HSBC is a trusted advisor to cloud-based messaging and archiving company Global Relay. As Global Relay has seized opportunities in the growing field of financial industry compliance, mostly outside Canada, HSBC has been instrumental to its success.
Warren Roy, CEO and founder of Global Relay, says that an entrepreneur doesn't have to know exactly what his business will grow to look like in the future. What is needed, however, is a good advisor with the ability to innovate in different markets that can help the entrepreneur learn the ropes.
Roy and Shannon Rogers, Global Relay president and general counsel, found that in HSBC. Rogers says, “They've been a long time customer, but they're also our banker. In between that, they've become an adviser on both fronts.”
Vancouver-based Global Relay's technologies are designed to help bankers, brokers, hedge funds, private equity firms, and other companies in the financial sector comply with industry standards and regulations. Global Relay provides secure messaging and archiving solutions to cover the spectrum of electronic communications, including e-mail, social media posts, and instant and text messages.
Global Relay started as a small company in British Columbia in 1999 without any international customers. Today, about 70% of U.S. hedge funds and more than half of U.S. broker-dealers are customers, and the company has expanded from its original base of small to mid-sized companies to large enterprises like HSBC.
Rogers jokingly remembers that “starvation” prompted Global Relay to expand beyond Canada.
Although he is able to laugh about it now, Roy says international growth was essential to keeping the business alive. The company's fortunes got a boost from the outside, too, when U.S. financial industry regulations changed in the early 2000s, requiring financial- industry actors to change compliance practices.
Rogers adds that the company was in the “right place at the right time” to sell its cloud-based products and services into the heart of the U.S. financial sector in New York City. It is there that the relationship began between HSBC and Global Relay.
HSBC was one of Global Relay's largest customers before becoming its banking and financial partner. Roy remembers that, even as a customer, HSBC made a “huge investment in educating” Global Relay.
He describes a meeting during which HSBC's global head of market data, “took off about six hours of his day” in order to “literally [give] us a history lesson of HSBC, explaining how the whole bank is organized globally, what it operates in, what its focus is, [and] where it makes its money” so that Global Relay could serve the bank successfully.
Roy also says that he set aside time to take Global Relay executives to meet with HSBC compliance teams in London, Hong Kong, and Singapore. Roy thinks this gave his company the foundation “that we needed to understand the people that were using our technologies.”
Roy and Rogers thought that if HSBC was willing to invest this much time in Global Relay as its vendor, the bank would likely do the same when serving as Global Relay's international banking partner. That's exactly what happened, Rogers says.
As Global Relay rapidly grew its sales and operations in the US, Europe, and Asia, the Canadian company's need for international banking services increased, too. And Rogers notes that HSBC's transition from customer to banker was relatively seamless.
Amber Sutherland, senior corporate banking manager, says that HSBC is able to provide clients like Global Relay with accounts in a number of countries, which is something other Canadian banks may not be able to do. HSBC also provides Global Relay with an online platform from which to view all its accounts all over the world through a single portal.
Roy says the ability to do this has brought transparency to Global Relay's financial status and made expansion much easier to navigate.
Beyond establishing bank accounts in markets outside Canada, HSBC also provides Global Relay a local presence in these countries.
“That's something we learned,” Roy says. “It's not necessarily something that was obvious.” He notes that one key to Global Relay's international growth was “having a presence, people, and support in those cities [through HSBC] and getting the confidence of potential customers while maintaining the confidence of existing customers as we grew within those companies.”
Global Relay's collaboration with HSBC has exceeded Roy's expectations. “In my wildest dreams, I never would have believed a bank would help any business as much as HSBC has helped Global Relay be successful,” he says.
“If you're going to succeed in business, you have to be innovative,” Roy explains. Some of those innovations, whether they are a new business model or a new technology, will require financing. In many cases, though, getting that financing can be tough because it carries high risk.
Roy explains that “one of the biggest helping hands” provided by HSBC was financing the late stages of Global Relay's green data centre—Canada's first. Although initial costs were covered by the central government's business development bank, the “traditional funding” had its drawbacks.
Roy says the government's valuation of the data centre project “was basically the value of the bricks and mortar and the materials in it,” but Global Relay argued that its true value was worth much more than the sum of the parts. HSBC stepped in to provide funding based on the data centre's ability to generate cash flow, enabling Global Relay to make the centre operational.
Rogers and Roy both say Global Relay's global competitive advantage (GCA) is not limited to its technology, its ability to provide subject matter expertise on privacy and security matters, its capacity to constantly innovate, or even an infrastructure dedicated to providing constant support. Rather, they assert, Global Relay's real advantage is being able to achieve a balance between all these factors.
Further, Roy adds, because all its technology products and services are built to scale, Global Relay increases its odds of successfully providing the other factors to customers regardless of size.
Global Relay also invests heavily to keep this competitive advantage alive and well. Roy notes that “nearly 70% of the payroll” is dedicated to the technology development department of Global Relay, “disproportionate to any business you will probably ever run across.”
Having built a strong base of business with hedge funds and brokerage firms, Global Relay is looking to expand its customer base with multinational banks and financial institutions. In that effort, HSBC is “a great referral customer,” Rogers points out. Roy adds that its unique relationship with HSBC as both a banker and a customer helped Global Relay develop a distinct advantage in this market: strong audits.
“HSBC was the first bank that really taught us about getting our services audited so that banks could do due diligence,” explains Roy. By requiring Global Relay to participate in independent, third-party security and operational audits, HSBC ensured that Global Relay's operations and technical capacity were able to handle its needs. Moreover, HSBC's guidance during the “huge undertaking” of the auditing ultimately led to Global Relay being able to tout its experience with audits as an advantage over competitors when going after new banking customers, Roy explains.
HSBC has been instrumental in helping Global Relay take advantage of the global growth in the financial sector that has resulted from stricter compliance regulations. Global Relay now boasts 97% of its revenue coming from outside Canada.
As Roy puts it, “We look at ourselves as a pretty young company, and, for us, the opportunity to grow is just beginning.” And Global Relay is confident HSBC will be by its side as that expansion continues.
Learn more about how your company can “sell to the world” by sharpening your global competitive advantage by reading Selling to the World: The Keys to International Business Success, a new report commissioned by HSBC from the Conference Board of Canada.
Note: The opinions expressed by those feature companies do not represent the Bank's views.
Source: Selling to the World: The Keys to International Business Success Report, June 2015
Note: The opinions expressed by featured companies do not necessarily represent the views of HSBC Bank Canada and likewise the opinions expressed by HSBC Bank Canada do not necessarily represent the featured company's view.
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