Peter F. Drucker, winner of the Presidential medal of freedom, management guru, and founder of the Leader to Leader institute, said, “Leaders grow; they are not made.” And with growth comes the ability for a person to be more participative than directive, more enabling than performing. Out of this understanding of the needs of those who would be affected by them comes the ability to innovate and lead. It is action, not position. Meet Sanjiv Sanghvi.
Sanghvi joined Wells Fargo Bank right out of college graduate school and has been with the financial giant ever since. With an M.B.A. from the University of Michigan and a B.S. from the Wharton School of the University of Pennsylvania, Sanghvi joined the commercial banking division of the bank fifteen years ago. “I took to the Wells Fargo culture of rewarding excellence, where a leader is expected to groom more leaders, not more followers.” After a stint as a commercial banking relationship manager, Sanghvi was made manager of the Palo Alto Commercial Banking Office branch, where the bank played a slightly unique role.

The traditional banking environment at the Oakland, CA operations handled the needs of the industrial clients, where it was more of “traditional” lending. The Palo Alto branch office catered to the technology domain of the Silicon Valley. “It was not about just playing a banker lender anymore,” says Sanghvi. “We were the financial services provider for the technology company—a client just plugged into our system for utilities like capital, managing cash flow, wire money, automated clearing houses (ACH), and a host of other services.” The 1996-98 years were also rapid expansion period for the technology companies that did not have too much cash to spend on its treasury management needs—and Sanghvi provided the plug-ins on seamless technology.

“Banking is about relationships—not just about being a lending agency, anybody can do that,” he says. After the stint in Palo Alto, he moved to Seattle, where the company was the fourth largest in the Washington state. The size and position of the organization made it easy for Wells Fargo to develop and nurture a good set of commercial banking clients in the treasury business. “The factors that made you successful in the past—while important and need to be retained—do not necessarily drive new customers to your business,” says Sanghvi. From a mindset of “how can we lend to you,” the need of the hour was to ask, “how can we be of service to you, and what can we do to build this relationship?” In the subsequent years, Sanghvi was responsible for the marketing area of handled wholesale banking in addition to the treasury product development, and returned to the company’s Oakland office. He calls the move into a new position a good “rounding off” experience. “I was in a position where I hadn’t done the job of the people before me, and it was a rich learning experience to gather in the valuable knowledge of the 100-odd team members.” From a customer-facing role in Palo Alto and Seattle, Sanghvi was now exposed to the internal machinations of the West coast financial behemoth. “And that was a fantastic view,” he laughs, “you never truly realize how big and intricate this bank is.” A few months ago, Sanghvi was made CEO of the Wells Fargo-HSBC Trade Bank, succeeding outgoing CEO Dave Weber of Wells Fargo.

“The most remarkable element in this was the name itself—one partner is one of the largest service provider in domestic commercial banking, including the treasury management business that was helping clients transact global deals, and the other was a global bank, with a presence in over 79 countries,” says Sanghvi. The Trade Bank—named one of “The Major Trade Banks” by World Trade magazine in April 2004—is an equity joint venture between Wells Fargo and HSBC. The only nationally chartered bank dedicated exclusively to international trade, The Trade Bank helps U.S. companies increase their overseas sales, manage risk and accelerate cash flow. It also provides its customers with the local market knowledge through the HSBC network covering 79 countries and territories. As trade finance continues to become less paper-based, Sanghvi’s experience in treasury management will be of value to the business.

Back in the eighties, when Wells Fargo decided to shed its international operations, there was a clear need for its customers to access global transaction facilities—considering that the bank was one of the largest middle markets and corporate banking entities. What started as a corresponding relationship with HSBC then matured into a joint venture, where Wells Fargo owns 60 percent. In 2005, the JV will be 10 years old. “The far-reaching decisions were made in how this joint venture could work in a non-bureaucratic way, and focus on delivering specific solutions to customers that rested on a seamless transaction between the two banks,” says Sanghvi. “We—through HSBC—offer some of the most unique credit services. For example, when customers receive large letters of credits, most banks come up against the country’s risk limits—how much you can lend against a country’s credit worthiness. Since HSBC has a forefeiaiting desk, where it buys and sells these LCs in the open market in other countries where it has a presence. This allows us to tale a lot more exposure,” the Trade Bank CEO comments. Most of the Trade Bank customers are able to conduct their import and export transaction documents through the bank’s online portal systems, which is in turn integrated with Wells Fargo’s industry leading the treasury management systems. “We are in an interesting situation, where we are still a small 200-member team, entrepreneurial and growing, and yet can deliver sophisticated financial solutions and be the largest service provider with the support of these two giant partners,” says Sanghvi.

From offering capabilities, Sanghvi now is a unique service provider, where he leverages the powers of HSBC’s large network to gather relevant information about global clients and business geographies, and Wells Fargo’s extensive knowledge of U.S. markets and structures to offer “expertise.” “The inter-relationships that exist between a Chinese manufacturer, a Hong Kong distributor, a U.S. buyer and the end-retailer are complex, and such knowledge is gained only by experience. One does not learn this from books, and over the course of the last ten years, we have fine-tuned this learning to help each customer’s unique needs,” says the CEO. “The Trade Bank has been growing the last 4 years, even during the downturn. A large part of it has been due to the fact that trade banking is what we do—and nothing else. Our incessant learning, and delivering relevant services to the highly competitive export-import market has helped us grow into new locations—we’re opening offices in Chicago, Orange County, and an office focused on technology in Palo Alto where we find new clients.”

In the last decade, the U.S. has also emerged as the largest exporter of technology, and the Valley has seen numerous companies that have built out products for the Korean and other Asian markets first, and in this, Sanghvi sees a shift to expand his bank’s export-related trade banking business. “Most companies today have extracted the efficiencies from their businesses and are looking for topline growth, which is going to arise from the export market,” comments Sanghvi. In this, he feels the Trade Bank is uniquely positioned to help clients in the entire process—mitigating risks in new countries, exploring partner viabilities, and so on. “It is not just executing simple letters of credit; we help our clients in reviewing their export needs and build a sustained program of integrated process management for them. This where the strength of our parent companies help us; we work towards the convergence in payments—foreign exchange, international payments, trade services that will all flow seamlessly through our technology-driven portals,” he says.

While traditional markets relied on physical verification of goods exchanged (bought or sold), the technology market plays out a different set of dynamics, with issues like IP, service level agreements, and project progress monitoring playing large roles. “Here again, our parent companies play a valuable role in serving these technology companies—we can use the extensive network of our global operations to check potential business partners’ worthiness, examine viable export transaction models for such technologies, and create practical business propositions for our clients—all the way from payroll in international currencies to mitigating risks in the business,” observes the CEO.

Sanghvi has been instrumental in “extracting efficiencies” from technology, and has played some key roles in building the web-based portal-based technologies on which Trade Bank offers clients single sign-on services. “The Commercial Electronic Office (aptly acronymed the CEO) was the first of its kind in financial the portal-based services,” recalls Sanghvi, who lead the roll-out some three years ago. The portal worked off the various application servers, though the sign-on and navigation was through a single interface. In the next generation that is being rolled out now, the interface now offers a group of “portlets” that give visibility to all the services and statuses of client transactions, increasing the efficiency in the information exchange. For customers that required direct transmission into the bank, the team developed better routing methodology—where the client’s system spewed out a purchase order from an internal ERP environment, and the Trade Bbank’s system would parse these within its internal system and push them out for actions—for payments, collections, ACH and so on, requiring no changes within client environments.

With the industry yet to move from a paper-heavy transaction to the electronic imaging platform, Sanghvi is enabling what he calls the “hybrid” systems. “This is like the hydrogen car—we are not going to see the world move to driving clean cars for a while, but the hybrid models are easing the transition, and electronic transactions are in the the same mode,” he comments. “Our vision now is to move from just enabling payments to integrateing with the supply chain. We need to integrate domestic, international and trade service payments into one platform—one business practise.”

Check21 is another institutional movement that is influencing Trade Bank’s business model. Post 9/11, when the entire airline industry ground to a halt, the banking industry could not clear checks without physical sighting of the checks. On October 21 of this year, banks were authorized to clear checks based on verifiable electronic images. “You will see a dramatic change in how customers will see their depository needs satisfied,” Sanghvi opines. “It will reduce clearing times, and shift the balance in customer service. The key is to enable this across different mediums—wires, checks, ACH, whatever they need, and it will all tie into their financial supply chain.”

In all this, Sanghvi has made careful choices in putting together his team. “When you are in a startup mode, customers don’t matter, technology even less—what you need is a great team,” he underlines his company philosophy. “In a people-centric business like ours, our people are our greatest strength.” He strongly believes in urging people to take on ownership for their roles within the company. “Once you assure them of your confidence in them, people tend to look outward—and there they see our customers. Whereas, if your team is not fully confident of your belief in them, they tend to spend time in shoring up their job security.”

In building the 200-odd member team, Sanghvi took care to let the team meet each fresh recruit, allowing the team space and time to become comfortable with them. “Here again, a single person interviewing a fresh candidate is not efficient,” he opines. Whereas, the entire team meeting the new candidate delegates ownership to the team—they are now vested in building the success of the new hire, and will make efforts to make the hire feel comfortable. “We expect candidates to interview the employers, as much as we interview them,” he underlines. “And I am a big believer in writing samples—I look for communications at all levels, and writing says a lot about a person.”

In seventeen years, Sanghvi has validated Drucker’s famed quote. “What excites me is the fact that we are more than just a financial institution—we can help the middle market companies grow into newer markets, expand their employment potential, and drive profitability into the system with efficient global transaction systems,” he says. “We can help them succeed in ways that were not available 20 years ago. The challenge is in understanding the untapped possibilities in the changing global markets, break out of routine, and innovate for the consumer; and yet remain absolutely focused on one fact: mitigateing your client’s risks.”

Leaders? They do tend to grow.