HSBC is in an ‘incredibly strong position,’ Andrew Beane, Chief Executive Officer, HSBC Bank Malta p.l.c. told The Malta Independent, the same day the bank announced the closing down of eight branches as part of a modernisation of its network.

HSBC made this announcement while saying that it is part of a strategic plan to increase its focus on digital banking services and to modernise its branch network. This will enable HSBC Malta to maximise the opportunities from the rapidly changing way customers are using banks, the bank said in a statement.

The bank will not be discharging any employees, and any redundancies will be voluntary, he said. 

Asked if there is another reason behind the branch closures, other than the change towards more digital solutions, such as financial issues that the public should be aware of, Beane said that "the bank is in an incredibly strong position and we have worked through a comprehensive risk management programme over the past few years."

"We have continued to pay a clear dividend to shareholders and that has been part of our strategy. When you look at the data, the reasons for the changes become self-evident, that the usage of banking services is changing profoundly - the fact that 80% of banking transactions globally are now digital, and 40% of them are on mobile devices. What we have seen in the past couple of years, which is accelerating, is that these trends are coming to Malta, and fast."

“Digital usage of our services by our customers is going up to 60% a year, and traditional transactions are going down by about 10%. You just have to position your business to what customers are doing and as we know things like mobile devices are changing the way people live their lives.”

“What I will say is that we don't have a vision to become only a digital only bank. Our view would be that banking of the future is about bringing the best of the human being and the best of digital technology together. We would want people to be able to conduct their basic banking easily, quickly and in their own time. But if they have a meaningful moment where, for example, they want to buy a house or have a financial problem they want to discuss or make an investment they can also access someone they trust to talk it through. So we are reorganising a bit yes, but it is really driven by these long-term trends."

This newsroom pointed out that Malta is still very much a cash-based society, and asked how this will effect, he said "I think that it is changing, and as said we are not moving to a digital only model. It is a balance, where we will have bigger, better branches that are more flexible and have easier access like parking. So we will bring the best of branch banking to people as well as the best of digital technology. That is my view on how banking will evolve so I think customers will see more from HSBC, just delivered in a slightly different way. 

Asked about redundancies, and how many will be required, he said that the bank does expect the number of roles to reduce 'which is a natural fact associated with change of model. The important thing to stress is that it is on a voluntary basis, so there would be no forced redundancies. We are discussing this with the Malta Union of Bank Employees at the moment. Due to the stock market obligations we have, we can only start those discussions properly today. So we do not have a number that we are going to disclose as we have not finished the consultation process. Because it is voluntary, colleagues may choose to take voluntary retirement etc. No forced redundancies."

Asked if the bank intends to increase employment in other sectors as a result of their move towards digital offerings, he said that the skills in banking are evolving. "We have seen more people within the bank move into things like digital marketing, technology, but equally there are areas we would like to grow such as face-to-face advisory services. So we have qualified more customers to provide mortgage advice for example, so again it is just a change in the way banking is working, so it will create many opportunities for colleagues, new jobs, new skills and a new more digital economy."

He said the bank will close seven branches and merge two, so a net closure of 8. “We will then have around 40 ATMs and self-service machines outside of our branch networks, so that is 56 places where you can access HSBC across the country. Wherever we close a traditional branch we will ensure that there is self-service capability there for customers. “

He added that the bank conducts a lot of analytical work in terms of how customers are using the branches, where they see too many branches close together which would be better served by a bigger branch for example, but said that there is no single reason and it is an aggregation of different analyses.

Beane said that the pressure for digitisation is coming from customers and that the decision was a local one taken by the board. "We are seeing a profound acceleration in the way customers are using e banking. We just launched our new app and we've seen 14% more customers in the first month. We've opened more than 5,000 new-to-bank customer accounts  this year. 95% of them chose to apply online.”

Asked to confirm that there is nothing wrong with the bank or any foretelling of something that will go wrong, and that this is purely a digitisation exercise, he reiterated that HSBC is in an “incredibly strong position. We exceed all our regulatory ratios, we have continued to pay dividends, made huge progress to meet all the anti-money laundering rules and comply with all of those. So this I think is really exciting and when you have strong foundations like HSBC it is like building a house – when you have good foundations you can build a house on top of it. So introducing new apps, new internet banking, a new flagship branch, new wealth management centres... it is now about leveraging those strengths. People should feel confident about HSBC and when we open our flagship branch next year I would say, come and see what a branch of the future looks like."