HSBC turns to 'embedded AI' to counter business-focused fintechs

• Key insight: HSBC has developed a set of tools designed to attract business clients to new forms of AI. 
• Forward look: The bank plans to add functions, such as an advanced digital assistant for corporate clients, in the coming months. 

With banks battling fintechs and each other to sell artificial intelligence-powered financial services, HSBC is stepping up its AI-based offerings to businesses.

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"What we're hearing most is they want to use AI to pull data from multiple sources in a faster way that allows them to take action," Amber Henderson-Smart, global head of client connectivity for HSBC, told American Banker.

HSBC, which is in the midst of a multi-year global initiative to deploy new forms of AI for both internal and external uses, is targeting current and potential business banking clients by making it easier for these businesses to tap machine learning. "The use of AI has been a big foundation for us," Henderson-Smart said. "We want to deliver something suitable for all of the clients that we bank with."

HSBCnio

The bank's AI service, called HSBCnio, combines financial services, data and analytics with businesses' workflows, with AI or other forms of digital connection available.

The bank has redesigned its business banking user interface in an effort to make it easier for businesses to view cash positions, payments, loans and foreign exchange transactions.

AI access is supported through HSBC's Model Context Protocol, which enables clients' own AI tools to query authorized account and transaction information, helping human workers find and interpret banking data. The Model Context Protocol is an open standard created by Anthropic that lets AI applications connect to external systems such as databases, files and APIs.

For HSBC, the MCP works with the bank's APIs, SDKs and sandbox, enabling treasury and finance teams to embed banking data into their internal platforms.

"There's less effort required for where they are connecting to AI," Henderson-Smart said.

HSBC plans to add more banking products and AI-enabled products to HSBCnio over time, including "Ask HSB," an AI-enabled feature designed to help clients query and interpret their banking information.

In business

HSBC does not release the number of business clients it has, but says it has about 41 million global consumer and business customers in 56 countries. The bank's corporate customers include a range of multinational corporations, small to mid-sized businesses, government and public sector entities and other financial institutions.

HSBCnio follows earlier AI-related moves at HSBC, including a global AI center in Singapore, support for agentic treasury products, AI-enable digital payments, and other work in natural-language processing, data science and AI governance. It also partners with Google to analyze about 1.35 billion transactions per month across about 40 million accounts, with HSBC reporting this system identifies two to four times more financial crime than human-based methods while reducing false positives by 60%.

The bank has also said the AI-driven strategy could eventually reduce HSBC's workforce by about 10%.

There's also a competitive impetus for the bank.

HSBC's business-focused AI product comes as banks, payment fintechs, and card networks invest in new forms of AI, as well as technology that enables access to AI and manages security risk. The HSBCnio release is a good example of how financial institutions are competing with fintechs by providing equal access to clients' data via APIs and MCP implementations, which are more secure than giving an AI agent credentials and directing it to scrape the online banking website, according to Aaron McPherson, a principal at AFM Consulting.

"It is also much more efficient, because agents waste a lot of time and bandwidth scanning and manipulating interfaces meant for humans. Each time the user asks a question, the agent has to start all over again, rather than having a dedicated pipeline to get the data," McPherson told American Banker.

From a business perspective, this sort of integration makes the bank more competitive with a fintech solution, and removes some of the temptation to switch, according to McPherson. "However, it depends on whether the bank continues to extend the capabilities of its APIs and MCP to match the types of transactions and inquiries that are possible with a fintech," McPherson said. "It can be difficult to keep up with the pace of change in the market when a financial institution has to deal with layers of regulation."

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HSBC had already undertaken work to modernize some of the back-office infrastructure that enables access to data and platforms, according to Jerry Silva, program vice president for IDC Financial Insights. "This is what typically allows a bank to offer state-of-the-art digital experiences to its customers across multiple channels," Silva told American Banker. "And this is exactly why a larger bank can compete more effectively than a fintech in serving the commercial markets. The primary product the bank offers is trust. That trust is built over decades of focus on risk, compliance, and security. Rarely can a fintech offer this level of trust across all the products a corporate entity needs."