- HSBC and Google Cloud teamed up to launch a chatbot to answer internal policy questions at the bank.
- It’s the latest investment in digital from HSBC, which spent $5.5 billion on tech in 2020.
- Insider spoke with two execs who led the project as banks increasingly focus on regulatory tech.
- Visit the Business section of Insider for more stories.
HSBC and Google Cloud just announced the latest step in a partnership that has seen the world’s sixth largest bank and the public-cloud provider team up on revamping the bank’s digital tools.
The UK-based bank will launch an internal, cloud-based chatbot called ORRA (Operational Resilience and Risk Application) to which the bank’s employees can direct questions about local and global policy issues, the companies said.
The tool will use Google Cloud’s machine learning and artificial intelligence to digitize a system that still relies on a paper trail and phone calls. Natural language processing, where computers can analyze vast swaths of unstructured data like that found in documents, will be used to streamline the search for answers to policy questions.
The chatbot will create orderly audit logs and be able to determine which questions employees are asking most often – usually an indication that policy guidelines are unclear and need rewriting – Steve Suarez, HSBC’s global head of innovation, finance and risk, told Insider.
“HSBC is a highly regulated organization, so managing risk effectively and efficiently is critical to making sure that we keep our customers safe and give them a great customer experience,” Suarez said.
While the companies declined to disclose the cost of the project, Suarez and Derek White, Google Cloud’s vice president of financial services, told Insider the project took four months in all to launch — a timeframe that White called “remarkable” given the companies were working within a “regulated bank environment.”
As part of the project, HSBC also partnered with consulting firm KPMG, who Suarez said provided the institutional knowledge of how to launch a cloud project like the chatbot, on top of Google’s “technical expertise and platform.”
“I think that three-way communication was what made this a very effective and impactful implementation for us,” he said.
Banks are looking at cloud-based tools to revamp regulatory tech
The policy-oriented service represents a new use case for cloud-hosted tools. Banks have typically used the tech to upgrade customer-facing offerings or data storage.
Wall Street has increasingly leaned into its usage of the public cloud in recent years as a result of the potential cost savings it offers. The cloud also provides users the opportunity to quickly spin up additional processing power as needed. This affords them the ability to innovate and experiment more rapidly than they would if they were just using traditional databases.
The launch of ORRA represents one part of a broader, industry-wide shift to focus on improving regulatory functions within financial institutions.
“The amount of capital and investment that people are making in this area — people realize the benefit for society, for our customers. And you can see when you follow the money. This is where the money is going,” Suarez said.
It was a sentiment echoed by White, who was previously the chief digital officer at US Bank before joining Google Cloud in 2020. Usage of the cloud can allow a company like HSBC, which operates in more than 64 markets around the globe, to adapt to changing, complex regulatory environments, he added.
“The need to be flexible and agile — the cloud enables that in a way like traditional technologies don’t,” White said.
The three broad areas in which White said he sees financial firms like HSBC adopting the cloud involve client user experience, back-office operations, and regulatory compliance and controls.
In this case, HSBC has chosen to focus on the third, rolling out the chatbot as one example of the $5.5 billion the bank spent on tech investments in 2020, according to its annual strategy report.
The partnership comes as more and more banks continue to explore working with third-party cloud providers to revamp systems that in some cases date back to the earliest days of computing. HSBC has also partnered with Amazon Web Services, for example, on a long-term cloud contract that will focus on more client-facing services in the bank’s global wealth and personal banking divisions.
It’s not the first tie-up, meanwhile, between HSBC and Google Cloud division.
In September of last year, the companies completed a project to improve HSBC’s Hong Kong call center efficiency by using machine-learning tools hosted in the cloud to review conversations — a particularly helpful tool in a market where calls might be held in English and Cantonese. And this February, HSBC announced it is moving its blockchain custody services, powered by software company R3, onto the Google Cloud as well.
One of the chief improvements cloud technology brings to a bank like HSBC is the ability to grow quickly and adapt tools like the chatbot to different situations, Suarez said. The bank noted that future versions of ORRA will be able to suggest guidance and provide judgement in response to user questions.
“In my backlog, I’ve got 16 chatbots. Now everybody’s saying, I want to apply it to this, I want to apply it to that,” he said.
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