Name: Citizens Bank Buys HSBC Branches and Scales Up National Expansion
Uploaded: 2021-06-30
Duration: 8 min 48 s
Description: CEO Bruce Van Saun says the deal 'allows us to be competitive nationally.'

CEO Bruce Van Saun says the deal "allows us to be competitive nationally."

Citizens Bank Buys HSBC Branches and Scales Up National Expansion 

Bruce Van Saun - CEO, Citizens Financial Group

Leadership

Citizens Buys HSBC Branches and Scales Up Expansion 

Bruce, thank you so much for joining us and to talk about all the changes going on as citizens financial. You recently bought 90 branches from HSBC and which is giving you a bigger presence in New York City Washington and Florida. Why did you do the deal? Well, we thought it was a great opportunity to extend our footprint on the Northeast corridor. So we're in boston, we're in Philly, but we really haven't connected New England with midlantic, so that was the most important thing. But we also like the fact that we picked up some additional presence in Washington, which is also on that I-95 corridor. And then we have a lot of snowbird clients down in Florida. So actually gaining a presence in expanding our presence there made sense. We quadrupled the size of our online banks. We bought their online business about 200,000 digital depositors. Which is also very attractive, allows us to scale up that business more quickly than we otherwise would. So what is it that citizens can do now that you couldn't do before this deal? We're trying to leverage our national consumer banking presence and build a real, full offering nationally, going after the mass affluent customer base. And so getting that scale and then being able to stitch all our products together uh will allow us, I think, to be very competitive nationally. Uh And then again, the density through the new york region were already there in terms of having commercial bankers and commercial real estate lenders and mortgage lenders. But you don't get the billboard value of taking retail deposits in the region. So putting those branches an important market, like New York will actually enhance our brand overall for the network. So you talk about scale, you're taking on $9 billion 800,000 customers. So what are your plans with that extra firepower? It's always good to have a nice funding pace because we see some great loan growth opportunities as the country comes out of the recession, uh, and out of the pandemic era, that's going to uh give us all the ability to fund that growth well and cost effectively. And how do you feel about doing more loans in any category, whether it's mortgages or consumer loans in this low interest rate environment, does that work for or against you? We will make a good spread on the loans. I think the bigger question has been with the whole, uh, us flush with liquidity courtesy of the Fed. Are people going to start borrowing again anytime soon? Because right now we have a lot of cash in, in our system, our deposits that are all time highs and our loan to deposit ratio is at an all time low. So we're looking for that loan growth. We play it some very attractive niches on the consumer side. So we do student loan refinancing were big now and point of sale finance, one of the pioneers there. So I think we'll get the loan growth. And then on the corporate side as the economy comes back, companies are going to start investing to play offense, they're going to invest in working capital to invest in capital expenditures. And so we want to be there and take advantage of that demand as it starts to kick in. As you know, one of the big trends that we saw during the pandemic was the accelerated adoption of digital banking consumers found that the switch to digital was seamless and they were very comfortable with it. And I understand that uh citizens, you've been doing a lot to expand the digital banking side of your business. But so tell us why it makes sense to add all of those brick and mortar branches as things are really moving more in the direction of digital. Well it's interesting are most satisfied customers use all of our channels. And so the customer actually likes an omni channel experience. They like to be going into a branch if they had need advice or they have a more complex transaction they want help with. Uh They also uh certainly have embraced the digital tools depositing checks by taking a picture on their phone. 30% of our deposits now come through the digital channel. So so that's a real positive. It allows us to re to reformulate the branches this advice centres and move them away from being the transaction centers that they were of of yesteryear. So uh and then the other thing customer want is to have your contact center available For them on a 24/7 basis. So if they have an issue they can just call up day or night. So if you get all that working seamlessly together, you have a very happy satisfied customer. As you know, there is so much attention focus these days on Syntex and how they are disrupting traditional banking. I understand that citizens has about 25 partnerships with fintech companies. What are you learning from those relationships? Well there's some great innovation out there um so we can't do it all ourselves and so try to keep the periscope out and tap into some of the great uh technology innovation and customer experience innovation that we're seeing. Um And so so that's really gone a long way here. We we originally thought the Fintech, so we're going to come and just be pure competitors. But I think it's worked out such that uh, they view the banks now as much as customers as uh, competitors. And so if we can uh, take advantage of in form good relationships with those texts, bring some of that innovation into our company, delivered to our customers and then not have to reinvent the wheel. We'd never be as fast and as nimble if we didn't have that orientation, you mentioned that there are some innovations that you have learned from the fintech relationships. Can you give an example? We use a Fintech called blend, for example, for the front end of our mortgage application process. And we're going to extend that into home equity line of credit. But that's really revolutionized our ability to improve the customer experience and keep track of where the documents are through the mortgage process, which as you know, is very cumbersome process so that something would have been very hard to build on our own. We also had another company partner Sigfig, that built a robo advisory service that were able to take that platform and integrated and offer a combined banking uh and investment advice platform all digitally. So again, would have been very hard for us to build that and design that and integrate that. So, those are two examples of great partnerships that have really bolstered our offerings to our customers Bruce. You became ceo of citizens in 2013 and you have done a lot to transform the bank and also to expand the national brand. But still a lot of people are not familiar with the citizen's name and that's even though you're one of the largest regional banks in the country, you're ranked on the Fortune 500 and citizens have been in business for almost 200 years. What do you want citizens to be known for and what do you have to do to accomplish that? When we did the IPO, we set out to be a top performing bank that delivers well for all our stakeholders and we thought there were really three things that were going to distinguish us, one was customer centric city, so really going to bat for customers being their trusted advisor, both on the consumer side. On the commercial side, the second was to operate the bank with good financial and operating discipline, and the third was really a commitment to excellence. That whatever we do, we're going to be excellent through and through. And I think that's been a good prescription for success and will continue to carry us into the future. You know, the whole banking industry has gotten so competitive. What are the leadership skills that you and your team need to have to stay ahead of the competition? Yeah, I think, you know, most folks who have grown up in the banking industry are good at execution. We operate in a heavily regulated industry and so we're good at risk management and keeping things inside the guard rail, so to speak. But we actually need, I think, a new revitalization of our creativity and our imagination to look outside the banking industry and see how things are changing very rapidly and imagine a different future and how we can help solve some problems in new ways. And we've done a bunch of that. We've innovated and student loan refinancing at point of sale financing. We're getting a real name for ourselves in those areas, but we have to really instill that inside the culture of the company.