Joy Macknight

HSBC’s Barry O’Byrne talks about transforming the mindset of the division from digital to digital-first through its approach to people, partners and technology.

HSBC has an enviable commercial banking footprint. The banking group operates in more than 50 markets, with over 1.3 million customers ranging from small and medium-sized enterprises (SMEs) up to large corporates.

The commercial banking division processes four billion payments a year in volume, while supporting about $1m of trade turnover every minute. It also provides lending products and connects clients to other areas of the institution, including global markets, as well as the wealth and private banking businesses. “We really sit at the epicentre of the group,” says Barry O’Byrne, who was appointed CEO of global commercial banking in February 2020.

The challenges and risks associated with transforming such an extensive and complex division into a future-fit and digital-first business are vast. But the commercial banking team has been on this journey over the past five years and will continue to evolve, according to Mr O’Byrne.

“Commercial banking is investing close to $2bn over a five-year period in digital transformation,” he says. “And while we have talked a lot about what we’re doing, it’s equally about how we’re doing it. And both are probably different to what we would have done in the past.”

The division is undertaking transformation in an agile fashion, which many wouldn’t expect in such a large organisation. “Commercial banking has made a massive cultural shift in how we undertake organisational change,” he says. “The vast majority of the change is done in some form of agile set-up. And the environments in which we do this have changed demonstrably – the workspaces are far more akin to what you would see in a fintech or big tech company.”

The division is also investing in upskilling its workforce, which is a continuous evolution, emphasises Mr O’Byrne. “We continue to invest in our capability to ensure that as an organisation we’re fit for the future, both in terms of digital capability and future skills,” he says. “But where we have gaps, we will go out to the market and bring that capability in.”

Partner power

HSBC relies on partnerships with fintechs and big tech companies as part of its digital-first transformation. For example, it engages in more than 1000 partnerships at any point in time.

But ensuring a successful partnership with a fintech start-up can be difficult, given the mismatch in size and complexity, and is something of which Mr O’Byrne is keenly aware. “We have candid and open discussions with fintechs, in terms of what success looks like for them, what it is they’re trying to achieve through the partnership, some of the constraints they have and how, as an organisation, we can help them,” says Mr O’Byrne, who has been personally involved in such discussions.

He points to the partnership with Quantexa, a data and analytics software company. “We worked with the Quantexa team to build out their capabilities and develop a leading solution in the global customer network analysis space,” he says. “Quantexa also leveraged the partnership to create brand awareness in the market.”

Contour Network, which uses blockchain technology to digitise documentary trade contracts, is another successful partnership he highlights. “By working with them, our customers benefit from the reduction in transaction times from 10 days to under 24 hours,” he adds.

As well as fintechs, HSBC has partnered with many big tech companies. In commercial banking, for example, the division collaborated with Oracle on identifying customer pain points. Previously, corporates using Oracle’s NetSuite, a cloud-based enterprise resource planning (ERP) system, had to leave the ERP and log in to banking applications. Working with customers, commercial banking explored how to embed its capability into NetSuite. Oracle launched the new functionality at its US community event, SuiteWorld, at the beginning of October, and the customer feedback was very positive.

“It’s always about finding that idea that will translate into a solution for the customer, then partnering – whether with a fintech or a big tech – to deliver that solution,” says Mr O’Byrne. “Ultimately, the customer is the judge of whether it is a successful outcome. But we need to be brave enough to reach out to our customers and truly understand what we’re solving for – that is the culture we’re continuously building in the organisation.”

Cloud enablement

Cloud is a big part of HSBC’s digital transformation journey. In the UK, the commercial banking division built a platform called Kinetic, a small business banking app, on Google Cloud. Launched in March 2021, the solution was based on research among UK SMEs to understand their greatest need.

“When we asked what they wanted from a bank, invariably they would ask for time back to run their business. Many are start-ups, with one or two people, and banking takes up precious time. So, we built a cloud-based banking app for SMEs, and now 48,000 companies are using it,” says Mr O’Byrne. “And to get the analytics that customers need, we have to use the cloud.”

Cloud technology also facilitates working with different players, according to Mr O’Byrne. “Cloud enables the creation of an ecosystem for SMEs,” he says, highlighting fintech partners that provide invoice matching and cash flow forecasting.

He returns to the example of the bank’s embedded finance in the Oracle NetSuite. “We’ve spent a lot of time looking at the embedded finance space and how new platforms are evolving. Platform businesses now have hundreds of thousands of customers and the only way to connect different parts of the ecosystem is by using cloud technology,” he says.

Future challenges

In addition to being client-focused and building a partner ecosystem, the commercial banking division is focused on creating an environment that is secure and resilient for both customers and partners, according to Mr O’Byrne. He believes that the focus on resiliency is one of the big shifts that happened during the pandemic, as companies strive to make their supply chains robust and ready for market shocks.

A focus on resiliency and digital solutions will help customers navigate emerging challenges. “In a rising inflation environment, customers are looking for the most efficient way of doing things. Cost is high on the agenda of all businesses around the world, and companies want to make their supply chains ever more efficient. Providing digital solutions and capability will help in that regard,” says Mr O’Byrne.

Additionally, sustainability is never far from top of mind for clients and the bank is stepping up its efforts in this space. “HSBC has made clear commitments in commercial banking – we want to support all of our 1.3 million customers on their transition journey [to net-zero emissions]. While already a priority, this is going to be an even bigger focus in the years ahead,” he adds.

Joy Macknight is editor of The Banker. Follow her on Twitter @joymacknight

Register to receive the Editor’s blog and in-depth coverage from the banking industry through the weekly e-newsletter.


All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker

For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Request a demonstration to The Banker Database

Join our community

The Banker on Twitter