Transcript
Speaker: This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
Speaker: Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
Speaker: Thank you for listening.
Speaker: Good morning, good afternoon, everyone.
Speaker: Thank you for joining us.
Speaker: I'm Valerie Knott.
Speaker: I'm one of the partners at EY specializing in wealth and asset management.
Speaker: And we're here today to talk to you about the radical trends disrupting financial services and changing customer demands, where we're going to go through some of the things we've seen historically, some of the things that the panel has a view on that's happening currently.
Speaker: And then we're going to finish with a bit about the future.
Speaker: So I have with me today, Kola Elori, Data and Analytics Director from Principal Global Advisors, Adina Gregorio, Founding Partner and CEO of Active Asset Allocation, and Paul Clark, Global Head of Digital and Data for HSBC Security Services.
Speaker: So if we kick off with our questions, I'll come to you, Kohler, first of all.
Speaker: Is cloud really transforming the landscape of data services?
Speaker: Yeah, thank you very much.
Speaker: Yes, absolutely.
Speaker: I think cloud is playing an important role in transforming the industry.
Speaker: And so far, we've seen companies adopt public cloud, private cloud, and a hybrid, which is sort of a combination of both private and public.
Speaker: And it gives them the opportunity to be able to not only leverage expertise of the cloud providers, but also to scale when they need to base on business demands.
Speaker: And so it allows them to focus on really the business outcomes as opposed to trying to solve all the technology glitches that happens.
Speaker: Thank you.
Speaker: Adina, data security?
Speaker: Data security is probably maybe one of the obstacles that are still seen as a possible problem in going to the cloud.
Speaker: But I was just going to complete on what Kola said and maybe give a really practical example.
Speaker: I mean, the cloud really helped my company go global in the sense that we make tailor-made investment algorithms for institutional clients.
Speaker: And for that, we make thousands of combinations and we look at possibilities of how assets can evolve over time.
Speaker: And this is very data consuming.
Speaker: And we built on the power of the cloud.
Speaker: to both be able to scale our business and then go global.
Speaker: So we can now address customers all over the world and we can do that in a quick and effective way.
Speaker: And it's all about the cloud.
Speaker: And again, going back to data security, actually the fact that I can host the data in each customer's country, it's really a plus for many of them.
Speaker: Did you want to build on that, Paul?
Speaker: Yeah.
Speaker: Data security is very important.
Speaker: Privacy is very important.
Speaker: Residency, I think, is a particularly important
Speaker: sometimes a little bit of a blocker.
Speaker: So different countries have restrictions over where data can be stored and how it can be accessed, but cloud can help with that.
Speaker: So you just need a strategy that allows you to have what we call multi-cloud.
Speaker: So the ability to connect to different cloud providers in different regions.
Speaker: But sort of coming back to your initial question, whether or not it's transforming is absolutely, really absolutely transforming.
Speaker: And I think
Speaker: What cloud does is cloud makes data so much more accessible, so much easier to share.
Speaker: And that means that as a design sort of principle, you can bring processes to data, which is a far more efficient model than how we've worked historically, which is we shift data to the processes.
Speaker: And that means that you can much more efficiently connect up third parties and offer sort of new exciting services.
Speaker: Thank you, Paul.
Speaker: What we really want to do is talk about the exciting aspects of data as well as the challenges.
Speaker: So Kohlu, what excites you most about what you're seeing in the market?
Speaker: Personally, as the concept of a data mesh, one of the value from that is it helps with the acquisition of companies.
Speaker: So what data mesh is, it allows
Speaker: If you're running in the cloud, it allows you to be able to connect to your providers as opposed to you trying to bring the centralized data.
Speaker: So you really focus on the connectivity between the different providers.
Speaker: Say, for example, you buy a company that is running on AWS and you're running on Google Cloud.
Speaker: With a data mesh concept, what you can do is you don't need to bring that data to your ecosystem.
Speaker: You use a data mesh framework to literally connect to them.
Speaker: And so it's a seamless integration from buying companies and also from electrical companies because all you just have to do is just disconnect the connectors from that.
Speaker: And so we see that as something that will be transforming the industry significantly and also data standardization.
Speaker: For data mesh to be very successful, entities within the industry need to be having the same sort of protocol conversations.
Speaker: The same way Swift has transformed the payment system
Speaker: That kind of concept really is required in the data mesh world for it to really be effective.
Speaker: And it really is going to make it easier for businesses to integrate, for businesses to be able to talk to each other, and also for them to really see the value their data has to all the entities.
Speaker: Thank you, Kola.
Speaker: Did you want to build on that, Paul?
Speaker: Firstly, I'll touch on data mesh specifically.
Speaker: So I completely agree with Chloe's point.
Speaker: We've, at HSBC, we've implemented a data mesh and it's been quite transformation for us.
Speaker: So, you know, a big part of the implementation of the data mesh and the principles around it is around ways of working.
Speaker: You're trying to avoid that bottleneck of a centralized, typically data warehouse team, a team that manages the data from domain owners.
Speaker: What you're trying to do is democratize data in such a way that the owners of the data, you build them a platform and tool and platform features, enable them to then pass that data into this common place and make it accessible on consumer outputs, if you like.
Speaker: that's been very very effective for us so we've had i think as of last week i think we've got 21 teams which we call tenants they operate within that mesh running 82 projects simultaneously now you imagine trying to do that with a data central data team what would you need four or five hundred people and we've got you know less than a tenth of that running this is a far far more efficient model so i'd completely echo on the um
Speaker: on the data mesh side.
Speaker: A couple of other things I think are interesting, managed data services.
Speaker: So definitely seeing a lot more demand for that, where clients are after things like data aggregation services.
Speaker: So when asset managers using four or five fund accountants or custodians or transfer agents, the ability to appoint one
Speaker: who can then aggregate that data on behalf of that client and provide like a common stream and access to that data.
Speaker: Again, cloud makes this so much more achievable.
Speaker: So definitely seeing that infrastructure as a service where, again, a client, an asset manager in this case, can leverage the infrastructure, the investment that you've made that some of the sort of bigger custodians and banks have invested in this sort of data infrastructure, make that available.
Speaker: So essentially, a client has part of that sort of infrastructure and they can leverage that themselves.
Speaker: And again, cloud makes that much easier to permission than there would have been easier before.
Speaker: And the third piece I'd say is expanded data sets.
Speaker: So there's definitely interest in sort of organizations creating the plumbing and the infrastructure to drive forward and be able to redistribute multiple different data sets, either from across, in that case of bank,
Speaker: you know, other parts of HSBC and we can make those data sets available to our clients or just as much third party data sets.
Speaker: So we'll do the plumbing and again, we permission that to our clients.
Speaker: I think there's a definite shift towards that, which I think is really good news for the customers, the consumers, it just means they haven't got the headache of having to go through the process of building up.
Speaker: Thank you, Paul.
Speaker: Edina, do you want to answer on what you're seeing as the trends really taking these organizations to the next level?
Speaker: Yeah, sure.
Speaker: And maybe just to build upon what Paul just said, I think the customer today has been used of having individualized solutions.
Speaker: When you look at all the data available, the most exciting thing I think you can do with it is actually use it to individualize solutions for your clients.
Speaker: And again, to give you a very practical example, when I started a company, I used to be able to service only clients with 100 million plus.
Speaker: assets under management because you had to do all this work.
Speaker: It took weeks to calibrate a model for a client.
Speaker: And today, thanks to the cloud, to all this digitalization, I can actually service clients with one euro of wealth.
Speaker: So you have all those digital tools and you can go on and ask the client, okay, what is your project?
Speaker: When do you need the money?
Speaker: What's the risk you're ready to take?
Speaker: This is how it looks like.
Speaker: And then you can
Speaker: on the spot, optimize a solution that is linked to that client.
Speaker: And then now going forward to all these things about sustainable investment, right?
Speaker: You need to be able to individualize the answer with respect to the client's feelings about ESG.
Speaker: Digital and data is the only way forward.
Speaker: Maybe one other interesting point of things that you can do with data.
Speaker: If you associate it with artificial intelligence, then you get on working on... For instance, we've developed an advanced indicator of crash.
Speaker: on equity markets.
Speaker: So it used to be only data numbers.
Speaker: So you crunch all the numbers and you come up with something, but that's not enough.
Speaker: I mean, we are in a world where markets are also driven by politics.
Speaker: So you need to be able to analyze everything that is being said
Speaker: In tweets, in the newspapers, in broadcast.
Speaker: And you can today take all that data, so structured, unstructured, put it together and work towards providing a better view of what will happen.
Speaker: Exciting stuff.
Speaker: Data is become an asset for every company now.
Speaker: There are lots of companies that all they do is provide data and they make a ton of money from it.
Speaker: Companies are going to realize that and they're going to say, if you want my data, you also have to pay for it.
Speaker: There's something they're going to start putting on their balance sheet and their income statement is revenue from data.
Speaker: The cloud enables them to do that.
Speaker: And that really is going to be the real power that's going to drive a lot of organizations to be able to say, you know what, I'm going to adopt the cloud.
Speaker: And now we've seen a lot of movement in the hybrid space where they have some public and some private due to security concerns.
Speaker: But I think over time, the value, especially the monetary value from data, is going to allow a lot of companies to adopt it so they can now expose it through the data mesh concept.
Speaker: Thank you.
Speaker: So we're going to move on to talk about platforms now.
Speaker: So what role do platforms have in the provision of data services?
Speaker: So I was going to come to you first, Adina.
Speaker: Yeah.
Speaker: And again, you are going to think that I'm only talking about myself, but I just want to give you a practical view on real things that you can... Because all the others you can read and listen to the guys that know about it all.
Speaker: For me, for instance, I was able to build a platform that actually...
Speaker: brings together asset managers, insurance, distributors, for actually putting together a personalized service for their final clients, for the final investor.
Speaker: So all this data and all this cloud actually
Speaker: allows us to both tend to the needs of every individual asset manager, insurance company, distribution network, but also to the very needs of their final customers.
Speaker: So I think with that, we are also...
Speaker: basically bringing something to the asset managers that's new.
Speaker: Because every time it strikes me, the asset manager is one seller of products that doesn't know his customer, right?
Speaker: I mean, Walmart knows his customers or Sean knows his customers, right?
Speaker: But the asset manager, I mean, I'm not talking about institutional clients, obviously, but the asset manager doesn't know his clients.
Speaker: So again, thanks to
Speaker: This data, this collaborative work that you can now do with all those platforms, thanks to the cloud, I think the asset manager will finally be able to know his customer.
Speaker: And thus, it opens up a new world of opportunities.
Speaker: Thank you, Dino.
Speaker: So Paul?
Speaker: Yeah, completely agree.
Speaker: Platforms mean convenience.
Speaker: So platform is the reason why we all go into Amazon to try and buy something rather than searching the rest of the internet because all your details are all set up already.
Speaker: You know it's going to arrive tomorrow.
Speaker: So that sort of consolidation of services into a platform is an effective mechanism.
Speaker: What it does specifically in this industry is it gives you that ability to price services in a different way and offer services in a different way.
Speaker: So because essentially what you've done is the plumbing is already there behind the scenes, it gives the client that ability to say, okay, can I try a pay-as-you-go proposition?
Speaker: rather than having to buy.
Speaker: So for example, on ESG, we're working with some third party ESG providers to offer their services to our clients.
Speaker: Now, if you're thinking I'm running a portfolio and I want to do some ESG analytics at the moment, what are you gonna do?
Speaker: You're gonna go and either you're gonna do that yourself firsthand, or you're gonna go and find some third parties who are specializing in this space.
Speaker: those third parties, if you have to sort of get a panel and you have to pick one and you have to go through and strike a contract and do an implementation and nine months later, you've got that now ready to go.
Speaker: In the ESG world particularly, the chances are you're wishing that by then you had chosen somebody else because it's moved on, the world's moved on so quickly.
Speaker: So I think
Speaker: What the platform proposition allows is that ability to say, look, here are five different providers.
Speaker: You can try them on a pay-as-you-go basis.
Speaker: You can try before you buy.
Speaker: And I think that becomes, certainly when we're talking to our clients, it's a very attractive proposition.
Speaker: And so I think what it powers is a kind of app store principle.
Speaker: And I think that's very effective.
Speaker: I think the other thing is worth saying about the redistribution of data.
Speaker: So they've sort of rushed towards being a...
Speaker: data supermarket, I think lots of providers are trying to move into that space.
Speaker: And again, that's a very attractive proposition, I think, from a client perspective.
Speaker: I think we need to work with the underlying data vendors to get them comfortable that the intermediaries and the platform providers have full control over that data so they can demonstrate
Speaker: that 26 customers have used your data this month, this is how they used it.
Speaker: And so we can lean on the technology now to do that.
Speaker: So things like what we call data lineage.
Speaker: So understanding who owns data and where it's come from.
Speaker: And data observability tells you how data is being used and who's using that data.
Speaker: Those things are really important and start to enable us to have much more productive conversations with vendors to say, this is all upside.
Speaker: We can distribute your product and we have total control over how it gets distributed.
Speaker: And you as the underlying vendor have total control over that.
Speaker: And I think that's, it's sort of shifting us into again, a new proposition where data accessibility is becoming a lot more interesting.
Speaker: Thank you, Paul.
Speaker: And then do you want to accelerate us into the future, Kerala?
Speaker: I've got to try.
Speaker: I think, you know, this deck is going to be quite transformational for technology and for data.
Speaker: For most companies, technology is probably their biggest problem.
Speaker: cost on their balance sheet because of the spend.
Speaker: And because what happens, someone says, I've got this great data, it's gonna do this, and then you buy it, you store it, you're paying for the storage, and then you're not using it.
Speaker: Either because the person who bought it left the company, tried a new thing, or did exchange jobs, or whatever that is.
Speaker: And so you have all this massive amount of data sitting in your data center, and you're paying the storage for it, your resources to maintain that.
Speaker: And what is going to happen with the data mesh concept over this year is that with data mesh, your cost is just literally going to go absolutely down.
Speaker: What happens is that you now have like a data exchange.
Speaker: You go to a data exchange, you subscribe to the data.
Speaker: You try it over a trial period because you have this data mesh so you can subscribe to it.
Speaker: If you don't like it,
Speaker: You stop the exchange, you're not interested anymore.
Speaker: And so you don't have to pay for the storage because really you're connected to the source.
Speaker: You're not bringing the data to your data center, to your cloud provider.
Speaker: You just literally go in there, you're looking at it, and when you're done, you're gonna leave it.
Speaker: And so from that, that concept is really gonna help businesses save cost.
Speaker: So the bottom line is gonna be improved.
Speaker: But also it's going to make us more efficient because then we go from a, give me all the data, which is what the quants are very good at.
Speaker: What do you want?
Speaker: I want all, all of it to try this out.
Speaker: It doesn't work.
Speaker: Stop it.
Speaker: Try the next thing.
Speaker: So we're going to become very, very efficient in how we use data and how companies manage expenses that come in the infrastructure of it.
Speaker: Thank you, Kola.
Speaker: Any final thought about the future you want to leave our audience with?
Speaker: Maybe just one, take care of your data before it becomes a liability.
Speaker: I wonder what we'll be talking about in five years' time.
Speaker: We will be talking about how you commercialise your data in the metaverse.
Speaker: Thank you for listening today.
Speaker: This has been HSBC Global Viewpoint Banking and Markets.
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