Banking giant HSBC says its e-commerce initiatives are beginning to pay off as online foreign-exchange transactions through Hong Kong have swelled to just over US$1 billion a week despite the economic slowdown. Bank officials yesterday said the onlinefx@hsbc portal, operated by HSBC's treasury and capital markets division, had generated about US$20 billion worth of forex transactions from virtually zero through 20,000 trades since August last year. Tony Cripps, HSBC's head of e-commerce for treasury and capital markets in Asia-Pacific, said although similar transactions through London and New York were larger, the surge in Asian transactions handled through Hong Kong marked increasing confidence in the emerging electronic banking channels in the region. This electronic trend is expected to change Asia's financial-services landscape, including HSBC's. About 20 per cent of the forex volume handled by HSBC in Asia is traded through online channels, including multi-bank electronic trading platform FXall, in which about 30 HSBC corporate clients trade. Mr Cripps said the bank expected that figure to rise to about 50 per cent in the next 18 months. 'E-channels are crucial to the future of HSBC,' he said. 'We are actually ahead of the industry curve.' The September 11 terrorist attacks in the United States were expected to hamper online forex transactions, but Mr Cripps said the fall in daily trading volumes was temporary and picked up later in the month to US$1.93 billion. Recent industry estimates cited by Mr Cripps show that Internet-based trading of currencies accounts for about 5 per cent of worldwide transactions. By 2003, that figure is expected to jump to 40 per cent. Larry Campbell, HSBC's manager for e-commerce business development and marketing, said the launch early next year of Web-based forex transactions would further enhance the shift to online trading among bank clients. At present, transactions made through onlinefx@hsbc are enabled via a Java-based application on clients' desktops. HSBC's online forex trading facility in Asia was first introduced in Hong Kong, Japan and Singapore. Further launches in the region are scheduled for next year. According to research firm International Data Corp, the electronic evolution of the forex market shows how banks are moving towards new business approaches that offer lower costs and new services. It said banks' efforts to use the Internet to reach additional customers, automate back-office processes, increase system integration and improve risk management were driving the online banking revolution. To date, the forex market had been one of the most conservative areas of banking, with trading with customers mainly done by phone or proprietary trading systems, the research firm said. The lack of a real-time competitive market had created inefficiency in the buy side of the business, resulting in higher costs for customers. Barry Flower, HSBC's head of e-commerce development, said the bank was conducting 'a staged and progressive implementation of providing electronic access to its products'. The bank's e-commerce initiatives were centred in Hong Kong and involved 30 key developers, as well as months of stringent tests and quality control. Last year, the bank invested about US$2.5 billion to further develop its information-technology resources. Of that, about US$150 million was spent on consumer and corporate Internet-based initiatives.