CEO of world’s fifth largest Tier 1 FX dealer quits after short stint despite FinTech revolution

The massive might and trade execution prowess that has kept the large Tier 1 financial institutions in their top slot may well be signified by the longevity and stability of their corporate structure, thus leadership tends to be of a very long term nature.

Banks in Canary Wharf, responsible collectively for over 65% of all global FX order flow, are historic institutions with vast resources, large scale in-house technology and trading system divisions, and often employ lengthy, consultation and due diligence-heavy, publicly approved and very expensive procedures when electing a new CEO.

Indeed, the CEO of a top level global bank is pretty much aligned with a national political leader in terms of responsibility and public accountability.

Oddly, however, today marks the resignation of John Flint, CEO of HSBC, the world’s fifth largest FX dealer by market share, after just 18 months in his position.

Mr Flint has served as group CEO of HSBC Group from February 2018, having succeeded Stuart Gulliver. After serving for about 18 months, Flint announced on 5 August 2019 that he is stepping down from the position, after a mutual agreement with the board.

The subject of an in internal promotion to CEO, Mr Flint joined HSBC in 1989 as international officer, and spent 14 years developing markets in Asia.

In 2004, he integrated all of HSBC’s investment activities under HSBC Global Asset Management umbrella. In 2006, Flint was promoted Group Treasurer, and Deputy Head of Global Markets and Head of Global Markets MENA in 2008.

In 2010, Flint became the CEO of HSBC Global Asset Management, and then in 2012, he was named chief of staff to the group’s CEO, in charge of strategy and planning. In January 2013, Flint became a managing director of HSBC and CEO of retail banking and wealth management (RBWM).

In October 2017, Flint was named CEO-designate of HSBC, and took over from Stuart Gulliver on 21 February 2018 until today’s announcement that he would leave.

This morning Mr Flint immediately ceased his day-to-day operations at the bank after mutual agreement with the board. His interim successor was named as Noel Quinn.

Interestingly, despite Mr Flint’s lifetime career at HSBC which led him to the top position at the company, his tenure in that post was unusually short and his leaving the position after a short time is particularly interesting given the bank’s new FinTech orientated direction which was implemented very recently under Mr Flint’s leadership.

Unlike the ineptitude displayed by predecessor Stuart Gulliver whose time at the top was peppered with corporate losses and regulatory scandals, Mr Flint’s short leadership has been during a time of rebuilding and modernization for HSBC’s institutional technology, including the bringing in of extrenal FinTech companies, which is a very unusual step for a banking institution, as they usually never venture outside of their own (legacy!) technology divisions.

Ever since the 1990s, bank trading infrastructure has been the creation of, and has been operated by internal departments, occasionally with long term outsourcing of solutions architecture projects to on-site consultants from Fujitsu-Siemens, Steria, VMWare or Accenture.

These days, many banks are lumbered with outmoded systems, largely due to the necessity from an operational specification and security perspective, to operate completely custom systems with long term staff being responsible for them, however the development cycle of technology in electronic trading has presented a delivery issue which is difficult to overcome when investment in technology needs to serve its intended lifetime.

begun building up a portfolio of financial technology firms to work within its operations, which the bank believes will help strengthen its FX capabilities and products. FX being a core business activity for the bank.

In April this year, HSBC began is collaborating with a variety of companies focused on areas such as settlement, balance sheet optimisation, credit, risk analytics and even robotics, in order to improve its services, believing that there are many specialist companies in the financial technology area that are outside of the banking arena, yet have the aptitude and rapid development skills to create a dynamic means of bringing very high quality new services to fruition, and wishes to assemble them into HSBC as an ecosystem.

This represented a very avantgarde direction from a mainstream bank, as the usual remit is to take note of a valuable new technological development and then brief the internal teams on how to design their own version of it and integrate it.

When I worked for 20 years on bank trading infrastructure, the development time for additional services and migrations of upgrades to existing infrastructure was 2 years, and was done in house.

Today, 2 years is a lifetime. Bank IT divisions can now easily work closely with FinTech firms and assemble them as a corporate ecosystem governed by the main IT division of a bank, especially given the London centric nature of most FinTech companies.

A precursor to this direction was made clear by HSBC just five months ago, when it went live on the Capitolis Novation service in FX.

HSBC, along with FX market share rival Citigroup, have both been losing FX market share to non bank market makers which are specific to the FX industry, in particular XTX Markets which is now the world’s number 1 FX dealer.

At the time, Vincent Bonamy, global head of global intermediary services at HSBC, said: “The FX prime brokerage novation tool will provide access to liquidity and credit in the FX options market, while allowing clients to offset their positions across their network of banks.”

Gil Mandelzis, CEO of Capitolis, added: “Citi and HSBC have used this service extensively across all their client activity, with executing banks and counterparties and for their proactive commitment to growing the community of participants across the buy and sell-side.”

Mr Mandelzis has a very long history of FX innovation at corporate level, having been one of the founders of Israel’s Traiana which was acquired in 2007 by Michael Spencer’s interdealer broker ICAP, when Mr Mandelzis was appointed CEO of EBS BrokerTec, a $500 million technology firm that was created through the merger of two fixed income and FX trading businesses, before founding Capitolis in 2017. Thus for those who remember him, Mr Mandelzis has been a huge figure in the FX industry.

Clearly, the banks have to do something to maintain their Tier 1 status and secure methodology as top level FX dealers, but also have to ensure that their high quality execution and competitive nature is preserved to avoid facing further onslaught from lean and progressive non-bank market makers.

HSBC’s step appeared to be a very good compromise, let’s hope the bank’s incoming CEO continues down that road, as it is very good for our industry to be that connected to a major FX dealing bank.