this year.

During the bank’s Q2 earnings call on August 1, group chief executive Noel Quinn said that while the company has remained committed to cutting costs, it has reinvested those savings into technology. “Delivering faster services, reducing friction, and offering more competitive products has been critical to improving the customer experience,” he said.

Quinn also revealed the bank is exploring further integration of generative AI across its businesses, in line with other financial services firms and tech vendors hoping to capitalize on the emerging tech, including Deutsche Börse, IBM, and MSCI. Quinn said the company now has a selection of “test-and-learn use cases,” and is scaling them up.

Generative AI became the topic du jour earlier this year following the launch of ChatGPT, the large language model powered by OpenAI, and the ongoing conversation around how this subset of AI will impact human workers.

In February, HSBC’s equity, data science and ESG team published a report on generative AI regarding the “intense hype” around the tech, concluding the report by saying that while there are potential exciting applications for the business, generative AI had some “serious social concerns” around it as well. But the team added that they believed “risks posed by generative AI could ease as the market matures, regulatory initiatives increase and knowledge of the technology rises.”

On the call, Quinn also said that one of HSBC’s key tech investments has been in its digital trade platform, HSBC Trade Solutions, which launched in October last year in the UK and Hong Kong—the company’s two largest markets. HTS allows clients to originate and manage all their trade finance products online with increased automation and straight-through processing on an API-native flexible tech stack.

Since the initial rollout, more than 26,000 business customers in Hong Kong and the UK have been migrated to HTS, which Quinn said is instrumental in enabling the bank to future-proof a market-leading business.

“Investing in technology is also key to enhancing our capabilities and building the bank of the future,” he said.