From Singular to Plural

Recently someone asked us an interesting question ‘Today we are witnessing a huge evolution, wherein young folks are turning to entrepreneurship and starting new businesses. You typically have been serving the large and well-established corporates that have been in business for decades. Do these evolutionary changes have any impact on you and your large corporate clients?

Our response was an emphatic Yes. In large corporate banking space, we have indeed transformed a lot in response to the changes the world is seeing... We typically assess the magnitude of this transformation across 3 dimensions:

1. Which new client segments have we started serving?
2. How are we utilising the power of networks and data to serve clients better?
3. How are we playing a role in the customer’s lifecycle, that is far bigger than banking?

Let’s discuss how these changes have manifested themselves over the years.

Wave 1: Age-old approach: One discussion, One client

 Till a decade back, our conversations with clients focussed on understanding their needs and discussing how our banking products and services can address their requirements. Scope of work focussed on fulfilling needs of that immediate client entity only, on a standalone basis. I called the nature of this relationship as ‘Singular’. 

Wave 2: A larger circle got developed

 Last decade witnessed an explosion of digital solutions. We started working with clients across geographies and categories to help them transact faster, safer, and with greater comfort through cutting-edge solutions. Corporate clients’ needs are far more complex and geographically widespread across an ever-increasing ecosystem, as compared to retail or smaller businesses.

Despite this, today every 3 out 4 of our corporate customers regularly use a variety of our digital and mobile platforms for wide variety of requirements- On-boarding, Documentation, Trade, cross-border payments, capital markets, and M&A

Where has all of this massive digitisation led us to? Digital footprints helped generate a lot of Data for us- Rich, accurate and real-time generating a lot of insights. This helped us to understand unique requirements and challenges of our clients’ suppliers, partners, customers in a far better way. It has eventually led us to leverage our relationship with corporates in a far more meaningful way, and carve out innovative solutions catering to this broader circle. For instance, we are able to provide financing within no time, to a supplier having a consistent track record, and a healthy relationship with our esteemed corporate clients. We transitioned from a singular to a plural relationship, and the journey keeps getting bigger and better.

Wave 3: Collaborate for a larger purpose

Till a few years back, our relationship with clients remained largely labelled as Bank <> Corporate. This has completely changed now, and we are now collaborators. I believe 2 phenomena caused this shift: Climatic change and Covid-19.

As a result of covid led disruptions in supply chains, and continuing adverse impacts of climatic disruptions, corporates are getting more concerned about health of the entire ecosystem they operate in. They expect banks to play a significant role in serving the larger interests of the society. This has completely transformed the role of a corporate banker. Among many areas, he/ she is now expected to discuss how the bank can:

1. Become more of a partner, beyond just banking. One of the key drivers is the common goal of sustainability. All of us have a role to play in protecting environment for future generations. With innovative products such as green trade finance, green deposits, green bonds, sustainability linked derivatives, HSBC has been at forefront of ushering in sustainable finance. We partner with large infrastructure and transport companies and their network, to raise green and social bonds. We finance new age businesses and their ecosystem such as e-commerce, and renewable energy to help corporates meet their sustainability goals.
2. Serve millions, by serving new economy. New forms of corporates have emerged and are thriving in the new digital world: D2C, SaaS, mobility, electric vehicles, those deploying technologies such as Metaverse, IoT, drones, etc. Many of them have Zero inventory, yet billions in valuation and millions of customers! Tech-savvy folks run these organisations, and they expect their banks to provide cutting edge solutions that can serve needs of millions of their customers without any disruptions. The circle of clients that banks serve has thus expanded to the last mile, invisible customer.

 These engagements continue to generate tons of valuable data. Clients now expect bankers to know all about them, their ecosystem and their goals through intelligent use of data and technology. Nature of relationship these days is far more strategic and collaborative, beyond simple banking or digital solutions…

 So, returning to the question we were asked- Yes, corporate banking has undergone a sea of change- From Singular to Plural, and yet it seems we have just started. As the big boys continue to transform the society, bankers will continue to play role of strategic enablers in their journeys.

Exciting times ahead of us. Would be great to hear your thoughts...

Co-authored by Gaurav Sahgal, MD & Country Head- International Subsidiary Business, and West India Head- Corporate Banking, HSBC India and Shekhar Lele- Business Innovation Lead, Commercial Banking, HSBC India