Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Hello and welcome to this special TMI podcast from Cyboss in Beijing.
Speaker: I'm Eleanor Hill, Editorial Consultant at TMI, and I'm joined by three special guests from HSBC today, two of whom you'll recognize from last year's Cyboss podcast.
Speaker: So we've got Manish Kohli, who is Head of Global Payment Solutions, Vivek Ramachandran, Head of Global Trade Solutions,
Speaker: and Fiona Horswell, Head of Global Security Services.
Speaker: Welcome all three of you, it's great to have you here.
Speaker: Maybe for anyone who didn't listen to the podcast last year, you could give us a little intro, tell us a little bit about yourselves.
Speaker: Manish.
Speaker: Hi Eleanor, glad to be here.
Speaker: I'm Manish Goli, I lead HSBC's Global Payment Solution Business.
Speaker: We help 1.3 million customers with their banking needs across
Speaker: payments, collections, managing the liquidity investments, the commercial card solutions across 50 countries.
Speaker: And we focus on bringing new innovative digital solutions to help them with their growth, their efficiency and risk management journeys.
Speaker: Wonderful stuff.
Speaker: Vivek?
Speaker: Great to see you again, Eleanor, and fantastic to be at Cyboss.
Speaker: I have the privilege of leading HSBC's Global Trade Solutions team.
Speaker: So we help all of our commercial banking and global banking clients with their trade needs, whether it's risk mitigation, financing, or structured solutions to help them expand their business.
Speaker: Superstar from Fiona.
Speaker: Hi there.
Speaker: So, security services, we support the world's largest asset owners, asset managers, banks and broker dealers in terms of all of their post-transaction facilities.
Speaker: So that forms direct custody, global custody, fund administration, etc.
Speaker: And we're in 33 markets across Australia.
Speaker: Asia in the Middle East on the ground and in 96 globally.
Speaker: Wow, some good stats there.
Speaker: And it's really nice to have the three of you in the same room so we can get the whole picture of what's going on.
Speaker: And that fits in nicely, I think, with the theme of this year's Cyboss, which is connecting the future of finance.
Speaker: So in that vein, today we'll be talking about a lot of forward looking topics,
Speaker: the shifting landscape in security services, the need for pace in trade digitalization, and the major trends shaping the future of payments.
Speaker: So without further ado, let's crack on.
Speaker: So Fiona, maybe I can pick on you first.
Speaker: And you can start us off with a bit of a bigger picture as to what's going on macro-wise in the market, what trends you're seeing at the moment, what impact that's actually having on flows and what it means for security services ultimately.
Speaker: So we are seeing that there's a dramatic increase in wealth generation across Asia and the Middle East.
Speaker: Asia alone over the last decade, assets under management have doubled to just over $17 trillion last year.
Speaker: And what that's forming is two things.
Speaker: One is the cross-border channel between Asia and the Middle East and into a region within Asia.
Speaker: And then also the demographic is much younger, meaning that they want different investment classes, different experience with digital perspective.
Speaker: And so for security services, we are looking at how we guide our clients through that opportunity in terms of the various markets and the opportunities that are there for them.
Speaker: and how to service their investors digitally from front to back.
Speaker: So new technologies, contemporary technology and contemporary asset classes are emerging.
Speaker: There's all sorts going on.
Speaker: It's very exciting, like you say, with the different demographics, so much to think about and get used to.
Speaker: Vivek and Manish, off the back of that, how are those trends that Fiona highlighted there actually impacting what you're seeing in your respective areas?
Speaker: Maybe we can give the listeners a little flavour of what's come up in the podcast.
Speaker: So, Vivek, if you go first.
Speaker: So, if you dig behind what's driving some of the themes that Fiona talked about, it's the creation of new economic wealth and new supply chains being created because of either geopolitics or resilience or sustainability.
Speaker: So the underlying drivers of where companies are trading, who they're trading with and how they're trading, the nature of commerce is evolving incredibly quickly.
Speaker: And I think that fits into what we're talking about the cyberspace about the future of finance and how the world is getting a lot more connected in many ways.
Speaker: Yeah, but that velocity is just incredible, isn't it?
Speaker: Yes.
Speaker: It's hard to keep pace.
Speaker: To misquote Hemingway, how does the world change slowly and then suddenly?
Speaker: Absolutely.
Speaker: It's upon you.
Speaker: Manish, what would you add to that?
Speaker: Yeah, I mean, first of all, I fully agree with the trends that Fiona and Vivek have talked about.
Speaker: And just moving a slightly different dimension to it, we are seeing a big mega trend around formalization of economies.
Speaker: So we're seeing how commerce would conventionally happen in many places through paper and historically analog mechanisms is now rapidly getting disrupted.
Speaker: It's leading to emergence of new revenue pools, new players.
Speaker: and definitely a new role for banks to play in helping intermediate and even accelerate some of these trends.
Speaker: And on the back of getting rid of paper and digitalisation, Vivek, that is squarely in your space because there is so much going on with electronic documentation in the trade world.
Speaker: Give us an update though on what's actually happening.
Speaker: What's the state of play with trade digitalisation, really?
Speaker: How long have we been talking about trade digitalisation?
Speaker: There's still over 28 billion pieces of paper that move around to make trade happen.
Speaker: So you could argue trade is not being digitised.
Speaker: But I'm quite glass half full about where we are.
Speaker: Because if you think about what it takes to change the world, we need a common set of standards.
Speaker: The ICC Digital Standards Initiative is helping us get them.
Speaker: We need a legal framework to adopt these standards.
Speaker: And I think whether it's the UNMLETR or the UK's Electronic Trade Documentation Act, we are developing that legal framework.
Speaker: Technology makes it easier to have reliable systems.
Speaker: So we no longer have to build a blockchain based consortium with multiple participants.
Speaker: and then everyone needs to be at the table.
Speaker: So do I think we'll come back next year and be in a digital world?
Speaker: No.
Speaker: But I think in the next five years, ten years, I'm hopeful.
Speaker: We'll get them.
Speaker: And you can't not but try harder because the upside, not just the efficiency gains, but the opportunity to unlock new business models and develop completely new streams of revenue for our clients and for financial institutions.
Speaker: is unlimited.
Speaker: Yes, absolutely immense it really is.
Speaker: But what do we need to be doing in more concrete terms to make sure that we do get there in five years time?
Speaker: The first and simplest thing, it sounds quite obvious, but the large institutions and the large players in the ecosystem need to be at the table.
Speaker: We have to suspend disbelief of what hasn't worked in the past and you have to be willing to adopt the new standards and trade under them.
Speaker: So whether it's electronic bills of lading,
Speaker: adopting APIs or exchanging information in new formats, you have to be at the table.
Speaker: And I think that's the starting point because it's all too easy to say this hasn't worked, it's not going to change.
Speaker: Trade has to become digital.
Speaker: And it's not because of trade finance.
Speaker: The financing is the easy bit almost.
Speaker: It's the underlying economic transaction that needs to change.
Speaker: It's the whole of the ecosystem around it.
Speaker: You mentioned MLETR or Milita or lots of people have very different pronunciations of that.
Speaker: I feel like I've been talking about it for ages, but there's lots of people that are still very behind on it.
Speaker: But don't stop talking about it.
Speaker: We've first adopted a version of that.
Speaker: Germany is working on it, the US is talking about it, India has been talking about it.
Speaker: So it feels like we're getting to a tipping point.
Speaker: And I hope I'm glad.
Speaker: I'm going to hold you to that and we'll see you next year how well things have moved on.
Speaker: But Manish, off the back of that, I wanted to talk a little bit about the changing payments infrastructure because that obviously supports everything that's going on here as well.
Speaker: We can't be at Cyfoss and not talk massively about payments.
Speaker: What are the biggest changes that you're seeing in that infrastructure piece?
Speaker: Well, Eleanor, I'm glad we're talking about payments because I think that the evolution of the payments landscape and the progress that it's made has been kind of slightly under-told story in the world of banking.
Speaker: And I do believe we are like, you know, once in a generation change in our payment infrastructure.
Speaker: And you look around in terms of real-time payment systems, and they've kind of evolved from just being there and moving money 24 by 7 to now moving to the next phase of value-added solutions, alias is interconnectivity between real-time payments.
Speaker: So we're seeing a massive change and enhancements in real-time.
Speaker: core foundation of how payments are done.
Speaker: Payments has a new language now with ISO 20022, which is increasingly now being used by our customers and ourselves in terms of not just delivering better data, but delivering better use cases on that data.
Speaker: Similarly, the forms of money has also been changing.
Speaker: It's not just the form of payments, but the form of money has been changing.
Speaker: And like many banks, we've been experimenting with digital assets.
Speaker: And not just for the sake of experimenting, but bringing more efficiency into the whole payment system.
Speaker: So I would say that when I look at what a good payment solutions attributes are, they are typically cost, speed, transparency, security.
Speaker: And I do believe that with the changes that the payments infrastructure have done over the last few years, we've made massive progress on all of these attributes.
Speaker: Now, there's a but I want to say, and the but is that I, however, feel there's more to be done.
Speaker: because I do not believe that the innovations in the payment industry have kept pace with the innovations in the industries that we serve, which like the services industry and commerce and how commerce has transitioned.
Speaker: So I don't want us all at Cyboss to feel happy with the way we have progressed.
Speaker: I think it's a good time to look back and say we've made good progress, but there's a lot more to be done to serve our constituents.
Speaker: I think, Manish, that can probably be true of banking overall.
Speaker: The world of commerce has moved faster than the world of banking.
Speaker: And I think that's the opportunity and challenge for us.
Speaker: We've got all of these new business models that we're alluding to here.
Speaker: So what needs to happen in the payment space to enable you to catch up with those, do you think?
Speaker: Yeah, well, I think, you know, the opportunity for the payments industry is A, to adopt a new business models, but actually drive the creation of new business models.
Speaker: But we've had many of our customers who when they are thinking of new solutions, so there's an asset manager that's thinking of creating a same day engagement solution and allowing for redemption, they think of payments as an enabler.
Speaker: We're thinking about the platform economy that wants to go global,
Speaker: they're looking at payments as a solution.
Speaker: They're looking at a gig economy player that wants to attract two sides of both the suppliers as well as the consumers of service.
Speaker: They look at payments as a differentiator.
Speaker: So my fundamental belief is that there is a lot that the payments industry can do, not just in terms of supporting this transition, but just making the art of the possible available to our customers in terms of driving some of these trends.
Speaker: And the good news again is that I see a lot of our customers being very keen to leverage the power of payments.
Speaker: And most of our conversation that we have with customers around give us more insights about new technology.
Speaker: You know, simplified banking for us so we can be more nimble in how we create more business models of the digital business models.
Speaker: And all of that is actually a very positive trend that I've seen.
Speaker: Yeah.
Speaker: And to be fair to you, you guys have done an amazing job at educating customers on the practical reality of things out there and what's available, particularly coming back to ISO, because that is a topic that I keep hearing about from corporates.
Speaker: There was a discussion on a treasury forum this week where someone had only just discovered about the changes to the structured address block.
Speaker: Wow.
Speaker: I've been writing about this for so many years, so props to you for doing that practical education and showing the art of the possible around the innovation side of things.
Speaker: Vivek, with the changing business models, obviously that means different things for trade and supply chains as well.
Speaker: So what are you seeing moving on there?
Speaker: I'll build on what Manish was talking about, which is the future of trade finance with the new models is embedded, which is embedded in the destination platform, embedded in the customer journey.
Speaker: And payments and financing almost are two sides of the same coin when you talk about whether it's e-commerce platforms, procure-to-play platforms.
Speaker: And that raises the bar for what banks need to do.
Speaker: Because we need to have digital onboarding, digital decisioning, APIs to connect to new platforms.
Speaker: It's a huge amount of work to be done to reinvent the business model, which we've traditionally been the destination for clients to come to.
Speaker: We now need to make sure our solutions are embedded wherever the clients are active, where the activity is taking place.
Speaker: Yeah.
Speaker: Different lens of looking through things.
Speaker: Very different lens.
Speaker: Trade has been described as the last analog frontier in banking.
Speaker: I think the future of platforms and e-commerce can change that.
Speaker: Yeah, there's a big momentum there, which is great.
Speaker: I think 47% of all B2B commerce is digital today.
Speaker: Oh, wow.
Speaker: Which is a staggering statistic.
Speaker: And that's a huge opportunity.
Speaker: Yeah, I'm sure I add a percentage point to that at least.
Speaker: Dreadful online shopping habits.
Speaker: Fiona, let's come to you and talk a little bit about
Speaker: new technologies and new business models and what that actually means in your world.
Speaker: With the new technologies we're seeing that we're able to make investments more accessible to individuals so if you think about issuing bonds digitally what we've seen over the last 12 months is really the emergence of those bonds being issued digitally, natively and then continuing and also tokenization of assets like gold
Speaker: We're seeing that the retail market in Hong Kong is really picking up there.
Speaker: And so again, what that means is that investors are able to access assets much more readily than they have been able to previously.
Speaker: So again, back to the point on the emerging wealth across Asia and also the demographic there.
Speaker: And then specifically what we see for security services is that we play an integral role in terms of bringing that ecosystem together.
Speaker: So working across the
Speaker: markets with FMIs, with regulators, with clients and educating and building that critical mass to make sure that that is progressive.
Speaker: And a further point to note is on the asset management side, what we're seeing is that we are very integral again to making sure that they fulfil their regulatory obligations, that there is data management that is practised
Speaker: in the right way there and really facilitating those opportunities again for asset managers.
Speaker: Brilliant stuff.
Speaker: And Manish and Vivek, anything else off the back of that?
Speaker: I'm conscious that we're at Cybos and we normally talk about collaboration with fintechs and we haven't entirely gone down that route.
Speaker: Or do you see any other innovative tech going forward that we need to touch on that we haven't, Manish?
Speaker: Yeah, I made this point at one of the panels yesterday, along this probably repeated.
Speaker: It is very encouraging to see how the collaboration between fintechs and banks is progressing.
Speaker: We have multifaceted relationships with fintechs.
Speaker: We look at them as customers.
Speaker: We look at them as
Speaker: solution providers as we build out new propositions.
Speaker: And we also look at them as an investable class where they are aligned to our strategy.
Speaker: And the comment I made yesterday was that the evolution and maturity on both banks and fintechs is evident for the fact like five years ago, you would always have conversations around
Speaker: who owns the customer.
Speaker: And I regret being in one panel, we had a big debate on this.
Speaker: And I remember rolling up my eyes and said, well, you know, in financial services, you know, none of us own the customer.
Speaker: The customer owns us and we all have this little role that we have to play to support them.
Speaker: And I just feel very happy that over the last couple of years, I've not heard that conversation, that phrase at all.
Speaker: But that's the beauty of Cyboss because we're sitting down with competitors who are also customers and we're their customers too.
Speaker: And I think that relationship now extends to a lot of fintechs.
Speaker: We compete with them in some places.
Speaker: We serve them and many others, but we also collaborate to develop common solutions.
Speaker: Yeah, the dynamic has changed enormously.
Speaker: If we think back to five years ago, even.
Speaker: But we need back to your question on digitization.
Speaker: We're not going to solve this by ourselves.
Speaker: It's not a banking system challenge.
Speaker: You need everyone in the ecosystem, the bank shippers, the freight forwarders and tech providers to all step up and play a part.
Speaker: Yeah, that's why they say banking is a team sport.
Speaker: It is.
Speaker: Well, we've done a great job here today of putting the world to rights and telling everyone what we need to do going forward.
Speaker: So with that whistle-stop tour of innovation done, what would be your key takeaways for our listeners?
Speaker: Let's go down the line and start with you, Manish.
Speaker: I would say, and you know, Cyboss is always a good reminder to me of this, that this is a very unique moment for all of us in banking.
Speaker: You know, we're seeing a big shift in how conventional banking has moved away from just
Speaker: supporting our clients with basic lending and basic safekeeping services, whether that's payments, cash, securities.
Speaker: And we're now moving to a stage where we're playing a very large role in the growth and the transformation journeys of our clients.
Speaker: And I think that we just have to pause and reflect on just the big change that has happened.
Speaker: And we see that accelerating.
Speaker: So
Speaker: I feel that at HSBC, we're very uniquely positioned to take advantage of that.
Speaker: We call it the three I's, innovation, insights, and international.
Speaker: And if we keep doing that, we are very well positioned to support this transition for our clients.
Speaker: wonderful.
Speaker: Fiona?
Speaker: Yeah, I think for security services, we're actually on the cusp of some significant change.
Speaker: And I'm expecting within the next five years to see a massive change in the operating model, the post-transaction execution value chain, and that accessibility to investors and client outcomes being at the forefront.
Speaker: And again, as Manish said,
Speaker: At HSBC we're in the right markets and we have the right relationships and that means that we can really assist our clients in terms of chasing opportunities and enabling them as they grow their business.
Speaker: brilliant stuff Vivek final thought hopefully from all of us you're getting excitement about the future I am and the future of finance for me is digital it's embedded and sustainable yeah let's make some more progress towards that and I'm definitely booking in a slot for you next year at Cybos and we can
Speaker: check up and see how much progress we've made but genuinely thank you all so much for joining us today on the podcast it's been a great discussion it's been good fun at the same time so really appreciate you taking the time out and for anyone listening wanting more cybos podcasts please head to the tmi website at tmi.co but thank you again
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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