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HSBC’s Sibos Spotlight: View from Sibos
27 Plays3 years ago
In the final episode of our Sibos podcast miniseries, TMI’s Eleanor Hill is joined by Nadine Lagarmitte, Neil Atkinson and Vinay Mendonca as they look back at Sibos 2022. Our guests discuss the prevalent topics from the event such as payment APIs, digital innovation, global trade and also share their key take-aways from our week in Amsterdam.
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Transcript
Introduction to HSBC Global Viewpoint
00:00:00
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.
00:00:12
Speaker
Make sure you're subscribed to stay up to date with new episodes.
00:00:15
Speaker
Thanks for listening, and now onto today's show.
TMI's TreasuryCast and Cyboss Spotlight Overview
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Welcome to TMI's TreasuryCast and HSBC's Cyboss Spotlight.
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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.
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Throughout this series, we will explore the critical topics impacting the transaction banking landscape, specifically looking at sustainability, digitization, and innovation.
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We will examine the opportunities and challenges disrupting the area of payments, trade, custody, and traditional business models.
Introduction of Special Guests
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So to help us do that today, we've got three special guests.
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They are Nadine Largamit, who is Global Head of Financial Institutions for Global Payment Solutions.
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We have Vinay Mendonca, who is Chief Growth Officer, Global Trade and Receivables Finance, and Neil Atkinson, Global Head of Banks and Broker Dealers Client Management for Security Services.
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And we're going to be discussing our reflections from the recent CIBOS conference in Amsterdam.
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So welcome to all three of you.
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It's great to have you here.
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Nadine and Vinay, you're back in the podcast studio with us.
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So excellent to have you back to have a bit more discussion.
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And Neil, welcome to the podcast for the first time.
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It's a pleasure to have you here.
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So I wanted to just kick off with some high level observations from the CIBOS conference because
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There's always so much going on that it's impossible to pick up on everything.
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And you three have been in different areas of the conference listening to different things.
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So Nadine, tell us a little bit about what you heard
Cyboss Conference Highlights with Nadine Largamit
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at Cybors.
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What surprised you most in terms of the conversations around payments?
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What were the expected hot topics and maybe some of the unexpected ones?
00:01:57
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Well, Eleonore, thank you again to be with you on this podcast.
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And I'm sure Neil and Vinay will agree with me that Cybos in person after three years was a very special event indeed.
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Our business is based on trust and relationship and our ability to reconnect in person was not to be underscore.
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I think it's really trying the feeling and the image of this first Cybos together.
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This was expected, but not at this scale.
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We clearly had a few missing key players due to COVID restriction.
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There were so many hot topics, Eleonore, but in my view, not too many unexpected ones.
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So let me just try to elaborate a little bit.
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Real-time payment became the most frequently discussed point, which is coming up to reality, relatively mature in a commercialization stage.
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The expected topic that are still key ones to the industry was ISO readiness implementation, GPI related feature for both institutional customer and corporate customer, API and embedded finance.
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But clearly ISO was an ISO data and how we can use the data.
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As a sponsor, I can tell you my passion ESG became a really key topic during the whole event with lots of different aspects sharing the event.
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And clearly, we all have to get used to the metaverse and the Web3 innovation, which we are all trying to learn and digest.
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But I think for corporate treasury, what's important, you know, it's not just about payment.
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I think a lot of discussion were about
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rising interest rate and some attention on the efficient liquidity model.
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So that's what I take.
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Thank you, Nadine.
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That's a great summary of what's going on.
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And like you say, there's so much that's hot and then there's what's going on now and then there's what's coming in the future in terms of the metaverse.
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And it's all very exciting and great to see ESG taking center stage as well.
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But focusing on those payment developments that you mentioned there, if I've
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put you on the spot and ask you to pick sort of the most critical out of those, what would you say is, is it ISO 20022?
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Is it payment APIs?
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Is it interoperability?
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What would be your number one pick?
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Well, I definitely, so for now, for the next few months, ISO was really a readiness to, and obviously, you know, there's been some different timetable puts around ISO.
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I think some people welcome those and some other
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you know, we're ready.
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So I think it's just trying to navigate through, you ultimately will, would be a true gift for all the corporate trolls and using this connectivity between all the banks using this kind of standards.
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I think, um,
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You know, CBDC and RTP to RTP connectivity, the interlink between both, you know, that's also a very, very key discussion.
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But I do think something, you know, I know that was on the SWIFT agenda, but the payment validation, you know, I mean, fraud and cybersecurity and resilience and resistance, I think, to all the bad people out there, you know,
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is very important.
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And this payment validation can really boost our ability to also enhance the client experience.
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That's, I would say, critical development.
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But there's so many, Eleonore,
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So much to talk about.
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I know.
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We're spoiled for choice.
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We really are.
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And it's not just in the payment space.
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There's a lot happening in trade as well, Vinay, isn't there?
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And I know you were speaking at Cybos, but you also had loads of meetings.
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So tell me a little bit about your key takeaways from those discussions around
Supply Chain Resilience and Innovation with Vinay Mendonca
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global trade.
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What impressed you or surprised you most?
00:05:54
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Sure.
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So thanks, Eleanor.
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Just to echo Nadine's comments, I think firstly, it's just fantastic to have all the banks, the tech companies, partners coming together to solve for some of the industry issues and make kind of trade simpler, safer, faster for our corporate clients.
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Right.
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So if I pick up kind of five themes, it was great to come back in person after, you know, missing out for almost two odd years.
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five teams that I thought I would pick up on and three specifically for our corporate customers and then a couple on the FI side.
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So I think across all the meetings we had, the panels and conferences, I'd say one of the largest theme that emerged is supply chain resilience, right?
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What role can the industry play through new technology, through visibility, transparency,
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digital decisioning to help the supply chains, not just our corporate clients, number one supplier tier, but going down multiple levels of suppliers.
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How can we help to improve the resiliency by offering liquidity to those suppliers by helping with risk mitigation solutions and helping them embrace digitization, not just with the largest clients, but across the ecosystem and get the benefits of that.
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So I'd say supply chain resiliency was a theme
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I almost came across any meeting or any panel or any discussion we did.
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And it's very clearly now moved on from being just something that the procurement team looked at or the supply chain side looked at or the treasurer looked at.
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It's, in fact, now a board level agenda for most of our corporate clients.
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Right.
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I'd say the second one was linked to a little bit around resiliency of supply chains as the new business models.
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And I think we're seeing trade increasingly taking place at new venues, whether that's through client ERP systems, through marketplaces, shipping platforms, logistic platforms, customs windows and platforms as well.
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And I think, you know, what we're trying to do there is how do we make trade
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finance available at these new venues.
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I'd say this was another second emerging theme, which we'd heard of a few years ago, but definitely is beginning to get scale now, but trade taking place at new venues.
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And then the third one, you know, Nadine already covered it, but clearly the transition towards not just kind of environmental goals, which is definitely something that's happening at PACE and scope three being the area that impacts supply chains of our clients where we help them.
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So that was a big one, but also towards social agenda items,
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being something that clearly has got a lot of attention, especially with fintechs and partners in this space, trying to help with the necessary transparency.
00:08:23
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And then a couple more, if I may add, is on the bank side, right?
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And Cybos is where we meet our FI partners.
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I think facilitating commerce is clearly something that all banks want to do for their customer base.
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But it is also true that some banks are in the process of reviewing their own networks, prioritizing their own networks, but at the same time as which their own customers' trade flows are expanding across the network as they build up more resilience.
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They go more diverse, they find new markets, etc.
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And it becomes quite challenging for them to facilitate.
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So it was really, Cybos is a great venue where we talk about how our network and our balance sheet can help our FI clients extend
00:09:03
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facilitate commerce for their end corporate customers right so we we did come across a lot of those discussions as they understand you know our presence in different jurisdictions and how we can help them help their end customer trade so that was fine that was something that was quite encouraging and the final theme to end is trade as an investable asset class is now becoming really quite embedded in the ecosystem right we talked about this three years ago
00:09:27
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You know, the number of investors in this space have moved on from just being banks, the asset managers, pension funds, and the appetite to invest is just increased given its short-term nature, safer form of lending.
00:09:38
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So it was brilliant to have more discussions.
00:09:40
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So those were kind of the five themes, Elinor, that kind of marked most of the discussions that we had, whether they were meetings or panels or conferences.
00:09:47
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Yeah, amazing.
00:09:48
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A whole download of four days in just a couple of minutes, Vinay.
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Thank you.
00:09:53
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Thank you so much for that.
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There's so much going on, so much progress being made that it's hard to pick what to speak about.
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We'll go into a few of those topics in a little bit more detail shortly.
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But Neil, just wanted to bring you into the conversation because we can't go to Cybos and not talk about what's happening in the security space.
00:10:12
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And obviously, one of the hot topics this year was the shift to shorter settlement cycles.
T+1 Settlement and Automation Challenges with Neil Atkinson
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Tell us what you heard on the conference floor,
00:10:20
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What was the feeling among attendees around whether T plus one settlement is sufficient or whether we really need to go atomic?
00:10:28
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Yeah, thanks, Eleanor.
00:10:29
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Well, it's good to be here for the first time amongst such great company.
00:10:33
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Look, I'd also echo what Nadine and Binay have said, that getting together physically for the first time in a few years and also adding in the Bintech and technology partners alongside the FIs, I thought was tremendous this year.
00:10:46
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The T plus one settlement was a hot topic at Cyboss.
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It's a big step forward, but it's not without its challenges for the industry.
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Yeah.
00:10:53
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I think it's also worth remembering, of course, that we do settle T plus one at the moment for certain securities like UST bills or UK guilds.
00:11:00
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I'm not really sure the question is specifically T plus one is sufficient or not, but rather if it's universally achievable in both developed and emerging markets.
00:11:10
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I think there are different challenges there.
00:11:13
Speaker
So as we go along this journey to T1 in the US and Canada, there'll be a number of lessons that we'll learn, just like we have been doing through India's phased approach to T1.
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For example, HSBC led advocacy efforts with regulators in India to extend custodian confirmation deadlines, and India is expected to operate entirely on a T1 basis from January 2023.
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So we'll continue to advocate on behalf of our clients as the story develops.
00:11:37
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Maybe Eleanor if we can briefly touch on a couple of the challenges that we might see here with development cycles.
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In order to allow settlement on T1, the period when the trade affirmations and matching process occur needs to be completed in a compressed time period along with rapid exception management.
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And specifically for broker-dealer clients, they'll need to be aware of where their inventory is.
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So for example, realignments between ICSDs and CSDs may be difficult.
00:12:02
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when we complete between T and T1.
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Personally, I think that the reduced settlement cycles create a really good opportunity for the industry to drive hard towards full automation of the processes involved and fully benefit from reduced settlement cycles.
00:12:17
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Yeah, it'd be nice to get towards that full automation point for sure.
00:12:21
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Neil, just to make it crystal clear for our listeners, tell us about the knock-on effect of faster settlement in terms of sort of cash and liquidity, what will be the client impact and then the benefits ultimately?
00:12:33
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It's good to be discussing this when we have Nadine here on the podcast as well.
00:12:36
Speaker
I think specifically related to cash and liquidity management, we need to consider if clients in different geographic locations and time zones will have the ability to meet funding deadlines.
00:12:45
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So, you know, as Nadine talked about earlier, kind of instantaneous movement of cash will be really important going forward.
00:12:52
Speaker
There will be impact on FX, securities lending and collateral management.
00:12:56
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So changes to settlement cycle will impact collateral management behavior, operating models, which will need to be reviewed.
00:13:02
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But generally speaking, greater efficiency gains should be achievable.
00:13:06
Speaker
Great stuff.
00:13:07
Speaker
All right.
00:13:07
Speaker
Lots to look forward to.
00:13:09
Speaker
I wanted to delve in a little bit into the digital agenda because this was obviously a huge topic at CIWOS and it underlies everything that we've spoken about already.
00:13:19
Speaker
And it was interesting for me to see the number of QR codes on the floor as opposed to paper publications, even TMI.
00:13:27
Speaker
So in the past, there would be a media alley where you would go and pick up your copy of TMI.
00:13:32
Speaker
But this year it was a QR code so people could get it digitally.
00:13:35
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So huge changes just around the conference itself, but obviously within the topics that we've been speaking about.
00:13:41
Speaker
So Nadine, you mentioned CBDCs before.
00:13:45
Speaker
Tell me a little bit more about how this drive towards digital currencies, including things like stable coin, is changing the payments landscape.
00:13:53
Speaker
What did you hear at the conference around that?
00:13:55
Speaker
Well, I would say that overall, I think that it's commonly agreed that CBDC could be a viable way to address many points in the payment space, either domestically and cross-corder.
00:14:09
Speaker
Yeah.
00:14:10
Speaker
However, there are still some pretty big issues to be resolved, such as, you know, the clarity on the legal position, you know, the position around domestic and versus cross-border.
00:14:21
Speaker
So I think, you know, the intent is definitely there to push and to support all those different sandbox around the world.
00:14:29
Speaker
I think the intent is there and the vision is there.
00:14:33
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Obviously, everybody's got to get to the table.
00:14:36
Speaker
And I think if it's something that
00:14:38
Speaker
You need to see a different pace of acceleration, see who will come to the table, which country will come to the table.
00:14:45
Speaker
So I think, you know, and we've learned over the years that in the payment business, in all those clubs, you need partner and you need to collaborate otherwise.
00:14:56
Speaker
you know one cannot uh do a payment around the world on his own no no for the stable coin i think it's a little bit different i think the additional risk scrutiny could be the additional study that can be done before it can facilitate mainstream payment yeah and that also will take time so
00:15:18
Speaker
You know, in short, I would say, you know, we are all in exploration stage.
00:15:23
Speaker
Likely some particular use case might be promising to take off.
00:15:27
Speaker
And events like Cyboss really, really help in bringing creativity and spontaneity on adapting this evolving change around payment.
00:15:38
Speaker
Yeah, and I know HSBC has been doing a lot in this space as well.
00:15:42
Speaker
And it's very exciting.
00:15:43
Speaker
Well, I'm trying very hard just to be industry-wise.
00:15:45
Speaker
I know.
00:15:46
Speaker
I'm not the...
00:15:47
Speaker
Too much HSBC pitch, but you are giving me the opportunity to say that, yes, we have been quite active around sandbox around the world.
00:15:59
Speaker
And it's great to be at the table with some very other credible institutions.
00:16:05
Speaker
Yeah, and it's exciting.
00:16:06
Speaker
And lots of treasurers asking me about CBDCs, actually, and very keen to sort of see how that plays out.
00:16:13
Speaker
So lots going on in terms of sort of digitising payments.
00:16:16
Speaker
And Vinay, obviously, trade is a massive area where we always talk about the digital agenda, partly because it was a little bit stuffy and paper-based and still is in many areas.
00:16:26
Speaker
But we've made huge amounts of
00:16:28
Speaker
progress already.
00:16:29
Speaker
How do you think we take this to the next level now?
00:16:32
Speaker
What needs to happen to progress the digital agenda in trades further?
00:16:36
Speaker
Yeah, so I think, you know, the way we come at it, Illinois, is to break the problem into two parts.
00:16:41
Speaker
I think the first is the ecosystem that exists between banks and our clients.
00:16:46
Speaker
And I must say there, we have to acknowledge that we've, you know, I believe we've reached digitization at scale in this particular area.
00:16:54
Speaker
Certainly, you know, we've hit an 88% e-penetration.
00:16:57
Speaker
So 88% of our transactions come to us digitally with our clients across a range of channels across all our products.
00:17:04
Speaker
So there's been some really good progress on that.
00:17:06
Speaker
Yes, COVID helped expedite and embrace that pace.
00:17:09
Speaker
of digitization, but that's its scale.
00:17:12
Speaker
However, trade in the wider ecosystem that is between not just banks and clients, but the shipping companies, freight forwarders, logistics, customs, is still very manual to your point and still very stuffy like you put it.
00:17:25
Speaker
There's a lot of paper out there still.
00:17:27
Speaker
We talked at Cyboss about only 1.2, 1.3% of bills of lading, which is the shipping document, are electronic.
00:17:34
Speaker
So there's still a hell of a lot of paper moving around across the world.
00:17:38
Speaker
And so we haven't achieved digitization at scale there at all, right?
00:17:42
Speaker
But having said that, there are some green shoots where digitization has taken place.
00:17:47
Speaker
A couple of things I'd say.
00:17:48
Speaker
One is I think people are past the stage of proof of concept sandboxes.
00:17:53
Speaker
And I think there was this phase when technology was there for the sake of being there.
00:17:58
Speaker
I think we're now at a stage where the problem statements are quite real.
00:18:02
Speaker
I think there have been solutions that have gone beyond the proof of concept stage to actually being
00:18:07
Speaker
signed up in commercial models having been agreed around it.
00:18:10
Speaker
There's some degree of consolidation that's taken place in the industry.
00:18:14
Speaker
Well, we're now at the phase where we need to really build a network around those, right?
00:18:18
Speaker
And there are some things that need to come together for that.
00:18:21
Speaker
So one is certainly regulation.
00:18:24
Speaker
I think the G7 is committed to implement the model law for electronic transferable records.
00:18:28
Speaker
And this, you know, as it gets to a wider commitment on G20, you could see a certain degree, a certain element of adoption,
00:18:36
Speaker
step change taking place almost with SMEs coming on board.
00:18:40
Speaker
Singapore, as we know, has the legislation as a couple of other markets do.
00:18:44
Speaker
And the UK is looking at right now, there's work in progress currently for its approval from the UK parliament, right?
00:18:49
Speaker
So I think that's something which will definitely add a boost.
00:18:53
Speaker
Standards are coming in faster.
00:18:55
Speaker
But I think what we discussed at length, to my point on 1.2% of bills of lading being digital, we now see there are six, seven or more providers, including shipping companies that are offering electronic bills of lading to their customers and on their websites and portals.
00:19:11
Speaker
So without a doubt, this is going to pick up.
00:19:14
Speaker
The question is, how does the interoperability take place if there are seven or eight different BL providers?
00:19:19
Speaker
All of us are going to have to access these multiple providers, and maybe that might be the answer through standards.
00:19:25
Speaker
But I think we're quite confident that we are seeing clients adopting these BLs much faster.
00:19:30
Speaker
And so maybe that 1.3% will hit 5% in the next few years, but that'll already be at a decent amount of scale, right?
00:19:37
Speaker
Yeah.
00:19:38
Speaker
a lot in that space happening.
00:19:39
Speaker
So I acknowledge that we've reached scale in one part of the ecosystem between plants and banks, but much more to do in between the wider trade ecosystem.
00:19:46
Speaker
Yeah, fingers crossed.
00:19:48
Speaker
But like you say, it's great to see those shipping companies taking the initiative and running with it as much as it does bring additional challenges for the future.
00:19:56
Speaker
With that in mind, Vinay, are there any specific technologies that you think can help in the digitization drive as we look ahead?
00:20:03
Speaker
Or is it more about coordinating bodies towards a common goal, standards, etc.?
00:20:08
Speaker
What do you think is most important?
00:20:10
Speaker
I'd say it's definitely a bit of both.
00:20:12
Speaker
I'd say that trying to get to interoperability in the first early stages of embracing digitization is not going to be something that's going to happen that easily.
00:20:21
Speaker
Yeah.
00:20:22
Speaker
The immediate priority has to be to embrace digitization.
00:20:25
Speaker
And what I'm pleased with is, like I said earlier, is I think the industry has moved around from playing with technology to actually now focusing on solving the problem.
00:20:33
Speaker
And I think if I talked about it, I think three key technologies are beginning to hit some degree of scale and kind of usage in the trade space.
00:20:42
Speaker
I think one is clearly APIs are now at scale within the trade space, right?
00:20:47
Speaker
We've got our own API developer portal.
00:20:49
Speaker
Almost all our product journeys are enabled by APIs and the consumption of APIs or subscription to APIs for sharing any amount of data, not just necessarily the trade data, but even credit information that's needed for decisioning is beginning to hit scale.
00:21:03
Speaker
So that's a given.
00:21:05
Speaker
And you'll see more of that with ERPs, et cetera, offering trade enabled APIs as well.
00:21:10
Speaker
So that's one technology I wanted to call out.
00:21:12
Speaker
The second one is certainly the use of distributed ledger, more so for parties to come together and transact with one another by owning their own data and not having to rely on a central counterparty.
00:21:24
Speaker
That's beginning to get scale.
00:21:26
Speaker
I think the next level where it might go to is things like tokens and digital assets.
00:21:30
Speaker
But for us,
00:21:31
Speaker
in the trade space, the use of DLT just for different parties to communicate with one another has picked up.
00:21:36
Speaker
And then the third one we saw a lot of at Cybors with numerous fintech partners there is in the AI and robotics space, which is just about taking and reading a document, understanding the document, what document is it?
00:21:49
Speaker
then picking up what the relevant fields are and then actually picking the data out using optical character recognition, putting into systems, making the back offices more efficient so we can turn around, better turnaround times for our customers so they can trade faster was something that I saw a lot of usage, right?
00:22:06
Speaker
So I'd say APIs, distributed ledger and AI and robotics for me would be three kind of tech drivers that I think, you know, there's going to be a lot more investment in these as a drive to digitization scales.
00:22:18
Speaker
Yeah, all making workflows a lot smoother and smarter, which I don't think anyone can argue against.
00:22:25
Speaker
Neil, let's bring you back in here, because obviously there's a lot going on sort of in terms of digital innovation in the security space.
00:22:32
Speaker
So tell us a little bit about how technology is helping to overcome the issues around fragmentation and assisting in this move towards faster settlement.
00:22:41
Speaker
Yeah, I think sort of Vina mentioned a few of these already with regard to trade, and I'll kind of mention some of them again here then.
00:22:47
Speaker
So
00:22:48
Speaker
In terms of DLT and the security side, we think that technology gives us faster settlement in some cases, especially when you think about the future of cash and CBDCs are likely to mean simultaneous movement.
00:22:59
Speaker
We touched on that a little bit earlier.
00:23:01
Speaker
There are other technologies that we see that will improve settlement times, reconciliation.
00:23:06
Speaker
So things like microservices that can automate manual processes.
00:23:10
Speaker
For example, creating matching engines that may help with trade affirmation, removing manual processes and using that software to provide for scale.
00:23:20
Speaker
Vinay also mentioned APIs.
00:23:21
Speaker
We're using a lot of APIs through the trade status and holdings for our clients.
00:23:27
Speaker
It's timely information passed between market participants and it's vital to that shortened settlement environment.
00:23:33
Speaker
Giving more transparency to our clients as well, Eleanor.
00:23:36
Speaker
Cloud solutions, data sharing, I think will also help.
00:23:39
Speaker
And the power of everyone having the same view of that data and not reconciling time and time again.
00:23:45
Speaker
Yeah.
00:23:47
Speaker
From the process.
00:23:48
Speaker
And then finally, fintechs.
00:23:49
Speaker
They were in abundance at Cybos and Asda Dam this year.
00:23:53
Speaker
But there are a variety of fintech players emerging who will help us solve pieces of this puzzle around automation and efficiency.
00:23:59
Speaker
So being able to integrate them and embed these providers in our ecosystem or our clients' ecosystems will become key.
00:24:06
Speaker
Yeah, loads going on in the fintech space.
00:24:09
Speaker
I met some names that I'd never heard of, but I've now sort of set up meetings with like, wow, okay, this is really impressive.
00:24:16
Speaker
But it's so good to hear about how some of those headaches are being taken away, Neil, by what's going on.
00:24:22
Speaker
But one of the other elements I wanted to ask you about quickly was just digital custody.
00:24:26
Speaker
So how do you expect that to evolve to support digital assets and securities?
Digital Assets and Securities Infrastructure
00:24:32
Speaker
Yeah, so just briefly on digital assets, the space is moving fast and firms are really looking into investing in that infrastructure that not only helps them enter the digital asset issuance or customers, but also bridges that gap between traditional and digital assets within ecosystems.
00:24:46
Speaker
So I think expect to see a lot of progress on tokenized assets and CBDCs in particular.
00:24:52
Speaker
Yeah, yeah, it's a really interesting area.
00:24:54
Speaker
And obviously, from our audience, the corporate treasurer's point of view, digital assets are kind of quite risky at the moment.
00:25:01
Speaker
I have had a couple of treasurers asking me about NFT issuance and their organisations are looking at NFTs.
00:25:06
Speaker
And then we have done a few pieces on tokenised funds and how that might help sort of customisation around investments in the future.
00:25:14
Speaker
So yeah, lots going on, lots to look into.
00:25:17
Speaker
So let's have a very quick
00:25:18
Speaker
discussion around what's happening a little bit more in the future and also how the bank is helping to prepare customers for this.
00:25:26
Speaker
So Nadine, what's your look into the crystal ball tell you about the future of payments over the next sort of 12 to 24 months and what are you doing at HSBC to get ready for this?
00:25:38
Speaker
Well, we've already discussed a lot of the things that we are looking between 12 and 24 months.
00:25:43
Speaker
But, you know, it is clear that, and you said yourself at Cybos, a tremendous amount of fintechs with a payment service provider.
00:25:52
Speaker
I think it's clear that if you are a corporate treasurer, you will have more option in terms of service provider.
00:25:57
Speaker
But clearly, I do think that the focus is a little bit different.
00:26:02
Speaker
I think we really continue focusing on
00:26:05
Speaker
servicing you know corporate treasury the liquidity piece we haven't talked a lot about it i do think with the raise of the interest rate more discussion will be on movement of funds uh forecasting maybe sound old-fashioned but because we haven't had those rates for a few years i think it does bring some new opportunity around that and we are busy on a few things around liquidity and clearly
00:26:33
Speaker
You know, we've talked about ESD and we talked about a lot about the payments, but the S is so more important than today's environment.
00:26:42
Speaker
You know, we need to continue without talents.
00:26:45
Speaker
We cannot really drive any, we can talk about the robots, but at the end, we still need some talents in the industry and to really bring this creativity that we need.
00:26:57
Speaker
And, you know, CBDC for sure,
00:27:01
Speaker
you know, mass merchant payout, you know, single payment versus API.
00:27:07
Speaker
I do think that it will only accelerate.
00:27:10
Speaker
I think we have the path.
00:27:12
Speaker
We are all working in the right pieces.
00:27:15
Speaker
We're putting the right investment, but there is the connectivity with the corporate treasurer, but you will be as good as your backend is.
00:27:23
Speaker
So connected front to back and simplify process,
00:27:28
Speaker
I do think client experience is ever going to be demanding for the provider and the receiver of the service because maybe we will ask more for the clients to do themselves in the future, who knows?
00:27:41
Speaker
And we will focus on the most stringing part.
00:27:44
Speaker
Most welcome by most, but, you know, depending how your own company is set up.
00:27:49
Speaker
So I do think talent, you know, staying alert with new trends and new, or making...
00:27:58
Speaker
Reuse some of what we use.
00:28:00
Speaker
I think a key thing that Cybos is that there was, yes, there's a lot of innovation, but there's also reusing.
00:28:08
Speaker
what has been there for a little while and thinking wider.
00:28:12
Speaker
Rene, coming across to you, tell me a little bit about what you're doing at HSBC, what's coming down the pipeline or what's already in the pipeline in terms of sort of improving the way clients engage in global trade, not only today, but also in this landscape that we've spoken about that's coming in the near future.
00:28:30
Speaker
Sure.
00:28:30
Speaker
So I think in terms of the today and a little bit of what we've done over the last couple of years is
00:28:35
Speaker
And at Cybos, we announced the launch of our new trade product platform, HSBC Trade Solutions, that's gone live in two of our largest and most complex home markets.
00:28:46
Speaker
And what that's done is help digitize that interaction, which I said, between the clients and ourselves.
00:28:51
Speaker
So customers can now see all of their trade transactions across our network in a single dashboard.
00:28:58
Speaker
They can almost personalize the widgets for those dashboard and what they want to see when they come in.
00:29:02
Speaker
It's so much simpler, easier for them to initiate transactions, whether it's for a letter of credit, a supply chain finance transaction through a range of different channels.
00:29:11
Speaker
And all of that's contributed towards getting to an 88% E-penetration, where 88% of our transactions
00:29:17
Speaker
come to us digitally.
00:29:18
Speaker
And that's for our corporate client base.
00:29:20
Speaker
I did want to touch upon also the FI digital network that we launched at Cyboss, where we now give our FI clients as an industry first, where they can view the status of transactions they route into our network.
00:29:34
Speaker
So for the first time, they can give their customers an end-to-end client experience
00:29:38
Speaker
or where transactions are within the HSBC network with real-time visibility as well, right?
00:29:43
Speaker
So that's something that's been happening and we'll just see more of that just scaling up almost hopefully towards 100% very quickly, right?
00:29:50
Speaker
But I'd say what's the exciting area, like I talked about, is trade happening at new venues and what we call as our trade as a service proposition, where we embed our products into client journeys on different venues, platforms, marketplaces,
00:30:06
Speaker
riding on those APIs that we talked about, we're just going to see that scale up even further.
00:30:10
Speaker
So we're working as we speak, and we have already with multiple fintech partners, ERP systems, marketplaces, shipping and logistics platforms to offer our solutions on these platforms where buyers and sellers are trading increasingly.
00:30:26
Speaker
So we expect that also to scale up very, very quickly as it already is right now.
00:30:31
Speaker
And I think in terms of the tomorrow, which we have to start almost the investments today, we'll certainly see an uptake on bills of trading, like I said, with the numerous providers out there.
00:30:41
Speaker
But also that will then drive digital or blockchain based letters of credit through solutions like Contour.
00:30:48
Speaker
So that is going to help digitize the wider ecosystem, which, like I said, like we said, is the more challenging area.
00:30:54
Speaker
But we do think that as we go from here on, hopefully the amount of paper involved in trade is just going to reduce.
00:30:59
Speaker
And then picking up from Nadine's point, I think we'll see the use of tokens in the future.
00:31:03
Speaker
And we are working with different platforms already to kind of embed what we call deep tier financing.
00:31:08
Speaker
So not just for our corporate and their buyers and sellers, but going down multiple levels and tokens will help make that happen.
00:31:16
Speaker
but also bring in a lens of ESG within that where we can actually see provenance across the supply chains and how the different levels of suppliers are performing in ESG indices.
00:31:26
Speaker
So certainly across those three horizons, quite excited about how trade transforms over the next 12 to 24 months.
HSBC's Sustainability Focus and Tech Investments
00:31:33
Speaker
Yeah, lots going on.
00:31:35
Speaker
And like you say, that ESG angle is so interesting.
00:31:37
Speaker
And there's the potential to kind of support minority owned businesses or women businesses as well.
00:31:43
Speaker
So there's just so much we can do.
00:31:44
Speaker
And really looking forward to hearing how that develops.
00:31:48
Speaker
Neil, let's get you to look into the crystal ball a little bit now.
00:31:52
Speaker
What do you see coming in terms of markets and securities trends, maybe drawing on those themes from Cybos this year?
00:31:59
Speaker
And what are you doing at HSBC to embrace these changes for the future?
00:32:04
Speaker
Yeah, again, Eleanor, similar themes.
00:32:06
Speaker
I think Nadine and Vinay touched on ESG and sustainability.
00:32:09
Speaker
They continue to be a focus for many of our clients.
00:32:12
Speaker
We recently announced Patrick Kondarjian as our head of sustainability across markets and security services.
00:32:18
Speaker
The space is evolving and will become ever more integral to the investment process for our clients.
00:32:22
Speaker
So we want to ensure that we're able to support them on that journey.
00:32:26
Speaker
Over the last few years in security services, we've invested heavily in modernizing our technology infrastructure with enhanced connectivity to CSDs, which give our clients near real-time market information.
00:32:37
Speaker
We've invested in digital channels so that our clients can access our services, including our Evolve portal, chatbots, Symfony, and APIs, all of which provide information and insights via our clients' choices of channels.
00:32:52
Speaker
Just finally, I can't go through the podcast without mentioning MarketSpace.
00:32:55
Speaker
So MarketSpace is our platform as a service.
00:32:58
Speaker
It's bringing together the best of HSBC services, as well as integrating third parties into the ecosystem.
00:33:04
Speaker
So it's helping us with many of the challenges and opportunities discussed at Cybos, including joining up cash and securities through better connectivity with our offerings with global payment solutions, accessing tokenization, digital assets, private asset solutions, but also allowing our clients to benefit from third-party providers who can add value to things like ESG reporting that I just mentioned.
00:33:25
Speaker
The pace of change across the industry is faster than ever.
00:33:27
Speaker
New trends emerging all the time and MarketSpace is helping us pivot in the direction that best supports our clients.
00:33:33
Speaker
Yeah.
00:33:34
Speaker
And for anyone listening, we did actually have a podcast earlier in this Cyboss Spotlight series all on MarketSpace.
00:33:40
Speaker
So do go and have a look for that.
00:33:42
Speaker
It's very interesting, all of the developments that are going
Enhancing Client Experience with Innovation
00:33:45
Speaker
on there.
00:33:45
Speaker
But we've covered a huge amount of ground in this podcast, some really interesting elements for everyone to go and have a think about and do a bit more research around.
00:33:54
Speaker
But how do we bring all of this together, all of these different sectors, all of this different innovation to actually improve the end-to-end experience for clients?
00:34:05
Speaker
And maybe just a quick comment from each of you on how we kind of make it all seamless in the future.
00:34:10
Speaker
Nadine, your final thoughts?
00:34:12
Speaker
I think every internal or external meeting, we should start with the clients.
00:34:16
Speaker
Everything as a service, everything should be built for that.
00:34:20
Speaker
I think simplification, both access and backend to allow frictionless payment.
00:34:27
Speaker
Instant comes with higher risk.
00:34:29
Speaker
So we can't forget the ability and our responsibility to fight the bad guys and, you know, frauds and make sure, you know, the part of the service is the resilience because, you know, money can go very quickly and when it's gone, it's gone.
00:34:46
Speaker
So you do need to think frictionless and instant bring new risk that we all have to embrace and accept and protect ourselves.
00:34:57
Speaker
Mm-hmm.
00:34:57
Speaker
And I think the best thing is through collaboration and, you know, close communication between your service provider and the clients, because it's very easy to wow on some of their connectivity.
00:35:09
Speaker
But at the end of the day, it is billions of payments that goes around the world and hackers get smarter.
00:35:16
Speaker
And I do think, you know, we need to keep that working on that even more, you know, contingency, all those kinds of good stuff.
00:35:24
Speaker
Yeah.
00:35:25
Speaker
Communication and optimism, because I think we need Eliana, some optimism around this world and some great people to work with together with technology.
00:35:37
Speaker
Yeah, always makes it a lot more fun, doesn't it?
00:35:40
Speaker
That's right.
00:35:40
Speaker
I have a good team behind you.
00:35:43
Speaker
Vinay, final thoughts from you?
00:35:44
Speaker
Sure.
00:35:45
Speaker
So I think in a time of kind of, you know, quick and rapid change in quite volatile environments,
00:35:51
Speaker
What we've seen is every time we co-create and really we talk a lot about co-creation these days with our customers, with our fintech partners, we land solutions that are really fit for purpose and faster and very agile and quick and a rapid way of working, right?
00:36:07
Speaker
So we get solutions.
00:36:08
Speaker
that meet the specific needs of users in our client offices.
00:36:12
Speaker
So co-creation is one.
00:36:13
Speaker
The second I'd say in terms of pulling it all together is always thinking enterprise-wide because, you know, in our clients' offices, some of the solutions could involve people right across sustainability, IT and technology, procurement, credit, sales, and making sure we're always thinking enterprise-wide at the client end is the second thing I'll say along with co-creation.
00:36:33
Speaker
And then the third one is always thinking ecosystem nowadays.
00:36:37
Speaker
So beyond just enterprise wide for the client, but their wider ecosystem of their buyers and their buyers, buyers, and similarly on the supplier side, because I think to land any solution, we don't just think trade finance any longer.
00:36:50
Speaker
We think about facilitating trade right across the entire ecosystem.
00:36:54
Speaker
So for me, those three things, co-creating, thinking enterprise wide, and actually then thinking ecosystem wide right across.
00:37:00
Speaker
Yeah.
00:37:01
Speaker
That's a great mindset to have going forward.
00:37:03
Speaker
Neil, over to you for your final thoughts.
00:37:06
Speaker
Thanks, Eleanor.
00:37:07
Speaker
Look, I think a lot of discussion at Zybos in the security space was about partnerships.
00:37:11
Speaker
So we're bringing it all together by focusing on our strengths, which is digitizing at scale, creating a fast, easy digital client experience and partnering with technology innovators and with our clients and executing with speed.
00:37:23
Speaker
Great stuff.
00:37:23
Speaker
Well, lots to look forward to.
00:37:25
Speaker
And thank you so much, all three of you for joining us today, sharing your insights, filling us with some hope for the future.
00:37:32
Speaker
And I'm sure we can catch up hopefully sometime next year and see what progress has been made and where we need to go next.
00:37:39
Speaker
But thank you for now for joining us.
00:37:40
Speaker
It's been a pleasure to have you here.
00:37:42
Speaker
Thank you.
00:37:42
Speaker
Thank you, Elena.
00:37:43
Speaker
Thank you so much.
00:37:44
Speaker
This has been HSBC's Cyboss Spotlight, a podcast miniseries produced especially by TMI for HSBC Global Viewpoint.
00:37:52
Speaker
To discover other episodes in this series, search for HSBC Global Viewpoint on Apple and Spotify or head to gbm.hsbc.com forward slash cyboss, where you can also find out more about HSBC's transaction banking insights and presence at Cyboss.
00:38:09
Speaker
Thank you for listening.
00:38:23
Speaker
Thank you for joining us at HSBC Global Viewpoint.
00:38:26
Speaker
We hope you enjoyed the discussion.
00:38:28
Speaker
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