Localization of Corporate Banking System HSBC in Russia

HSBC Group is one of the world’s largest organizations providing a wide range of banking and financial services throughout the world. Initially, HSBC Bank (RR) provided service to entities and to private wealth management in Russia. Meanwhile, the strategic objective of the Group in Russia was to enter the retail banking market and take one of the leading places thereon.

Details about the Client

Project Summary

The main task was to localize and implement the main HSBC corporate system. HSBC Bank (RR) implemented, jointly with “Neoflex”, the project on localization and implementation of this system, as well as other systems involved in the processes of customer service.

Neoflexlocalized the corporate ABS by creating the IT-landscape in which this system serves as the main accounting system, and a range of features that reflect the requirements of Russian regulators and the bank itself, and implement other landscape components. Among these components are HSBC corporate application for the processing of plastic cards, as well as three Russian system, such as accounting ABS, the system for scanning documents, and the Client-Bank system.

As a result of the successful implementation of the project in November 2008, HSBC Bank (RR) changed the Russian ABS, used for servicing the legal entities, with the corporate ABS, and launched the bank’s retail business just “from scratch” in June 2009.

Services Provided

Deployed Software

Background

The main objective of the HSBC Group in Russia is to provide banking services and world-class products to individuals. Achieving this goal has required the use of the corporate bank activities automation system that supports complex business processes, including retail customer service.

Before the project, the bank was involved in servicing a relatively small number of businesses and individuals. At the same time, the accounting operations were carried out in the Russian ABS. With regard to corporate ABS, the bank has used its non-localized version for generation of the corporate reporting only.

Meanwhile, HSBC standards require banks located throughout the world to use corporate ABS specially developed for the Group as the main reporting ABS. This ABS supports the Western rules of accounting and automates all main types of HSBC activity.

This is what has defined the project objectives as follows: to localize the corporate system in accordance with the requirements of Russian regulators to conduct banking business, to change the Russian ABS, used for servicing the legal entities, with the corporate ABS and to put the corporate ABS into practice to provide for operation of the retail business.

The project was implemented by the combined team of specialists of the HSBC’s IT-service head office, its office in Russia, and Neoflex. At the same time, the Neoflex specialists were imposed with the task of ensuring the localization of the bank’s corporate systems.

Solution

The bank’s corporate ABS HSBC is comparable with the most powerful mass-market foreign ABS in terms of the number of its tools, the volume provided by the functionality, and complexity of the business processes implemented. Support by the system of a large number of the Group’s deep-laid business processes, implemented in accordance with foreign accounting standards, has determined the large amount of work on localization.

In accordance with its approach, Neoflex proposed to localize the corporate ABS by creating an IT-landscape. Corporate ABS in this landscape acts as the main accounting system. The landscape also includes: HSBC corporate application for the processing of plastic cards, as well as several Russian systems to ensure the implementation of Russian specifics. This Russian accounting ABS, which is charged with the processing of Russian payments and the reporting generation in accordance with regulations of the Central Bank of the Russian Federation, as well as the system for scanning documents and the Client-Bank class system.

The coordinated work of the systems has been proposed to be supported by means of the integration solution built in SOA ideology. In this respect, the integrated solution was also charged with the task of bringing the corporate ABS data to the form dictated by Russian accounting rules.

Outcomes

The established solution allowed HSBC to organize the work of its representative office in Russia according to the conduct of business rules accepted by the group. In November 2008, the bank changed the support of basic maintenance operations of legal entities from the Russian ABS into the corporate one; in June 2009 it started the retail business in Russia “from scratch”.

Today, the solution provides for a customer service with respect to 12 bank products in full compliance with HSBC corporate standards and requirements of Russian regulators. The created IT-landscape enables HSBC to quickly bring new banking products and services to the Russian market.

HSBC Bank (RR) project has confirmed the effectiveness of the Neoflex approach to the localization of foreign ABS by dividing the required functionality across multiple systems, interconnected with an integration solution.

Interview

Johan Sekora
Johan Sekora
Head of Private Client Department, HSBC in Russia

What were the basic project backgrounds?

In 2006, the HSBC Group has made a strategic decision to enter the retail markets in six new countries. Among these countries was Russia as well, which is the Group’s great interest due to the significant market volume.

The organizational process of running a retail business in Russia is not much more difficult than in other countries. Business processes in emerging markets, including Russia, have much in common. HSBC corporate business processes are versatile enough, and, as a rule, we have never encountered any problems with their adaptation in our country. But in Russia, we faced some special legal requirements and those of the state regulators that were not supported by our corporate systems. So, we had to start the project on their localization.

How difficult was the task of bringing the bank's activities in accordance with Russian specifics?

Complying with the Group’s decision to enter the Russian retail market was not so easy. The requirements of the Central Bank of Russia are very specific, e.g. those applicable to reporting. Holding a series of binding agreements with the regional offices of the Central Bank at the opening of the bank branches in the regions of Russia has been new in our practice.

Besides, despite our experience of launching multilingual systems — both in English and in the local state language, there were certain difficulties associated with the parallel use of Cyrillic and Latin characters. But all these problems were successfully resolved in the course of the project.

How do you assess the outputs of the project?

Although only a short time has passed since the opening of the retail business, but we have already attracted a lot of customers and a large volume of deposits, especially foreign currency, i.e. dollar and euro.

Extensive discussion, which determined the final form of the product range that we offer in the Russian market continued almost to the launch of the retail business. Nevertheless, the solution was ready on time and, moreover, has completely justified.

I must say that after the official launch of the solution, it has been modified with a number of functions, and the implementation of these services has been carried out in such a way that it was not noticeable to customers and did not affect their service on previously launched products and services. This confirms that, on the basis of the solution created in the course of the project, we can develop new promising business areas. Now (October 2009), the Bank is preparing to launch two large-project businesses, i.e. mortgage lending and private investment.

What is your assessment of Neoflex as the project performer?

During my ten-year practice of working with different companies in different countries, I have never seen the solution supplier team be integrated into the overall design team so deeply and densely as the Neoflex team was. I am very pleased with the interaction with the Neoflex team and warmly thank all the participants for their contribution to the successful implementation of the project.

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