Technology is going to upend the finance industry, but HSBC (hsbc) chief executive Stuart Gulliver is less concerned than you might expect.
The big names of banking are under attack from startups using new fintech, or financial technology, to offer services such as payments, foreign exchange transfers, and even wealth management at a fraction of the price that HSBC and its peers have traditionally charged. At the Fortune Global Forum in Guangzhou, Gulliver said that he expects banks to stay at the top of the food chain.
“All of the bank CEOs are enthusiastic purchasers of fintech capability, because the fintech industry almost represents a supermarket to purchase from,” he said. “We’ve brought in facial recognition technology, vocal recognition technology, machine learning—all of this stuff we have brought in from inside.”
Indeed, given the pressure to “evolve at pace,” slashing and burning cost centers wherever possible, banks have little option, he noted.
Gulliver wasn’t as blunt as some in talking about what’s coming down the track for big global banks’ workforce, although he acknowledged that in retail banking, at least, there’ll be fewer jobs and a smaller revenue pool. By contrast, Deutsche Bank CEO John Cryan told an industry event in his backyard in Frankfurt recently that half of his colleagues could expect to lose their jobs to technology and other rationalizing pressures.
“In most large companies—certainly in the banking industry, and I would say in most industries in the room—you’ve probably got a 10% turnover in staff every year anyway,” Gulliver said. “I don’t think any of this results in dramatic headcount reductions as a binary act.”
Gulliver used the example of wealth management to show how technology could also ‘democratize’ banking by making traditionally premium services affordable to the great mass of people. The high cost of human advisers, and the need to protect the bank against the future risk of lawsuits, had meant that most wealth management products were “priced to exclude” all but the very rich, he said.
But when the same process of helping people invest is done through an automated questionnaire online, he argued, “you are actually pointing out to them the risks, you are doing it at a very low cost price…you are opening up much better investment processes to them than you could do with very expensive individuals—and with the risk of regulatory fines against it.”
Gulliver is due to step down as CEO in February after seven years at the helm. He has ridden out a series of governance and conduct scandals at the bank, including the manipulation of foreign exchange and interest rate markets and helping wealthy customers evade taxes through its Swiss private bank unit. He’ll be succeeded by John Flint, an HSBC veteran who currently runs retail banking and wealth management.
Operationally, Gulliver has shifted HSBC’s focus heavily towards Asia, with the Pearl River delta area—the southern Chinese mega-conurbation that includes Shenzhen, Guangzhou, and Dongguan, among others—as a special focus.
He called the region “one of the biggest investment opportunities for the next 20 years,” pointing to the fact that despite its explosive growth in recent years, per capita GDP is still only where Hong Kong was in 1993.