HSBC Strategic Audit Work (Case Study Sample)

HSBC STRATEGIC AUDIT WORK
FIGURE 1 - SWOT ANALYSIS
STRENGTHS

WEAKNESS

S1 Presence of a strong capital and asset base for the bank
S2 The bank has consistently been recording increase in profits over the last three years.
S3 The bank has established a huge dominance in the market by being a global leader in over 30 countries.
S4 The bank has a strong strategic focus that is depicted by its mission, vision and organizational culture that has helped it established worldwide dominance
S5 The bank values diversity and it has employed more than 235000 people worldwide which contributes to its strength of having a reliable staff for its operations.
S6 High dividend to shareholders since restructuring
S7 On-going M&As across BU’s, Technology Platform
S8 Exiting loss making geographies
S9. The bank has a high rate of opening new branches and expansion in potential profit making areas as well as a high rate of assimilation and merging with other companies for growth in new territories.

W1 Poor performance on digital banking services
W2 Insufficient innovation in online and mobile
W3 Poor customer service
W4 Lack of gender diversity (women leadership) in top management
W5 Reducing global footprint and access
W6: Currently the bank has very few branches opened only in North Africa yet Africa has many emerging economies that have the fastest growth.
W7: The reputation of the bank has been put into question over a series of setbacks like both online and mobile banking not working, helping tax evasion in Switzerland and the Huawei controversy.
W8: The laying off of people through 10,000 job cuts was not perceived well by the public.
W9: The bank has also come under scrutiny over increased overdraft charges in the UK with customer complaining that they have quadrupled.

OPPORTUNITIES

THREATS

O1 Growth in emerging markets – Asia, Africa and Latin America
O2 Belt & Road Initiative
O3 Centralized Leadership
O4 Growing digital demand and emergence of financial TPP’s
O5 Lower Interest rate will boost new customer base
O6: Through the CSR initiatives like the sponsorship of British Cycling and teaming up with shelter and crisis to the homeless people, the bank can seek to restore its reputation in the targeted customers.
O7: Since customers want personalized options and custom made banking products and experiences, the bank should fully embrace open banking so that it can take of the opportunity to make the demanded products by the customers.
O9: The bank should take advantage of the huge diversity of customers it has. Those in Hong Kong prefer the traditional method of visiting branches and hence more branches should be opened there. There are those that prefer digital and online banking. The same way WeChat has opened a mobile method of payment, the same can be done by the bank.
O10: The bank should also utilise cloud technology and ensure secure back up of data. Use of biometric technology and artificial intelligence should also be embraced as security based authentication methods.

T1 Brexit and the reality impacts of British banks to lose ‘passporting’ rights in the EU.
T2 US – China Tariffs
T3 Increased competition on digital platforms
T4 Cybersecurity & Privacy
T5 Financial crime, reputation crisis
T6 Job loss due to restructuring resulting in negative WOM
T7: The rise of open banking that will lead to increased completion from FinTech firms that will target the banks customer’s once financial and banking information is shared across the institutions.
T8: Private banking has been risky and could lead to a damage on the bank reputation.
T10: Interest rates on the US dollar BLOC are expected to fall rather than rise.

The purpose of SWOT analysis is to analyse the internal forces that affects a company. It serves to reveal the micro (internal) environment of a company. These internal forces are the ones that the company has control of and can improve on. The above SWOT analysis for HSBC reveals that the bank has more strengths and opportunities than its weaknesses and threats
FIGURE 2 - EXTERNAL ENVIRONMENT – PESTEL ANALYSIS
Political

Economical

* Brexit
* US China Tariffs
* Huawei Controversy
* Presence of EU directives on Open Banking that are pushing the bank to start sharing customer information.
* The availability of strategic partnerships with Chinse companies like Shezhen Qianhai that could lead to the bank gaining political acceptance and dominance in China mainland.

* Interest rate environment
* Brexit Uncertainty
* US Interest Rate Falling
* FCA regulation on overdrafts rates
* Online Banks offer better rates
* Presence of emerging markets in Asia that have relaxed their foreign direct investment restrictions and hence can be explored for joint ventures, new branches and partnerships for profit.
*

Social

Technology

* Growth spurt in Digitalization and online banking services.
* Senior leadership gender diversity. More women should be in top positions.
* Increasing spending power of the middle class
* Good corporate social responsibility activities that have led to customers opening more accounts at the bank.
* Presence of diverse cultures across all the countries that the bank has opened branches and hence the richness in diversity of products the bank offers,

* Digital disruption in banking – bitcoin, Fintech
* Automation and digitization
* Open Banking (API)
* The rapid change and pace of technology has led to some of the branches being closed due to the switch from rational face to face or telephone to online banking.
* The ease and quick adaptability of some of the traditional customers to the online and digital banking channels has been met with critic over issues like data privacy and confidentiality. Some customers are very slow to adapt to changes in technology.
* While the bank strives to move in tandem with the recent technological advancements like open banking through API and cloud technology, the challenge of data protection and privacy remains a key issue of customer satisfaction.
*

Legal

Environmental

* Cybersecurity, Privacy
* UK Ring-fenced bank
* Swiss Bank controversy of aiding tax evasion has serious legal implications on the bank.
* Private banking has resulted in some serious legal accusations.
* It is also the responsibility of the bank to ensure that the TPPs that it shares banking information on clients have been accredited and authenticated to prevent data loss leaks and legal implications.
* The bank has also come under scrutiny in UK over quadrupling overdraft interest rates to the detriment of the customers.

* Low carbon and resource efficient future outlook
* Sustainable operations and initiatives
* Circular Economy
* Adherence to ISO standards in environment protection and wildlife conservation.

PESTLE analysis is used to analyse the external forces that affect a company. It is usually the outside factors that determine the company’s macro environment that it has no control over. PESTLE analysis is done to ensure that the company understands the industry it is operating in and the forces that control it. As seen above, technological factors are the paramount external forces affecting the company.
FIGURE 3 - MCKINSEYS 7 S’s
Structure
With the Head Quarters in London and having global footprint in over countries, the bank has a unique corporate structure that helps in manage operation effectively. The bank operates through four main product lines namely: retail banking and wealth management, global banking and markets, commercial banking and global private banking. The bank operates in the following regions namely: Middle East and North Africa, Europe, North America, South And Latin America, Asia Pacific Region and Australia.
The bank has a strong financial management with assets amounting to $2.5trillion and ranks number 9 in the world leading tier one banks.

Staff
Despite having a ratio of 52% women to 48% men, the bank has less women in the senior executive management positions.
The staff are Professional, Motivated and undergo serious training from time to time facilitated by the bank.
The presence of HSBC university shows the bank’s commitment to excellence in its training its staff.
The bank has also promoted fair wages especially in the recent discovery that staff from south America were earning more than others.

Skills
Upskill and Reskill potential in Digital Banking
The bank needs to carry out digital and online campaigns targeting its traditional customers that are slow to embrace the same.
The banks should exploit the introduction...