Banking on trust

Banks not only have to create wealth, but also safeguard and responsibly look after other people's money.
Banks not only have to create wealth, but also safeguard and responsibly look after other people's money.ST FILE PHOTO

Financial institutions must ensure that clients' long-term financial well-being and interests are being looked after

Trust has become one of the most pervasive aspects of life in the 21st century. It plays a key function in our daily lives: deciding which doctor to see, what school to send our children to, which airline to fly.

Trust is built over time and is based on hard evidence and experience, and this is especially true when it comes to our finances.

It might be easy to think that a bank's purpose is to simply create wealth.

But it is this thinking that led to people in some parts of the world losing their homes because they were allowed to take on mortgages they could never service or to lose their life savings by taking on high-risk and unsuitable products.

Thankfully, that has not happened in Singapore, but it is an important reminder that the first principle of banking is that money is not an end in itself, but a means to enable people to realise their aspirations - whether that is to create a healthy and happy family environment or act upon a passion or business idea.

One could say that banks have lost their way in recent years and at its core has been the failure to put customers first, resulting in the erosion of confidence in these institutions.

  • Confucius says...

  • According to Confucius, rulers need three resources: weapons, food and trust. The ruler who cannot have all three should give up weapons first, then food - but should hold on to trust at all costs.


In response, the global regulatory effort on the retail and private banking side has been to move away from a product-push approach towards needs-based selling to ensure that clients' long-term financial well-being and interests are being looked after.

For its part, the Monetary Authority of Singapore has been working with the financial services industry to develop a culture aimed at customer centricity through a range of initiatives including the Financial Advisers Code of Conduct, Guidelines on Fair Dealing, and the introduction of a balanced scorecard .

The regulatory changes are designed to drive consumer confidence, protect customers against unfair practices and to require banks to be more transparent in their disclosures.

Ultimately, it is all geared towards building and maintaining trust.


HSBC has not always got this right in the past, which is why we have sought to drive fairer and more transparent outcomes for our customers for several years now. We have done this in three ways.

Since 2011, we have reviewed, and continue to do so, all our products - whether these are produced by the bank or provided by third parties - resulting in a simplified product range. Second, we formally assess the fairness of the pricing of our products.

And the final piece was introducing a new incentive scheme for our sales people around the world in 2013, which shifts the starting point of a client conversation away from a retail or investment product to instead being about quality conversations on needs, and then being able to deliver the most relevant and suitable solutions.


While being consistent with regulation is paramount, what should equally drive banks down this path is that customers expect no less.

Mr Alberto Brea, the global head of executive planning for New York-based advertising agency Ogilvy, said rather than technology being the great disrupter, non-customer centricity is the biggest threat to any business, and banks need to respond to this or they will go the same way as many other industries.

Customer research across the Asia-Pacific shows that the key driver for recommendation is that a bank understands them. Delving into this further shows that customers want a bank that treats them fairly and makes them feel valued.

Linked to this should be an unwavering desire to increase the quality of service.

From HSBC's perspective, we know we can always improve, which makes us even more determined. Customer feedback helps us identify the root cause of complaints and was what underpinned our efforts to conduct more than 1.6 million customer surveys globally last year.


Having a customer-centric approach is particularly important to Singapore and to Singaporeans, especially as the demographics shift.

By 2030, the number of citizens aged 65 and older will double, while the number of working-age citizens to each elderly person will fall to 2.1 from the current level of 4.9.

This points to a higher demand for financial planning so that people can build a retirement nest egg in which they feel secure enough to enjoy their lives and confident that they can leave a legacy.

There also needs to be recognition that aspirations are evolving with shifting generations and shifting wealth patterns.

A big thrust of the Government's Committee on the Future Economy report is for Singaporeans to become more entrepreneurial and international in their outlook.

But this is already happening. Singaporeans increasingly have international needs, including working and living abroad or supporting children in overseas universities. How can we remove the noise and complexity and make these key life events much less stressful for Singaporeans?

By 2020, more than half of all investible assets will be controlled by Gen X and millennials.

Given millennials' increasing role in the wealth of Singapore, they are also telling us that they want to engage digitally. But with digitisation and arm's length interaction, how financial literacy and advice are delivered will become a crucial theme.

Again, by being focused and cognisant of core motivations, the industry will be better placed to support the breadth of customers' needs.


The other very obvious and emerging trend is how technology is disrupting various industries, with the likes of Amazon, Alibaba and Facebook using their broad platforms' reach to diversify their offering into other verticals, including banking through things like loan applications and payments.

While this is fine, HSBC's 2017 Trust In Technology global research report found that when it comes to finances, consumers seek safety and prudence from those who manage their money above everything else.

However, this does not let banks off the hook in terms of reinforcing the need for them to deploy better technology to improve customer experience and journeys.

It does, though, illustrate how society's expectations of banks and other institutions are evolving in some ways and staying still in others.

That is why, for banks to stay relevant, they cannot lose sight of their core purpose: to safeguard and responsibly look after other people's money.

So, while culture and behaviour within banking should be underpinned by strong regulatory governance, achieving high standards can come only from building and maintaining trust.

• Anurag Mathur is HSBC Singapore's head of retail banking and wealth management and Tony Cripps is its chief executive.

A version of this article appeared in the print edition of The Sunday Times on August 13, 2017, with the headline 'Banking on trust'. Print Edition | Subscribe