By Simon Clark 

HSBC Holdings PLC has a new plan to find riches in China. It is hiring 3,000 branchless bankers to search prosperous coastal cities for wealthy clients who need advice on insurance and investments.

The venture, known as HSBC Pinnacle, is led by Trista Sun, a 41-year-old Chinese banker with the enthusiasm of a financial-technology entrepreneur. She has set up a fintech platform in Shanghai to operate Pinnacle--HSBC says it is the first foreign company to get a license to do this--and is recruiting financial planners to roam Shanghai, Hangzhou, Guangzhou and Shenzhen armed with digital tablets.

Pinnacle is critical to HSBC Chief Executive Noel Quinn's plan to revive the bank's lagging fortunes with what he calls three pivots: to Asia, to wealth management and to business that generates fee income--advisory work, for example--rather than lending. It is also part of a digital-banking push at HSBC that analysts say is overdue.

HSBC was founded by British bankers in Hong Kong and Shanghai in 1865 but it has struggled to keep pace with China's breakneck economic growth and digital transformation. It has also become embroiled in the geopolitical tensions between China, the U.S. and the U.K.

Still, Ms. Sun believes HSBC's long history and experience can give it an edge over newer companies, even as it pushes into higher-tech areas.

"We probably underestimate the value of traditional financial institutions," Ms. Sun said in an interview. "It requires expertise and experience to understand how to manage risk, how to design the right products, sustainably grow the business."

HSBC has a long history in mainland China and an extensive reach. In 1984, it became the first foreign institution to secure a banking license on the mainland since the founding of the People's Republic of China in 1949. It has about 160 branches on the mainland, more than any other foreign bank.

But that hasn't translated into big retail-banking profits recently. HSBC's wealth and personal banking unit lost $34 million in mainland China last year while earning $4.93 billion of pretax profit in Hong Kong, a highly lucrative home market for the bank. Of the 226,000 people HSBC employs globally, 27,000 are in mainland China and 29,000 are in Hong Kong.

Meanwhile, HSBC faces increasing competition from JPMorgan Chase & Co., Goldman Sachs Group Inc. and other U.S. banks.

"The American financial services industry is absolutely cleaning up in China," Sherard Cowper-Coles, HSBC's head of public affairs and a former British diplomat, said in an online discussion last month. "The big American banks, the big American investment houses are making huge progress."

The prize with Pinnacle is a greater share of the money from China's burgeoning middle class, a group that will swell to 600 million people by 2028, according to HSBC. Ms. Sun's team is competing with both domestic and international financial institutions, such as China Merchants Bank Co. and AIA Group Ltd., in focusing on about 30 million people who have at least $100,000 to invest.

"We are targeting the higher end of the market and we believe the right way to engage is a digital and people-blended service," Ms. Sun said. Pinnacle's wealth planners advise on life and health insurance as well as saving for education, retirement and legacy planning.

"HSBC has chosen the right strategy and now the challenge is execution," said Richard Leung, the former head of UBS's private banking unit in China and a former HSBC banker. "HSBC should look at their customers and say, 'what can we offer that local banks can't?' They would expect HSBC to offer something international."

Ms. Sun said she would explore offering global insurance for critical illness and high-end medical services and is also drawing on know-how from other markets.

Others are less optimistic. Anne Boden, the founder of British digital startup Starling Bank Ltd., is skeptical that the venture can succeed.

"When an industry disrupter isn't led by a founder, but instead by a company employee who can go back to their corner office if the venture fails, it lacks the absolute drive to succeed," Ms. Boden said.

Ms. Sun's friends say she could have been a billionaire had she accepted a job offer from Alibaba Group Holding Ltd. founder Jack Ma in 2004. Ms. Sun declined because she had already committed to joining HSBC.

Since then, Alibaba has grown into an online commerce behemoth with a market capitalization that is more than five times bigger than HSBC's $122 billion. And Ant Group Co., the Alibaba affiliate that Mr. Ma controls, has become a fintech giant. Alibaba's shares have more than tripled since its 2014 initial public offering in the U.S., while HSBC's U.S.-traded shares have fallen 46% in the same period.

Ms. Sun grew up in Wuxi, a city of about 5 million, before studying journalism in Shanghai. After a brief stint in television she started a sales- and leadership-training company.

"I was more interested in the business world," she said.

She has worked for HSBC in Hong Kong, London and Shanghai. She recognized the threat to traditional banking from technology when an entrepreneur wearing a black hoodie spoke at an internal conference in 2015. He told the bankers they were "old and out" because startups would take business away from them.

"I do remember the discomfort I had during that session," Ms. Sun wrote on LinkedIn recently.

Current and former HSBC executives say Ms. Sun is a strong leader. A few years ago, she attended a gathering of global retail bankers. Stuart Gulliver, then HSBC's CEO, told the audience that most markets outside Hong Kong and the U.K. were insignificant for HSBC--a tough message for employees working in those locations, people who attended said. Ms. Sun spoke up, saying HSBC connected the smaller centers into one global market, the people said.

"She was articulate, made her point well and did so with a smile," one of the people said. "Stuart reacted to the challenge well."

Frances Yoon contributed to this article.

Write to Simon Clark at simon.clark@wsj.com

 

(END) Dow Jones Newswires

March 24, 2021 05:44 ET (09:44 GMT)

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