Does It Compensation Strategies of Two Banking Leaders

 Does It Compensation Strategies of Two Banking Giants Essay

HKU753

ALI FARHOOMAND

DOES IT COMPENSATION? STRATEGIES OF TWO BANKING TITANS

You can see the computer age everywhere but in efficiency statistics. - Robert Solow (1987)

In the earlier 20 years, there had been a debate regarding whether or not THAT paid off in the long term. While some wondered the positive contribution of IT to productivity, others attributed the so-called IT paradox to measurement technique and to having less measurable data, such as improved quality, selection, customer service, velocity and responsiveness. To make matters worse, a controversial document published in Harvard Organization Review asserted that, as IT was being commoditized, the chances of attaining IT-based competitive advantages were rapidly disappearing (Carr, 2003). If this is true, then simply companies should spend fewer, wait much longer to invest in even more matured solutions and should be a little more careful about the expenses of IT purchases. Financial services firms had for ages been among the most rigorous users of information technology (IT), starting in 1867, when the stock ticker began bringing current Wall Street information to Main Street. Starting in the 1980s, the development of the Internet and telecommunication systems had additional facilitated the development of new bank products and launched alternative delivery and syndication channels. It absolutely was estimated which it spending made up 20-25% of non-interest costs and about 6% of annual revenue for banks (Kauffman and Weber 2002). The global bank industry was expected to use US$241. a couple of billion in 2007 into it, including components, software, IT services, internal services and telecommunications (Moskalyuk 2007). Inspite of these behemoth investments, it is not necessarily all that obvious whether THAT investment takes care of for banks. It is also unclear whether these kinds of investments would improve only the operational effectiveness of banks or in the event they would as well enhance their tactical positioning and sustainable competitive advantage. This situatio tries to highlight these two important issues by simply evaluating the IT purchases at HSBC and Citibank, two huge global financial institutions of identical size but with different THAT strategies. Might the IT

This case was nominated to find the best Paper Prize at the Foreign Conference upon Information Systems (ICIS) 3 years ago.

Minyi Huang prepared this case under the guidance of Prof. Ali Farhoomand for class discussion. This case is definitely not intended to show effective or ineffective handling of decision or perhaps business processes. © 3 years ago by The Asia Case Analysis Centre, The University of Hong Kong. Zero part of this kind of publication could possibly be reproduced or transmitted in any form or by any kind of means—electronic, mechanical, photocopying, saving, or otherwise (including the internet)—without the agreement of The School of Hong Kong. Ref. 07/366C

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07/366C

Does IT Payoff? Strategies of Two Banking Titans

investment strategies adopted simply by HSBC and Citigroup enable them to enhance their financial performance in the future? Which in turn of the two banks would see higher returns on their IT investments in the long run? Just how should they evaluate such results?

Global Bank Industry

3 tectonic forces had reshaped the proper landscape of the financial industry in the previous 2 decades: deregulation, the advent of new technologies, and globalization of business. Deregulation, which acquired started in the 1980s with the removal of many important regulatory barriers to international financial, allowed banks to expand the scope of their businesses globally. The advent of the web and advanced telecommunication technology allowed finance institutions to operate more easily and cost-effectively across borders. Finally, whilst globalization of business experienced led to an outburst in demand for international finance, it also become more intense competition, bringing about declining fascination margins and fee incomes. 1 When confronted with such sweeping forces, banking institutions were under pressure to find...

Recommendations: Banks, T. " Simply Connect, ” IT Leadership, 1 May 2006, http://www.theitleader.com/features/feature437/. Carr, In. G. " IT doesn't matter, ” HBR AT Large, May, 2003, pp. 41-49. Citigroup Annual Report, Citigroup, 1997 – 2006. Citigroup Diversity Report, Citigroup, 1997-2006. Deloitte Global Financial Services Offshoring: Scaling the Heights, Deloitte Touche Tohmatsu, 2005. Deloitte Global Bank Industry Outlook: Issues coming 2007, Deloitte Touche Tohmatsu, 2007. Eckenrode, J. " 2007 Lender Technology Forecast: Challenges and Opportunities, ” Bank Systems and Technology, 1st March 2007. HSBC " HSBC Holdings Plc: Presentation to Financial Stableness Institute”, HSBC, 19 June 2006. HSBC Corporate Technique, 2007, HSBC, http://www.hsbc.com/hsbc/investor_centre/strategy. HSBC Annual Report, 1997-2006. Kauffman, R. T., and Weber, B. W. " Summary of the Exceptional Issue on Advances in Research about Information Systems in the Finance Industry, ” Journal of Organizational Processing and Electronic digital Commerce (12: 1), 2002, pp. 1-4. Moskalyuk, A. " Bank Industry THIS Spending to get to $241. a couple of bln in 2007”, DZNet Research, 5th March 2007, http://blogs.zdnet.com/ITFacts/?p=12508. Rapp, W. Versus. Information Technology Approaches: How Leading Firms Utilize it to Gain an Advantage, Oxford University or college Press, Oxford, 2002. Solow, Robert Meters. (1987) " We'd better watch out, ” New York Times, 12 September, Book Review, s. 36. Quittner, J. " Beyond THIS: Outsourcers Expand Services, ” American Company (171: 216), 9 Nov 2006, pp. 26-28. Vashistha, A. " What is the weakest website link in global outsourcing? ” InformationWeek's Optimizer (66), 04 2007. Wikipedia " Citigroup”, 2007, http://en.wikipedia.org/wiki/Citigroup#Business_model.

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