HSBC's 90% Return: A Tale of Tech Investment and Regional Focus

In the past three years, investors in HSBC Holdings (LON:HSBA) have witnessed a remarkable 90% return on their investments. This impressive performance can be attributed to several key factors, including the bank's strategic restructuring plan and its significant investment in technology.

HSBC's strategic restructuring plan, announced in 2021, has had a profound impact on the bank's performance. The plan, spearheaded by CEO Georges Elhedery, aimed to streamline operations, enhance efficiency, and create a more regionally focused approach to meet the evolving needs of the global market. One of the key impacts of this restructuring is the reduction in costs. In the first two years of the three-year cost-reduction program, HSBC achieved savings of $3.3 billion, exceeding its overall target of between $5 billion and $5.5 billion. The bank expects to exceed this target and plans to cut an additional $2 billion in costs in 2025 and $0.5 billion in 2026 (HSBC, 2025).

The restructuring has also allowed HSBC to invest more in digitalization. The bank plans to increase its investment in digitalization to 21% of operating expenses in 2025, up from 19% in 2021. This investment is expected to improve the digital experience for customers and drive growth in the bank's digital channels (HSBC, 2025).

Additionally, the restructuring has enabled HSBC to shift capital from the west to Asia and the Middle East in search of better returns. The bank has successfully reduced risk-weighted assets by $104 billion as a result of its program, boosting operations in the East (HSBC, 2025).



HSBC's investment in technology has played a significant role in driving growth, particularly in the face of the COVID-19 pandemic. The bank has prioritized technology investments, with a planned spend of USD5.8 billion in 2020 alone. This investment has enabled HSBC to upgrade digital banking platforms for both personal banking and corporate clients, making banking simpler, safer, and more personalized.

One key example of HSBC's technology-driven growth is the increase in mobile payments. In the first half of 2020, the value of mobile payments increased by 220% compared to the same period in 2019. This growth can be attributed to the bank's investment in digital channels and mobile apps, which have made it easier for customers to manage their finances remotely.

Another example is the increase in downloads of the HSBCnet mobile app for corporate customers. In the first nine months of 2020, downloads of the app rose by 155% compared to the same period in 2019. This growth indicates that HSBC's investment in digital platforms has been successful in meeting the needs of corporate clients, who have increasingly turned to digital channels for their banking needs.

HSBC's investment in technology has also enabled the bank to streamline operations and improve efficiency. For example, the bank has cut account opening times in many markets from days or weeks to under 24 hours by using digital tools to replace manual and paper-based processes. This has not only improved the customer experience but has also reduced costs for the bank.

In addition, HSBC's investment in artificial intelligence has enabled the bank to improve its ATM management. The bank's in-house iCash tool uses AI to ensure that more than 1,200 ATMs in Hong Kong do not run out of money. This has improved the customer experience and reduced costs for the bank.

HSBC's investment in technology has also enabled the bank to better manage risk. For example, the bank uses data and analytics technology to screen around 689 million transactions across 236 million accounts each month for signs of money laundering and financial crime. This has helped the bank to better manage risk and comply with regulatory requirements.

In conclusion, HSBC's 90% return over the past three years can be attributed to its strategic restructuring plan and its significant investment in technology. The bank's focus on cost reduction, digitalization, and regional expansion has driven its impressive performance. As the global economy continues to evolve, HSBC's commitment to innovation and adaptability will be crucial in maintaining its competitive edge.