Interview with Tom Halpin, Global Head of Cash Management, HSBC
InstaPay Editor, Lauren Jones caught up with Tom Halpin, Global Head of Cash Management at HSBC at Sibos 2019, to talk through pain points in corporate payments and legacy infrastructure challenges.
HSBC is undergoing a digital transformation strategy, how is this effecting the payments part of the business?
Our digital transformation strategy and payments strategy are totally interconnected. When you take a look at what our digital strategy is focused on, it is about simplifying the customer journey and helping them grow their business more efficiently and more effectively. When you couple that with our payments strategy, it gets to the core of the fact we want to do things simpler, faster and more transparent for our customers. The digital journey enables many of those components and simplifies it. A great example is APIs: they are now a channel by which we are sharing information with our customers at a quicker pace. That pace of information exchange for our customers on the elements of data that are important to them, gives us a chance to help solve their business problems and pain points.
A payments transformation program can take decades to complete, if it ever will. Are there any ‘quick wins’ that can be sought?
I think there are many quick wins but it starts with having a clear strategy on what you want to achieve and how you want to execute that strategy. One of the things we have done at HSBC is to give our customers a greater chance to take advantage of our transformation by taking our payments architecture and making it simpler and more modular. We have made our architecture very services-orientated in the process so we present solutions faster to our customers and present information to them faster. A great example would be real time payments, but what HSBC are doing to help our customers is layering on top mobile payment and collection solutions, and embedding things such as QR codes that help our customers with a more efficient receivables process. So we are leveraging the transformation of our legacy systems by creating component parts that can support both the legacy environment as well as the new digital environment, and therefore creating a more efficient ecosystem.
So like I say, there are a lot of quick wins. However, it all has to be thought of within the construct of what our customers desire and then how we can deliver that.
Payments transformation is something most banks are undertaking to keep up with consumer demand. But it is a real challenge to gain traction at an infrastructure transformation level, without regulation; even though it has the potential to be the bedrock of enhanced customer proposition and economies of scale. Why do you think this is?
Changing legacy infrastructure requires commitment to the change. There are challenges in changing industry infrastructures that have been proven to be secure, robust and sound. But the change is broader than just a bank system. If our customers are not in a position to consume the change then upgrading infrastructure doesn’t create genuine value. We want to make sure we are doing things that our customers can use. Our investments are towards solutions that our customers consume. One example is SWIFT gpi: HSBC was part of the design process, but we were not one of the first banks to go live – we deliberately delayed launch for around six months to get ourselves ready to take advantage of the value that it presented. Now, we’re the most significant SWIFT gpi bank globally, supporting 101 currencies and fully activated in 29 markets.
Data is now being considered as the new oil, a statement I have some reticence in agreeing with. But HSBC was one of the first banks here in the UK to harness the opportunity that open banking gives by offering Connected Money, where customers can see account information from all their providers in one place. The industry is still fully understanding the scale of the opportunity when it comes to data – from a corporate perspective, what are the pain points that open banking could help solve?
The magic words there are ‘pain points’ and data is the new medicine for many of the problems that have ailed corporates for years. It’s important for banks to take data and turn it into information and insights that help our customers drive their business more efficiently and effectively. A couple of examples that come to mind are (i) receivables matching – we see from talking to our corporate treasurers that one of the biggest operational efficiency challenges is the ability to reconcile their incoming payments with their invoices. Through the combination of the data available with payments and new technology such as AI, we can help them reconcile, so that they can turn that incoming credit into a positive working capital experience and make better decisions. A second example is as a corporate you can also take greater insight from that data to enable you to be more forward looking – on issues such as FX positions or the buying behaviour of your consumers. So data is definitely the new asset that can help us position ourselves differently.
Instant payments seems to be a driving force for change within a bank, but usage globally remains low. How can corporate customers be incentivised to use it?
You have to remember it is two-sided usage, one is the actual sending of the payment and the other is the receiving of the payment. Instant payments are very good in allowing corporates to better manage their outward cash flows and to be more predictive, but there are fundamental changes that a corporate needs to go through when it is talking about receiving instant payments. They are now potentially going to be asked to operate in a 24/7/365 environment, so their systems will need to change. I think you have to take a look at what problems we are solving with instant payments, and a big part of that ties back to data that can help with reconciliation. On the receivables side it is not just about getting your money faster, but the incentive to help corporate customers would be the richness of data that in turn creates value.
Tom Halpin, Global Head of Cash Management, HSBC