To lower risk and protect teams, HSBC takes to Google Cloud services

HSBC has launched a new innovative solution on Google Cloud to manage credit risk more efficiently in its trading portfolio.
7 October 2021


Google Cloud services enable businesses today to have greater agility, especially when it comes to dealing with their customers. However, not all industries can make the most of public cloud services. Banks and financial institutions for example can only run certain workloads on the public cloud due to regulatory requirements.

Part of this is due to the challenges banks are facing from fintech companies. Unlike banks, fintech companies can provide better and faster services to customers as most of them are cloud-native or do not have legacy infrastructure holding them back.

As such, many banks are developing apps on-premises, but are running and testing them on the public cloud. Banks are using the public cloud to run external processes or run services that do not infringe regulatory requirements while some banks use APIs to generate income growth from corporate customer segments, improve customer experience, and fuel innovation.

According to a McKinsey report, APIs are transforming the way B2B banking is done. As an easy means of money and data transfer between a bank’s systems and those of third parties, these tools pave the way for banking services to be embedded directly into a corporate customer’s own platforms.

However, banks and financial institutions often want to leverage the public cloud due to its flexibility and agility in offering innovative solutions. As such, HSBC announced a new innovative solution on Google Cloud to manage credit risk more efficiently in its trading portfolio.

The HSBC Risk Advisory tool uses Google Cloud technology to enable the bank’s traders and risk managers to run multiple “what if” scenarios simultaneously and quickly, to identify capital requirements necessary to cover potential rating downgrades and default risk of credit products, such as corporate bonds.

The HSBC Risk Advisory tool harnesses the power of cloud computing, where billions of data points are generated, with results delivered in minutes. This allows HSBC traders to better manage their trading portfolios on an intraday basis.

According to Ajay Yadav, Global Head of Fixed Income & Digital Strategy for Traded Risk at HSBC, the computing power of Google Cloud services makes it much quicker to run complex simulations for many different what-if scenarios, providing a more holistic risk picture of trading for optimum decision-making.

“HSBC’s digital development team built this innovative capability in less than five months in collaboration with Google Cloud. The focus now is to take the HSBC Risk Advisory tool and integrate climate risk into it as a proof of concept, which we are aiming to make available in the next few months,” explained Yadav.

Adrian Poole, the Director of Financial Services at UKI, Google Cloud said, “Through our continued partnership, we are bringing the best of our cloud capabilities to help HSBC develop innovative data and analytics solutions in evolving risk areas. It’s exciting to see how financial services organizations like HSBC are embracing cloud technologies and building powerful solutions to empower faster and more informed decision-making, including for climate change-related risks.”

With customer experiences being core to banks and financial services, one of HSBC’s key strategic pillars is to digitize at scale across its international market network. This is to make the bank more efficient and open up new growth opportunities.

For HSBC, being a data-led organization is integral to unlock new insights and value for customers. The same can also be applied to most banks that want to create a better customer experience.

The bottom line is, if banks can leverage Google Cloud services or any other public cloud for that matter, they may just be able to create the seamless experience customers desire most.