The most technically sophisticated companies on earth - AI startups, quantum computing firms, climate tech scaleups - have almost no interest in banking. They want payments to clear, credit to move, accounts to open, and their bank to disappear so they can get back to building.
That's the paradox at the heart of HSBC Innovation Banking's commercial model, and it shapes every product decision, hire, and AI deployment they make.
At Backbase Engage in London, Backbase's Tim Rutten sat down with Ad van der Poel, Chief Commercial Officer at HSBC Innovation Banking UK, to talk through how a bank built for the innovation economy actually approaches AI in commercial banking - and why the transformation has to start internally before it ever touches a client. This blog summarizes the main takeaways from their conversation.
Link to full conversation on Banking Reinvented Podcast
The case for invisible business banking
Banks have been slow to recognize that customers are far more attached to the outcome they're trying to achieve than to the financial product that gets them there. A founder raising a Series A doesn't want to think about payment rails, and a climate tech scale up doesn't want to manage treasury manually. They want the financial layer to disappear into the background, and they want to get on with their business.
Their clients - across healthcare, life sciences, fintech, and frontier tech - are small teams where the CEO is often also the CFO, and where everybody is rolling up their sleeves. For HSBC Innovation Banking, every internal decision runs through the same filter: does this reduce the friction the client feels, or add to it?
HSBC IB designs for invisibility. For instance, API-first connectivity that reduces their clients' interaction footprint to as little as possible, automation that removes the manual steps, and a service layer that handles complexity without surfacing it to the client.
The market is moving in the same direction. McKinsey found that embedded finance accounted for 5-6% of lending revenues from retail and SME customers in Europe in 2023. It also found that it could reach 20-25% by 2030 as more financial services disappear into the platforms where businesses already operate.
Invisible banking is a growth strategy, not just a UX preference. According to Mckinsey, the acquisition cost of a qualified SME lending lead in one major European market runs 15 to 20 times higher through traditional channels than through embedded finance.
Additionally, half of SMBs say they'd willingly pay a non-financial provider for the same services they currently get from banks, which adds to the financial case for embedded banking in the case of SMBs.
Banking for the innovation economy
HSBC Innovation Banking works with companies across healthcare, life sciences, fintech, consumer tech, and "frontier tech," which includes AI, quantum computing, semiconductors and climate tech. These are businesses trying to solve hard problems, investors to report to, products to ship and teams to build.
The bank's model follows clients from early-stage investment all the way to global scale. Sector-deep knowledge runs through every function, not just relationship managers. Onboarding teams and operations staff understand the specific regulatory and commercial profile of a fintech client versus a healthcare company.
The goal is to make banking as invisible as possible, give clients stability, automate what can be automated, connect via APIs and stay out of the client’s way.
Mono-product: the new commercial banking threat
Business banking has historically been the last segment to modernize. The competitive landscape, however, is changing fast, and it's coming from multiple angles at once.
Challenger banks are building out from mono-product starting points, such as cross-border payments and cards and expense management services. Meanwhile, non-bank players are moving into venture debt.
For HSBC Innovation Banking, the answer to fragmented competition is the full lifecycle proposition. Broad product coverage matters, but the real differentiator is end-to-end customer journey ownership.
"Client satisfaction from our onboarding process is near 100% - which is quite unique," says Ad. "We help clients through every step, and hopefully they start to see us as a business partner." The score isn't driven by speed - onboarding isn't always done in two hours. It's driven by people who understand the client's industry, guiding them from early-stage startup to global scale.
Why AI in commercial banking has to start internally
According to BCG, only 25% of financial institutions are currently using AI to reinforce their competitive position. The rest still run isolated pilots rather than building comprehensive strategies. The banks that do get it right compound that advantage quickly.
HSBC Innovation Banking is deploying AI today in faster call resolution, fraud monitoring, sanctions screening and AML. In other words, AI is mainly focused on taking over routine work that pulls specialists away from what actually differentiates the bank.
"The more we can take them away from the day-to-day routine tasks, the more they can focus on the client and show our uniqueness," Ad explains.
The logic is clear: Relationship managers spend as much as 60% of their time on admin tasks, which is a significant barrier to growth that undermines the client experience. For a bank whose entire value proposition rests on deep sector expertise delivered by people, that's an expensive drag. AI deployed internally gives those specialists back the hours they're losing to administration.
Agentic banking: honest about the timeline
During the podcast, Tim raised the topic of MCP servers - the protocol layer that lets AI agents interact with banking services directly. Ad's answer: it is still too early to call. The protocol is interesting and the standardization potential is real, but the use case still needs to be client-led before the channel gets decided.
AI-driven instant checkout and processing through Stripe inside ChatGPT shows what API-native commerce looks like when the protocol is standardized. For HSBC Innovation Banking, the same logic applies to their own capabilities.
"Defining APIs in a very collaborative way with a marketplace and the client is a big way forward for the type of clients that we have," Ad says. "Within that, we will offer our specific capabilities through AI-based APIs."
The sequencing is deliberate - work out what clients actually need before committing to the channel.
But lending is a different story. “There is a credit assessment that needs to happen - we pull in a lot of data, including from the client, but also from the environment around us." The goal is still speed, but through better data flow rather than cutting corners on risk.
"Clients first and foremost want stability and certainty," he adds. "That's what we need to deliver first, and on top of that comes innovation."
The real competitive advantage most banks underestimate
Ad's most telling observation from the conversation isn't about technology, but about culture. Instead of asking whether AI will eliminate their roles, HSBC Innovation Banking staff are generating their own ideas for how to use it. The upskilling program running across the wider HSBC Group is producing employees who see AI as a way to increase the value of what they already do.
That cultural momentum has a structural enabler behind it. Operating as a focused unit inside a large group means HSBC Innovation Banking can move faster than a full corporate division, test more freely, and carry HSBC's compliance infrastructure while doing it.
Additionally, their clients - many of whom are AI companies themselves - are willing co-testers. That combination of internal energy, structural agility and client proximity creates a feedback loop most commercial banks can't easily replicate.
Asked about the single lesson that applies across every business banking transformation, Ad's answer was: everybody needs to be involved, from the top down. For a smaller organization, the founder has to drive it. For a larger one, senior management has to want it enough to push through the friction.
---
This post is based on an episode of the Banking Reinvented podcast. Explore how Backbase supports AI in commercial banking and digital transformation for banks.
