Samir Assaf, Chief Executive, Global Banking and Markets, HSBC, discusses the challenges facing transaction banking and how the sector can work together to meet them. Mr Assaf was delivering the keynote speech at Sibos, an annual banking and financial event, in Dubai on 16 September 2013.
There is no doubt that our industry has faced problems in recent years. Macroeconomic change, regulation, new technologies and a changing currency landscape have transformed the operating environment. Against this backdrop our culture and integrity has also come into question.
We are each addressing these issues directly in our own institutions, and together as an industry. I think that one of the most powerful forces to help us meet these challenges, and improve our culture, is to put a renewed focus on why banking is important to society.
The financial sector remains essential to global growth by facilitating the expanding flow of goods and capital around the world.
Our industry, at its best, provides the pillars on which the global economy stands – and transaction banking is central to this. However, there is no doubt that the events of recent years have had a profound impact on the banking industry, and that we are still in the cycle of resolution.
In the aftermath of the crisis regulators are right to set the highest standards of conduct
In the aftermath of the crisis regulators are right to set the highest standards of conduct for the banking industry, including to help tackle financial crime.
While this changes the way banks operate, the industry must accept these new expectations, deliver on them and manage the increased costs.
At HSBC we are determined to adopt and enforce the highest behavioural and compliance standards globally – because it’s the right thing to do. So, as an industry, we have to ask ourselves: in the changed operating environment, with revenues constrained and costs increased, are there other ways in which we need to adapt?
I think that we need to make a fundamental change – which requires practical change and, actually, a mental shift. In this industry we’re used to competing – and we should continue to do so. But I believe that the crisis taught us that we have to work together as well.
In our industry we all do so many of the same things – replicating work and cost for no advantage. We can gain scale through combining some activities to share and improve services, and reduce costs.
Let’s take an example. All banks conduct ‘know your customer’, or KYC, due diligence on clients. In doing this we all source the same data. So we should be looking to create a KYC utility with other players in the market which will save costs and improve practices in the industry.
Another candidate for greater cooperation is the sourcing and organising of financial market data and prices. Currently banks have their own processes for this. We each spend time analysing the same data in the same way before feeding it into our own proprietary systems.
Again, we need to ask if there is a better way. An independent, auditable data aggregator could provide this service for multiple banks. It would be cheaper and more transparent for regulators, it would enforce standardisation in valuation, which is good for everyone, and it would create better data.
It is essential that the industry succeeds so that we can continue to support growth, development and connectivity in the global economy. It is our collective and individual responsibility to continue working to this end.
Through simple innovations such as these, we can deal with some of the challenges we face, provide a better service to our clients and renew the focus on our core purpose.
Read the full speech by Samir Assaf