Strategies of Two Banking Giants
Many of us share a fairly basic view of banks. They are places to store money, make basic investments like term deposits, sign up for a credit card or get a loan. Behind this mundane view, however, is a highly regulated system that ties our day-to-day banking back into the wider financial system. Banking environment has become highly competitive today. To be able to survive and grow in the changing market environment banks are going for the latest technologies, which is being perceived as an ‘enabling resource’ that can help in developing learner and more flexible structure that can respond quickly to the dynamics of a fast changing market scenario. It is also viewed as an instrument of cost reduction and effective communication with people and institutions like with the banking business. Information Technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. Internet has significantly influenced delivery channels of the banks. Internet has emerged as an important medium for delivery of banking products and services. As the impact of IT has grown in organizations, IT strategy is finally getting the attention it deserves in business. Nevertheless, most organizations are still in the very early stages of learning how to develop an effective IT strategy and synchronize it with an overall business strategy. Getting the balance right between the many different ways IT can be used to affect a business is a constant challenge for today’s leaders. HSBC and Citigroup are both the largest global banks of similar size that uses Information Technology but in different approaches and strategies. This paper discusses how their IT strategies enable them to improve both of their financial performance in the future, how does their IT strategies differ from each other and which bank is cleverer in its IT strategy.
Ma. Eliza Jijeth V. dela Cruz
Would IT Investment strategies enable them to improve financial performance in the future? Strategic planning can be described as the process of using systematic criteria and rigorous investigation to formulate, implement, and control strategy, and formally document organizational expectations. However, more recent studies (Miller and Cardinal, 1994: Schwenk and Shrader, 1993. e.g., methodological flaws, nonrobust statistical methods) provide convincing evidence and additional support for their conclusions that strategic planning does indeed result in superior financial performance.
Because of the modification in the strategic environment of the financial industries, HSBC and Citigroup changed their strategic posture by investing in information technology that will lead to delivery of their products and services across the globe, cutting costs, and establishing their strategic position. Both the banks verified that their IT investment strategies will enable them to develop financial performance through their benefits.
Expanded their global reach to over 150
countries and territories
Enhanced the banking experience with
provision of intelligent banking service
Led to rapid decision-making and local
Increased customer base to 1.2 million
internet banking customers, 177,000
customers using TV banking
New technology introduced like
internet payment gateway, mobile
banking, online storefronts, TV banking
Internet sales increased by 25%, 2006
with over 250,000 new online savings
Better understanding of customer needs
and enhanced targeting and analytical
In personal finance services, IT services
helped in increasing customer by 40%
to 16 million and online sales volume
Helped in meeting the objective “better
serve clients and lower costs”...