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HSBC Mexico Upgrades Its Core Banking Systems in One Big Bang

HSBC Mexico decided to upgrade its core banking applications in one shot, tapping CSC's automated upgrade program to govern the implementation.

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If a bank is going for a "big bang" core systems upgrade, it seems appropriate to launch the new systems on July 4, even if the bank is based in Mexico and its customers don't celebrate the United States' day of independence. Before Mexico City-based HSBC Mexico (HBMX), part of HSBC Group (London; US$2.5 trillion in assets) went live with new core applications on Independence Day in 2008, it had been using a mix of legacy versions of core banking applications from Hogan Systems, which was acquired by CSC in August 1996.

According to Arturo Rivera Fermoso, IT director, core systems, for HBMX, the aging software prevented the bank from leveraging state-of-the-art hardware. "In some cases, the oldest applications within our Hogan suite prevented us from fully using the new capabilities of our hardware system," he relates. "For example, we were limited to batch processing on some functions but wanted to move to all real-time and achieve 24x7 availability."

Still, HBMX approached the possibility of upgrading the heart of its operations with caution. "Our core banking applications are mission-critical, so we had chosen not to upgrade to current application versions until the benefits of the upgrade outweighed the cost and risk," Fermoso says, adding that the bank decided to take the leap in 2006.

An Accelerated Upgrade

Originally HBMX considered performing the systems upgrade in-house. After careful consideration, however, the bank felt a more accelerated upgrade approach, as offered by CSC, limited the risk of the conversion, Fermoso says. He explains that the Falls Church, Va.-based vendor tapped its automated upgrade program (AUP) to govern the project.

The AUP, according to Fermoso, is a suite of programs and scripts that compare up to three versions of a given code base (initial delivery, customer-modified and new release) to identify and automatically merge the bank's custom core modifications into the latest releases of the Hogan core systems. "The AUP flagged conflicts for review and manual rework, which CSC assisted us with," Fermoso recalls. "That helped prove the upgrade retrofit preserved HSBC's custom code and the system was operating as intended. ... With this program, we retained our customizations of Hogan base code while realizing the benefits of upgraded base functionality. Moreover, the CSC team conducted the upgrade largely out of their development lab, creating a minimal impact to our daily operations."

Fermoso notes that this approach saved the bank a great deal of time compared with more traditional upgrade models. "A previous upgrade of only one Hogan application took almost 50 percent longer than this upgrade utilizing the AUP approach," he reports.

To support the upgraded core applications, Fermoso adds, CSC recommended that the bank use Armonk, N.Y.-based IBM's z/OS System Logger, a multiple virtual storage (MVS) component that IBM says creates a single, merged log containing data from multiple instances of an application within the system complex. HBMX already was operating on the Series z/OS hardware platform, Fermoso notes, so other than the MVS logger no additional investment was necessary.

Ultimately HBMX launched upgraded versions of its Hogan deposits transaction engine (Integrated Deposits System), online maintenance and inquiry application (Financial Support System), online transaction delivery engine (Online Delivery System) and processing platform (Platform Automation System) in one major conversion than a phased approach, Fermoso relates. "We were able to do this because of the acceptance testing built into CSC's AUP," he asserts.

The planned timeline for the project was 12 months from initiation through delivery of the upgraded code base to the bank, Fermoso continues, adding that it actually was completed in 13 months. An additional six months of integration and user testing, he adds, was conducted prior to placing the upgraded applications in production.

CSC provided the bank with on-site training on the new versions of the Hogan applications. "The classes varied from one to three days," Fermoso relates, explaining that "HSBC assigned key core banking personnel to these classes, including cross-training."

Overall, according to Fermoso, the upgrade went faster and used fewer resources than the bank anticipated, and the results have been worth the effort. "We now have easier core banking reporting. Transaction integration and information delivery can be automated with the real-time 24x7 processing, freeing HSBC from manual processes and providing more efficiency," he says. Perhaps most important, "More resource effort can be directed at strategic business projects rather than [core system] maintenance," he adds, noting that specific metrics on the improvements are currently being tracked but are not yet public.

As for the future, Fermoso says, the new versions of the Hogan core applications should keep HBMX humming for at least the next three years.

Case Study Snapshot

Institution: HSBC Mexico, part of HSBC Group (London).

Assets: US$2.5 trillion in assets (HSBC Group).

Business Challenge: Upgrade legacy core applications to support growth.

Solution: CSC's (Falls Church, Va.) Hogan Core Banking System, including the Hogan Integrated Deposits System, Financial Support System, Online Delivery System and Platform Automation System.

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