Sibos 2024 day 1: What you need to know

Today marked the launch of Sibos 2024, the annual gathering of the world’s transaction banking community. Significantly, it is the first occasion the landmark event has been held in Beijing.

Why is this significant? The collection of international experience and ability here tells us something positive about payments in a fragmented world. The diversity of attendance at the conference speaks to a willingness of the payments, trade and securities services industries to collaborate and build together. That is an important force.

China and the world monetary system

HSBC has been front and centre of the agenda here today, starting with a presentation by David Liao, Co-CEO, Asia Pacific.

David addressed China’s role in the world monetary system, noting that he was speaking in the capital city of the world’s largest exporter and second-largest importer; a major offshore lender and investor with $3 trillion in foreign exchange reserves¹; and the world’s second-largest bond market.

“The goal is to achieve an increase in the RMB’s usage in a way that helps companies and people transact with the rest of the world,” he said.

Today HSBC became a direct participant in China’s Cross-border Interbank Payment System (CIPS). Doing so allows HSBC to play an integral role in supporting the growing demand from its clients for solutions that facilitate RMB trade. The RMB is the fourth-largest international trade currency².

The dollar remains the world’s dominant currency for investment, payments and financial services, David said. But its influence will evolve with continued policy developments in China and technology that enables the innovation of alternative instruments and systems. “Reports of the US dollar’s death have been greatly exaggerated,” he said.

The bank of tomorrow

In another key session, Manish Kohli, Head of Global Payments Solutions, offered his thoughts on the characteristics of a future-proof bank: one resilient to disruptive technology, increasing customer expectations, shifting regulatory boundaries and the growing importance of ESG considerations.

Payments, clearly, will be a key part of such a bank, Manish said. “There’s an increasing understanding in the industry that transaction banking is very accretive to bank valuation,” he said. Where other bank units might interact with clients with occasional loans and M&A transactions, “the hundreds of payments you do every second for a client” lead to a much closer level of engagement.

So investment in technology around payments capability, particularly in digitisation, is vital. “There’s a very big chance a lot of existing technology is already not fit for purpose for the demands of a digital economy,” he said. “The industry has changed and so the infrastructure needs to change.”

Keeping abreast of this technological demand while meeting customer needs today can create challenges. “So everything we do for client requirements today must also be accretive towards the future state architecture we need.”

Partnership with fintechs and other non-banks is essential. “We have to solve for the needs of clients, the world is changing rapidly, and fintechs are a way to accelerate our solutions,” Manish said. He recalled a panel five years ago in which the debate was whether fintechs or banks owned the customer. “I’m so happy you don’t hear that language now.”

A vision for securities services

Collaboration is also essential in the securities services space, said Fiona Horsewill, Global Head of Securities Services, in a panel picturing the future of the industry.

Fiona spoke of the key drivers for the industry, including growth in wealth, especially among the younger generation in the Middle East, India and Asia. “We have a digitally native cohort of people who are amassing wealth in that population,” she said.

In the digital realm, she referenced the digital issuance of bonds and tokenisation of physical gold as traditionally illiquid assets now becoming more accessible. “Tokenisation has the potential to unlock access to a wide range of assets for a new demographic of investors,” reducing global wealth disparities, she said.

An event of connection

The theme of Sibos 2024 is Connecting the future of finance.

“I’m confident that the success of Sibos 2024 will foster deeper collaboration between financial institutions and continue the development of Beijing’s financial centre,” said Yin Yong, Mayor of Beijing.

Look out for further updates from HSBC in the days ahead.