By Malini Bhupta
The HSBC group will invest $ 6 billion in India, a key market for the group, over the next five years. Surendra Rosha, Group Managing Director and CEO, HSBC India, told Malini Bhupta that the bank offers a unique proposition to its international clients in India, as well as to Indian companies on their overseas needs. Edited excerpts:
The pandemic has been a big disruptor. What has been its impact on the banking sector around the world?
The global economy has suffered a severe contraction due to the pandemic and the banking sector has obviously not been immune from it. Of the many things the pandemic has resulted in, the most important is that it has forced companies to think outside the box and sidestep constraints to find the way forward. This helped develop a certain degree of flexibility and resilience over a short period of time, which could have been difficult in normal times. It has also accelerated the shift to everything digital. Our customers across all segments have increasingly moved towards digital adoption. This ensured that our service capabilities were not compromised due to lockdown and social distancing. I believe that a substantial part of our banking activities could eventually evolve towards digital self-service models.
The pandemic has also resulted in a greater focus on global supply chains, and supply chain resilience has become a key metric for many leadership teams and boards. The overhaul of global supply chains has also highlighted India’s role in global manufacturing. Even before the pandemic, we had been actively collaborating with the Indian government on reform initiatives, as well as to understand how ecosystems and supply chains are changing. This allowed us to discover sectors with growth potential, in which we can help nourish the ecosystem. We aim to play a central role in helping flagship companies and their supplier ecosystem strengthen their supply chains, including exploring (and executing) the transition to India.
India is an important market for most of the global banks operating in India. What is your plan for India over the next few years?
India is a key element in the growth of the HSBC Group. In the Group’s recently announced annual financial results, HSBC India recorded a PBT of over $ 1 billion, also in a difficult year. HSBC India is currently the third largest contributor to the Group’s profits. Our global network is the main strength of the bank. We aim to continue to strengthen the links between our global customers and their needs in India, just as we seek to serve Indian customers on their global needs. Transaction banking, covering cash management, custody, trading and foreign exchange, is a priority area for us. As the pandemic has disrupted global trade, we believe trade is poised to grow as India deepens trade ties after the pandemic. On the retail side, India has one of the largest diasporas of all and many of its members have banking needs in India. Our ability to connect those who live, work or study in our other markets, back in India, is a very unique proposition. India’s growing capital needs and growing share in the portfolios of global investors are also very important. We serve these investor clients, be they pension funds, sovereign wealth funds or insurance companies in many markets and will continue to serve their needs in India.
Fintechs are ready to challenge banks like never before, forcing many banks to partner with them and even invest in them. How do you see the role of banks evolving in the times to come?
The emergence of fintechs in recent years has been beneficial for the banking sector. They have brought a sense of urgency to the digital financial services agenda. Innovation has become a central area of interest for us and for many of our peers. We believe there is a tremendous opportunity for banks to partner with fintechs in specific segments. Such a collaborative approach will be beneficial for the larger banking ecosystem. We have worked with fintech partners in the recent past, in the fields of transaction banking and retail banking. We will continue to do so in the years to come, collaborating in segments where we see opportunities to work together.
Digitization is the new buzzword, with the pandemic accelerating the pace of the phenomenon. How is HSBC reacting to the new normal? What about the challenges posed by digitization, such as the growing number of cyber attacks?
The pandemic has certainly contributed to greater adoption of digital banking channels. At HSBC, however, digital evolution is an ongoing endeavor. We have been at the forefront of the digital payments ecosystem as well as trade finance, pioneering the adoption of blockchain technology. Although digitalization has led to more fraud and cyber attacks online, we are constantly testing our systems and capabilities against malware and cyber attacks. We invest in security systems and periodically improve our offerings to ensure that our customers are protected against cyber attacks and malware.
What segments in India are you most interested in as a World Bank? And what are you doing to grow in them?
We have three lines of business: banking and global markets, commercial banking, and personal banking. Our growth imperatives for the three business sectors are well articulated. As an international bank, our global network straddles key economic corridors. This means that we are ideally placed to meet the needs of our customers and help strengthen international trade.
One of the areas that excites me the most is the emergence of sustainable finance and the growth of renewable energies. We believe that companies have a great opportunity to help solve ecological problems and that areas such as climate change need a strong strategy, expertise and rapid delivery. Globally, the HSBC Group is committing between $ 750 and $ 1 trillion over the next nine years to help businesses reduce their carbon footprint. We will therefore be keen to support Indian companies in this process.
As globalization has passed under a cloud, do you see the movement of capital being impacted?
The pandemic has certainly had an impact on globalization and international trade. This has changed the contours of international trade as supply chains have been severely disrupted. However, from a long-term perspective, I am convinced that international trade will continue to flourish; we are already seeing the first signs of renewal. This will create new opportunities as well as challenges for different countries. But the uncontrollable reasons for international trade, movement of capital and the greater need for an integrated world economy will certainly not diminish.
From India’s perspective, as the reforms of the past 18 months materialize and seriously push for privatization, I see India’s share in global trade in goods and services increasing. significantly over the next five to seven years. Likewise, international capital will play a key role in financing India’s ambitions in building infrastructure and manufacturing capacity.
HSBC is stepping up its investments in Asia. What’s the plan for India?
Asia has always been at the heart of the Group’s growth. In its recently announced financial results, the Group announced an investment of approximately $ 6 billion over the next five years in its operations in Asia, including India. India continues to be attractive from a long-term perspective, given its growth rate, demographics, and overall digital framework. We believe it will continue to function well and that its international needs, be it capital or trade, will increase. We will continue to invest in our capabilities to serve our international customers in India, as well as the overseas needs of our Indian customers. Our unique ability to connect across economic corridors is key to our growth ambitions and makes us optimistic about our prospects in India.