Page 118 - DMGT303_BANKING_AND_INSURANCE

Unit 5: Payment and Settlement System

Notes
The challenge for HSBC was to implement this real-time technology, in an efficient manner,
with a strong focus on how the service would be utilised by both the retail and corporate
customer base. This foresight enabled HSBC to provide a seamless transition for their
customers, whilst delivering a strong foundation, which allows for further development
of compelling value propositions.
HSBC’s current personal customer offering is to provide free Faster Payments at the point
of delivery, which does not provide an area where additional revenues could be easily
achieved. However, it has delivered benefits in the form of improved customer loyalty,
retention and recruitment. For the corporate market, HSBC quickly realised the
opportunities that the Faster Payments Service presents.

“We are delighted to have seized the commercial advantages of Faster Payments early.
From the outset we regarded this as a technical project with tangible business benefits”.
The benefits

The HSBC proposition for the Faster Payments Service embraced the benefits for retail
and corporate customers. HSBC envisaged that retail customers would welcome the speed,
certainty and convenience of Faster Payments, which can be effected on-line, by telephone
or through the branch network. HSBC is one of a few participants in the Faster Payments
Service to offer confirmation of when the beneficiary will receive the payment. This
feature provides certainty and transparency for retail customers. It was also vital that the
new service was introduced with minimal service disruption to customers and strong
internal controls were implemented to mitigate risk.
HSBC focussed on areas within the corporate sector where Faster Payments can deliver
immediate value, this focuses on two different payment options. Firstly, where businesses
have an urgent need to pay their customers quickly and with confidence, they are prepared
to pay a premium to send the payments via the Faster Payments Service.
Low-cost, immediate payments also contribute to businesses and individuals managing
their cash better. Retail customers can potentially make payments later, in the knowledge
that beneficiaries will receive cleared funds within two hours. New payments have been
attracted to the Faster Payments Service, from other non-premium payment channels.
HSBC’s obvious commitment to the service helps drive the universality of the service–
firstly through their competitive customer proposition, which encourages other financial
institutions to follow suit, which in turn which makes the HSBC offering more consistent
to all. Further, HSBC is already driving revenue through enabling agency banks to access
the Faster Payments Service, effectively creating a virtuous circle of investment for HSBC.
Secondly, HSBC has focussed on receivables propositions, which provide value to corporate
clients, through focussing on the presentation and reconciliation of data supplied to their
customers. Delivering itemised data in near real time or fast batch is the current offering,
this provides clear opportunities for customers to integrate their current reconciliation
processes to improve cash flow management and provide more flexible services to their
own customers.
Future Roadmap
HSBC has identified several areas that have the potential to deliver further value to both
corporate and retail customers. Some of the key areas for future development include:
An increase in the cap limits, from £10,000 with the goal of achieving £100,000
within the medium term

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