WWCode Talks Tech #7: Industry Chat: Software Engineering and Banking
Written by WWCode HQ
Join Divya Kaggere Siddalingaiah, Lead Architect, US Payments, @HSBC, for an exciting conversation about software, engineering, and tech careers in the banking sector. Recommended for attendees interested in exploring new fields, making connections in banking, and learning about new roles in the industry.
I was born and brought up in India. I have a Bachelor of Engineering. I'm in the IT industry in banking. Currently, I'm leading the technology architecture for payments, liquidity, and cash management. I started my career as a mainframe programmer and played various roles within finance IT. I'm representing HSBC bank today. HSBC stands for Hong Kong and Shanghai Banking Corporation. It's one of the world's leading international banks. HSBC Bank USA has our operational head office in New York City with around 43,000 employees. We have around 31% of leadership roles held by our female colleagues.
Banking has multiple pillars to focus on. We have four very high-level areas: retail, private banking, commercial banking, and investment banking. There is a common set of functions that are cross-functional for all. The primary focus of retail banking is to offer various products and services to consumers like you and me. Private banking is more focused on products for high-net-worth clients. Some of the products in retail banking are our checking or savings accounts, debit or credit cards, and home loans. In commercial banking, most of the products which I mentioned earlier would be still appropriate, however, the customer base would be small and medium businesses and also large corporations. In investment banking, the focus is on shares, market, foreign currency, and buying and selling securities. The customers here are generally other banks or non-banking financial institutions. A very critical role is keeping the bank safe, running efficiently and well, under all the risk and regulatory controls. The risk could be financial, non-financial, or market, etc.
Technology function is integrated into banking to provide comprehensive technological solutions. The current state of technology in banking digitization is changing how people interact and do business on a day-to-day basis. Advancements in banking and technology are continuing to influence the future of financial services around the world. Increasing demand for digital banking experience from millennials or Gen Z is transforming how the entire consumer banking industry operates. Retail and mobile banking technology have their hand in seemingly every aspect of the banking industry. The influence of technology will continue to launch banking into a digitized future. Cards will continue to be prevalent in the current times, both debit as well as credit cards. The credit card industry is one of the innovative industries, introducing more user-friendly solutions and products, such as virtual cards.
API, Application Programming Interface, is a common trend in banking technology to make proprietary data available to anyone who has consumer's permission to access it. APIs are the main drivers in transforming the current technical estate into a more agile micro-services architecture, in order to support the bank to remain competitive in innovative products and services. FinTechs have also used API technology to enable their businesses to work. Their success is encouraging competitors to develop their own APIs.
Banks have initiated cloud transformation programs to migrate and transform the IT landscape from running on their own infrastructure into the infrastructure provided by major public cloud providers. While the majority of the financial institutions are actively using cloud services today, the majority of them have yet to deploy the core systems to the cloud due to the significant complexity and concerns over security risk, governance, and control. At HSBC, we use the cloud for strategy because all new IT must be built using public cloud infrastructure in a hybrid cloud model. We have been making very good progress on that front across all IT functions.
Another technology that is growing each day is artificial intelligence. With AI and machine learning in banking, there are no limits to opportunity. Customer service is done through virtual assistance to automate conversations and interact with customers through messaging platforms. Risk modeling or data modeling can be used in order to continuously improve efficiency and effectiveness. Consumers are increasingly demanding relevant, timely, and personalized experiences that can save them time and money. Open banking has become one of the main drivers of digital transformation. It's impacting technology and infrastructure investments, data modernization, and even FinTech partnership.
For some institutions, the decision may be to build banking as a platform or banking as a service. FinTech partnership provides the opportunity to streamline and automate back office processes, build a stronger innovation culture, and improve customer retention. FinTechs are nothing but financial technology companies. The trend in the banking industry is the partnership between financial institutions and FinTechs. FinTechs and financial institutions have their own strengths in making them successful, they do lack some of the criteria required to be successful today as well as for tomorrow, that's where partnership and synergy between them come in. If we consider financial institutions on one side, they have a brand, they have name recognition, and they have a customer base. They offer a wide range of products and services. They have robust infrastructure, and inherently they have a better experience in risk management and access to capital. On the other side, FinTechs, have a culture of innovation. Their technological expertise is high compared to financial institutions with modern IT systems and no baggage of the legacy systems. When these strengths come together, the outcome is powerful.
I have some examples of FinTechs in various domains of banking. In the payment space, we have Venmo, Zoom, Wise, etc., which are used by many of us. Under lending space, we have many digital-only lending offerings for providing quick loans, such as Affirm, SoFi, and LendingClub. There is a rise in neobanks. Neobanks are digital-only banks. All banking offerings are done through digital channels. Lastly, markets, currency, and exchange space have seen many FinTechs growing such as Ripple, Coinbase, digital assets, etc.
As an engineer, where are the opportunities in HSBC or banking in general? APIs, container technologies, and cyber security technologies are fundamental to solving any new business problem. Cloud technology stack is universal to everything built new today. New products that are introduced involve one or many customer journeys, from onboarding a brand new customer using digital channels and web technologies, and mostly running through processes like automated credit decisioning to provide credit products such as credit cards or mortgages. This happens through a series of API integrations to connect multiple applications in order to achieve that seamless journey to the customer.
Another huge space in any banking today is payment technology. These are digital payments, such as real-time payments, and peer-to-peer payments. They are all initiated through customer digital channels and processed through several core banking systems in order to move money from one financial institution to another, with extensive use of many technologies. Finally, there is data. Data drives everything in an enterprise to make key decisions. Data IT itself is a very major part of the IT function, which works towards providing quality and most accurate data insights to businesses via visualizations. Not to leave out the data science using Python or R opportunities. There are so many opportunities in banking, or in the FinTech industry to explore software engineering.
Within the retail banking space, the FinTechs have proven Neo banking offerings and business operations would perfectly fit into the future. Digital banking business will become less visible because it will be embedded in other daily activities with the help of AI voice interfaces and other emerging technologies. Digital banking technologies are all converging towards one end goal, which is invisible banking. With wearable technology, payments, on-demand loans and other banking activities will increasingly be done by talking to your Siri or Alexa or to even to your car, or through a phone app. When it comes to the commercial banking space, commercial digital account opening systems are increasingly getting a boost every day. In 2021, 30% of the banks anticipated choosing a new system, which is not very much different from what we do in HSBC.
We have new platforms to provide commercial customers with an account onboarding completely digital. The newer platforms are built using modern technologies which are highly scalable, adaptable and more agile. We have reduced commercial customer onboarding lead time from about 30 days, down to 10 days, and we expect to reduce it even more. This will progressively get better and more efficient. Digital banking is undoubtedly convenient for domestic bank customers, but also for those who wish to open accounts with offshore banks. It's no longer necessary to make a trip to the country of choice to open an account in person.
Customer-facing API channels will be very popular by providing the capabilities to our corporate customers to initiate digital real-time payments in order to send funds to their customers or suppliers. This would mean product fulfillment systems, such as payment processing systems, will be able to cater to the needs of omnichannel through heavy utilization of the API landscape. Banks are also striking deals with companies and FinTechs to offer banking as a service, which can allow third parties to offer banking products without actually becoming a bank. The appeal of embedded banking is to provide an easy and seamless way to deposit, pay or borrow without leaving a non-financial company's app. The result is the ability of non-financial firms to retain customers and increase the overall value of the relationship.