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CNBC Transcript: Interview with Chris Clark, Global Head of Marketing at HSBC

Marketing|Media|Money profiles the chief marketing officers at some of the world's biggest brands, exploring their careers, their business challenges and how they are directing their significant advertising spend.

Following are excerpts are taken from the latest episode of Marketing|Media|Money with Chris Clark, Global Head of Marketing at HSBC.

JC: Chris thank you so muchfor joining us. Let's start by talking about HSBC which I think is synonymouswith the local bank as we view it. Now obviously, you're in a period oftransition, which in practical terms I think people understand is up to fivebillion dollar cost cutting exercise, a shift away from many of your localcountry regions. What does that mean in terms of the brand?

CC: HSBC's brand, particularlythe 'World's Local Bank' and its strap line, was an incredibly powerfulpositioning for us. But the reality of our business is that we have to simplifyit. So taking out quite a lot of small countries meant we probably weren'treally the world's local bank. And actually moving away from it is difficult.Obviously there's a management challenge called 'find another one'. But it'salso difficult to get it out of people's heads – if I had that little pen inMen In Black where they take the alien out of your head and do a quick bzzz, youknow, it would be wonderful, but I don't.

JC: You basically did toogood a job?

CC: That's very kind. I thinkat some level it became very powerful that's for sure. Partly because we founda very unique way of moving it around the world in particular at the airports,which I think is something that's very iconic and associated with us.

JC: When I'm talking about abank though that's going through the transition that you did, in that the sheerscale of cost cutting that the CEO was talking about, was cost part of thedecision not to do a shift from localbank to something else - because surely if you could have done that you would?

CC: Yes, but I think you'vegot to also understand, what is the role of a simple end line, and if you lookat marketing these days I think there are many incredibly successful brands whodon't have a classical end line. You know the Googles and the Apples of this world,they're not, you know, strapped to some set of words that they have totranslate into multiple languages, because one of the things is that theworld's local bank translates quite well but not perfectly. And so for us,often it was a compromise in many languages.

JC: So it became ultimately alimitation to the business.

CC: It didn't become alimitation, I think I'm going to sort of say to myself, it became somethingthat didn't position us in the way in which was truthful about the nature ofour business. We weren't the world's local bank. We didn't have branches inplaces like Thailand anymore. And so it sort of is slightly disingenuous tosort of claim to be it. And so actually what you've got to do is start thinkingabout the kinds of products and services that people are going to need frombanks in the future.

JC: To what extent was itabout trying to get away from what had happened at the bank and in the broaderindustry over the last several years with the accusations, the fines, the misdemeanours?As Douglas Flynt, the chairman, called them - a list of misdemeanours, aterrible list in fact.

CC: Yeah I think bankingdidn't necessarily do itself as many favours as it could have done really and Ithink it's difficult being the sort of marketing guy in the midst of all ofthat stuff. But one of our senior team puts it very well when he says, you know,some of the things that we're having to deal with aren't our fault, but theyare our problem. And so, as a grown up management team you have to rally aroundand make sure what you do is address those things in the most sensible wayspossible. And sometimes that involves simplifying your business, cutting somecosts and figuring out how to reshape it.

JC: Let's look at one of yourLocal Bank era advert now. It's actually I think very interesting for some ofthe shift that we've seen.


OK so pets in bed. Tell me about thisone.

CC: I think we've always beenstorytellers. It's a lovely thing about our brand and I think one of the thingswe discovered when I first went there 16 years ago was that the organizationwas filled with stories actually, that were everything from folks who ended upopening offices in bizarre parts of the world, and people who had to deal withreally amazing kind of financial crises in places like Mexico and in the sortof Asia financial crisis and the sort of war stories they all tell.

JC: But doesn't that stillhappen?

CC: It does. But we're veryvery sort of dependent on it as a kind of organization - that storytelling bit isa bit of a kind of, you know, the legends of the place.

JC: Let's look at one ofyour new era advertising campaigns. Thisis interesting and I think actually very different


Beautifully shot. I think is the firstthing that hits me. What feelings, what emotions are you trying to invoke with this?

CC: Well I think there's areally interesting conversation. Business is not actually devoid of emotion.It's not even at the top end of the corporate ladder. We believe that, actually,one of the things we understand as a bank is the ups and downs of corporations,the multigenerational families we've banked in Hong Kong who have becomemonstrously successful entrepreneurs and we've had fantastic relationships withover the years and I think for us that's the kind of thing that we were tryingto tap into with that ad.

JC: Some of the humour andthe wit that you managed to pull out of these adverts when you were HSBC, theLocal Bank in some ways has been lost in the new adverts. I just wonderedwhether you're actually going for a more sober, caring image because it's aboutre-establishing that sense of the bank.

CC: Well not really becausewe have used humour still.

JC: I miss the wit…

CC: We had a nice one with alittle girl running a lemonade stand, you might have seen that at some point, whichtraded in various different currencies, that's pretty recent. And so we do playaround, we sometimes do funny things. We've done mortgage ads in the UK withsort of, you know, father's building treehouses for rather difficult daughterswho want bigger and bigger tree houses, and you know we've done some stuff thatwe still think has a wry smile to it. But I think you also have got tounderstand that you can't try and just keep being funny. You've got to try andmake some other points along the way and engage in a different fashion.

JC: Do you think you've re-establishedtrust?

CC: I think it's going totake a long time to establish a firm level of trust in banking. One of thethings we do see quite often is our deposits grow and grow and grow, and that'sbecause we've always been a safe haven for people's money. We've never takengovernment money during all of the troubles, we've never had to ask for, youknow, repeated capital injections from anywhere, we did a rights issue in 2008.But outside of those things we haven't done monstrous capital raising, we don'tscare the kind of market with what we do.

JC: You've been hit bymassive fines…

CC: We have and that's awful,and we are absolutely clear about that being our darkest days. But those finesaffect our profitability, not our capital and so we are a flight to quality forpeople during troubled times. And so trust is one of those things that if youdo a market research survey, I'm sure we'll get a relatively poor score. But ifyou look at what people do and who they trust to look after their money, we arelucky enough to be one that they do trust and we have some nascent trust, Iwouldn't say it's proper trust yet, we've got a bit of work to do.

JC: I read recently thatyour marketing budget is almost a billion dollars. Is that right?

CC: It's probably aroundabout there, yeah.

JC: You're going to be cageywith me.

CC: A little bit.

JC: You've also been doing trialsin China with Baidu and Tencent. Can you just give us a sense of what you'redoing there and what your findings are so far, I know it's early days.

CC: One of the things Ithink we've seen is that particularly the kind WeChat platform in China isactually becoming a proper user IT platform, I mean the Shanghai governmentwill now let you book doctor's appointments, you can pay parking tickets. Itbecomes your one stop kind of way to engage with all things digital and it'sbasically began life as a messaging platform. And actually when you look atsome of the ways in which innovations are occurring across some of the othersocial media platforms, I think they should be looking to the East now for whathappens next, whether you're Facebook or whether you're Twitter or whetheryou're Instagram. You know, what's happening in the East I think will changethe whole dialogue, so for us we're looking at transactional banking, we'relooking at, you know, using as acquisition platforms. It's very powerful andit's very trusted by the users.

JC: If you look at China aswell in terms of the banking model, we look at Alibaba and what they're doing,not only on the pay side with their banking model as well, we've got challengerbanks here in particular in the UK as you've mentioned already, fin tech. Howconcerned are you about the cannibalization of your business as a big globalbank?

CC: I do think there arepeople out there who just do things better than banks. Payments has been adefinite place where banks have had to cede a bit of territory. Apple Pay,Android Pay is really one of our products enabled onto someone else's platform.And that's the sort of stuff we've got to get our heads around. We've got toopen our doors we've got to build stuff with API layers that can allow othersin. We've got to do things that will let them investigate our back officesystems, have access to them. You know, one day, who knows, there may be frontends from others that plug into banking systems. But at the moment, you know,banks have to start thinking about this as opportunity in partnership, not abig fat threat.

JC: So one way I think youuniquely engage with people is in airports with the billboards that you use,and I travel a great deal and I see them, and they make me think but I'm notsure that when I look at those they makes me think 'I need to switch my bank toHSBC'. Is that what you going for?

CC: Nah it's not. It's not aplace to try and sell you stuff. It's actually, one of the things we alwayssort of felt was we developed over the years was, we've kind of got yourattention while you're standing on that jetway and getting on a plane. Theleast we can do is give you something to make you think or even entertain you alittle bit or make you smile. But at the end of the day we can't necessarilyflog you stuff because I don't think thats sort of fair, and so we always tookthat view, and I must admit my paymasters and senior team in the bank have beenfantastically supportive over the years and the reaction we've had to it has beenbrilliant and we've had many imitators. So that's always a form of flattery.

JC: I want to talk about Brexit.What's your perception there? What does that mean for the bank and branding?

CC: Brexit is a moment wherewhat we have to do is be very clear and customer focused, I'm going back in to mycustomer again. Starting to understand the realities of Brexit is somethingthat I think, you know, all of us would love to understand have a fullunderstanding of what Brexit is really means tomorrow morning, including TheresaMay. And I think at the end of the day no one does. No one really knows what itmeans. Manyof us in particularly the big corporates all felt clearly that Brexit is a verybad thing and you know very happy to say on television that I'm very much aremainer. But at the same time, you know, we are where we are, and when youlook at the processes of democracy you've got to honour it. But do you reallyunderstand what it means yet, I don't think we do. However, we believe that weneed to respond and be strong for our customers.

JC: As a bank, there wasuncertainty over whether you were going to be headquartered in London or goback to Asia. You drew a line under that recently and said, look, no matter howBrexit goes, your being and remaining in London. Because as you've kind ofpointed out I think Brexit has surprised a lot of people and the vote decisionhas surprised a lot of people. Is the decision at the bank still andfundamentally going to be we're staying in the UK?

CC: Absolutely, yeah, Ican't see why we would ever choose not to. So there may be various things we'dhave to evaluate in terms of moving componentry but not much. It's not big. Someonereported a thousand jobs I don't know what the official number will be but youknow various different you know Euro desks and stuff like that might have tomove at some point but that's at a point when we know we've got to do it. Wedon't know the terms of what we'll be leaving on yet. Article 50 hasn'tactually even been invoked yet and once it is, the negotiation's going to bevery long and sort of arduous and so you know we've no idea what the terms willbe.

JC: So we are now joined byCharlie Crowe, chairman of C Squared. Charlie, I know you want to start off bytalking about just differentiating the brand at HSBC.

Charlie: I think it's incrediblyhard for financial services companies and banks to differentiate their brand.What would you say HSBC stands for these days?

CC: I think the key part ofour differentiations always swung around quite a lot of our international kindof stuff. And one of the things that I think's been important to us is that inin of itself sort of international slightly kind of dull because it just means anendless list of countries. So what we've always tried to do is try and use someof the culture of the places where we've operated so, you know, you have seensome of the ads today that even the set themselves in places like the Far Eastand sort of you know the Middle East and Latin America and all sorts of partsof the world. And so for us it's been about being a proper global citizen Isuppose. And actually one of the things that I do know from our glorioustracking studies we run, that actually international is the key thing thatwe're seen as being different for. The issue for us often becomes in makingthat relevant.

Charlie: Obviously you're nowcompeting with fin tech companies with no legacy, that could be international throughthe web immediately. Are you concerned and worried by some of the banks thatare now online bank only and some of the fin tech companies that are beginningto sort of nibble at your heels. Is that a big concern for you guys?

CC: It should be a sort ofconcern that needs fair vigilance. The issue though is, out of those people whoare running real banks? Who are running proper balance sheets, with Baselregulation levels of tier one capital? Very few. And that component part whichmakes the bank a proper bank, which is the proper risk and balance sheet basedpiece, isn't something they are finding very easy to get to, and even theGoogles of this world who have pretty deep pockets are probably not sittingthere saying themselves - what we really need is a few hundred million of ourcapital tied up doing absolutely nothing, waiting for something to happen,which is what banks business models are predicated on and we have to hold thatcapital.

JC: The perception's cleanerfor the challenger banks isn't it. The legacy issues aren't there.

CC: Yes and I think therewill be plenty of early adopters who will go and give it a go and if it's agreat customer experience and it works out and is safe, then, you know, we willsee them build some business. I think that'sabsolutely the reality. So you know whether it's Atom bank or whoever else, youknow, you will see somebody coming along and starting to build a bit of abusiness. But without a kind of commitment to the service excellence that youget from sort of places like First Direct which for us is a challenger bankbecause it still stays as one, has weathered the storms of the kind of eggs andthe ifs and all of those guys who have been gone. We now see a new lot which iscoming through in the sort of grown up internet banking world. And actually forus you know we always take huge pride in our business at First Direct which isalways stood proud in all of that space.

Charlie: You mentioned earlier puttingthe API into WeChat in China and seeing how that's come on. Do you see that as a model for how you mightrelate to other online platforms across the world?

CC: This is an entirelypersonal view, so it's not a corporate one from the bank, but I think you knowthere might be a time in the future where I might turn to my 2 kids kids andsay in 10 years' time 'Who are you banking with at the moment?' And they say money'swith HSBC but I really like using the Amazon front end for this, that, and theother. I don't know. I think those are the kind of possibilities we might haveto face into. But if we work with those guys, if we get alongside them andstart to get them to help us understand better and partner with them, becausewe have to, because they'd need our risk, they'd need our ability to run thebalance sheet, to take the deposits, to lend them to the right people, to makethe business work and I think those are the kind of alliances in the futurethat you might see. It's an entirely personal view. It's not corporate one.

Charlie: You talk about businessmodels and agencies. It's quite interesting to see, you know, from a bank'spoint of view, so involved in regulatory activities and so on and doing thingsby the book. This recent report on the agency model in the States from the ANA,the Association of National Advertisers, that has disclosed the fact that mediaagencies are receiving rebates from the media vending companies and notnecessarily disclosing them back to their clients - it's caused, as you know, quitea furore. What's your attitude to that report and has that changed your ownattitude towards the agency market place.

CC: I think it's one ofthose things that reflects quite poorly on the media marketplace in terms ofhow it's operated and I don't think for us it's caused us major issues. We havesome very tight audit processes we run I'm afraid our agencies through and weare reasonably reassured that our exposure to any of that is almost zero.

Charlie: Only reasonably.

CC: Well you know I'm onlysaying that because essentially I'm on television.

JC: How do you police thatthough?

CC: We have some quite strong abilities to auditwhat we do, we use third party audit companies so we do use media audit groupsto look at how this all works for us, and we've also engaged with some of thebig accountancy practices as well to look at these things. It might make usvery unpopular with some of those vendors of ours, but actually at the end ofthe day I'm feeling like I can sleep at night actually knowing where I'm prettycertain where most of our money is and how it's been spent.

JC: You have point of salesdata, I mean, you have, if you want to assess consumer behaviour you haveaccess to premium data and surely if you're crafting a product for a consumer,this data, you can't knock that.

CC: No. And we're reallylucky and we are incredibly privileged to have the kind of information that wehave and the interactions we have. Very few businesses in the world will seetheir customers as many times as we do in a week. So you think about your ownpersonal habits, how many times you look at your bank balance, how many timesyou go online to pay a bill, how many times you get your credit card out yourwallet, how many times you go to a cash point machine, and there are very fewbusinesses that can know as much about their customers as banks can.

JC: How much is too much,because you're kind of in a privileged position to be sceptical.

CC: Yeah you can also drownin a sea of data or not figure out what's really going on. And I think for usthe issue is, we talk quite openly in some of our meetings amongst my guysabout starting a different data contract with a customer. It's their data. Somy contract to you would be the data I have is your data. I need to put it towork for you. How do I do that? How do I make sure I flip you out of themortgage you are on because you haven't noticed we've changed our rate. How do I make sure that I look at your creditcard balance and say why are you rolling this over when actually all you coulddo is take a small personal loan, pay this off, and those are the kinds ofthings we do, and we have for instance taken that view. So this year, over thelast year, it was sort of you know back in the last year, we took a veryparticular view about overdraft in the UK. We chose to take the information wehave that says this customer is just going to overdrawn and we kind of thinkthey probably don't mean to. We send you a text and as long as what you do isclear, we don't get into any of the silly stuff that banks use to get into withtheir customers and it cost us a lot of money and good, we're very pleasedbecause that's the right thing to do to protect the customer and use their datafor them.

JC: Chris you've been there16 years – why are you leaving?

CC: I'm not leaving, I'mretiring. It's a slightly different thing, so I'm still there. We announced thefact that I would quite like to go and sort of probably prod my vegetable patchsometime in February 2016 so I'm taking some time to sort of, you know, to helpthem find a successor. They're a brilliant bunch of guys to work with, oursenior team, so they're not, you know, sort of chasing me out the door. I thinkmost folks are slightly in denial because I still get up the morning and kindof make myself unpopular and do a variety of things. So you know I'm not sortof leaving in a sort of funny little fit of pique.

JC: Would you work in a bankagain?

CC: No, because I've worked forwhat I think is the best bank in the world, I really don't think there's anymuch point. I worked at Saatchi and Saatchi which in its day I think was thebest ad agency in the world so I'm very lucky I've had two absolute pearlersand I've no intention to repeat either of them.

JC: Something tells me this manis not going to be tending vegetables.

Charlie: I suspect there's a fewnon-executive directorships. Which fin tech company would interest you most?

CC: In the fin techs, I'mnot so sure, if you're allowing me a slightly broader scope I'd like to have aconversation with Tencent when they decide to land in the UK.

Charlie: Interesting, and aninteresting note to complete the interview that there's so much innovation nowcoming out of Asia, and we're all waiting, particularly Marketing Media Money,to see how that's going to influence the rest of the world.

JC: So the future's brightand the future's in Asia potentially.

CC: The future is bright andthe future's in the palm of your hands if you just go and have a look.

JC: What a great way to end.Thank you.

CC: Thank you very much.