Surendra Rosha, co-CEO of HSBC Asia Pacific, spoke with The Jakarta Post’s Vincent Fabian Thomas and Mark Lempp on May 24 to discuss the bank’s plans in the region.

Question: Do current geopolitical issues and concern over Fed rate hikes affect HSBC’s operation in the Asia Pacific region?

Answer: From our perspective, this is no different from any other part of the economic sector. Whether interest rates are going down or going up, we have to consistently be led by what our customers are doing, how they're impacted, and ensure that we are calibrating our approach, our services and product capabilities to match that.

So, I'm reasonably comfortable. Yes, the Fed is raising rates. Many central banks in Asia do this, but I've been a banker for 31 years. We've seen these cycles before. We have to start with the customer, and that’s my approach.

The IMF has cut its global economic-growth projection to 3.6 percent, down 0.8 percentage points from last year's estimates. What does that mean for your business in the region?

Growth rates may be moderately lower on a real basis, but overall economic activity continues to grow. We still believe that, in the long term or medium term, if you take it through the cycle, Asia will drive the global growth, and therefore we think that Asia Pacific as an aggregate is going to be a significant contributor to global growth. Therefore, the implementation or the execution of our strategy in Asia is critical for us.

Do you have any plans to expand your business in ASEAN?

Yes, absolutely. We said that we're going to be investing in Asia and specifically within ASEAN [with] a very clear focus on certain areas – so, to increase transaction banking, related investment services, cash management, trade, foreign exchange, etc. -- to allow our customers to trade and move money across borders, like make it more efficient [with] technology.

So, these are investments in technology for retail and wealth customers. Again, we are investing a lot more in Asia now -- to improve our mobile capabilities, to improve the ability of our customers to transact digitally with us. And that is already starting to bear fruit in the way that our strategies [are executed].

And the last bit that I would say is, we're extremely focused in the context of Asia and particularly as well in the area of sustainability, financing [the energy] transition, to allow for our customers to meet their net-zero goals.

Is there any particular number?

It’s US$6 billion that we've invested over the period -- over the five-year period from last year. So, it is a five-year investment cycle that we're going through. Now, $6 billion could increase. It really depends on opportunity, the scale at which we're thinking about this. We want to invest -- we want to invest in the areas of wholesale banking and wealth.

After a number of years of not being acquisitive, HSBC is back looking at acquisitions in Asia Pacific, so … They bring capabilities to our existing platform, either in terms of product or distribution to our customers, or… We're acquiring customers in the process.

So, it's not changing the core of the organization, but it's bringing acquisitions that will help us grow our product capability -- or distribution capability -- or the customers we serve in the core of our strategy. Some of the investments could be in fintech.

What kind of fintech?

Answer: Could be solutions from a risk-management standpoint, solutions in the space of cyber etc. So, we need to think about this holistically. […] Sometimes we bucket fintech as being what is visible to us as users, but there are some great companies out there that are building capabilities, which a firm like ours can work with [to bring them] into our organization and help us serve our customers better.

With the rise of digital banks in ASEAN and Indonesia, does HSBC plan to expand to digital banking?

We are already a digital bank. If we look at the percentage of transactions that customers do with us, it’s overwhelmingly digitally done. We have to be digitally led as an organization, as a bank.

So, [whether] you title it digital or conventional is not relevant. When we serve our customers, increasingly, the overwhelming nature of the transactions is done digitally.

I think the idea of putting a digital bank label… And, you know, whether we are going to be digital or not is, to me, not a discussion that we spend too much time on.

Are banks at a disadvantage when it comes to due diligence on potential clients? Is the bar higher for them before they are allowed to dole out credit?

Banks are a regulated group of entities -- and that means its own governance compliance costs. Perhaps some of the fintech organization you may not have.

But then banks have a level of trust that society has, which is far greater than fintech. We have the cost of regulation, but let's not forget the benefit of regulation.

It means that banks are far more trusted organizations because you keep your money with us. Right, there is a duty of care and stewardship that is associated with that.

So, I think we have to keep that in mind when we just look at a specific comparison with fintech, which is not necessarily the same in many ways.

Are there concerns a Fed rate hike could cause more credit defaults and restructuring?

In the Indonesian context, that is not a concern. I think we're reasonably comfortable with the customer book we have.

[There’s the impact of] interest rates going up, but also the positive impact in many ways of larger inflows into Indonesia and the opening up from the pandemic etc. So, in balance, we are very comfortable with our books. And we intend to continue to grow with [our] customers. So, one of the things that I certainly am asking the team to do [is] think about how we can have a more accelerated program for customer acquisition in Indonesia.

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