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. Thanks for listening. And now onto today's show.
Speaker: Hello and welcome to TMI's Treasurycast. I'm Eleanor Hill, Editorial Consultant at TMI. And today's episode forms part of our special Redefining Treasury series produced in collaboration with HSBC. We're exploring how the Treasury function is evolving in response to new technologies, new expectations, and the very rapidly changing operating environment out there. So for today's episode, we're looking at the very hot topic of connectivity. So there's loads to cover. We'll be looking at how treasury teams can make sure they've got the right information and connectivity capabilities and everything in the right place at the right time, which is perhaps easier said than done. But we have two experts here to help us along through this topic. So I'm delighted to be joined by Amber Henderson-Smott, who is Global Head of Client Connectivity, and Peter Crawley, Global Head of Corporate Sales, both within Global Payment Solutions at HSBC. So Amber and Peter, welcome. It's great to have you here. i hope you're doing well. I know we've got absolutely loads to get into today, and it's it's such a good topic because it's moving so, so quickly. But... Amber, let's kick off maybe with a look at best in class connectivity, what that looks like today, how it's changed for treasurers, because I think there's so many different expectations now. It's not just the faster movement of data and payments, but as I said in the intro, it's getting that right information, the capabilities at the point where they need them, when they need them. So Amber, what are you seeing in terms of that best in class?
Speaker: Thanks, Eleanor. and look Great to be here. Look, treasurers definitely have more complexity than ever before to manage. As you said, payments are moving faster, market dynamics are quicker, but also new forms of digital money are growing and they're definitely here to stay.
Speaker: I think at the same time, we're also hearing from our clients that they want leaner operations, they want tighter controls and better technology. And at the end of the day, all of this is driving greater demand for greater precision. So what this really means is getting the right information at the right time to our clients so they can act on it with confidence. And that's what best in class connectivity is really all about. You know, bank connectivity needs to be able to enable faster decision, you know, process, you know, automation and adapt for the future. So whether that's ISO, AI, digital currencies or whatever next innovation is coming in financial infrastructure. um And many of our clients are also on their own technology journeys to streamline their treasury.
Speaker: Last year, we ran a treasury pulse survey, and that told us that just over 40% of our clients are using an ERP or TMS today to support their processes. But it also told us about 30% are still relying on spreadsheets. So, yeah you know, there's definitely no single best connectivity model that's right for everyone or every use case.
Speaker: And so at HSBC, our focus is really about bringing multiple connectivity options together in a single experience. So treasurers might use Swift for high volume payment processing, whilst also using APIs to access real-time balances or instant credit notifications.
Speaker: I think there's even more value unlocked from bank connectivity in a treasury context when it's tightly integrated into the systems and workflows our clients already use. So it could be an ERP or it could just be Microsoft Excel. And that gives treasurers better access to information, greater automation, and ultimately a much faster path to make decisions and take action.
Speaker: Yeah, but like you say, Amber, within the systems that they're already using and it doesn't have to be some huge transformation project, which I'm sure we'll get into, but very interesting stats there from that survey. And I'm sure a number of the listeners will feel the pain on the the spreadsheet side of the 30 odd percent, as you said, Peter, anything you'd add to that? Yeah, morning, Eleanor. Thanks. and And I think Amber gave a great summary there, but perhaps I could just give one example to bring it to life. And we have a customer bandwidth, the cloud communications platform as a service company. And what's interesting about their story is it wasn't about just, you know implementing another bank connection. It started with a conversation about what the treasury team was trying to achieve and, you know, from a visibility control of the cash and,
Speaker: ability to make decisions based on real-time information rather than waiting for for files and and and reports. So we we kind of worked alongside them in their chosen treasury platform. In that case, it was Travata. And we used APIs to connect kind of real-time balance and and and transaction data directly into the systems they use. And so I think that meant kind of moving away from a model where information arrived, you know, sort of scheduled batches, you know, more into when treasury needs it. And so...
Speaker: I think a lot of this is also about, you know, going beyond simply seeing balances foster. and You know, when treasury teams have immediate access to transaction level information, they can reconcile more efficiently and it can identify exceptions, improve cash flow and and, you know, make funding and payment decisions with confidence as well. you know, think this is really important to, and Amber set the foundation here around, you know, scalable connectivity solutions for the future.
Speaker: Absolutely. And that like you said, when Treasury needs that data, it's there. So it might be actually an on-demand model rather than a real-time model. And there's all these different ways that are going to work for different clients. But top marks, Peter, for bringing us an example. That's what we always ask our podcast guests. They're like, please, can you bring it to life for us? So well done for squeezing that in so early on in the podcast. Peter, I'm going to pick your brain a little bit more in terms of what What corporates are asking for these days? I know, as we've said, is there's no kind of one size fits all. Everyone is different. But when you're having these conversations around connectivity with clients, who's shaping those requirements now? Is it Treasury alone? is there a lot of input from the CFO? Are the tech teams involved? Is it even the wider business? And how are you seeing priorities differ according to like the organization type, the operating model, and also that level of digital maturity? Just give us a sense of what you're seeing out there. Yeah, I mean, that's a great question. and there's a lot in that. I mean, and what we're seeing is that the agenda is no longer set by Treasury alone. i mean, Treasury remains at the center because they're responsible for liquidity and risk and funding and, of course, banking relationships. But increasingly, they're working alongside, as you say, CFOs, but also technology teams, other business leaders.
Speaker: And these stakeholders within the corporate organizations all have a stake in how cash and financial data flows through the organization. and What's common across almost every client conversation is the desire for better visibility and and yeah and foster decision making. You know, the environments our clients operate in are are are often volatile, The markets can move quickly. um They're growing. Organizations want real-time view of liquidity rather than relying on yesterday's information. And they want to understand where like cash sits globally, you know forecast more accurately and make funding and investment and hedging decisions, as i said earlier, with ah with a bit more confidence. and but But it's not just that visibility. you know They're looking to also simplify complexity. you and I think you you touched on on models. you know Organizations expand internationally.
Speaker: They can often inherit multiple banking relationships, sometimes different connectivity models and have ah quite fragmented processes that and have almost been imported as ah as a function of their of their growth. And there's this growing focus we see on standardization in addition to this automation. And often that comes with establishing some form of single connectivity framework. i use the the word framework because it's sometimes, ah you know, a basket of different tools underneath that connectivity framework that they can then scale across their their business lines and and different markets.
Speaker: I mean, the priorities do depend on the digital maturity of the customer as well. yeah I mean, more advanced organizations are kind of focused on APIs and real-time data and how AI can help automation um in decision-making. But there are many, many others that are still earlier in their transformation journeys, um concentrating on, say, standardizing processes or automation. improving their controls or reducing manual intervention which still exists in the in the payment workflows and cash management and management workflows so i think regardless of where they are the direction of travel is remarkably consistent though and they want connectivity simpler you know they want it to be more intelligent more integrated into the systems that they use every day and then i just want to access data um and i haven't yet mentioned it but they also want this to be done in a cost-efficient way Have your cake and eat it. That's absolutely it. Yeah.
Speaker: there Good stuff. but Just to maybe add to what Peter said, right? I think, you know, we talk a lot about business and operational teams wanting simplification. They want things streamlined, automated, more embedded, less manual work. And so, you know, it's not surprising that technology is therefore becoming a really important part of Treasury or it's already there, but it's becoming much bigger. And so what that means is our clients' technology teams and now have a seat at the table when we are presenting on RFPs or having conversations, and maybe that wasn't the case you know three or four years ago. And so it's really important for us to make sure when we're looking at connectivity with customers, you know what is the right architecture, the security, the scalability? These are all things that are more important than ever before. And we also need to consider, as Peter said, you know, the cost, right? What's the internal effort needed to implement and then maintain each connection with the bank as it goes forward? And so for us at HSBC, it's not just a case of the connectivity itself, but also what's the developer and the implementation experience, right? These are just as important. And so, you know, good connectivity or best-in-class connectivity, as we started off the session, really needs to be easy to test, easy to deploy, and adapt and scale.
Speaker: And so I guess in practice that means things like quality API documentation, testing sandbox, and proven integrations with ERPs and TMS platforms such as SAP, FIS, Kariba. And all of that helps reduce the effort involved in connecting to the bank. yeah um To bring it to life, a good example is the recent work we did with Sha Ta Fook Jewellery Group in Hong Kong. We actually worked with them as they implemented their SAP S4 HANA and also multi-bank connectivity with HSBC. And that helped them create a standard proven integration that they're actually now able to repeat across the entities as the business grows. And it's also given the group much better visibility and control over their payments and cash positions.
Speaker: Ah, brilliant stuff, Amber. Thank you for that. And again, gold star for the example for us for bringing it to life. You're so right. It's got to be, you know, it can't just work for the bank or be the best thing that the bank has seen in a different organization. It has to work for the client. It has to be scalable and achievable for the client and maintainable. And all of those things pile into an equation that's going to be slightly different for everyone, but you can bring those experiences together.
Speaker: Brilliant stuff, Amber, thank you, Peter. I'm gonna come back to you because we've mentioned all of these connectivity ways. We've had to host the host, we've mentioned Swift, we talked about APIs. Of course, you mentioned AI and we've got these emerging agent to agent models that are coming as well, very exciting. But if you're a treasurer out there listening, how do you then choose the right approach for a particular process or outcome? Because it's like being in a sweet shop at the moment.
Speaker: Yeah, that's so that's a good analogy, Eleanor. I think the starting point is recognizing that there isn't a single connectivity model that's right for every organization or every process. i mean, the question shouldn't be, and which channel should I use? It should be rather, what outcome am I trying to achieve?
Speaker: I mean, if a treasurer needs real-time visibility of cash positions, balances or transaction activity embedded directly into their ERP or treasury management systems, APIs are often the natural choice. and They provide this kind of immediacy that um you know we've referenced and access to information to support decision making.
Speaker: But then for higher volume payment processing, often The traditional channels like host-to-host connections and and Swift remain incredibly important because they're proven and scalable and and deeply embedded in many ways with many organizations operating models.
Speaker: i mean, banking portals in and and mobile channels you know also continue to play a critical role. I mean, no matter how automated an organization becomes, there are always situations, I often get calls with something on a Friday that's urgent and has dropped out of the the process and, you know, we need to help investigate an exception or or get something, you know, cross-border really quickly. And so those those channels are also needed as well. But I'd say what we're increasingly seeing is that leading treasury organizations don't choose one model. you know they They combine several. They use connectivity channel where it delivers the most sort of value, creating almost an architecture that balances real-time insight and ops resilience, because that resilience is really important in large organizations especially, and the scalability and cost.
Speaker: And the other factor is digital maturity. I mean, some organizations are already exploring AI-enabled workflows and agent-to-agent interactions, and while others are focused on automating core processes and and reducing manual intervention. I mean, both both can be the right strategy. I think it comes down to what depends on where the business is on its transformation journey, which I've mentioned earlier. And and and really, we see our role at HSBC is helping our clients navigate those choices, you know, and designing a sort of connectivity strategy, as it were, that supports today's priorities, but also tomorrow's ambitions. And that's why we we we continue to invest in the in the connectivity ecosystem, including newer digital capabilities that I'm sure Amber's going to get into. don't want to front-run those. But, you know, ultimately, your question, I mean, the best connectivity model is the one that fits the client's operating model today while giving them some form of
Speaker: flexibility to evolve into the newer technologies and capabilities as as their businesses grow and mature. Yeah, that makes sense, Peter. Thank you. Amber, how would you build on that in terms of choosing the right connectivity model and those implementation considerations that determine whether that connectivity is actually going to work successfully in practice, which I know is not always, ah that doesn't always go as smoothly as we want. but Yeah, so...
Speaker: I think, as Peter said, right, there's a huge amount of complexity it can feel really complex and almost overwhelming if you look at the different options that you have as an organisation and a lot of different considerations. I think the good news I'd like to share is there is a pretty straightforward implementation approach that we use, which is really four steps. The first is the outcome, which is really important. The reason we're all here is to deliver for our clients on the outcomes they're looking for. The second step is matching the right connectivity. The third is testing. And then the fourth is scaling safely. And so if we think about the outcome, you know, it's usually going to be streamlining a particular treasury task. So it could be payment initiation and approvals, it could be delivering real-time balances into the TMS, or it might just be starting with automating statement reconciliation. And so the first step really is to identify where is information fragmented or where manual intervention exists, or maybe where addressing any delayed action could give the greatest benefit.
Speaker: Once you're clear on the outcome that you want to go after, the next step is really matching the right bank connectivity to the outcome. And so again, you know, without repeating the points that Peter said, this is where treasurers need to think about what's the speed of information they need, what kind of transaction volumes are they looking at, is the process batch-based or event-driven?
Speaker: and then they also need to think about where does the work need to happen? Obviously, ideally within the yeah ah ERP would be preferable, but obviously depending on the level of automation and control they're looking to achieve, that'll be a key factor. And so the message really is you don't need to transfer everything at once. We recommend building on one use case first. So again, it could be a single process, a payment type, a market. And this is really important because the implementation is not just about the technical readiness.
Speaker: There's often changes that our clients will need to make internally to their operational processes. There could even be changes to certain roles and responsibilities within the Treasury team. So starting small, then scaling allows you to work out any wrinkles so you can then speed up the implementation with more confidence across any remaining processes, entities and markets. it some brilliant suggestions there. Amber, thank you very much for that. I wanted to just diversify a little bit. We've touched on a lot of the interesting shifts that are happening in the market out there. um
Speaker: We've mentioned AI, etc. But also seeing more banking information and services appearing directly within yeah ERP and TMS workflows. So tell us a little bit about that. How far has embedded banking in inverted commas progressed? Where do you see it creating value?
Speaker: And then how are banks giving clients greater choice, but without requiring a new integration every time that needs change? Yeah, great. Look, I think I said earlier that just over 40% of our clients are now using an ERP or TMS with some level of host-to-host or API connectivity behind the scenes. And so embedded banking's made real progress, but there's definitely more work to do.
Speaker: The value of embedded banking really comes from being able to bring balances, transaction details, payment initiation, and exception management directly into the client's own platform. And so that reduces the need to move between systems or bring information together manually, so improves the visibility while strengthening controls, which is definitely what our treasurers are looking for.
Speaker: It also allows bank data to be brought together and sit alongside or be aggregated with internal data. So this could be internal forecasts, payables, policies, maybe internal approvals, which gives the Treasury team much more context that helps them make faster, better informed decisions.
Speaker: And that same context will be really important as AI becomes more widely used in Treasury. And I think we're going to chat about that. A little bit more coming up. So the benefit's not just about optimising the day-to-day processes. The other benefit is about shortening the onboarding time. So reducing bespoke integration work and having to train treasury teams multiple times on different bank portals. And so again, you know building on you know what I said before, it makes the implementation a lot more repeatable and predictable. I spoke earlier about Chowtay Fook's use SAP multi-bank connectivity. Another really good example of embedded banking is our pre-integration with FIS that we launched at the start of the year. So this gives clients a proven integration of real-time balances and transaction information through our FIS integrity, quantum and payment hub. We also launched for some of our smaller customers the HSBC Integrator that has established connections to NetSuite and Sage.
Speaker: And these proven integrations and established connections have helped our existing HSBC customers ultimately enable their connectivity in a matter of days instead of what used to take weeks. been busy times on your side by the sounds of it, good stuff. um And we look forward to learning more about all of these integrations as we go. But Peter, i wanted to come to you because I'd love to learn a little bit more about the real-time connectivity piece. Because when I speak to some treasurers who maybe aren't ready for it yet, They don't necessarily see the benefits of what is in their mind just getting the same information sooner. But tell us a bit about how it can actually change your business outcome. I know you've got a little case study up your sleeve. I think it's a Unilever one um around kind of immediate credit notifications that impacts receivables, available credit, and then the company's ability to sell a little bit more.
Speaker: Yeah, I mean, firstly, what I'd say, and and and you're absolutely right, and when I speak with treasurers, immediacy is often um synonymous with getting payments out earlier, which might work against the working capital agenda that they have.
Speaker: But I think this is where the conversation moves beyond connectivity and into business value. And and and real-time connectivity isn't simply... about receiving the same information as you say a few hours earlier or instantly it's helping change the decisions a company can make and the outcomes it can achieve and you know the unideva case is a fantastic example of that i mean historically their cash flow forecasting relied on end of day reporting across multiple time zones which meant treasury teams were often
Speaker: making decisions using information that was already out of date or quite old funding and liquidity and risk decisions were often being made on a retrospective view of the business and and working with hsbc unilever implemented api connectivity that provides ah real-time visibility across more than around about 300 accounts spanning asia and and and europe and Treasury can now see balances and cash movements as they happen, regardless of the market and time zone.
Speaker: But the real crux of it is what's important, is what it enables, really. Incoming funds are identified immediately. The Treasury gets confidence and gains confidence in having that liquidity available sooner.
Speaker: That means and with the reconciliation of that, which is happening you much faster, that credit limits can be released more quickly to distributors and trading partners. And that allows orders to be fulfilled and goods to be shipped sooner. So in other words, like better connectivity doesn't just...
Speaker: improve treasury operations, it can actually help accelerate revenue generation and support business growth. You know, the same visibility also improves their forecasting, funding decisions, working capital management, and treasury teams can deploy the cash as a result more efficiently and avoid having, you know, the unnecessary buffers that are synonymous with, you know, batch store and released style cash management arrangements. So, um I mean, the real breakthrough is that connectivity is no longer just an information channel. It becomes an enabler of of a better and faster decisions.
Speaker: And when a treasurer can act on information, the moment it becomes available, the benefits in my mind extend far beyond the the treasury function into the yeah the wider organization's ability to serve customers and and and grow revenues and and, of course, manage their risks as well.
Speaker: Yeah, absolutely. It's definitely ah a ripple effect in the in a very large way. And I i know the Treasury team at Unilever very well, and they're always looking for kind of market leading solutions. They're always very quick to adopt things. So definitely one for our listeners to have a look out for. um Do follow what the Unilever team are up to because they've always got good ideas. Yeah.
Speaker: I know I've spoken to Unilever a little bit about AI as well and pluses and minuses and you've got to be cautious, but you've also got to take the opportunity. So let's delve into AI a bit more. You mentioned the kind of agent to agent workflows that we are starting to see you coming through or people are at least exploring them. What are you seeing clients prioritizing as they introduce AI into their treasury workflows, whether it's they're looking at forecasting, whether they're thinking about fraud detection, liquidity, execut execution. Tell us what you're seeing.
Speaker: Yeah, all all of the above. I mean, it's such an exciting space, a really big topic as well, and yeah very much came alive this this year, I would say. At the beginning of the year, it seemed to have sort popped right onto the top of the agenda of CFOs and treasurers, Treasury teams are prioritizing AI, where where I would say delivers measurable outcomes. And you've referenced a few examples, all of them we've we've we've seen coming to life. I mean, it's already entering Treasury. and A quarter of the Treasurers that we survey say that AI is either in production or in a pilot.
Speaker: and and another third roughly are evaluating it. So I think there is um an AI tsunami on its way. And there's certainly a lot of interest, a lot of dialogue, a lot of projects and a lot of work going on here. But where I think um I like to point to is, say, tangible use cases. One I saw recently was applying AI to account receivable collections and the dining processes to accelerate collections and reduce manual efforts.
Speaker: Lower days, sales outstanding and improve the cash conversion cycle. And this demonstrated how clients are looking to embed AI directly into their operations and decision making again. i mean, looking ahead, I think AI is likely to change connectivity and and and certainly something we're already starting to see technology. a simple exchange between banks and yeah ERPs and TMS platforms, which I think we've covered quite well here, yeah into more sort of intelligent orchestration of workflows. and Rather than treasury teams with manually extracting information and then, say, triggering actions, you can see an environment and and we're starting to see them emerge globally.
Speaker: and in a bunch of cases where ai agents could analyze positions identify exceptions recommend actions and ultimately execute approved tasks across connected systems and all of those things you mentioned you know cash flow forecasting for detection and liquidity placement we're seeing um work around that space so I think the next step may be sort of agent-based treasury where where AI not only forecasts liquidity, detects fraud or prioritise collections, et cetera, but also collaborates across banking payments and ERP ecosystems sort drive execution. and I think it's that shift from information into execution that is getting very interesting in in this space. And I sense from the clients that we speak to and the feedback is suggesting very strong interest in
Speaker: in in these things being scalable, commercial AI and treasury ah use cases, not not just proofs of concepts. and And they need to deliver some kind of operational efficiency or or or improve the cash outcomes that our clients are you know looking to achieve.
Speaker: Absolutely echo that. That's the kind of things we're getting questions around on our side as well. And people looking for case studies on those already, although it's very early days. But I think, Peter, you you kind of mentioned that, you know, it's it's very exciting times, but we know underneath we need to have a lot of caution around it as well when we're moving towards that execution piece. So, Amber, let's bring you in here because tell us a little bit about A, how connectivity enables those use cases that Peter mentioned prepares us for this agent to agent interaction. But also once we get there, once we've got agents accessing this data, initiating actions, how do we then need to bring in things like know your agent, ah permissions, auditability, and of course that human accountability that we speak about so much.
Speaker: Yeah, sure, Eleanor. So, i mean, for us, we know bank connectivity is really key for AI because the intelligence is ultimately only as good as the information can access. So whether AI is sitting on our client's side or within a bank channel, we need to make sure we can deliver timely and accurate data, the right context, and, of course, clear permissions.
Speaker: And we're already seeing AI change the way that connectivity works with our customers. So, for example, we've started using Model Context Protocol or MCP for short, So we can securely connect our APIs into our client's AI tools. This builds on trusted security and permissions that we already have in place for clients using APIs.
Speaker: So it's a really nice way to sort of start introducing that to customers in a secure way that they're familiar with. And we're also working on how we can let users use their HSBC net credentials, for example, to log on using our MCP into their AI tools like Claude. And look, these approaches work well when there's a person in the loop, but as we move more toward those AI agents taking more action independently, we're going to need to go a step further. So that's where things like know your agent and being able to identify the agent, their permissions, the way we think about oversight and accountability definitely needs to evolve.
Speaker: Well, go on, tell us a little bit more about that, Amber. What do you see in terms of that evolution? Yeah, I think if you, you know, we think about it, you've got humans doing something today. In the future, AI agents will take on more parts of that workflow. And so I think it keeps simple, right? It's really every decision must remain clear, controlled, and audible. And a good way to think about it is it's no different to whether that action was being taken by a human. And so this means we need to go beyond just testing AI models when we deploy them We need to continue to have oversight on how that AI is performing every day because LLMs change, the data underneath changes. And so we need to think about what information is being used, where is it being sourced from, which model and version are involved, and what thresholds do you need to put in place to make sure you have human review or approval where it needs to happen.
Speaker: And that's where we always talk about accountability needing to remain clear. And I said that before, you know, AI definitely helps people reach faster decisions, better informed decisions even, because you can process really large amounts of information quickly. And that's great. But it is important that we don't become complacent and we continue to look at what is the AI producing in terms of decisions and definitely make sure there's a human in the loop for higher risk outcomes. And the permissions of the AI agents are important part of that. So again, building on the know your agent, it's really about defining who the AI agent is, what data they can access, what actions they're allowed to take, and then how do we control what funds they have access to as well.
Speaker: Good news, the industry is responding. And even this morning, I saw another announcement. There's a newly formed Agentic Payments Alliance that's come together with Visa, MasterCard, and Fireserve. I'd say they're definitely starting to look at more the e-commerce space and consumer and business payments, but there's no doubt those standards that they work on for agent identity and all authorization are de you know going to slip into more of the treasury B2B space as well.
Speaker: and for us at HSBC, we're working really closely with our new Singapore AI Innovation Centre on this, with MIS as well, on what the right approach is. So, As Peter said, as you said earlier, little the opportunity is significant, but we need to make sure we have the right controls alongside the technology so we can all operate safely and make sure we can rely on the agents to be accurate.
Speaker: Absolutely. And I liked what you said about the complacency from people as well, Amber, but because that is so, so important. And there's some interesting studies out there and looking at how humans behave when they're getting outputs from ai agents and yeah how many mistakes they catch at the beginning of the task and how many mistakes they catch yeah after a few hours of the task and it all changing. So there's so much for us to think about, but yeah, lots of exciting opportunities coming down the line as well. Peter, I'm going to give you the tough task of wrapping up for us. I know we've covered absolutely loads today and we've looked at organisations having very different levels of of technical readiness. They also have different levels of investment capacity, risk appetite. So,
Speaker: For our audience, for our listeners out there, what is a realistic first step, would you say, Peter, for a treasury team that wants to improve their connectivity, but not necessarily going out on some costly big bang transformation? And tell us a little bit about how the bank can help there as well.
Speaker: yeah then Well, firstly, what I would say is I ah feel old in this conversation because I remember the days when we were delivering payments via fax machines and moving to offline versions of banking and on on a computer into online host to host. You know, setting up the first closed user groups with Swift now into, you know, more advanced versions of host to host, you know, TCP IP protocols. And then, you know, where we are in API land and, you know, listening to Amber speak about model context protocol layers for agents to talk to agents. What an exciting time to be in the payments business. But, you know, to your question, I think the realistic path forward is evolutionary, not revolutionary. you know Over the next three to five years, most treasuries will still operate a ah hybrid model of some combination of existing channels such as Swift or host-to-host and banking portals with targeted option of APIs.
Speaker: embedded banking and and and eventually, you know, some AI enabled interactions. I mean, as, as Amber pointed out. So i think the goal is not to replace everything at once, but connect the right capability to the right treasury outcome. And, yeah you know, for treasury looking to improve connectivity without a costly transformation program, the first step is going to be to identify you know, a handful maybe, or a few, perhaps even a single high value use case, such as real-time cash visibility or payment status tracking or automated reconciliation and solve that problem first. Sort of start small, prove the value, then scale. You know, the bank's role is to co-design a roadmap that grows with the client. And there is a basket of tools available.
Speaker: We don't offer fax machine payments anymore, but ah you definitely the more modern versions of the the tools are there. but That means like using proven interactions, you know as sandbox testing and and you know standardized connectivity patterns or clients often ask for reusable architectures that minimize implementation efforts. And, know, Amber's touched on on our approach to that and all of this so that they can create a sort of foundation for for future capabilities, such as AI agents, which are most certainly on their way and already here. And and and these embedded workflows, which takes away a lot of the implementation setup.
Speaker: So really connectivity becomes ah a journey of, let's say, incremental value rather than a big bang project. Yeah, absolutely. That's the best way. But Peter, thank you. You gave me some nice memories there. My dad used to have a home office with a fax machine and I was forever tasked with changing the, you know, the thermal paper and it would go black. Yeah. so you gave me a lovely memory there. I forgot to mention the CD-ROM. I'm sure there are others.
Speaker: The floppy disk. City Ron was still around not that long ago. yeah but it was It was. Oh, my goodness. Those were the days. But it's it's amazing how quickly things are are moving on. And it's great to hear from both of you about what you're seeing in terms of best practices and completely agree with you that, Peter, it's... is not about necessarily this big bang transformation. You can do it incrementally, start with that outcome that you want to improve, choose something really tangible, then you can look for the right connectivity for the job and build from there. So thank you both ever so much for coming on. It's been a real pleasure to have you here. And for those of you listening, just a reminder that this is part of TMI's special Redefining Treasury series. produced in collaboration with HSBC. And I hope you've enjoyed this discussion. We've certainly enjoyed recording it. And please do check out the other episodes in the series.
Speaker: Thank you.
Speaker: Thank you for joining us at HSBC Global Viewpoint. We hope you enjoyed the discussion. Make sure you're subscribed to stay up to date with new episodes.
