Sibos is one of the most important events in the global banking calendar. It’s also an event that HSBC is taking very seriously this year. Noel Quinn has been with HSBC since 1987 and was appointed CEO in March 2020, and opened this year’s Sibos event.
Noel may have come across as a ‘digital champion’ when he spoke at Singapore Fintech Festival last year. But he has had some of the biggest challenges to deal with amongst all the CEOs of a Global Systemically important Bank. It is only now that he is starting to look like a natural when it comes to being a CEO. We covered some of HSBC’s main challenges of 2020 in our summary of the ‘potentially disastrous investments of 2020’ story from early this year:
HSBC have trimmed their French and U.S. businesses since Noel took charge, two of the many initiatives he inherited. But it’s the banks challenges in Hong Kong that gained the most press in 2020. Many of the banks customers will feel reassured, though, having seen how well HSBC has coped.
Noel summarized the banks’ recent financial performance: “Even in a low interest environment, we had a positive performance on revenue. We delivered well on our cost saving targets.”
He went on to explain how it was “the resilience of our people. They made it happen. We learnt that in the face of adversity, you can get things done.”
HSBC’s and #WorkFromHome
Companies across the world are facing the challenge of how and when to return to the office. Many of the Tech giants have simply allowed their teams to work from home in perpetuity. There are, however, other more traditional businesses, where the flexibility to working from home isn’t quite as available.
Bank CEOs like Jamie Dimon of JP Morgan have complained about how it is harder to implement a company culture without employees being in the office. Noel is also facing this challenge at HSBC:
“When COVID first hit the world, we lent an incremental $41 billion in eight weeks to our corporate clients to help them navigate liquidity pressures. We did that with our colleagues working from home. And we did it digitally.” Noel explained, highlighting the strength of the teams at HSBC.
When it comes to whether or not HSBC is looking for its’ employees to return to the office, Noel shared how “70% of our colleagues would prefer to have some form of flexibility. My answer to that, as a leader, is, that I trusted my colleagues last year while they were working from home, and they did a great job. I cannot now tell them that I no longer trust you to work from home.”
“I do believe in office-based work, but do I need to demand that they’re in there five days a week? No, I trust,” he continued. “Some roles have to be office-based, if you’re a high frequency trader or if you’re working in a branch serving clients. The balance is role-based. My view is a balanced approach to the future working environment.”
With travel to Hong Kong still banned for UK nationals, the enforcement of a full return to the office may still be something that is on HSBC’s radar, rather than something they need to address today. HSBC will be sponsoring Hong Kong Fintech Week this coming November. But, Barry O’Byrne, Chief Executive, Global Commercial Banking at HSBC, who is based out of Hong Kong, will be speaking on behalf of the bank at the event this year.
HSBC and Sustainability
HSBC and Noel Quinn have a leading role at the COP-26 later in 2021. The need for the bank to highlight it’s sustainability aspirations was also prompted after the latest protest by Extinction Rebellion outside the bank’s head office in Canary Wharf, just this April.
And, while most banks are seen as slow, Noel highlights how things are changing dramatically: “We have to wake up to the fact that sustainability has to take a more prominent role going forward than in the past.”
Explaining how the bank approaches change, Noel refocused on how the bank has “been around for 156 years as an organisation.” And continued by sharing how, “In that time we have seen the industrial landscape of the world change dramatically, many times. I honestly believe we’re about to see that same revolution take place, and it will take place in the next 10 to 15 years. Because, industries will have to re-platform their technology base, industries will have to transform their business models. Carbon heavy industries, carbon heavy business models will have to migrate to carbon light or carbon neutral.”
The first objective for Noel is “to help our clients transition from their current business model to a more sustainable one. If we do that, then OUR balance sheet transitions,” Noel explained.
“There are certain stakeholders that suggest I should just reposition my balance sheet, withdraw from fossil fuels, withdraw from certain industry segments. I could do that, and then my balance sheet looks good, nicely sustainable. But, I haven’t changed the world. I haven’t helped those clients move their businesses to a net zero business model.”
Noel compares the battle to reach net zero, to how quickly and efficiently scientists came up with the Vaccine for COVID. Conservative estimates had put it at 3 years, but we had the vaccine in 12 months. Noel believes we have the collective capacity to “really accelerate the change to achieve the sustainability objectives.”
HSBC’s ‘World of Opportunity’
Noel explains how: “We’ve been around for 156 years bridging east and west. We still believe there’s a need to bridge east and west, from a corporate point of view and a trading point of view.” He concluded, pointing to the messages that clients are giving the bank.
But, whilst the bank continues to bridge east and west, this may not be what the majority of the banks’ customers wanted to hear from the bank. So HSBC ran a survey.
One of the biggest things that Noel felt came through from the survey of 1000s of colleagues and customers, was how stakeholders felt the organisation was helping entrepreneurs achieve their ambitions. “Opening up a world of opportunity” whether in the UK or Hong Kong, is where HSBC’s clients and people want the bank to focus going forward.
“SMEs is where we’re focused as HSBC, that’s our heritage. Banking, entrepreneurial businesses, particularly in the emerging markets, particularly those involved in the supply chain to the very large manufacturers of the world.” Noel explained. “That’s why I think we have a natural ability to facilitate the transition to net zero.”
HSBC and China
The focus of global banks on China is not new. HSBC’s position in Hong Kong and China is unique, meaning that some of the insights Noel had to share may not be the same as other bank CEOs.
Noel shared how: “If you think about the urbanisation that has taken place in China. The 75 Plus Cities with more than 1 million population. And you think about the GDP growth curve, where cities are moving towards the $12,000 per head per capita. And, at that moment, those markets become ‘consumption’ markets. That’s the moment they start to want to buy financial services products, life insurance, investment products. That is where you tap into the underlying economic growth of a market.”
HSBC seems to have prepared itself well for the changes that are afoot in China. It would have been great to hear him speak about initiatives such as the Greater Bay Area in more detail. Keep watching the Sibos programme for news on this and other initiatives appearing across the landscape in South East Asia.
Crypto – Transparency and Convertibility
HSBC are one of the few global banks that have shown some reluctance in ‘embracing’ cryptocurrencies. Noel was quick to point out why.
“I’m keen on being part of the journey of digital currencies, but I have two criteria that are important.” Noel explained. “You want to know who the counterparties are, and if there are any intermediaries. If you can’t do that, you have a problem with financial crime compliance. So, to be able to facilitate a cross border payment system where you don’t have transparency of counter-parties will be a compliance challenge.”
Commenting on ‘convertibility’ Noel explained how there are “certain digital currencies that are being talked about, that are being put forward as asset classes. Highly volatile asset classes are okay for certain clients but not for all clients. So, you have a conduct issue if you’re promoting an asset class, ie. a digital currency or a crypto, to a client, where that volatility level is unsuitable for that client.”
Noel, then, is looking at digital currencies, not through a fixed lens, but he wants to understand how those digital currencies will affect those two attributes: Transparency and Convertibility.
A reassuring approach from a trusted bank. One that may not cater to ALL their customers, however, the arguments remain compelling.
Find out more about HSBC’s plans by registering for Sibos. It’s still not too late.
Author: Andy Samu
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