HSBC plans to double mobile bank users in cost-cutting drive
HSBC is planning to shift services away from its branches in a push to make more of its customers migrate to its digital and mobile channels as it embarks on a massive cost and jobs cutting program.
The London-based bank, which is planning to cut 35,000 jobs to trim costs, is seeking to double the number of mobile users by 2022, which could generate more revenue per customer.
Part of that will mean branch services that can be done digitally, such as opening accounts and making simple investments, are increasingly handled on mobile and other devices, meaning fewer staff will be there to meet and greet customers, according to Kevin Martin, head of digital transformation of its wealth and personal banking business. The employees in place will instead focus on more complex transactions such as family planning, life insurance and mortgage loans, while the bank will strive to do away with paperwork and signatures wherever possible.
This will also allow the lender to set aside more space for its customers, increasing separation and safety in the post-pandemic age. "All of that was already underway," Martin said in a recent interview. "This crisis has probably accelerated it."
The shift comes at a precarious time for the global banking industry, which is being walloped by a surge in bad debt after years of struggling with rock-bottom interest rates. Lenders such as HSBC have pounced on the lockdown to pick up the pace of their digital transformations in a bid to reduce costs in their interactions with customers.
"All the industry is going to struggle for a while in terms of margin on deposits," said Martin, who is also chief operating officer of the unit. "What I would say though is that the cost to service our customers on average will decrease."
In Asia, major consumer banks including Citigroup and Standard Chartered are also seeing a surge in demand for digital services for everything from wealth management to insurance.
HSBC is seeking to trim $4.5 billion in costs over the next three years. The program was last week revived by the lender after being put on pause due to the virus outbreak.
"Since February we have pressed forward with some aspects of our transformation program, but we now need to look to the long term and move ahead with others, including reducing our costs," Chief Executive Noel Quinn said in a memo to his staff.
The branch transformation by HSBC could mark a final push into becoming nearly an all digital bank. Almost 90% of its global transactions are already handled remotely and electronically.
HSBC has rolled out more than 270 new digital products and features to retail customers so far this year, up from about 160 last year, Martin said.