Douglas Flint FCMA Group Finance Director, HSBC
HSBC achieved record profits in 2005. What's the secret?
There can be only one measure of success: relevance to customers. So, if there is a secret, it's to make propositions that they find attractive. We've got the advantage of having a variety of businesses and strong links worldwide. This has made us more relevant than many other institutions to more customers in more places and helps us to develop the brand. It's a combination of product design and quality of experience in terms of the service that people enjoy with HSBC. Customers believe that we take a particular interest in them and tailor things in a way that they find attractive. I think we position ourselves as an organisation that respects individuality.
Where do you go from here?
We still face huge challenges. All of us get frustrated about the things we could do better or areas where we haven't yet fulfilled our potential. There's a huge amount of talent here that we're only starting to utilise, for example. There are enormous opportunities for us to take lessons from all over the world and translate them into products and services that work elsewhere. We also have the chance to create centres of excellence for all sorts of analytics, processing skills and technological developments.
So there's no danger of complacency.
When we sit down as a top-level team and consider what could damage us, complacency is always up there as something we must never give in to. It has been the downfall of many a successful firm, but we work hard to ensure that we don't succumb to it. One of the advantages of being in 76 countries is that there are always one or two where we're doing badly. That keeps your feet on the ground and reminds everyone that not everything goes right all of the time. Our experience in many emerging markets tells us that there are good reasons for all the controls and policy frameworks we have.
Do you believe that IFRS will help to expand the bank's global reach?
Having served on the advisory council of the IASB, I'm a great fan of IFRS. An international framework of accounting standards is an important contribution to the global capital market. In any transition there are going to be teething problems. Perfection is impossible, but greater utility is achievable. The market is generally finding it hard to understand all the ramifications, but that will improve with familiarity. One can only hope that we have a reasonable period of stability before things are revised again, so that we get better at producing and explaining IFRS results.
HSBC claims to have the strongest network of any foreign bank in China. How does it intend to build on this?
We've been in China since 1865. Although our network is fairly modest in terms of location--we have 23 outlets there--we do have significant partners, including Bank of Communications, Ping An Insurance, Bank of Shanghai and, via Hang Seng Bank, Industrial Bank. We are working with Chinese institutions to develop governance and operational excellence as they modernise their banking system. That gives us an important early insight into China's financial sector. We hope to develop this, both with our partners and independently, when the regulations permit us to do so.
Governance, compliance and financial reporting are certainly areas that are being focused on as the Chinese develop their markets. They're keen to learn fast while avoiding mistakes made by others. China's economy is taking dramatic shortcuts in the sense that its industries can move from very simple processing to state-of-the-art structures without going through the intermediate evolutionary stages. In the financial markets they can study the models around the world that have evolved over the past 70 or 100 years and decide what might work for their particular circumstances. It's a tremendous set of case studies to follow.
Which aspects of the Chinese system are particularly challenging? …