Case 1, Submission by- Group 4

7 billion and 25000 new online savings accounts. Customers increased by 24% and 116% in online transaction volumes. personalized content and improve customer accessibility.000 customers with US $ provided common presentation and browser capability to offer all bank’s services to customers. leading to annual savings of $67 million.2 million internet banking customers over 150 countries with 76. spent $1 billion for coordination of comprehensive global credit card technology. ● In 2005. ● In 2003. 2G Innovative Business Solutions provided real time sales campaign activities and presented customers with personalized content user-related images and pre-filled forms. $164 million spent on second-generation hsbc. bank launched Global Technology centre by off-shoring.000 visits and 177. If this is the case how could these two banks justify their multi-billion dollar investments in IT? HSBC ● In 2001. Some have argued that companies should spend less on IT and wait longer to invest in more mature technologies because IT is a commodity and brings little competitive advantage. ● In 2004 with launch of HSBCnet.2 billion in deposits. bank provided range of transaction banking and treasury services to corporate and mid-level customers. Investment Banking and markets. improved service projects and online banking. ● In commercial banking. saved $30 million.Q1. Investment also included development of Finance Corporation’s WHIRL credit card system. Personal Bank Services : IT investment enhanced targeting and analytical insights to better meet customer needs and drive sales growth. number of customers registered for commercial banking increased by 43% with launch of new e-banking platform in 2004. HSBC Direct : Direct banking and Savings scheme reached 343. Bank invested in updating its websites for serving additional features. ● In 2006. raised US $5. ● In 2005. [40% growth in personal customer numbers to 16 million and 55% increase in online sales volume] . It served 1.650.1 billion spent due to increased activity supporting in new capabilities in Corporate.000 TV banking customers. ● In 2005. ● In 2002. $1.

● First Bank to offer pre-approved online mortgages and introduced 2300 self -service terminals through HSBCnet. HSBCnet served corporate and mid-market customers by providing transaction banking and treasury services. ● Investment in Customer Relationship Management System : Helped in providing additional intelligent services to customers. a joint venture with Merrill Lynch. ● Interactive Financial Services with IBM : offering multi-channel e-banking service. mobile banking for daily banking and share dealing. ● PayDirect from HSBC : Enabled secure online money transfers for customers with email address and bank account. leading to annual savings of $67 million.Q2. spent $1 billion for coordination of comprehensive global credit card technology. ● Executed “Manage for Value” strategy through e-commerce projects like internet gateway to allow merchants to authorize and accept credit payments. ● Merrill Lynch HSBC : online banking and broking service for affluent customers. or do they invest strategically with a view to entrenching their competitive positions? HSBC : Operational & Strategic Investments in IT ● In 2003. ● HSBC Universal Banking System : Risk and credit control system to manage and implement group projects and provide consultation services to meet local needs to keep up with the strategy of ‘World’s local bank’ ● 2G Innovative Business Solutions : Allows present customers with personalized content and pre-filled forms. raised US $5. How would you assess IT investment strategies at HSBC and Citigroup? Do they invest in IT primarily as a way of cutting costs and improving their operational efficiencies. ● Launched First Mondex Card : An electronic wallet to store money on a chip . enabled merchants to set up online storefronts. a joint venture with Master Card.7 billion. Citigroup : Operational Investments in IT ● Objectives of using technology: “Better serve clients and lower costs” ● Citigroup used IT to enhance its organizational strengths & capture expert knowledge of its extensive international branch network .

enhanced Citigroup Direct.Acquired Lava Trading.Launched new foreign exchange products. research reports. Internet units like e-Commerce.● ● ● Launched IT program to integrated Citibank systems into a standard global platform to cope with mergers’ demands. upgraded CitiDirect Online Banking(in 90 countries) ● Year 2004. insurance and mortgage services ● Introduces business-to-business e-commerce system (Citigroup Commerce) in Asia Pacific region ● Allowed clients to open A/C and transfer money using mobile phones using trial service with Mobile One in Singapore ● It accelerated its global growth in credit card business through 10 strategic acquisitions. created Global Transaction Services. interactive investment tools and offered online banking.Acquired Egg Banking Plc(leading online bank). authentication and certification to big companies and government organizations Citigroup : Strategic Investments in IT ● Strategic Alliances with Netscape.e-business and e-Capital Markets were created to empower business lines and Internet Operating Group was created to drive corporate internet strategy and coordinate across various divisions ● Creation of Citi. biometric credit card services in Singapore and biometric ATMs for microfinance customers in India . brokerage and insurance ● Introduced MyCiti. research & email exchange with financial consultants Launched e-Citi Commerce Solutions in 1998 to offer electronic bill payment presentation. joint venture with Shanghai Pudong Development Bank(issued first dual card currency in China ● Year 2006. AOL & Oracle to provide financial advice. emergence of new Euro currency and reprogramming required for Y2K program Development of internet based administrative platform to support development in pension and mutual funds and capabilities’ expansion to provide clients with round-the-clock account to become the first global finacial institution to offer account aggregation ● Made a strategic alliance with Microsoft Network and AOL to develop different online products in 2001 ● Year 2002. launched Citibank Direct. Global Securities services.“Citi on the Net”. reaching 100 million accounts in 2000 and provided best-in-industry cost position ● Rapid integration of CitiFinancial system with 750 former associates’ branches in US in 2000 ● Adoption of strategy. to offer integrated services in areas of banking.

standard technological platform. operational excellence and organizations ability to learn and improve. Employing AIAC framework for measuring IT payoff The IT investments made by CITIGROUP have been identified comparatively superior to HSBC based on the following facts: ● Citigroup had an integrated approach towards IT governance.comparing financial measurements such as ROI or TCO. Traditional methods of assessing the value of investments are .productivity or reducing cost .The primary aim was to adopt a global approach which takes care of the local conditions as well. and employing qualitative frameworks like IE (Information Economics).The scorecard divides the organization into 4 areas-financial performance.This is achieved by providing valuable information when the organization requires it the most . how should companies go about assessing the value of their IT investments? In your assessment which of the two banks is cleverer in its IT investments? ● ● ● ● ● The value added by IT investments are beyond increasing efficiency . To assess the value created or added by the IT investment the company must have a clear understanding of who the customers are. ● Whereas HSBC focussed on being perceived as the worlds local bank and promoting its regional technology services . group wide.To evaluate these requirements the business model and strategy adopted need to clearly defined. By applying appropriate frameworks on the value chain. how this value is provided to the customers in a sustainable way and the profits they wish to make by providing this value .Q3. the intangible benefits of IT investment can be quantified. using combination of packaged and customized software . One such framework used by organizations is the BALANCED SCORECARD which provides a comprehensive view of the organizational performance . thereby providing . and they are designed complementing each other as well. ● Citigroup provided customers a unified. what are their most important values and requirements. customer relationships.the main idea is to increase the company’s scope and knowledge to compete in a constantly changing environment . In general. Another important step is assessing the benefits of IT are through the value chain.