My approach generally is to be aggressive in terms of driving the business forward. Over the last four years, we have grown the business a lot. When I started here in 1997, we only had a fraction the staff that we have now. In Hong Kong, we now have 169 people. Now, that is not all growth, as client service operations, and product development are now also under the cash management banner. So to an extent, our growth has resulted from consolidation, but still there has also been a tremendous amount of business growth resulting in additional new headcount.
I think we now provide very good cash management service and what I want to do now is to spread that to a much wider market sector. Our target markets will be the financial institutions, and large and small corporates, and that is a very large target sector. There is only really ourselves and Citibank that can cover that breadth. We have good people now, but in this business, I'm convinced that if you don't get the right people, you don't get the best business. That is going to be my first and foremost focus both in Hong Kong and in the region. Once you get the right people, you can get the right products.
We will ensure we retain our traditional middle market strengths, I also want to make sure that we have the products and the technology to service at the high end, for the top multinationals. So we will see HSBC and Citibank competing head to head. The only way to succeed is to have the right people in the key positions. We have a good team in Hong Kong, although some positions still need to be filled. In some Asian countries, this is a challenge as cash management is pretty new and there is not much experience in the market. This is not a business where you can learn as you go along, you need to have the experience, and if that means hiring externally, or bringing people in from other countries, we will do it.
Is this going to start a bidding war?
No, it doesn't make sense for HSBC to get into a bidding war. If you are motivated, committed and ambitious, then there are only a couple of cash management banks that you can work for. HSBC is one of them. HSBC should be and can be the best cash management bank in Asia. It is my job to position HSBC as number one in Asia, which is exactly what I intend to do. If we can share our vision with others, then it shouldn't be difficult to convince them to work for us. Yes, we need to pay market rates, yes, we need to take people externally, but I don't want people to join us just because of the salary. Also, we are not just going to take people externally, we have career development paths for people within the bank. I also want to make sure that we spread people across the region, which is important to spread best practice across the region. Likewise, we are taking people from Europe or the states. That is a good way of bringing expertise into the region. Cash management is more developed in Europe and the US and therefore have more experienced people. In Asia there is a shortage of cash management professionals. Corporates want to employ cash management people and they sometimes look to their bankers. We also see local banks in the future looking to develop their cash management business which will add further pressure to the limited pool of talent. It is very difficult to make acceptable returns in traditional corporate banking. It is too expensive and risky to just lend money. So you have to get the transaction fees and cash management revenue. As a result, many more local banks will also be building up their cash management expertise and looking to hire people with cash management experience.
Are Asian corporations taking cash management more seriously as well?
Definitely. There is no question about it. Cash management is the lifeblood of a companies' treasury operations. As credit is easier to come by these days, companies are focusing more on risk management and transaction efficiencies. Corporates need to make sure payments are sufficient, receivables are in on time, and that the information that goes with it comes in a timely manner. It is not just about managing your cash, it is about managing your information, keeping track of overdue receivables for example. Changes in technology also play a part. Most corporations now have very sophisticated back office systems, that allow treasury to be more efficient and better manage cash. If you don't do pay attention to this and your competitors do, you will be at a competitive disadvantage.
When announcing your appointment, you said that HSBC is going to concentrate more on new product rollouts, what is in store?
Previously, HSBC has traditionally focused on HEXAGON as a fully-integrated system, which has been a one size fits all solution. But we do recognise that the needs of a very centralized high volume company are different from a very small or autonomous company operating on an in country basis. The latter would want one single electronic platform to manage all their operations in country, whether that be thick client or thin client. A centralized company would have higher volumes, higher value transactions and may prefer a single proprietary pipeline to their bank. It's quick, cheap and secure.
Like wise the internet. We are e-enabling existing capabilities as well as keeping traditional delivery channels. There are so many companies that still want traditional systems. There are a few companies that want e-enabled channels, and we know that in the future, there will be a lot more. So we have to roll out products using both e-enabled and traditional delivery methods. At the moment, we see plenty of companies wanting to use the internet for managing information only. The majority of companies don't want to transaction over the internet yet. Countries are also different. From China, for example, we have seen the greatest demand for management information, other than Hong Kong or Singapore. As a foreign bank, we can only deal with foreign companies at present. Many of these companies are investing a lot of money in China where is very little existing product infrastructure. Consequently many are keen to move straight to the internet for management information and transaction management.
What internal changes will you bring to the bank?
We are doing a project, a study on whether we should centralize all our processing in the region. At the moment we have a big processing centre in Hong Kong, China and one in Hyderabad, India, which covers a lot of the processing for Europe. We could either expand those or chose a third site altogether. In due course it could even be global, but at the moment we are focusing on the region. We need to also decide if we want to cover just payments or trade and payments and so forth. We have traditionally not centralized our processing because we believe there are benefits to having local operations and being able to tailor to the local market. Also, because we have had a large customer base, we have traditionally had a significant enough volume, in country, to get pretty good economies of scale. But we think that the way technology and communications have moved ahead, we can probably still provide local tailoring from a centralized location.
And where would the likely location be for the center?
We have short listed 4-5 countries. The decision will be taken on cost, reliability and regulatory issues amongst others.
On a more personal level, does your move to become head and to specialize in cash management signify any internal changes within the bank? I understand that this is an unusual move for an international manager (IM) such as you.
This is an unusual move. The IM structure is such that you would spend a few years in a job, and then get moved to a different job, often in a different location. This has been a strength of the bank because it means that we have people with broad banking experience, internationally as well as across banking sectors. It means that the bank has been able to operate on a fairly consistent basis internationally. Therefore, for the bank to allow me to specialize is relatively unusual. For an IM to specialize, the bank has to go through some soul searching to decide that it is right for the bank and for the individual. Cash management, however, is such a big business, and becoming an increasing specialized that we believe it would be difficult for anyone to succeed without the appropriate experience.
Are the days of the IM numbered?
The days of the IM adding value just because he was an IM and loyal and trustworthy and will do an honest days work are over. We take on some exceptionally bright people that can truly add value. We do not expect an IM not to be an exceptional performer. Before, it was a trust and loyalty issue, but these days, it is a performance issue. If IMs were not seen to be adding value in terms of their performance, I don't think they would figure in the banks strategy, but I don't think this is the case.
