HSBC is Europe’s largest bank, with assets under management of nearly $3 trillion, and it recently rescued Silicon Valley Bank’s U.K. subsidiary. Meanwhile, it just launched its Innovation Banking unit to integrate SVB UK with newly formed teams in the U.S., Israel, and Hong Kong that will be focusing on tech and life science enterprises.
The initiative garnered support from British Prime Minister Rishi Sunak, who believes it will foster innovation, create jobs, and solidify the U.K.’s position as a leading force in science and technology.
Fortune contributor Anna Tutova caught up with HSBC CEO Noel Quinn in London this week, and he shared insight on the bank’s strategic vision and rebranding efforts, and offered perspectives on timely topics like crypto and the role of central bank digital currencies.
(This interview has been edited for brevity and clarity.)
HSBC has been quite busy. Can you comment on the Innovation Banking unit, the Silicon Valley Bank acquisition, and on other upcoming plans?
Happy to do that. First of all, the reason we bought Silicon Valley Bank UK was, if you remember, HSBC was founded 158 years ago with the express intent of financing entrepreneurs, helping entrepreneurs grow their businesses, and seeking out opportunities around the world. And therefore, for us to buy the U.K. arm of Silicon Valley Bank was a natural strategic fit. They’re the entrepreneurs in the tech, the life science sector, and innovation. And why wouldn’t we want to bank the exact group of people that are building the technologies of tomorrow, the health care system of tomorrow? They are a natural group of entrepreneurs that we should be banking. So it was a strategic opportunity. We did it very willingly, and I’m really pleased in the three months since we bought the business. It exceeded my expectations. There is a positive reaction from customers: We opened more accounts in the last three months in the U.K. business than the three months prior to our acquisition.
And what I really wanted to do is to put it in the rebranding. HSBC Innovation Bank brings together the best of both worlds: the specialism that was SVB UK, the focus on the sector, the ecosystem with the financial strength of HSBC.
What types of technologies and innovations do you see as the most strategic for HSBC currently?
I think the technology sector and the life science sector are equally exciting. The pace of change in quantum computing, A.I., the development of completely new business models, the use of technology to create a greener world for the future, a more sustainable world. That’s hugely exciting. But so, too, is the innovation that’s taking place in the life science sector. Just look at what the U.K. was able to do during COVID, the development of vaccines, the bringing to market of new vaccine solutions at a much more rapid pace than had ever been done before.
The development of genetics and protein mapping has been done by some of the firms here in the U.K., DeepMind. I think it is a phenomenal change. And if you roll this forward 10- to 15 years, there are going to be some businesses created today that are going to be the global champions of innovation around the world. Why wouldn’t HSBC want to be part of that journey?
You’ve expressed some concerns regarding cryptocurrency, but HSBC is making some moves in blockchain: There was the launch last year of the bond tokenization platform Orion. So what’s your opinion on blockchain as a technology, and further plans does HSBC have in this area?
I’m very keen on blockchain as a technology base. We were one of the first banks globally—if not the first bank—to process trade finance on blockchain technology. We have since built tokenization of the capital markets. We did a real-life, fully fledged bond issue for a bank in Europe just this year written on blockchain. So I’m very much a fan of the technology.
The question is: How do you use the technology for products in banking? You know, tokenized capital markets are a one-technological, one-product solution. Trade finance is another product solution all on the same technology, but different products. Crypto is a product on a technology base called blockchain.
Crypto as an asset class is something I’m more cautious on, because offering that asset class to retail investors in the same way you’d offer a share or a bond is a different risk profile. And therefore, as a financial institution, I’ll go more cautiously, and I’m very, very cautious on crypto. I don’t think that it’s suitable as a product for many of the clients we bank, but the technology is great.
Do you think your stance on crypto may change with more clarity in terms of regulation?
I think we’d have to see how the regulatory environment changes. But at the moment, there isn’t a strong enough regulatory environment over crypto, so I’m going to remain cautious on crypto in the near term.
And what’s your stance on central bank digital currencies?
Very much in favor of it. We are developing a central bank digital currency. We’re developing it in Hong Kong—there’s a small group of countries that are developing that as a real-life solution. We’re fully in on central bank digital currency.
We’re one of the biggest global payments houses in the world. Last year, we processed over $600 trillion of payments on behalf of our clients. Central bank digital currencies is a natural thing for HSBC to do. And it’s in a regulatory environment governed by the central banks that are participating in it. So we’re fully, fully invested in that.
And does HSBC have any plans to develop its own custody solution for digital assets, like many other banks?
Yeah, we are developing our own custody solution for digital assets. We’re going, again, into that sensibly, cautiously. But we are going in, we are looking at that as a solution.
Can you share a bit more on the global vision for HSBC in this difficult environment, when other banks are going bankrupt?
Well, we’re very fortunate, and I’m a very fortunate CEO that we have a very strongly capitalized balance sheet, very strong capital ratios, and very, very strong liquidity. So, of my $1.6 trillion of customer deposits, I hold at least $800 billion of that in high-quality liquid assets. So we’re super liquid and we’re cautious, very cautious on our investment profile of how we use that liquidity.
Now, one of our strengths is, as you say, being a global bank in a world that’s becoming increasingly complex. My job and the job of my colleagues is to help clients navigate an increasingly complex global environment. We’ve been doing it for years—we are the biggest trade bank in the world. We help clients find suppliers, finance suppliers, wherever they want to supply, buy their supplies from around the world. That’s what we do. We help companies navigate a complex world.
