Navigating the digitised landscape

Digital disruption is coming to the financial industry. Both banks and corporate treasurers need to be prepared.

The ongoing digital revolution is having a profound impact on our personal and business lives. For individuals, the world has become more mobile, more social, and more interconnected. Change in the corporate landscape comes from a newfound ability to instantly reach customers, which has opened fresh opportunities for growth.

Corporate treasurers have an important role to play in this journey into the digital world. They help improve the customer experience by ensuring that the company uses up-to-date payment solutions that are both safe and convenient. Contactless payments are already common in many markets, while payment platforms that use fingerprints or retinal scans looking increasingly viable.

"Companies increasingly expect banks to adopt some of these new technologies and make them faster, safer, and more convenient," said Mark Troutman, Global Head of Global Liquidity and Cash Management Corporate Sales, HSBC.

At the same time, a treasurer can use technology to drive operational efficiencies. Automating manual processes saves both time and money, leading to a treasury department that is both leaner and more effective.

Against this backdrop of rapid change, it can be a challenge for corporate treasurers to keep up with the latest technological developments. By assembling a diverse range of experts, HSBC addressed the key digital trends in Asia in a customer engagement event held in Singapore the way that technology companies are changing the world and how financial services are preparing for disruption.

Going digital in Asia

To truly go digital, everybody in a company needs to think about the customer experience, according to keynote speaker Goh Shufen, principal at marketing consultancy R3 Worldwide. Each stage of a customer's interaction with the company must be assessed to see how technology can make it better – from the first time a customer hears about the brand, to the point where they actually make a transaction, as well as the way they receive the goods and talk about the company afterwards. It is an approach that requires the participation of many different departments.

"A strategy that puts the customer first requires you to break down the silos within your company," said Ms. Goh. "IT has to talk to marketing, marketing has to talk to customer services, and so on." In order to ensure that all of these diverse functions work together, the company's most senior management must understand and champion the digital drive.

Ms. Goh also highlighted the importance of mobile in Asia. All over the world, companies are under pressure to offer customers a platform that provides full functionality on a smartphone. But in Asia, where there is extremely rapid growth in mobile penetration, there is an even stronger need for a smartphone solution.

Mobile is so important in the region because in many markets, a smartphone is the first and only channel that people have to get online – people have leapfrogged desktop PCs and gone straight to mobile. In developing markets such as Vietnam, people show a high level of willingness to pay for data usage on their phones; and the success of mobile payment platforms in China demonstrates that people are comfortable using their phone to manage financial transactions.

Rethinking financial processes

"A lot of the disruption that's happening in the financial industry is about dis-intermediation, making the fund transfer cycle cheaper, faster and creating benefits for both sides – getting a discount to the consumer or getting a better margin on the merchant side," said Vivek Anand, Regional Sales Sector Head, Technology, Media and Telecom, Global Liquidity and Cash Management, Asia Pacific, HSBC, who moderated a panel discussion on how companies can best manage digital disruption.

There are three areas where financial companies can implement digitisation, said Mr. Anshuman Singh, Managing Director, Digital and Technology Strategy for ASEAN at Accenture. The first comes from a realisation across the industry that banks need to improve their customer experience; while the second area is driving investment in improving back office operations. The third relates to the more difficult topic of disruption.

While there is already progress in digitising the customer experience and upgrading treasury functions, Mr. Singh said that the financial services industry is lagging behind in adopting disruptive business models.

"Are financial institutions really capable of disrupting themselves, and the industry that they are in? I think it is fair to say that they are not ready to do that yet," said Mr. Singh. "That's the reason that the customer needs that remain unsatisfied are being filled by FinTechs and other startups."

In fact, executing a digital strategy requires financial firms to adopt an agile mindset that is typically found in a FinTech. Strategies no longer need to be a long engagement, with companies taking a more experiential approach where the failure of one idea is rapidly followed up by another experiment. "Fail cheaply, fail fast. Recover and learn from it," said Mr. Singh.

FinTechs are often portrayed as companies that are on track to disrupt traditional financial companies in a way that threatens the industry's incumbents. Although it is true that the new startups understand how to exploit technology to drive speed, transparency and scale, that does not necessarily mean that they want to, or are even able to, take over the role of banks or other financial institutions.

"The potential Fintech's that are disrupting the frontline client offering are also companies that don't want to be banks," said Raof Latiff, Regional Head of Product, Global Liquidity and Cash Management, Asia Pacific, HSBC.

Instead of thinking of the relationship between banks and FinTechs as a competitive struggle, it makes sense to think of a more collaborative partnership. When a bank decides to transform the services used by corporate treasurers in digital experiences it might work with a FinTech to find a solution.

Safe and secure

Experience also plays an important role in another part of the digital transformation of financial services – namely, a new service needs to be considered safe and secure by its potential clients. But at the same time, the notion of trust itself is undergoing an evolution in the online space, according to Mr. Ganesh Iyer, Regional Vice President of Finance, Asia Pacific and Japan at SAP.

The traditional model of trust was faith-based – the belief in an established institution that is guided by a sturdy framework of rules. But since many large institutions have failed to live up to expectations in recent years, Mr. Iyer says that faith has become less important compared to a customer's actual experiences with a company. This means that a fast and convenient online service can establish itself as a reliable provider in a very short period of time, with the most notable examples in the transportation and hospitality industries.

The challenge for companies with a portfolio of digital services is how to deal with a security breach, such as when client data is compromised. Of course, a business needs to be transparent about the problem with its clients via clear communication.

But at the same time, Mr. Iyer says that even when there is a serious breach, trust is not as fragile as many people expect: "It is the age of instant gratification and people that want to follow innovation are willing to take risks."

The changing nature of trust is just another way of showing how the shift towards the digital age of finance will be a period of fundamental change. To get the most of out of this transition, businesses will have to step out of their comfort zone by taking part in the disruption process – by changing the way they do business in order to enjoy more efficient processes, or by making investments in new technology.

The consistent message throughout the event in Singapore was that businesses cannot ignore the upcoming wave of change, and that corporate treasurers can play an important role in the broader project of digitising a company's goods and services.

"There is no such thing as a digital strategy. Digital is part of your overall strategy," said Chia Tek Yew, Head of Financial Services Advisory at KPMG. "Don't treat this as something that will happen in the future. Treat it as something that is happening now. And unless you address it, and make the right technology bets, you're going to struggle going forward."

The event concluded with closing remarks from Bonnie Chiu, Regional Head of Sales, Global Banking Corporates, Global Liquidity and Cash Management at HSBC. She emphasised the need for companies to find a way to break down silos towards the end of improving customer service. In addition, she pointed out that professionals who do not consider themselves technologically savvy will have to embrace technology.

"HSBC is working hard to make sure that all our corporate treasury clients are adopting the new technology to bring in more value to their business," said Ms. Chiu.

This document is issued by The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch ("HSBC" or "we").
The document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.

The information contained in this document is derived from sources we believe to be reliable but which we have not independently verified. HSBC makes no representation or warranty (express or implied) of any nature nor is any responsibility of any kind accepted with respect to the completeness or accuracy of any information, projection, representation or warranty (expressed or implied) in, or omission from, this document. No liability is accepted whatsoever for any direct, indirect or consequential loss (whether arising in contract, tort or otherwise) arising from the use of or reliance on this document or any information contained herein by the recipient or any third party. If you seek to rely in any way whatsoever upon any content contained in this document, you do so at your own risk.

This document does not constitute an offer or solicitation for, or advice that you should enter into or start using, any of the arrangement, product, service or modes of payment infrastructure mentioned in this document. Recipients should not rely on this document in making any decisions and they should make their own independent appraisal of and investigations into the information described in this document. No consideration has been given to the particular business objectives, financial situation or particular needs of any recipient. Any examples given are for the purposes of illustration only.

No part of this document may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC.

Contact us

Customer Service and Technical Support

You are leaving the HSBC Commercial Banking website.

Please be aware that the external site policies will differ from our website terms and conditions and privacy policy. The next site will open in a new browser window or tab.