The archivists of the HSBC group have produced a wonderful series of videos to commemorate the 150th anniversary of the bank. These videos are aimed at a variety of external stakeholders as well as the bank’s worldwide workforce. As someone who has published academic research on HSBC’s history, I was really impressed by the way in which these videos strike the right balance between accessibility to the general public and the display of detailed historical knowledge.
HSBC’s investment in these high-quality videos was obviously substantial, which means that the bank’s senior managers see the firm’s long history as a strategic asset. As I looked at these videos, I was reminded of the paper by Suddaby, Foster, and Trank (2010) that demonstrated that “rhetorical history” can be an important source of competitive advantage for firms because rhetorical history is often inimitable. If Bank X attracts customers by lengthening its hours of service, it is pretty easy for Bank Y to do the same. Bank X is then back to square one. To be sustainable, a firm’s source of competitive advantage needs to be something that is difficult to copy. An old bank that uses its heritage is marketing has an important competitive advantage that newer rivals necessarily lack.
It is worthwhile pausing to think about the implications of this insight for banking strategy in the face of rapid technological change. The core function of any bank is financial intermediation. A great deal has recently been written by academic and popular authors about how new technologies have the potential to increase the competitive pressures on banks by allowing borrowers and lenders to cut out the middleman. Think of P2P lending. There is even a weekly podcast called Breaking Banks on the subject. Some authors suggest that disintermediation will soon destroy banking as we know out or at the very least reshape the entire financial system. It is true that banks have certain fixed costs that their nimbler, online-only peers don’t have. However, old banks such as HSBC have a key advantage in the fact they have a long history they can point to in their communications with depositors, employees, regulators, and other stakeholders.
Suddaby, R., Foster, W. M., & Trank, C. Q. (2010). Rhetorical history as a source of competitive advantage. Advances in Strategic Management, 27, 147-173.