Ever since London opened the first underground railway in 1863, it has been known for its world-class transport infrastructure. With a growing population approaching nine million residents and almost 20 million visitors each year, the UK capital’s challenge is to deliver a service that justifies its reputation, by giving travellers the best experience when using London’s public transport.
Enter Transport for London (TfL), the local government body responsible for Greater London’s transport system. It is charged with implementing much of the Mayor of London’s transport strategy, which champions a “Healthy Streets Approach” that makes health and personal experience a priority.
Turning strategy into reality at TfL has involved leveraging technology in order to enhance customer experience and introducing greater efficiency to their operations. Over the last few years, they have initiated several significant projects aimed at reducing the use of cash in their business, encouraging the use of Oyster cards and other methods of contactless payment.
TfL’s Financial Services Centre (FSC) is the business unit responsible for processing the firm’s accounts payables and receivables. In support of TfL’s broader strategic objective, the FSC has been exploring ways to reduce costs and generate better value for the taxpayer by reducing onerous and manually-intensive processes. One such process was the refunding of Oyster card balances.
Oyster cards are smart cards that hold pay-as-you-go credit, Travelcard and Buss Pass tickets. London commuters load money into the cards to pay travel fares.
Tube travellers, including tourists or business travellers overseas, are able to reclaim the unspent balances on their Oyster cards. In the past, the TfL FSC handled Oyster card refund claims manually. This was an arduous and expensive process. In London’s peak summer tourist months, there are up to 50 repayments a day. Two to three staff had spent as much as three quarters of their day manually processing transactions of as little as a few pounds. Najam Israr, TfL’s Head of Delivery Enhancement explains: “Say you came from abroad and you have an Oyster card with GBP10 left. You then return to your home country, and submit a claim for the unused amount. Around 40 per cent of claims are under GBP20 and some of them are as little as GBP3 or GBP4” explains Najam Israr, TfL’s Head of Delivery Enhancement. This means that the administrative cost of making a refund might well exceed its value.
Not only was it costly for TfL, but it was also a lengthy and inconvenient process for the payment beneficiary, who would receive the reimbursement in the form of a cheque that they would need to deposit at their bank.
For travellers and UK residents, reclaiming Oyster card balances is now a smoother experience
Working closely with HSBC’s Global Liquidity & Cash Management (GLCM) team, TfL introduced HSBC’s Beneficiary Self-Management solution early in 2018. This solution is designed to speed up repayments and avoid the inefficiencies of making one-off, low value Oyster card refunds.
For travellers and UK residents, reclaiming Oyster card balances is now a smoother experience. A customer seeking a refund would submit their claim to TfL, with basic information such as their name, email address and Oyster card number. TfL collates a file with all the claims and sends it on to HSBC. HSBC then sends the customer a unique reference code which the customer uses on the TfL website to provide their bank account details, and they receive a credit into their bank account within 48 hours of posting their request. There are neither cheques nor expensive correspondent banking fees, and payment is automatically converted to the claimant’s local currency, using TfL’s preferential FX rates. David Jones, Director, Transportation, Aviation and Logistics at HSBC notes, “We worked closely with TfL to meet their requirements, including ensuring that the end client receives the full amount of the refund sterling equivalent.”
At launch, the solution was available for claims in Pounds Sterling, US Dollar, Euro, and Japanese Yen. The process is now streamlined across 66 currencies.
With Beneficiary Self-Management, TfL’s staff no longer process refunds one by one. They send one file to HSBC, which then processes the refunds. “We have been able to introduce roughly 60 per cent time savings, equating to nearly five hours per day, freeing up staff for retraining and other important tasks” says Israr. “In terms of control; governance is a lot better, it's a lot stronger and has greater visibility.”
The solution is the result of close cooperation between TfL and HSBC to solve a real treasury challenge. Explains Ziad Kabbara, HSBC GLCM’s Global Head for Transportation, Aviation and Logistics: “TfL is a valued customer, and the first of many clients to adopt this innovative solution so it was important we got it right. We successfully collaborated to co-create the client experience and functionality that TfL wanted.”
For TfL, this is just one example of how it is using technology to enable better decisions and improve quality of life. But it also shows how London’s transport network is becoming more efficient and improving the customer experience with the help of partners like HSBC, as the capital seeks to become a smarter city.