Group 12 – Brexit. How HSBC and Prudential will react?

After the referendum on 23 June 2016, where 52% of the population voted for leaving the EU, the government of the UK started the procedures to withdraw. By 2019 the UK should finally quit the EU. It brings new threats for the UK businesses and citizens which operate in Europe. One of them are HSBC and Prudential

HSBC heading into uncertainty after Brexit

It is a British multinational banking and financial services holding company headquartered in London, United Kingdom. It is the world’s sixth largest bank by total assets with total assets of US$2.410 trillion (as of December 2016).


  • HSBC is planning to move up to 1,000 staff from the UK to Paris due to Britain’s narrow vote to leave the EU. The leading global bank, which has assets worth $2.6 trillion (£1.9 trillion), has said it will relocate the jobs if the UK leaves the single market, a possible outcome of post-Brexit negotiations, according to the BBC.

It is possible the UK could leave the EU but remain a part of the European Economic         Area (EEA), in a model similar to that of Norway, Iceland and Liechtenstein.

  • HSBC to close 62 UK branches as judges stall Brexit vote

The high street bank HSBC has announced that it will shut down 62 branches across the UK on the same day the Supreme court made its decision on the Brexit vote.

The enormous cuts to the branch network could trigger up to 180 job losses, but the bank said it would try and redeploy staff where possible.

  • Concentrate on Asia

Douglas Flint said ‘Concern over the sustainable level of economic growth in China was the most significant feature of the first quarter and, as this moderated, uncertainty over the upcoming UK referendum on membership of the European Union intensified.’

The bank saw demand for credit investment fall as a consequence of uncertainty during the first half of the year, and a chill in equity market activity was exacerbated by factors including a crash in the price of oil.

Analysts said the bank will be more concerned about the impact of China, rather than the EU referendum, as Asia accounted for 83.5 per cent of HSBC’s global profits last year.

The United Kingdom’s Brexit vote has major implications for the insurance and financial sectors, considering their investment yields and income are likely to fall due to the pressure on interest rates. Prudential ‘s ( PRU ) stock fell over 7% following the Brexit vote on June 23 amid increased economic uncertainty and fears of falling investment income owing to subdued interest rates and falling yields.

The new head of Prudential’s M&G fund management arm, Anne Richards, has said it is considering shifting more funds to Dublin and Luxembourg after the Brexit vote.

Richards, who joined in June from Aberdeen Asset Management, said a tenth of M&G’s £255.4bn assets under management were from EU clients. “It’s a very important client base for us.”

Investors spooked by the EU referendum have been withdrawing their money, causing a 10% drop in M&G’s first-half profits. Richards said the firm was considering expanding its Dublin base, where it began building a funds business shortly after the Brexit vote, to maintain access to the EU’s single market.

“What we are trying to do … is give ourselves options so we are in a position to react and adapt,” she said. “Dublin and Luxembourg would potentially be options for us if we decide we want to have additional funds domiciled in Europe.”

This will depend on how the UK’s Brexit negotiations with the EU pan out. Under current rules, investment managers need a base in the EU to sell their funds to continental European retail investors.

Mike Wells, Prudential’s chief executive, said there was no question of leaving the UK behind after the country’s vote to quit the EU. “We like the market, we are succeeding here,” he said, adding that “at group level the immediate impact will not be material”. Prudential generates 80% of its sales and 70% of its profits outside Europe.

M&G’s operating profits dropped 10% to £225m in the first six months of the year, as investors pulled out nearly £7bn in the run-up to the EU referendum. The fund outflows are now slowing, after the Brexit vote triggered a spike in withdrawals.


Group 10: The reaction and adaptation of Prudential and HSBC after the Brexit announcement

    According to the U.K. newspaper « independent », HSBC is planning to transfer a thousand jobs of jobs from London to Paris because of the Brexit. Indeed, Goldman Sachs warned that it may have to “restructure” its UK operations which currently employ about 6,000 people. So, 1000 jobs at the bank’s offices in London are involved with products covered by EU legislation, which probably need to move to France when the UK leaves the single market.

The CEO of HSBC, Stuart Gulliver said that among the various domain of banking in the UK, it is the investment sector in world markets that would be affected by the exit of the unique market confirmed by the British Prime Minister. Gulliver emphasized that the sector that is expected to be displaced concerns about 20% of the revenues of its investment bank based in UK, adding that foreign exchange, bond and equity markets should not be displaced.


   Apart from its market activities, HSBC has two other entities in the United Kingdom, which it will not modify despite Brexit: its global headquarters, which HSBC has decided to maintain in London, and its retail bank specifically responsible for British customers.

 These statements by the Director of HSBC came after the speech of British Prime Minister Theresa May. After several speculations that London would seek to make a « soft Brexit », Theresa May finally pronounced itself for a « hard Brexit” and a complete exit of the single market which pushed HSBC to move on Paris.

   This job transfer results from a prudential strategy and can be explain by the fact that the U.K.’s money, the pound, will soon loose a lot of value and so, the great  Britain will face a strong inflation at the end of the following year. HSBC forecasted that inflation could increase by 4 per cent within 18 month after the pound sterling’s Brexit induced collapse.
    The FTSE 100 dropped into the red after the referendum. Its retreat was short lived and Brexit backers have been able to point to its recovery as evidence of Britain’s strength. That’s disingenuous at best. The index is dominated by big multinational companies that make most of their money overseas: mining companies, banks and pharmaceutical outfits with profits largely denominated in dollars or dollar linked currencies. They are thus shielded from the Brexit beat down. The UK is only a small component of their business.

   HSBC is not the only company that wants to move its business. These relocations will be made in order to always have access to the single market of the European Union after Britain announced that it is out of the EU.

Prudential, the largest insurer of UK, said some operations of London such as the M & G fund management division and asset management business should be moved to Dublin or Luxembourg.

One tenth of Prudential M & G’s assets under management, amounting to € 255.4 billion, comes mainly from customers in the EU.

The brexit pushed British insurance to relocate following stock prices that fell sharply.




Group 8 – Banks in our Pocket : The new turn of the banks!

  • Banking innovation, services and new technology: how are modern banks attracting new customers?

According to the newspaper “Le Parisien” the Banks compete with new ideas and innovations in order to attract customers whose expectations have changed. (

Indeed, it is a brand new digital turning point that the banks decide to adopt.

There is no longer notion of liquidity. The money is now judged as obsolete.

All the heart of the financial world is now revolutionized and attached to digital.

To attract new customers – customers who are always linked to evolution, innovation, development and, above all, more mobile customers than ever before – banks have a duty to offer exclusive, futuristic and completely revolutionary services.

The bank today, as defined by Phillip Jean, has a digital duty (

Phillip Jean, for whom « technological evolutions (…) should upset our relationship with money » think that  the end of the reign of the banks will arrive if they delay to revolutionize and perfect their services. There is thus a « strategic interest » for banks to innovate.


Competition between banks and banking services reinforces the fight for innovation more and more harshly.

Furthermore, many services have appeared in recent years for 20 years. A banking activity that was until then mainly focused on a traditional link with its clients, a real relationship between a bank agent and a client, tends to disappear.

In fact, customers no longer go to a bank. Instead of this, they establish all their shares from their cell phones. « The progress of NICTs has revolutionized the functioning of banks »


This digital development can exceed the link that customers maintain with their banks.

Moreover, banks act as intermediaries between customers and digital payment / withdrawal systems such as Visa and MasterCard tend to disappear

According to Les Echos, « MasterCard and Visa announce their digital wallet »


Therefore, « Online banks and mutual benefit from this mobility to the detriment of commercial banks« .

The attractiveness of banks is the main reason for the development of this mobility. According to Les echos, the main reasons that a customer decides to move from one bank to another:

  • 29%: the quality of  the service is more advanced, more elaborate (« availability and responsiveness of advisors ») for the prices charged by the bank (value for money)
  • 44%: daily banking fees
  • 15%: the mortgage rate
  • 11%: return on savings products


How do banks adapt to our existing unsatisfied needs? And what are the innovations that reflect, unbeknownst to us, the world to which we belong?


A large number of innovations can be identified, undoubtedly the bank by smartphone is the most known of them, this also shows that banks have understood the main issue. ‘Today it is possible to open a bank account from your smartphone’. All the banking services are now gathered behind a mobile banking applications including bank transfers, secure online payments, videoconferencing with your banking advisor, scholarship, documents and contracts, etc. Contactless payment is the best mirror of our generation with a prompt payment that tends to save time to customers.

However, digital development goes with some security issues and the development of cybercrime in the 21st century. To fight effectively and radically against this new threat, banks are taking on their responsibilities by financing for your security and safety, by introducing new methods and techniques that limit the risk of being hacked including dynamic cryptogram and biometric security, the most simplistic and safe authentication solution possible .

Ultimately, competition and new entrants are the main principle that affected banks to invest in innovation, they see it as a way to enter new market with a target market shaped by digitalization.

GROUP 17:Banking innovation, services and new technology: how are modern banks attracting new customers?



The world evolves each day and in order to keep customers or to attract another customer, banks have to innovate and create advantages which will be good not only for the new customers who uses the new technology but also for the other type of people. The banks try to “keep customers away, but too close“. This means that the banks are doing their maximum in order to avoid a displacement of their customers. (In other words, banks are trying to avoid any kind of trips to their customers regarding an issue or to get an important information. In fact, a trip is considered as a cost). So, their customers can have access to their account by being at home thanks to the internet and the applications. It is the case of Boursorama bank, which is the leader of online bank in France. By seeing the evolution of technologies with time, these banks decides to put several accessibilities and possibilities on the internet, so customers can manage their accounts as they want without leaving their house. The different strategies that banks use are:

  • The online services ( virtual world )

With the creation of many applications, customers can easily have access to their accounts at any time. It allows customers to be in contact with their account at anytime. In fact, they can do transactions like transferring money from their account to another. It allows the transactions to be faster and easier. The application like the google wallet allows also to do purchase to the shop very quickly.

Through the online applications, a calling system, customers benefit from banking services at different locations: home, office, and even while traveling; So this is a way to make them feel closer and more comfortable even though they are physically far. Nowadays, people are always seeking for such online services in which they do not have to make any physical effort. It is really different from the traditional methods.

Banks also use the social networks in order to make the promotion of their banks. It allows the customers to have much information regarding banks’ offer, and also issues of some customers with the bank. The social network that banks use can be the Facebook page.

Also through the application, customers can now deposit their check by taking a picture of it and put it in the mobile application.

Those services are very simple and useful.

  • Limitation of risk fraud ( security of transactions)

With the technology of nowadays, transactions are more secured. In fact, Banks use a high level of security for all transactions. For the smartphones’ apps, banks ask for many passwords and put a limitation on payment per day for the credit card in order to prevent any kind of unwanted issues. Also with the contactless card, there is a limitation of payment per day with it. Then, when people lose their credit card, they just need to give a call on a free charge number to the bank and they will automatically block the card and delete all transactions not made by the client.  With this in mind, it reassures the customers and helps to attract new customers. Then, the online payment is also secured by the banks because after putting the number of the credit card, the banks ask for a confirmation in the application or by a code sent to your phone number.

  • Partnership with many other companies

Many banks do a partnership with other companies like targeting schools in order to attract students and also to give them internship or scholarship to some students. Moreover, banks do a partnership with the hospital in order to provide health insurance to the customers in need to make them feel better. Another partnership, banks target also car’s users in order also to give them an insurance. Those partnerships reduce the cost of some services and this attracts many new customers because nowadays many people are looking for the less expensive possibilities.

This is actually the strategy used by modern banks and their way of thinking. Thanks to the use of innovative technologies banks are being very successful at maintaining and growing their customers’ satisfaction.

  • Follow-up

After a conversation with customers, banks’ agents should give a call or a kind of email showing his interest in the plan they had done in order to make them feel very important. By giving this interest, customers will keep loyal to the bank because they take care of them and listen to them. For instance, after a meeting with a client, agents can ask by email or phone call if they have received or done what they had talked about.

References :

GROUP 19 – “Banking innovation, services and new technology: how are modern banks attracting new customers?”

Banks are, in short, the opposite of a tech startup. So a tech startup wanting to take on the banks on their own turf has its work cut out for it.

But that’s the goal of London-based firm Monzo (née Mondo: the company had to change its name this year after a trademark challenge). The company doesn’t just want to become a new bank, though. It wants to become the Facebook of banking, with a billion users worldwide, bypassing much of the traditional banking infrastructure in the process to become something the world has never seen.

That’s a long way away, though. In the present, Monzo is operating in a limited beta test, with 50,000 cardholders using the service through pre-paid debit cards. It just got a restricted banking licence, putting it on the path to opening up a full current account service in early 2017 (as well as granting it deposit protection, faster payments and direct debits).

Building a bank from the ground up

It’s not just a result of founder Tom Blomfield’s goal “to get to 1 billion customers”, and subsequent plans for international expansion before the company has even fully launched in the UK (Monzo is “testing US dollar and Euro cards right now”, he says). It’s also because, where its competitors have largely been positioning themselves as innovative banks, focusing on the cost savings afforded without the overheads of branches, and highlighting their competitive deals, Monzo has focused more on the wider possibilities offered by building a bank from the ground up in the 21st century.

Blomfield’s ambition can get ahead of him at times, leaving it hard to disentangle possibilities from plans, and plans from actually existing products. So here’s what Monzo is today: a pre-paid MasterCard, issued by Wirecard Solutions, with deep hooks into a companion app which offers a real-time log of your spending and control over how the card is used.

The real-time log is impressive for anyone who’s had to wait days for online banking to update to find out how much they spent after a boozy night out, and Blomfield proudly points out that it would be impossible for a “legacy bank” to do the same. “If you slap this app on top of NatWest’s systems, the phone wouldn’t buzz when you make the transaction. It would buzz three days later, when the bank finally posted to its ledger.”

Other pre-paid accounts are more real-time, and Blomfield concedes that American Express also offers that speed of response. But, he says, “the amount of information that we ingest and show is a hundred times greater” than even new payment networks. That means that not only can the app show you what you spent, it can tag it to the physical location of the store, pull the logo of the brand, and let you sort your spending by location, category, or cost.

There are other draws, concerning safety and security. The app allows a user to freeze and unfreeze cards at will – perfect for those “where’s my wallet?! Oh, there it is” moments – and can report when and why transactions fail as well as when they succeed.

For users of Monzo today, then, that’s most of the tech on offer. The other major draw is the fact that the service offers fee-free, 0% commission use overseas, something Blomfield gets quite excited about as he checks his own bank account for comparison. “Let’s see how much Natwest charge me on similar transactions. ATM transaction … oh my god. So, for a £100 transaction, about £5.60 in charges, and then an exchange rate that’s way off.

Let’s take the example of Monzo, a startup company that consist of an app, more specifically a banking app.

Finally, a bank as smart as your phone

Built for your smartphone, this is banking like never before. One that updates your balance instantly, gives intelligent notifications, and is actually easy to use.

Monzo isn’t your typical banking app. It’s powerful, fast, and beautiful.

Get instant spending notifications, add receipts to your purchases, manage your budget, and more. We don’t charge setup or usage fees, and there are zero charges for spending abroad.

Fast and friendly support

Still having to wait on hold for hours to get anything sorted with your bank? Monzo provides world-class support through in-app chat, with an average response time of under ten minutes.

We started Monzo because we think that banking should be better

In a world where you can use an app on your phone to order food or a taxi, it’s ridiculous that your bank still takes days to update your balance when you make a card payment.

We’re building the bank of the future, available now.

Banking doesn’t have to be old fashioned

We’re building our systems from scratch, using the latest technology used by Amazon and Google, so we can give you a real-time balance on your account.

Use our API to build apps using your own data, and send us feedback on what features you’d like to see next using our forum.