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, 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 impacting the transaction banking landscape, specifically looking at sustainability, digitization, and innovation.
Speaker: We will examine the opportunities and challenges disrupting the area of payments, trade, custody, and traditional business models.
Speaker: So to help us do that today, we've got three special guests.
Speaker: They are Nadine Largamit, who is Global Head of Financial Institutions for Global Payment Solutions.
Speaker: 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.
Speaker: And we're going to be discussing our reflections from the recent CIBOS conference in Amsterdam.
Speaker: So welcome to all three of you.
Speaker: It's great to have you here.
Speaker: Nadine and Vinay, you're back in the podcast studio with us.
Speaker: So excellent to have you back to have a bit more discussion.
Speaker: And Neil, welcome to the podcast for the first time.
Speaker: It's a pleasure to have you here.
Speaker: So I wanted to just kick off with some high level observations from the CIBOS conference because
Speaker: There's always so much going on that it's impossible to pick up on everything.
Speaker: And you three have been in different areas of the conference listening to different things.
Speaker: So Nadine, tell us a little bit about what you heard at Cybors.
Speaker: What surprised you most in terms of the conversations around payments?
Speaker: What were the expected hot topics and maybe some of the unexpected ones?
Speaker: Well, Eleonore, thank you again to be with you on this podcast.
Speaker: And I'm sure Neil and Vinay will agree with me that Cybos in person after three years was a very special event indeed.
Speaker: Our business is based on trust and relationship and our ability to reconnect in person was not to be underscore.
Speaker: I think it's really trying the feeling and the image of this first Cybos together.
Speaker: This was expected, but not at this scale.
Speaker: We clearly had a few missing key players due to COVID restriction.
Speaker: There were so many hot topics, Eleonore, but in my view, not too many unexpected ones.
Speaker: So let me just try to elaborate a little bit.
Speaker: Real-time payment became the most frequently discussed point, which is coming up to reality, relatively mature in a commercialization stage.
Speaker: 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.
Speaker: But clearly ISO was an ISO data and how we can use the data.
Speaker: 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.
Speaker: And clearly, we all have to get used to the metaverse and the Web3 innovation, which we are all trying to learn and digest.
Speaker: But I think for corporate treasury, what's important, you know, it's not just about payment.
Speaker: I think a lot of discussion were about
Speaker: rising interest rate and some attention on the efficient liquidity model.
Speaker: So that's what I take.
Speaker: Thank you, Nadine.
Speaker: That's a great summary of what's going on.
Speaker: 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.
Speaker: And it's all very exciting and great to see ESG taking center stage as well.
Speaker: But focusing on those payment developments that you mentioned there, if I've
Speaker: 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?
Speaker: Is it payment APIs?
Speaker: Is it interoperability?
Speaker: What would be your number one pick?
Speaker: 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.
Speaker: I think some people welcome those and some other
Speaker: you know, we're ready.
Speaker: 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.
Speaker: I think, um,
Speaker: You know, CBDC and RTP to RTP connectivity, the interlink between both, you know, that's also a very, very key discussion.
Speaker: 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,
Speaker: is very important.
Speaker: And this payment validation can really boost our ability to also enhance the client experience.
Speaker: That's, I would say, critical development.
Speaker: But there's so many, Eleonore,
Speaker: So much to talk about.
Speaker: I know.
Speaker: We're spoiled for choice.
Speaker: We really are.
Speaker: And it's not just in the payment space.
Speaker: There's a lot happening in trade as well, Vinay, isn't there?
Speaker: And I know you were speaking at Cybos, but you also had loads of meetings.
Speaker: So tell me a little bit about your key takeaways from those discussions around global trade.
Speaker: What impressed you or surprised you most?
Speaker: Sure.
Speaker: So thanks, Eleanor.
Speaker: 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.
Speaker: Right.
Speaker: 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.
Speaker: 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.
Speaker: 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?
Speaker: What role can the industry play through new technology, through visibility, transparency,
Speaker: digital decisioning to help the supply chains, not just our corporate clients, number one supplier tier, but going down multiple levels of suppliers.
Speaker: 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.
Speaker: So I'd say supply chain resiliency was a theme
Speaker: I almost came across any meeting or any panel or any discussion we did.
Speaker: 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.
Speaker: It's, in fact, now a board level agenda for most of our corporate clients.
Speaker: Right.
Speaker: I'd say the second one was linked to a little bit around resiliency of supply chains as the new business models.
Speaker: 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.
Speaker: And I think, you know, what we're trying to do there is how do we make trade
Speaker: finance available at these new venues.
Speaker: 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.
Speaker: 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.
Speaker: So that was a big one, but also towards social agenda items,
Speaker: 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.
Speaker: And then a couple more, if I may add, is on the bank side, right?
Speaker: And Cybos is where we meet our FI partners.
Speaker: I think facilitating commerce is clearly something that all banks want to do for their customer base.
Speaker: 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.
Speaker: They go more diverse, they find new markets, etc.
Speaker: And it becomes quite challenging for them to facilitate.
Speaker: 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
Speaker: 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
Speaker: 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.
Speaker: So it was brilliant to have more discussions.
Speaker: 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.
Speaker: Yeah, amazing.
Speaker: A whole download of four days in just a couple of minutes, Vinay.
Speaker: Thank you.
Speaker: Thank you so much for that.
Speaker: There's so much going on, so much progress being made that it's hard to pick what to speak about.
Speaker: We'll go into a few of those topics in a little bit more detail shortly.
Speaker: 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.
Speaker: And obviously, one of the hot topics this year was the shift to shorter settlement cycles.
Speaker: Tell us what you heard on the conference floor,
Speaker: What was the feeling among attendees around whether T plus one settlement is sufficient or whether we really need to go atomic?
Speaker: Yeah, thanks, Eleanor.
Speaker: Well, it's good to be here for the first time amongst such great company.
Speaker: 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.
Speaker: The T plus one settlement was a hot topic at Cyboss.
Speaker: It's a big step forward, but it's not without its challenges for the industry.
Speaker: Yeah.
Speaker: 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.
Speaker: 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.
Speaker: I think there are different challenges there.
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.
Speaker: 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.
Speaker: So we'll continue to advocate on behalf of our clients as the story develops.
Speaker: Maybe Eleanor if we can briefly touch on a couple of the challenges that we might see here with development cycles.
Speaker: 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.
Speaker: And specifically for broker-dealer clients, they'll need to be aware of where their inventory is.
Speaker: So for example, realignments between ICSDs and CSDs may be difficult.
Speaker: when we complete between T and T1.
Speaker: 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.
Speaker: Yeah, it'd be nice to get towards that full automation point for sure.
Speaker: 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?
Speaker: It's good to be discussing this when we have Nadine here on the podcast as well.
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.
Speaker: So, you know, as Nadine talked about earlier, kind of instantaneous movement of cash will be really important going forward.
Speaker: There will be impact on FX, securities lending and collateral management.
Speaker: So changes to settlement cycle will impact collateral management behavior, operating models, which will need to be reviewed.
Speaker: But generally speaking, greater efficiency gains should be achievable.
Speaker: Great stuff.
Speaker: All right.
Speaker: Lots to look forward to.
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.
Speaker: And it was interesting for me to see the number of QR codes on the floor as opposed to paper publications, even TMI.
Speaker: So in the past, there would be a media alley where you would go and pick up your copy of TMI.
Speaker: But this year it was a QR code so people could get it digitally.
Speaker: So huge changes just around the conference itself, but obviously within the topics that we've been speaking about.
Speaker: So Nadine, you mentioned CBDCs before.
Speaker: Tell me a little bit more about how this drive towards digital currencies, including things like stable coin, is changing the payments landscape.
Speaker: What did you hear at the conference around that?
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.
Speaker: Yeah.
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.
Speaker: So I think, you know, the intent is definitely there to push and to support all those different sandbox around the world.
Speaker: I think the intent is there and the vision is there.
Speaker: Obviously, everybody's got to get to the table.
Speaker: And I think if it's something that
Speaker: You need to see a different pace of acceleration, see who will come to the table, which country will come to the table.
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.
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
Speaker: You know, in short, I would say, you know, we are all in exploration stage.
Speaker: Likely some particular use case might be promising to take off.
Speaker: And events like Cyboss really, really help in bringing creativity and spontaneity on adapting this evolving change around payment.
Speaker: Yeah, and I know HSBC has been doing a lot in this space as well.
Speaker: And it's very exciting.
Speaker: Well, I'm trying very hard just to be industry-wise.
Speaker: I know.
Speaker: I'm not the...
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.
Speaker: And it's great to be at the table with some very other credible institutions.
Speaker: Yeah, and it's exciting.
Speaker: And lots of treasurers asking me about CBDCs, actually, and very keen to sort of see how that plays out.
Speaker: So lots going on in terms of sort of digitising payments.
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.
Speaker: But we've made huge amounts of
Speaker: progress already.
Speaker: How do you think we take this to the next level now?
Speaker: What needs to happen to progress the digital agenda in trades further?
Speaker: Yeah, so I think, you know, the way we come at it, Illinois, is to break the problem into two parts.
Speaker: I think the first is the ecosystem that exists between banks and our clients.
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.
Speaker: Certainly, you know, we've hit an 88% e-penetration.
Speaker: So 88% of our transactions come to us digitally with our clients across a range of channels across all our products.
Speaker: So there's been some really good progress on that.
Speaker: Yes, COVID helped expedite and embrace that pace.
Speaker: of digitization, but that's its scale.
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.
Speaker: There's a lot of paper out there still.
Speaker: We talked at Cyboss about only 1.2, 1.3% of bills of lading, which is the shipping document, are electronic.
Speaker: So there's still a hell of a lot of paper moving around across the world.
Speaker: And so we haven't achieved digitization at scale there at all, right?
Speaker: But having said that, there are some green shoots where digitization has taken place.
Speaker: A couple of things I'd say.
Speaker: One is I think people are past the stage of proof of concept sandboxes.
Speaker: And I think there was this phase when technology was there for the sake of being there.
Speaker: I think we're now at a stage where the problem statements are quite real.
Speaker: I think there have been solutions that have gone beyond the proof of concept stage to actually being
Speaker: signed up in commercial models having been agreed around it.
Speaker: There's some degree of consolidation that's taken place in the industry.
Speaker: Well, we're now at the phase where we need to really build a network around those, right?
Speaker: And there are some things that need to come together for that.
Speaker: So one is certainly regulation.
Speaker: I think the G7 is committed to implement the model law for electronic transferable records.
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,
Speaker: step change taking place almost with SMEs coming on board.
Speaker: Singapore, as we know, has the legislation as a couple of other markets do.
Speaker: And the UK is looking at right now, there's work in progress currently for its approval from the UK parliament, right?
Speaker: So I think that's something which will definitely add a boost.
Speaker: Standards are coming in faster.
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.
Speaker: So without a doubt, this is going to pick up.
Speaker: The question is, how does the interoperability take place if there are seven or eight different BL providers?
Speaker: All of us are going to have to access these multiple providers, and maybe that might be the answer through standards.
Speaker: But I think we're quite confident that we are seeing clients adopting these BLs much faster.
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?
Speaker: Yeah.
Speaker: a lot in that space happening.
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.
Speaker: Yeah, fingers crossed.
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.
Speaker: With that in mind, Vinay, are there any specific technologies that you think can help in the digitization drive as we look ahead?
Speaker: Or is it more about coordinating bodies towards a common goal, standards, etc.?
Speaker: What do you think is most important?
Speaker: I'd say it's definitely a bit of both.
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.
Speaker: Yeah.
Speaker: The immediate priority has to be to embrace digitization.
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.
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.
Speaker: I think one is clearly APIs are now at scale within the trade space, right?
Speaker: We've got our own API developer portal.
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.
Speaker: So that's a given.
Speaker: And you'll see more of that with ERPs, et cetera, offering trade enabled APIs as well.
Speaker: So that's one technology I wanted to call out.
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.
Speaker: That's beginning to get scale.
Speaker: I think the next level where it might go to is things like tokens and digital assets.
Speaker: But for us,
Speaker: in the trade space, the use of DLT just for different parties to communicate with one another has picked up.
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?
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?
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.
Speaker: Yeah, all making workflows a lot smoother and smarter, which I don't think anyone can argue against.
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.
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.
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.
Speaker: So
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.
Speaker: We touched on that a little bit earlier.
Speaker: There are other technologies that we see that will improve settlement times, reconciliation.
Speaker: So things like microservices that can automate manual processes.
Speaker: For example, creating matching engines that may help with trade affirmation, removing manual processes and using that software to provide for scale.
Speaker: Vinay also mentioned APIs.
Speaker: We're using a lot of APIs through the trade status and holdings for our clients.
Speaker: It's timely information passed between market participants and it's vital to that shortened settlement environment.
Speaker: Giving more transparency to our clients as well, Eleanor.
Speaker: Cloud solutions, data sharing, I think will also help.
Speaker: And the power of everyone having the same view of that data and not reconciling time and time again.
Speaker: Yeah.
Speaker: From the process.
Speaker: And then finally, fintechs.
Speaker: They were in abundance at Cybos and Asda Dam this year.
Speaker: But there are a variety of fintech players emerging who will help us solve pieces of this puzzle around automation and efficiency.
Speaker: So being able to integrate them and embed these providers in our ecosystem or our clients' ecosystems will become key.
Speaker: Yeah, loads going on in the fintech space.
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.
Speaker: But it's so good to hear about how some of those headaches are being taken away, Neil, by what's going on.
Speaker: But one of the other elements I wanted to ask you about quickly was just digital custody.
Speaker: So how do you expect that to evolve to support digital assets and securities?
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.
Speaker: So I think expect to see a lot of progress on tokenized assets and CBDCs in particular.
Speaker: Yeah, yeah, it's a really interesting area.
Speaker: And obviously, from our audience, the corporate treasurer's point of view, digital assets are kind of quite risky at the moment.
Speaker: I have had a couple of treasurers asking me about NFT issuance and their organisations are looking at NFTs.
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.
Speaker: So yeah, lots going on, lots to look into.
Speaker: So let's have a very quick
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.
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?
Speaker: Well, we've already discussed a lot of the things that we are looking between 12 and 24 months.
Speaker: But, you know, it is clear that, and you said yourself at Cybos, a tremendous amount of fintechs with a payment service provider.
Speaker: I think it's clear that if you are a corporate treasurer, you will have more option in terms of service provider.
Speaker: But clearly, I do think that the focus is a little bit different.
Speaker: I think we really continue focusing on
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
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.
Speaker: You know, we need to continue without talents.
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.
Speaker: And, you know, CBDC for sure,
Speaker: you know, mass merchant payout, you know, single payment versus API.
Speaker: I do think that it will only accelerate.
Speaker: I think we have the path.
Speaker: We are all working in the right pieces.
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.
Speaker: So connected front to back and simplify process,
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?
Speaker: And we will focus on the most stringing part.
Speaker: Most welcome by most, but, you know, depending how your own company is set up.
Speaker: So I do think talent, you know, staying alert with new trends and new, or making...
Speaker: Reuse some of what we use.
Speaker: I think a key thing that Cybos is that there was, yes, there's a lot of innovation, but there's also reusing.
Speaker: what has been there for a little while and thinking wider.
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.
Speaker: Sure.
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
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.
Speaker: And what that's done is help digitize that interaction, which I said, between the clients and ourselves.
Speaker: So customers can now see all of their trade transactions across our network in a single dashboard.
Speaker: They can almost personalize the widgets for those dashboard and what they want to see when they come in.
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.
Speaker: And all of that's contributed towards getting to an 88% E-penetration, where 88% of our transactions
Speaker: come to us digitally.
Speaker: And that's for our corporate client base.
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.
Speaker: So for the first time, they can give their customers an end-to-end client experience
Speaker: or where transactions are within the HSBC network with real-time visibility as well, right?
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?
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,
Speaker: riding on those APIs that we talked about, we're just going to see that scale up even further.
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.
Speaker: So we expect that also to scale up very, very quickly as it already is right now.
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.
Speaker: But also that will then drive digital or blockchain based letters of credit through solutions like Contour.
Speaker: So that is going to help digitize the wider ecosystem, which, like I said, like we said, is the more challenging area.
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.
Speaker: And then picking up from Nadine's point, I think we'll see the use of tokens in the future.
Speaker: And we are working with different platforms already to kind of embed what we call deep tier financing.
Speaker: So not just for our corporate and their buyers and sellers, but going down multiple levels and tokens will help make that happen.
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.
Speaker: So certainly across those three horizons, quite excited about how trade transforms over the next 12 to 24 months.
Speaker: Yeah, lots going on.
Speaker: And like you say, that ESG angle is so interesting.
Speaker: And there's the potential to kind of support minority owned businesses or women businesses as well.
Speaker: So there's just so much we can do.
Speaker: And really looking forward to hearing how that develops.
Speaker: Neil, let's get you to look into the crystal ball a little bit now.
Speaker: What do you see coming in terms of markets and securities trends, maybe drawing on those themes from Cybos this year?
Speaker: And what are you doing at HSBC to embrace these changes for the future?
Speaker: Yeah, again, Eleanor, similar themes.
Speaker: I think Nadine and Vinay touched on ESG and sustainability.
Speaker: They continue to be a focus for many of our clients.
Speaker: We recently announced Patrick Kondarjian as our head of sustainability across markets and security services.
Speaker: The space is evolving and will become ever more integral to the investment process for our clients.
Speaker: So we want to ensure that we're able to support them on that journey.
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.
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.
Speaker: Just finally, I can't go through the podcast without mentioning MarketSpace.
Speaker: So MarketSpace is our platform as a service.
Speaker: It's bringing together the best of HSBC services, as well as integrating third parties into the ecosystem.
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.
Speaker: The pace of change across the industry is faster than ever.
Speaker: New trends emerging all the time and MarketSpace is helping us pivot in the direction that best supports our clients.
Speaker: Yeah.
Speaker: And for anyone listening, we did actually have a podcast earlier in this Cyboss Spotlight series all on MarketSpace.
Speaker: So do go and have a look for that.
Speaker: It's very interesting, all of the developments that are going on there.
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.
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?
Speaker: And maybe just a quick comment from each of you on how we kind of make it all seamless in the future.
Speaker: Nadine, your final thoughts?
Speaker: I think every internal or external meeting, we should start with the clients.
Speaker: Everything as a service, everything should be built for that.
Speaker: I think simplification, both access and backend to allow frictionless payment.
Speaker: Instant comes with higher risk.
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.
Speaker: So you do need to think frictionless and instant bring new risk that we all have to embrace and accept and protect ourselves.
Speaker: Mm-hmm.
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.
Speaker: But at the end of the day, it is billions of payments that goes around the world and hackers get smarter.
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.
Speaker: Yeah.
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.
Speaker: Yeah, always makes it a lot more fun, doesn't it?
Speaker: That's right.
Speaker: I have a good team behind you.
Speaker: Vinay, final thoughts from you?
Speaker: Sure.
Speaker: So I think in a time of kind of, you know, quick and rapid change in quite volatile environments,
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?
Speaker: So we get solutions.
Speaker: that meet the specific needs of users in our client offices.
Speaker: So co-creation is one.
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.
Speaker: And then the third one is always thinking ecosystem nowadays.
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.
Speaker: We think about facilitating trade right across the entire ecosystem.
Speaker: So for me, those three things, co-creating, thinking enterprise wide, and actually then thinking ecosystem wide right across.
Speaker: Yeah.
Speaker: That's a great mindset to have going forward.
Speaker: Neil, over to you for your final thoughts.
Speaker: Thanks, Eleanor.
Speaker: Look, I think a lot of discussion at Zybos in the security space was about partnerships.
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.
Speaker: Great stuff.
Speaker: Well, lots to look forward to.
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.
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.
Speaker: But thank you for now for joining us.
Speaker: It's been a pleasure to have you here.
Speaker: Thank you.
Speaker: Thank you, Elena.
Speaker: Thank you so much.
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 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.
Speaker: Thank you for listening.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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