- Start-ups need early financial backing as engines of economic and technological progress.
- HSBC sees Singapore as a strategic hub for global innovation-driven banking expansion.
- Bank leverages expertise and networks to fund start-ups despite higher risks.
Start-ups are vital for innovation, and providing them with sufficient banking and financial support from the initial stages to growth is essential for any economy. To solidify its status as a global innovation center, banks in Singapore need to contribute to businesses that will define the future economy, despite the greater risks associated with lending to start-ups compared to established companies.
These are the perspectives of HSBC group CEO Georges Elhedery, who interviewed with The Straits Times during a recent visit to Singapore. The Republic, an international innovation center, is crucial to HSBC’s global strategy as the bank grows in the Asia-Pacific sector.
“There are great innovation start-ups in Singapore. There’s a venture capital appetite in Singapore. Being able to leverage and bring all our expertise to bear in this ecosystem is paramount, and that’s another major development area for us.”
In a conversation with ST at the HSBC office in Marina Bay Financial Centre, Mr. Elhedery mentioned that a significant portion of GDP growth in key economies, such as the US, is currently fueled by innovation, technology, and artificial intelligence (AI). He stated that although advanced technology constitutes just 4 percent of the US GDP, it is accounts for 92 percent of GDP growth.
Numerous start-ups in Singapore are currently focused on expanding internationally, and HSBC has noted significant interest from clients drawn to the bank's worldwide network. In October, the bank introduced its innovation banking services in Singapore to assist venture-backed companies and their investors, providing sector knowledge, specialized products, customized financing solutions, and access to new opportunities via HSBC’s worldwide network.
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The bank committed US$1.5 billion (S$1.94 billion) in financing within the Republic, focusing on high-growth firms. Numerous start-ups require funding to launch, especially when they grow internationally. However, banks frequently lack involvement at this phase because they are usually hesitant to provide loans to start-ups due to their elevated credit risk.
To address these risks, HSBC utilizes its extensive industry knowledge and strong connections with start-ups and their backers. In addition to financing early-stage companies, the bank also supports the broader innovation ecosystem, including their backers. The bank aids entrepreneurs by offering various services, such as international private banking for tailored wealth management. At present, nearly two-thirds of the bank's worldwide private banking clientele in Singapore consists of entrepreneurs.