Executive Interview -- Business Class for Banking

By Rob Churcher

J@pan Inc talks to HSBC Premier Financial Service (PFS) Relationship Manager Adrien Wattel about taking on the high-end Japanese retail banking market

J@pan Inc: Can you explain about the Premier service and the strategy behind it.
Adrien Wattel: Japan is facing an unprecedented situation with low interest rates, an ageing population and uncertainty over financial security during retirement. In the near future, the so-called “baby-boom generation” will start retiring and the government estimates over 10 million people will be entering their 60s over the next five years.

We believe Japan is on the brink of a paradigm shift from a traditional savings culture to an investment and wealth management culture, reflecting a growing interest in retirement planning and a growing appetite for alternatives to straight savings vehicles. This is why we decided to launch HSBC Premier.

We believe Japan is on the brink of a paradigm shift from a traditional savings culture to an investment and wealth management culture, reflecting a growing interest in retirement planning and a growing appetite for alternatives to straight savings vehicles.

Premier combines HSBC’s global wealth management expertise, local knowledge and international reach, to offer customers tailored wealth management services. We are not targeting everyone and the service has been developed to support the wealth management needs of people with at least 10 million yen in liquid financial assets.

To put it simply, if HSBC Premier were an airline, we would only offer business-class services. The key to the service is that each customer has a dedicated relationship manager who understands their financial goals, appetite toward risk etc. and supports them on a daily basis.

HSBC Premier is offered in over 40 countries and territories around the world and once you are a Premier customer in one country, you are recognized as a Premier customer anywhere in the world.

JI: What is the relationship manager’s role?
AW: The main role of the relationship manager is to create a trusted partnership with our customers. Relationship managers spend time talking with customers, particularly during the early stages of the relationship, to understand their needs and build trust. Understanding is the key to the relationship and it’s because of this that we can make professional, knowledge-based recommendations and react quickly when things change. This is crucial in the current volatile financial environment.

JI: While HSBC has been operating in Japan for 140 years, the retail side of the business just started 12 months ago. What are the main issues you are facing to build trust?
AW: With over 9,500 offices in 85 countries and territories, the HSBC Group is one of the world’s largest financial institutions. Over 100 million customers entrust us with deposits of over $1.2 trillion. One of the main reasons for this trust is our financial strength which has been built on maintaining a solid capital base, ensuring strong liquidity, a conservative approach to risk and having well diversified earnings by geography and business. We are also one of the world’s most strongly capitalized banks.

Adrien WattelAdrien Wattel, Relationship Manager, HSBC PFS (Premier Financial Service)

HSBC has had a presence in Japan for more than 140 years and we fully appreciate the importance placed on trust and longterm relationships here. We certainly don’t take them for granted and work very hard on building and maintaining relationships with all our traditional core corporate and institutional clients.

However, trust only develops over time. With the launch of HSBC Premier we are targeting a completely new customer base and this means we have to work even harder to build trust.

JI: With foreign banks facing huge losses, are you finding that your Japanese customers are getting spooked, and switching to Japanese banks that they think are now safer?
AW: Not at all, in fact what we’ve been seeing since last summer and the start of the financial crisis, is that more and more new customers are coming to us.

JI: Tell us about the international aspect to HSBC’s retail approach, how does it work exactly—for example in terms of credit history?
AW: Say for example a French ex-pat comes to work in Japan. Since he would have no credit history here, he may experience difficulties opening up a bank account, getting a credit card or obtaining a mortgage here, despite the fact that he’s a high earner with an exemplary credit record back in France.

If he were a Premier customer, his account would be ready for him when he walked off the plane and since we would have access to his credit history in France, his credit card application would be smooth and it would be much easier to get a mortgage or loan here. He’d really hit the ground running.

JI: Getting a mortgage for foreign residents in Japan can be extremely difficult. HSBC offers a mortgage which actually is designed for foreigners. How does it work?
AW: We currently offer two mortgage products for foreigners. ‘Smart Home Mortgage’ has been developed for people looking for a first mortgage, while ‘Smart Investment Mortgage’ targets people who are looking for a secondary mortgage, for example to purchase a dream holiday home in Hokkaido.

Traditionally, gaining a mortgage has been challenging for foreigners who don’t have permanent residency or a Japanese spouse. However, with Premier, even clients who have just arrived in Japan are eligible to apply for a mortgage. So really they can get their foot in the door when buying a property in Japan with much less hassle.

One key optional feature of our mortgage offering is ‘balance offset.’ Using this, a client can use their account balance to offset their mortgage, helping them to reduce interest rate costs.

For example, if a client takes out a mortgage of 100 million yen and has 30 million yen in his or her Premier account, then he or she would only need to pay interest on 70 million yen. This gives the client flexibility in being able to use their 30 million yen to make investments, for example, by setting up a US dollar account. JI