HSBC: Challenges and Resolution
Identifies a challenge or opportunity in HSBC bank that has multiple and varied approaches to its resolution.
HSBC is an international Bank and financial services company, started its operations in 1866, with headquarters in Hong Kong and Shanghai. This bank is the seventh largest in its assets and also the largest bank in Europe. HSBC has four major operations, commercially in banking; International and Investment funding, Trade and Treasury Managing, International and Private Banking. The bank has marked its presence significantly, in the worldwide markets of finance, having its operations in America, Asia Pacific, and Europe. HSBC is recognized as a conventional and risk-averse strategic corporate (Brownsell & A, 2009).
HSBC is primarily marked on the stock trades of Hong Kong and trade stocks of London. It has been the second largest listed company with the latter. The company has thirty thousand and nine hundred offices in sixty-seven states across Africa, Asia, Europe, and America. HSBC has been marked as the most moneymaking corporate with $19.13 billion of total revenue in 2007.
To manage its business operations during the time of economic crisis HSBC endures leading its conservative tactics, intended at the approach of risk-averse as compared to other corporates (GHEORGHE & C, 2015). A group which is solid and an esteemed bank who vigorously accomplishes its possessions, market and sales prices worldwide and is graded as the most money-making bank in the world. The strong occurrence of the groups on the market of finance is the secret behind its success in the world.
A company which is supported up by 330,000 workers, employed in 85 states, 210000 shareholders and 128 million worldwide. These figures indicate company’s unmatched presence in the global world market.
HSBC Direct: it’s a banking over the phone or online direct banking operations which entices clients through money advancing, accounts and finance support. The bank was established in the USA first and after its success, it was launched in other states including South Korea, Canada, Australia, France, Taiwan, and India.
HSBC net: this offers the transaction functionality of the bank, which ranges from the outflows and management of cash to the services of trade. This amenity is widely utilized for the international customers and the wide corporate. The international e-commerce bank’s plan for its trade and the international customers are also under this brand.
HSBC Advance: this is a group product which is typically used by working professionals. This is for days today baking services like transfer of salary, ATM card advancements, recent account and fund accounts, business plan of protections and financial techniques. The HSBC empowers the users to open an account in any state and helps in their credit history transfer.
HSBC’s principal business groups and divisions
HSBC Premier: this product is the premium fiscal facilities product of the bank. It has its own Select card called HSBC Premier World Card. The users having this card have a steadfast premier special relationship executive, 24-hour admittance internationally to the call centers, permitted banking facilities and favored charges. HSBC has made a special slogan for this “Premier for one, Premier for All”.
HSBC has four business groups to organize its customer-facing activities those are commercial Banking, financially supporting, sales banking and treasury administration, and private and international banking.
Commercial Banking: the bank provides financial services to small, medium-sized and middle-market enterprises. HSBC has around 2 million customers including sole proprietors, partnerships, public quoted businesses and incorporated businesses.
Global banking and markets: for its institutional and corporate clients the bank provide investment banking and financial solutions which includes corporate banking, investment banking, payments and cash management, trade services and asset management services.
Global private banking: the banks private banking is very famous in the market providing facilities to the high worth customers and their families across ninety-three settings of Europe, America, Middle East Africa and the Asia-Pacific region.
Banking of sales and the administration of treasury: wide ranges of private economic facilities, including existing and savings accounts, loans, financing of the car, insurance, credit cards, pensions and funds obliged to over fifty-four million users (Virgo & J, 2013).
Group service centers: To lower the cost of facilities in the states that are developed, HSBC is familiar with the work of processing to decrease the cost of economies to save the money. HSBC has started its operations in cities like Pune, Bangalore, Gurgaon, Hyderabad, Kolkata, Guangzhou(China), Kuala Lumpur (Malaysia) and Curitiba(Brazil) to take on work as the processing of data and services to the users and internal software engineering.
In the future, the bank will essence on the tactical and arranged areas for the operations in all over the world with the further prominence on the management of human resource with strategies and technically innovative applications within the group. These two aspects will enable HSBC to run quality amenities and win the markets internationally. Namely, the enhanced and new security systems will avoid leak in the security systems and avoid further leaks of information. In the light of the ongoing financial crisis, the bank will not apply the $25 billion. Fund showed by the government of UK to save the banking system of the state. This method is completely different from those that are leading by the groups from its main rivals at the present. HSBC plans to lend $ 750 million to underpin the capital base of UK. With this persistence over the last four years the bank has issued finances to aid other banks of UK.
Aims
The answer to the question of saving the electronic-based transfers of cash is a complex procedure of keeping currency to count on upon several parts and measures all allied finished an erratic system all around the globe.
Systems to be used by the HSBC in future are:
- Firewall enterprise and management.
- Group of structures.
- Settings of web and enabling the internet facilities.
- Management of security.
- Interruption Recognition Arrangement
- Host developed methods
- internet commercial submissions including the Lending, payment, investing.
- Inward organization servers.
- Software design for sustenance.
HSBC has been doing very well in the local and global market all these years until 2016 when there was a 62 percent fall in pre-tax profits. There are numerous reasons for the fall which are both internal and external. After a careful reading and going through lots of articles on the internet here are some major problems or the challenges the company is facing:
The current scenario of HSBC Bank in Oman highlights that the company has achieved the higher customer base, but lacks the systematic performance schedule to provide the most effective customer services. It is due to the lack of proper communication that prevents the company from building the synchronized work atmosphere and the effective teamwork. The study would thus shed lights on the importance of the effective communication to build the strong teamwork.
The current Geo-Political Situation: HSBC being a global company with their huge presence in the European an US markets. The company has a major shareholding in both North and South America with headquarters in USA, Canada, Mexico, Bermuda and HSBC Finance Corporation. Trump and Clinton have big differences in their policy proposals which create uncertainty post-election policy outcome. This uncertainty could potentially affect the direction of both the US and global economy and markets. Especially Business Tax, Income Tax, Trade Agreements and Immigrations. This led to investors not to invest in portfolio though the effect was the only short term.
The BREXIT Effect: when BREXIT took place HSBC’s net profit fell by 82 percent, it damaged the profit margins, non-existent interest rates and increase in regulations. HSBC’s profits thinned down from its private banking operations in Europe. The Swiss-based unit came to controversies in a tax fraud in 2015 resulting in huge fines and forced restricting of the division. The bank deemed its performance satisfactory even after evident reassurances and explanations the traders did not believe, and the bank faced the huge financial crisis. While this was already going with the bank, BREXIT took place and in the preparations, the bank announced $300 million in permissible and repositioning fees, as it planned to move its 1000 staff from London to Paris. In the half of 2017, the bank had $4 million for the cost linked with the UK withdrawal. The company has planned to move the London based funding bankers to Paris about of its one-fifth value, the movement of the employees is expected to incur a damage of $1 billion of profits.
Compliance and Regulatory enforcement: HSBC has been into many controversies after 2009 like money laundering, US Senate investigation, $3.5 billion scheme of currency, Forex Scandal, Libor and Euribor to mention a few ( Naheem, 2016).
The bank stated it is liable to an audit according to the section 166, where the manager gives a free congregation, including the firm’s book accounts and the aptitude to scrutinize the control and checking the balance of the corporation.
HSBC was obliged to make repayments with a calculation of $1.9 billion to the experts of US after it was initiated to have scarce of control management setup. They were directed to announce a free consistency of screening, recognizing the probable unreceptive to tax matters. The bank is furthermore subjected to the examinations of progressing and studies by the Justice Department of US.
Money Laundering: HSBC was caught laundering Black money through India after a strict undercover investigation was done by a media outlet in India where the bank officers were caught in the camera. HSBC has been whacking illegal money with a value of ?60 billion (US$920 million) in Geneva. Also, for suspected drug dealers and criminals, HSBC has set up offshore accounts in New Jersey (Lopez, Linette, Warren, 2013). In June 2015, the bank was fined 40 million Swiss francs, after money laundering investigation conducted by Geneva Authorities.
US Senate investigation: US officials ordered HSBC to reinforce the laundering practices for the anti-money plan. US Senate published a report in July 2012 which stated that the bank has breached the currency valeting rules, had abetted Iran and North Korea to evade US nuclear weapon agreements.
Currency Scheme: HSBC bank alleged $3.5 billion currency scheme scam done by the executives of the bank to its own clients for manipulating the foreign market trades to profit themselves and the bank.
Likewise, there were more scandals and controversies which attributed to bank poor performance and, the investors and the traders could not trust the bank anymore.
The Global Technological Disruption: while the world is fast changing, embracing technology and depending more on the internet for the day today bank activities. The concept is changing fast, with doing day to day banking activities over the internet than following traditions banking business model. These days the bank may need less manpower, but technological infrastructure and transformation are very much required. This transformation requires huge investment and the bank requires to invent and transmute faster than other corporates to detention its anticipated role markets locally, provincially and internationally. There was slow down in the technological features of the bank, causing the outage, customers have observed that their accounts were not showing the details but only a plain text.
Approaches of Activities
The communication and organizing activities of the organization are determined by two approaches one is the container approach and another one is the social constructionist approach. The container approach assumes that organizations are independent entities in which the communication takes place in a hierarchical way, and the hierarchy influences the direction and content of the information flow. In the social constructionist method, the communication itself produces the shape and form of the organization. Like in this situation the members of the organization constantly keep on funneling the information through one person and centralized network and the central hub controls the information flow.
When the content of the communication is changed and it is being directed towards a large group of people then this creates a new organizational structure which is termed as decentralized networks. In order to define the organizational communications, it is important to determine the way the employees view the relationship between organization and communication.
The HSBC Oman should work towards creating the communication channels which can properly link its organization and communication strategies so that the group formation norms are made effectively and the communication can take place efficiently (Al-Muharrami, S, & Murthy, Y. S. R, 2017).
The container approach is irrelevant for HSBC Oman as it only serves the purpose of linking the message channel to the receiver while the social constructionist technique, the administrative communication, the communication dialectal is required to generate diverse social edifices like networks teams and social relationships (Davies, 2017).
The constraint which HSBC Oman is facing is that its pre-existing organizational structure and the definition of communication has created potential disruption of communication for the organization. The bank needs the communication methods that create potentialities for development for the bank instead of creating inhibition in development.
The organizational communication has five major parts which start with the organizational leadership, the team formation and team structure, the communication networks within the organization, the culture of the organization and how the organization learning takes place.
The development of effective communicational transparency helps in generating the detailed understanding of any organizational function. The establishment of the effective communication helps the associated employees to identify their responsibility in accomplishing the corporate goal. The following framework suggests the flow of communication that is needed to be maintained to communicate and convey the messages to the receiver. The stages of creating the communication that starts with the ideas of the sender and passing through the encoding stages, transmitting via signals, reaches to the receiver to the decoded message. The establishment of such communicational transparency is much beneficial in establishing effective teamwork within an organization. The framework below suggests the four stages of Teamwork introduced by Tuckman. It describes that the effective teamwork is developed by the formulation of the effective relationship and communication. The stages, such as forming, storming, norming, and performing present the orientation of the teamwork that can be formulated through effective communicational transparency. The communication is also essential to create the focus on the task and inform the allocated responsibility within the workplace. Hence, it can be stated that the communicational transparency within an organization impacts on the development of the profitable work scenario by formulating efficient teamwork.
The communication network is defined as the group of individuals who can identify and work on identified lines of regular communication. All these lines determine that who talks to whom about what and when at what place.
The network theory and literature determines that whether the communication system should be centralized or decentralized, a centralized communication is good for small organization which has a limited number of employees and decentralized communication network is good for the large organizations which have a large number of employees between whom the continuous communication takes place. The decentralized network is good for HSBC Oman as the organization has a complex business environment and each member of the organization is responsible for contributing with ideas and knowledge for increasing the operational efficiencies of the organization.
It is being recommended for HSBC Oman that the Network Should be like that which facilitate the efficient dissemination of the information, accurate planning, and rapid acquisition. The different networks forms of the organization are that the organization should employ flat hierarchies so that the flexible communication can take place in the time of need. HSBC should develop a flexible relationship with the network within the organization which connect the bank with the country bound network. The bank should use information technology to bring together the employees scattered in different geographic locations. The bank should emphasize the use of self-managed and autonomous teams.
Conclusion
In the end, it can be concluded that if HSBC applies appropriate organizational strategies then its communication issues can be resolved and its operations in Oman may improve (Ziadah & R, 2017).
Outstandingly responses for the assets by providing the services of electronic banking (Xu & P, 2017). The Private banking through the internet settings, HSBC facilitates the users to transfer and have their money online anywhere. The bank works with the support of technology of IT in its employed location to provide an opportunity for economic supervisions. One of the monetary organizations gave to its clients all over the globe is the capacity of saving the money which has turned into an emergent outline with the contemporary Insurgency of web computing settings.
There is a need to develop the infrastructure for resolving the issues which the public is facing on the web settings with the advancement in the submissions is often intricate and based on inherited arrangements.
- There is a need to rationalize the systems of support according to the present demands of people changing with the change in technology.
- The bank should provide with the accessibility to the proficiency of safety and security with the online facilities.
- They should be supporting technically for the organization by specific corporates, which dictate a lot of money.
- The risks of security should be calculated which the business is having, including the computer program, hacking systems, and scam.
They should have made the security openings to the clientele’s individual data to any other person, which can make the clients to trust the group. There is a need to develop the features of the physical sanctuary of all computer hardware. Updating of the equipment accounts and imposition finding tackles id needed. The assurance with commandments and guidelines is required for the advancement of the HSBC bank.
References
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HSBC to secure online business customers. (2006). Computer Fraud & Security, 2006(4), p.2.
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HSBC’s Deferred Prosecution Agreement, Statement of Facts. Case 1:12-cr-00763-ILG Document 3-3, December 11, 2012.
Lopez, Linette. Elizabeth Warren Savaged A Treasury Official During A Hearing On HSBC’s International Money Laundering Scandal. Business Insider. March 7, 2013.
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Virgo, J. (2013). Investment risk, loss, and causation: After Rubenstein v HSBC Bank Plc [2012] EWCA 1184. Trusts & Trustees, 19(5), pp.430-434.
Xu, P. (2017). The Global E-commerce Strategy in the Banking Industry: a Comparison of HSBC and Barclays.
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