The world’s best bank for payments and treasury: HSBC

The battle between the world’s commercial banks in payments and treasury has reached new levels of intensity in recent years thanks to rapidly advancing technology and several firms placing all-in bets on capturing more of the business’s steady and sticky revenues.

As a result, corporate treasury teams have probably never been better served by their cash-management banks than they are today. But it has become more challenging for treasurers to differentiate between firms as greater investment has brought greater convergence in many areas.

But some banks are still able to stand out, and last year, HSBC did just that – delivering record revenues of $16.9 billion from its global payment solutions (GPS) business, up 71% on 2022 and at least a few billion dollars more than some of its nearest competitors.

Such revenues are impressive, making up about a quarter of HSBC Group’s total 2023 revenues. But what is powerful is that the bank generated this without having as strong a business as its closest rivals in the biggest and most lucrative market of all, the US.

Manish Kohli, the New York-based head of HSBC’s GPS business, says over and above income from higher rates, the bank generated a healthy amount of alpha from increased client transaction activity; a repricing of services; balance-sheet growth; and sound balance-sheet management in passing on rate rises.

“We were systematic and disciplined in the areas that mattered,” he tells Euromoney.

This mix of factors was not unique to HSBC; most other commercial banks did something similar. The difference was simply that HSBC managed to cultivate greater growth and manage its balance sheet better.

This shouldn’t be seen in isolation. The bank’s performance is correlated to the strengths of its underlying payments business, which is buttressed by the key strengths of the group.

These include the global network and connectivity HSBC can provide; a well-capitalized, $3 trillion balance sheet; a broad range of wholesale banking products and services; and advanced technology platforms enabling corporate treasurers to move and manage money securely and efficiently.

These attributes have helped attract over 1.3 million clients across sectors, which last year processed some 4.5 billion transactions, worth a total of $600 trillion in over 130 currencies. The bank was also named the leading bank globally for corporates and financial institutions in the 2023 Euromoney cash management survey.

Other key strengths have contributed to its success. These include a rapidly expanding real-time payments network, now live in 29 countries; over 1,000 global partnerships with leading technology companies, fintechs and e-commerce platforms; and substantial investment in its capabilities to support the rapid growth of direct-to-consumer e-commerce globally.

HSBC has also demonstrated a commitment to financial and digital innovation. For example, the bank was the first to provide cross-border e-commerce settlement in renminbi for Chinese merchants selling goods on overseas e-marketplaces. It successfully implemented 200 cross-border renminbi cash pools for clients in multiple markets.

HSBC UAE also collaborated with its Saudi affiliate, SAB, to enable the first application programming interface (API) customer with a Saudi account, on a Hong Kong API profile.

Furthermore, the bank introduced the HSBC Omni Collect capability in the UK (allowing clients to offer multiple payment options to their customers), multiple corporate treasury APIs, the Swift payment pre-validation API in the US, and a new artificial intelligence-enabled FX product across multiple markets.

It is also trialling the use of retail central bank digital currency in China, where it is enabling a school to collect this form of payment from parents to pay for their children’s tuition.

“Everybody talks about pilots,” says Kohli. "But this is exciting for us as it actually focuses upon real-world deployment, solving problems for clients, which is a differentiating factor."

For Kohli, another distinctive quality of HSBC is the length and depth of many of its client relationships, which comes from supporting their growth over decades, from a small business-banking customer to a large global banking client with international ambitions.

“A lot of our client base has grown with us over many years," he says, "and so we’re the natural bank for them when they want to expand internationally.”