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.
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Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Welcome to TMI's TreasuryCast and HSBC's Cyboss Spotlight.
Speaker: I'm Eleanor Hill, Editor of TMI, and I'm delighted to be working with HSBC to bring you an in-depth look at the events from this year's Cyboss.
Speaker: Throughout this series, we will explore the critical topics on the Cybos 2023 agenda that will shape our industry in the next decade, including sustainability, digital acceleration, and technological innovation.
Speaker: We'll examine the opportunities and the challenges in the areas of payments, securities, cash management, and trade.
Speaker: for this special episode recorded on the conference floor at Cybos in Toronto.
Speaker: I'm delighted to be joined by Manish Kohli, who is Global Head of Payment Solutions at HSBC.
Speaker: And today we're going to explore the topic of treasury transformation and how banks are helping their clients on their digital change journeys.
Speaker: So Manish, welcome.
Speaker: It's great to have you here.
Speaker: How are you doing?
Speaker: Thank you, Eleanor.
Speaker: It's so great to be here.
Speaker: The Buzz and Cyboss is all as exciting as always.
Speaker: You know, this is always a felt to be a place where the best financial institutions and the best financial minds come together.
Speaker: So I'm really excited about this week ahead.
Speaker: Yeah, absolutely.
Speaker: So much to learn, so many people to see.
Speaker: But as I mentioned, we're here to talk about digital transformation, which has been a key topic for a good couple of years now, but things are moving on very rapidly.
Speaker: But it'd be great to understand, just taking a step back to begin with, Manish, why do treasurers actually need to go digital?
Speaker: Do you think it's an absolute prerequisite of doing business today and being an efficient treasurer today?
Speaker: Yes, absolutely, absolutely, absolutely, yes.
Speaker: I can't underscore this enough.
Speaker: So let's maybe zoom out a little and see and start with the reason why digitization is important for corporations.
Speaker: And we are operating in a digital age with digitization happening across all aspects of commerce and all aspects of society.
Speaker: We're in a world where societies are getting formalized.
Speaker: We're seeing money moving more towards cashless mechanisms.
Speaker: Now this is driven by tech savvy consumers who value immediacy and an intuitive experience when buying products and services.
Speaker: So that's where it all starts.
Speaker: Now while this change at a consumer behavior level is happening, it's been enabled by leapfrog advancements in technology that enable these new business models that we haven't historically seen before.
Speaker: So the point I want to make is that digitization is starting with the consumer and it's moving on to businesses.
Speaker: And organizations are now continuously transforming them at scale to succeed in this new paradigm.
Speaker: And the ones who don't, they either risk obsolescence or risk disintermediation.
Speaker: Now, let's see this in the context of the evolving role of Treasury, which is now becoming an increasingly strategic department and not just a risk or a cost center.
Speaker: And hence, the position of a Treasurer is one of an important stakeholder in the digital journey of a company, or for that matter, any strategic journey of a corporation.
Speaker: Now, I do believe that most treasurers that I have met in my time in banking have had a keen focus on driving digitization themselves.
Speaker: You know, I was just looking at a study from the European Association of Corporate Treasurers that indicated that 60% of treasurers interviewed had put
Speaker: treasury technology review and replacement of IT tools as a key priority for the next 12 to 24 months.
Speaker: And why is that?
Speaker: This is because they are predominantly positioning themselves and treasuries to serve the businesses better digitally and help businesses build digital business models.
Speaker: So on this context, I feel that treasurers must find the right digital tools and banking partners that deliver a range of outcomes from, let's say, superior customer experience to scale to security to richness of data, market reach amongst others.
Speaker: And just putting it rather simplistically, I see the phrases digital treasury and effective treasury as synonymous.
Speaker: And for treasurers to either resist or ignore this change would lead to a treasury that is
Speaker: exposed to greater risks, manual and inefficient processes, higher operating costs, which effectively make the firms non-competitive.
Speaker: And you can't afford not to be embracing all of those digital tools that are out there and there's so much going on with automation and we've got things like AI coming as well.
Speaker: But Manish, you mentioned there that
Speaker: Treasurers really need to get a handle on the technologies that they should be investing in.
Speaker: So tell us a little bit more about that.
Speaker: Are there specific processes, specific tech that you'd call out that Treasury should prioritise for their transformation journeys?
Speaker: Yeah, that's a very good question, Eleanor.
Speaker: I mean, there are so many buzzwords going around.
Speaker: There are so many concepts going around that it's very difficult for treasurals to tell signal from noise.
Speaker: And, you know, however, I just see technology or some of these new processes just enablers.
Speaker: And I think the prioritization should be in the context of
Speaker: the business objectives that drive that transformation.
Speaker: So it is important in my mind for Treasury to strategically engage with businesses and identify their key priorities then assess the process or technologies that can make those changes successful and be delivered.
Speaker: So looking at that wider ecosystem rather than just the kind of very narrow view.
Speaker: Absolutely, because different companies and corporations are looking at different priorities.
Speaker: Now, just building on that point, if a company is implementing a direct-to-consumer business model, then using API technology for payments is necessary to make the customer journey frictionless.
Speaker: And many of our clients who are on that path are reviewing their existing treasury policies and banking arrangements to support the 24 by 7 flow of funds.
Speaker: Now, talking about a few examples of our customers that are in the public domain, I can think of Saxo, a leading financial fintech specialist.
Speaker: They leverage our treasury APIs and integration with Singapore's real-time payment infrastructure to support real-time funds transfer into a trading and investment platform serving their retail customer base.
Speaker: And the beauty of that solution was that the new API that they consumed from us allowed for a full automation of their manual processes as well as the experiences that they gave to their customers.
Speaker: Now, that is one example of where the company's priority is going direct to consumers.
Speaker: Now, on the other hand, if the objective is to drive better capital efficiency, then engaging with providers on cash pooling and improving cash forecasting to achieve effective self-funding is a priority, and that requires a very different set of technologies and processes for treasurers to invite.
Speaker: I can think of another example of a company called Micron Technology.
Speaker: It's a US headquarter MNC and they're leaders in innovative memory and storage solutions.
Speaker: And we work with the regional treasury center in Asia to set up cross-currency sweeps, enabling real-time automated FX conversion, minimizing FX exposure, which was a key business priority, and reducing excess cash and optimizing the use of global US dollar liquidity.
Speaker: I think, you know, it always comes down to what the objectives of the company are.
Speaker: And I think that those objectives should be North Star, that Treasury should anchor the transformation objectives around.
Speaker: That makes sense.
Speaker: And some great examples there, Manish, and I'm sure our listeners ears will have pricked up at those, particularly that FX one, which is an issue for so many people.
Speaker: But we've
Speaker: You've spoken about the downsides of not embracing transformation, but what should a treasurer ultimately be aiming to do and achieve with a digital transformation in terms of scope and outcome, do you think?
Speaker: Yeah, again, that's another very good question.
Speaker: And let me just again bring in some of our experiences and perspectives over here.
Speaker: So, you know, we deal with customers across multiple markets globally and across various forms of scale from small enterprises to large global corporations.
Speaker: And we have seen transformation initiatives in Treasuries succeed, but also fail.
Speaker: And again, as a result of this, we've built our own library of repertoire of what we believe is the secret sauce and objectives that our clients should think of when they think of transformation at scale, especially in terms of building a digital treasury.
Speaker: And I'd say, our advisors typically, these four or five things.
Speaker: One, make sure you determine both the short term and long term objectives for the transformation project.
Speaker: Because it's important to show quick successes, but again, let the quick successes not drive where the end direction of the transformation journey is.
Speaker: And I think what many customers and clients typically struggle with is a clear definition of the problem statement.
Speaker: And the reason for that is that projects try to do too much with multiple competing objectives, and hence there's a risk of diluting outcomes.
Speaker: So that would be our first advice, determine short and long-term objectives.
Speaker: The second one we often tell clients who are like, you need to make sure you do gather all impacted teams together and collaboratively establish a business case with the intended outcome and scope.
Speaker: Stakeholder buy-in is critical, and I can't emphasize this enough.
Speaker: So, the third one I'd say is, make sure you outline the considerations around the target operating model and establish its design.
Speaker: So, it's important, the important point over here is, we need to make sure that this is not just a technology project, but this is a business and a process redesign project.
Speaker: And this is where I think sometimes companies go wrong in terms of looking at this purely from a technology lens.
Speaker: Thinking it might be a silver bullet for them as well.
Speaker: That's absolutely true.
Speaker: Building on from there, you know, what we often tell our customers to do is to look and explore best practices, like through banking partners, and they can draw on their experiences on other client journeys and showcase the tools and the art of the possible in terms of solutions that are available.
Speaker: And again, like I mentioned, banks like us deal with the cross section of clients and markets and we have robust tools to accelerate this journey and help distill between what I'd say is an average outcome and a great outcome.
Speaker: And strangely, many of our conversations with clients are around, hey, nobody else has gone down this path and journey before.
Speaker: I hate to say this at times, but yes, across the world there are a lot of customers.
Speaker: They may not have done exactly what this transformation project is, but they've done bits and pieces of it and their learnings that they're very, very happy to share.
Speaker: And I'd say our final piece of advice is make sure you implement the project with a very clear, actionable plan for change management.
Speaker: and make sure you appoint champions who can sustain the journey of transformation much beyond the life of the transformation project.
Speaker: And I think if that's not done, this project remains just a project and kind of demise is when it kind of all eyes are off it.
Speaker: underlying many of those things that you've mentioned there is just the importance of people as well.
Speaker: You know, it's not just technology, it's not just digital solutions, it's all people and processes as well, which we've brought together nicely there.
Speaker: But Manisha, you mentioned about what banks can bring to the table and how they can make the difference between a success and just a mediocre outcome.
Speaker: Looking specifically at real-time treasury, that 24-7 space,
Speaker: Are banks the key to success here and what do you think treasurers can expect from their banks in terms of understanding and delivery of a real-time environment?
Speaker: Yeah, absolutely.
Speaker: I do believe banks have a very important role to play in delivering the success of a real-time treasury.
Speaker: And if you look at the foundations of a real-time treasury, it's really nothing more than real-time data and real-time transactions.
Speaker: And unfortunately, many banks haven't made that transition from a world of batch to real-time in how they serve and support their customers.
Speaker: But the ones that have made that transition are able to support their clients very effectively.
Speaker: I feel happy that we read this mega trend on digitization early and it's helped position us to better support our clients in this space.
Speaker: And again, if I talk about the top two or three things that we're focused on is number one, the ability to deliver and receive funds in real time from suppliers and buyers, from employees and consumers, all using real time payment rails.
Speaker: So, you know, as one of our strategic and stated ambitions, we want to be the real-time bank of the world.
Speaker: And we have participated in over 30 real-time payment schemes globally, and we continue to invest to grow our network in breadth with functionality as well as the countries where we offer real-time capabilities to our customers.
Speaker: So, like I said, it's a core part of our payment strategy.
Speaker: It's something that we'll continue to invest in.
Speaker: And also, we aren't just building for ourselves, but we're also supporting regulators and market infrastructure so they can continue to further enhance their real-time payment schemes with new capabilities.
Speaker: So that's definitely one part.
Speaker: And the second part, I'd say, is that the ability to access information real-time, it's so important for a real-time tragedy to succeed, which is why we've invested in exhaustive set of APIs, liquidity dashboards, just to help improve
Speaker: a treasury's decision making capability around funding, around hedging effectiveness and the speedier application of cash receivables and support just in time deployment in their supply chain.
Speaker: So it is those investments that, you know, and these capabilities along with our client segment expertise and knowledge of local markets where we feel that we can be a key enable to our clients as they set up real time treasuries.
Speaker: That makes sense.
Speaker: And yeah, those APIs are so critical and
Speaker: Definitely speaking to more treasurers who are now embracing them and getting there.
Speaker: But Manish, not everyone is quite in that bucket and it can be quite overwhelming with all of these developments to consider.
Speaker: So what are your final thoughts, final words of advice for our listeners who are maybe feeling a little bit daunted by all of these digital solutions on offer out there?
Speaker: And as a bank, what would you say to them to kind of coax them into action to join the digital transformation journey?
Speaker: Well, again, we've heard these hesitations and these concerns a few times.
Speaker: And my personal approach is, let's always start with building conviction.
Speaker: Every journey that one of our clients is on, there's probably somebody in some part of the world that's
Speaker: gone and undertaken at least a part of the journey with success.
Speaker: And what we believe is that our job is to bring our clients together and help them share successes and share best practices and successes.
Speaker: So connecting our clients with other clients similarly placed and who've been on this journey, I always feel is probably one of the first steps.
Speaker: And the other thing is like, you know, when we look at speaking, engaging with clients, it's important to bring out that a treasury transformation is not just a treasury initiative.
Speaker: It's an initiative that involves engagement with
Speaker: other key stakeholders that our clients' ends across technology, around operations and the business teams and payment engineering and commerce and HR and so on and so forth to understand their challenges and desired outcomes.
Speaker: So we do spend time connecting our treasuries with other business stakeholders and their own organization to tell them what the art of the possible is and what a great outcome could look like.
Speaker: And similarly, what we also do is we make our teams available, our teams who have deep market expertise.
Speaker: We have a team called Treasury Solutions Group, who closely engage with our clients on not just the what to do, but the how of the journey.
Speaker: So the how of how to accelerate the client journey.
Speaker: And helping our clients define the key problems, recommend the best practices that help address those problems, and deliver a successful transformation program.
Speaker: And, Eleanor, the final answer is that when it comes to implementation, it is also about making sure that the right technology capabilities are available to our clients.
Speaker: And we touched on APIs as an example.
Speaker: So just sticking to that, we make our
Speaker: global developer portal available to clients so they can kind of see and test the capabilities before they move them and deploy them into full production.
Speaker: Similarly, with our liquidity and payments and card solutions.
Speaker: I just maybe end on this one note to say that our belief is that our success is tightly interlinked with our clients.
Speaker: So we invest in bringing our knowledge and expertise across client segments, across markets, across the breadth of our solutions and get them to work for our clients.
Speaker: makes complete sense to me.
Speaker: Manish, thank you so much.
Speaker: It's been a real mini masterclass in digital transformation today, so much appreciated.
Speaker: Great.
Speaker: Thank you, Eleanor.
Speaker: Always a pleasure to catch up.
Speaker: Take care.
Speaker: Thank you for joining us today.
Speaker: This has been HSBC's Cyboss Spotlight, a podcast miniseries produced especially by TMI for HSBC Global Viewpoint.
Speaker: To discover other episodes in this series, search for HSBC Global Viewpoint or TMI's Treasurycast on Apple Podcasts and Spotify.
Speaker: And to find out more about HSBC's presence at Cyboss, visit gbm.hsbc.com forward slash cyboss.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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