Industry experts weigh in

on how AI, machine learning are changing businesses

Digital Summit 2019

New technology will change treasury and business functions, and corporations must respond (fast).

Kuwait Digital Summit

The HSBC Digital Innovation Summit was held in Kuwait on April 23, 2019. The summit aimed to highlight the challenges and opportunities presented by digitisation, through speeches by industry leaders and a panel discussion with HSBC’s customers about their first-hand experiences of how digitisation is supporting their businesses to grow. A case study of a company’s digital transformation strategy in partnership with HSBC was also presented, highlighting how HSBC could support our client on the road to digitalization across several key areas at the same time, ie Liquidity & Cash Management, Markets, Trade & Supply Chain.

In a live poll, the audience was asked: “What is the most exciting digital solution that you consider relevant for your corporation?” The majority of respondents (64 percent) chose artificial intelligence, followed by big data (16 percent) and blockchain (14 percent).

Asked what they believed would be the most important application of artificial intelligence in the world of treasury, 46 percent of the audience chose predictive analytics, followed by cash flow forecasting (21 percent) and automation of routine treasury tasks (16 percent).

Technology will increase treasury function efficiency

Building on this, Ian Pettigrew, regional head of innovation, Global Liquidity and Cash Management for HSBC MENAT, identified cash flow forecasting and reconciliations as key areas for technological change in the banking industry, while giving an overview of the extended scope of digitalisation in Finance.

“We believe that artificial intelligence and machine learning will allow us to greatly enhance the ability to predict (cash flows),” he said. “And once you have predicted those positions, things like artificial intelligence can then help you decide what to do with that.”

As an illustration, Pettigrew told the audience that using application programming interface (API) technology, a complete rebuild of the HSBC Connect proposition has meant that “what used to take six months can now take two weeks. That means that you can be online faster, it means that there is less time spent in terms of implementation costs and project management costs.”

Speaking on the future of trade finance, Jason Barrass, regional head of product management in global trade and receivables finance for HSBC MENAT, said, “API can allow us to communicate in different languages, different code, with different consortiums.”

Barrass identified blockchain as a solution to the problem of inefficiency in global trade settlement.

“We can provide some transparency around what’s going on,” he said. “Because now, as opposed to having to send faxes, text, emails, we have an online, very secure way of transferring data as it relates to trade, while ultimately reducing our clients’ working capital needs by 10-12 days.”

Regulators are getting on board

On regulatory developments in the digital banking space, Pettigrew noted that regulation is helping to support innovation.

“Regulators are astute to the fact that they cannot regulate as fast as technology is going to change … and where that causes a problem is where the regulators are not comfortable about a new particular technology because they don’t understand it.”

To solve it, regulators are creating tools like sandboxes, or controlled test environments, and the Global Financial Innovation Network, a multi-country framework for cross-border innovation. Barrass emphasised the need for regulatory participation, arguing, “We need to have the regulator here working with us, because whilst we may have some electronic rules built around trade, we really do need the regulators to be fully on board with this technology and how we move it away from the paper base.”

Working with fintechs

Finally, Pettigrew noted that the rise of fintechs for banks is a threat, but also an opportunity. “They are more nimble ... Their ability to change and develop and introduce new types of products and services very quickly to new markets is a threat for us.”

HSBC partners with fintechs where relevant to drive adoption and improve speed to market, he said.

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