Traditional banks are becoming technology incubators

The shift is not cosmetic or cyclical. It reflects a structural evolution in how banks operate, invest, and engage with the innovation economy globally.

One driver is macroeconomic. The era of ultra-low interest rates is over and outside the AI cluster it has become harder for early-stage technology companies to raise funds from venture capitalists. Pitchbook data shows venture capital global fundraising and deal counts have steadily declined since 2022. For startups this makes banks, with their large, stable balance sheets, more attractive as investors and business partners.

Another driver is the direction of innovation. Rapid advances in artificial intelligence, digital assets, and quantum technologies are fundamentally rewiring the financial services infrastructure. Large international banks who recognise this are moving to leverage their financial and intellectual resources to become technology players in their own right.

Banks as large-scale technology users

At the most basic level, global banks are among the world’s largest buyers and users of enterprise technology - some estimate that banking and insurance make up to 20% of the overall Software as a Service (SaaS) spend. The scale and complexity of modern financial services demand advanced capabilities in data, analytics, cybersecurity, cloud infrastructure, and increasingly AI-driven decision-making. At HSBC, this transformation is powered by a global technology workforce of over 30,000 software engineers and technologists. The bank is committed to investing in innovation and operational excellence. This spans the deployment of AI across risk management, financial crime, customer service, and operations; the exploration of digital assets and tokenisation to modernise payments and market infrastructure; and early-stage research into quantum computing and its implications for finance. These are not experimental side projects. They are core to how a bank operating across more than 50 markets manages risk, serves customers, and allocates capital.

As regulation tightens and expectations around resilience and trust increase, banks are often required to operationalise emerging technologies earlier and more rigorously than many other sectors. That reality positions them not just as buyers of innovation, but as demanding production environments where technology is tested at scale.

Banks as long-term capital providers to technology

The second dimension of this shift is investment. While venture capital markets have remained uneven since 2022, particularly outside AI, banks have continued to deploy long-term capital into strategically important technologies; HSBC has committed over $6 billion in technology spend last year.

Through HSBC Ventures, we invest in technology companies operating at the frontier of data, AI, financial crime, digital infrastructure, and enterprise software as well as companies that we can work with around our core businesses including Payments, Lending, Trade, Markets and Wealth to name a few. The objective is to build a portfolio of capabilities and partners that can be deployed within HSBC to help us serve our customers better.

To date, HSBC Ventures has invested in over 70 companies globally, building a diverse portfolio that spans multiple technology domains. Notable investments include Fano Labs, applying AI to multilingual speech analytics in our call centers; Quantexa, using advanced AI, data and network analytics to combat financial crime as well as intelligent decisioning; and fintechs like Dowsure, which help us develop digital journeys in ecommerce ecosystems. We have also invested in Classiq, a pioneer in quantum computing, and Elliptic, a leader in transaction monitoring in digital assets for financial services. These partnerships sit at the intersection of innovation and regulation, where technology must work not only in theory, but in complex, real-world financial systems.

Corporate venture capital, when done well, acts as a translation layer—bridging the pace of startup innovation with the operational, regulatory, and security requirements of global institutions. That role is becoming increasingly important as technologies mature into delivering meaningful scaled business outcomes.

Banks as lenders to the innovation economy

A third role some banks play in the technology ecosystem is as providers of credit. Equity capital alone does not build durable companies; access to tailored banking services and lending does.

The acquisition of Silicon Valley Bank’s UK business and the global rollout of HSBC Innovation Banking reflect a recognition that high-growth technology companies require financial partners who understand their business models, risk profiles, and growth trajectories. By extending specialised banking and lending services to technology founders and investors, banks help ensure that innovation ecosystems remain resilient across economic cycles.

A converging model

Taken together, these roles—technology user, equity investor, and lender—point to a converging model for global banks. The distinction between “financial institution” and “technology participant” is becoming increasingly artificial.

This convergence matters. Many of the technologies shaping the next decade of finance—AI, digital assets, quantum—will not reach their full potential without institutions capable of deploying them safely, at scale, and across borders. Equally, banks that fail to embed emerging technologies into their core operations risk falling behind the real economy they serve. Banks that combine scale, trust, and long-term capital with deep engagement in the technology ecosystem can become powerful platforms.

The future of financial services will not be built by startups or incumbents alone. It will be shaped by those institutions able to operate across the full lifecycle of technology—from research and investment to deployment and scale. Increasingly, that includes global banks.

Against this backdrop of rapid digital transformation and evolving capital flows, the upcoming HSBC Global Investment Summit in Hong Kong on 14–16 April takes on even greater significance. As global leaders gather to discuss new networks of innovation, finance, trade, and geopolitics, HSBC's role supporting innovation stands as a compelling example of how collaboration and forward-thinking investment can reshape entire economies.