The Road to a Digital Economy

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I had the opportunity to participate to a truly inspiring keynote speech from Surendra Rosha , Co-Chief Executive of 汇丰 Asia Pacific at the 2023 Hong Kong Fintech Week. This article aims to highlight what I believe are the key points of the speech.

This year Hong Kong FinTech Week event has been organized by WHub ( Karen Contet and Karena Belin ) for Invest Hong Kong , FinTech Hong Kong and the Financial Services and the Treasury Bureau of HK SAR.

If you are curious to know more about how a banking giant such HSBC views the transformation that is underway in the financial services and its role in enabling the march toward a fully digital economy, then I invite you to have a quick read of the following.

If you are in a hurry, just read the following executive summary, and the key take aways that are more specific to AI and Generative AI at the end of the article. In all case, let’s continue the discussion. So, feel free to drop a comment, a like and share.

Please note that the views expressed in this article are solely my personal understanding and opinions, and they do not reflect the views of HSBC.

Executive summary

HSBC has come a long way in digital transformation since its first IBM 360 mainframe computer arrival in 1967, changing how banking was done. Today, HSBC plays a leading role in building Hong Kong's ecosystem through talent development, cross-industry partnerships, and variety of digital initiatives. Digitizing trade finance, central bank digital currencies, tokenized assets and AI platforms expand financial services.

True digital evolution demands overcoming complacency and moving beyond early scepticism through collaborative innovation.

Coexistence models see banks enabling FinTechs through trusted relationships meeting stability and compliance needs.

• New waves of disruption in payments landscape have accelerated digital adoption nearly universally, bringing costs down and increasing financial inclusion.
• Emerging technologies like DLT, AI, quantum computing will drive the next phase of financial services disruption over the next decade.

Establishing comprehensive yet flexible regulation is a prerequisite to responsible participation.

• Partnerships advance innovation while regulators ensure consumer protection on the road ahead.
• Addressing opportunities and risks around virtual assets, ensuring financial efficiency with AI, and defining regulation will be important.

The road to a Digital Economy

As highlighted earlier, HSBC's own digital journey started in 1967 with it acquires an IBM 360 mainframe, radically changing how the bank operated. Subsequent waves of disruption, especially in digital payments post-Global Financial Crisis, have accelerated digital adoption worldwide.

Now, technologies like distributed ledger (DLT), artificial intelligence (AI), and quantum computing promise to further shake up the industry. However, between the 1.4 billion unbanked globally and speculative activities in virtual assets, the realities facing financial institutions span the full spectrum.

The co-CEO of HSBC in Asia, highlighted the importance of responsibly addressing the current challenges and opportunities while considering future possibilities. Asia is leading the way in digital payments, and new frontiers are rapidly emerging as well.

HSBC is investing significantly to stay ahead of innovation while strengthening customer solutions. Over four years, this commitment has improved returns. Hong Kong is also positioning itself as the top global FinTech centre through competitive edges and government backing.

Some important initiatives in Hong Kong include talent development in partnership with HKUST, the exploration of applied AI and quantum computing, and the digitization of industry-specific sectors like trade finance. Additionally, there is a focus on expanding payment infrastructures and conducting trials for central bank digital currencies. These efforts demonstrate Hong Kong's collaborative approach to innovation..

Balancing comprehensiveness and flexibility in regulations establishes essential guidelines, particularly when it comes to retail customers. Similar activities require consistent oversight.

Meanwhile, the ecosystem thrives through open innovation. Initiatives such as tokenized assets and digital bonds contribute to expanding financial access, though their full potential awaits the development of supporting infrastructure.

While startups drive change, banking stability remains crucial. When Silicon Valley Bank (renamed HSBC Innovation Banking following the acquisition by HSBC of the UK entity) encountered issues, traditional institutions ensured continuity. Such realities reinforce coexistence models where FinTechs thrive through partnerships instead of disruption. HSBC aims to provide platforms across its network for outside solutions.

Overall, overcoming complacency demands continued investment aligning with fast-evolving needs. The digital economy in Asia alone is now worth US$ 2 trillion, positioned to surge dramatically.

On this road to a digital future, we can be optimist that cooperation between innovators and incumbents can deliver inclusive, safe progress fueling industries and societies globally.

You can watch the replay of the keynote speech on YouTube: The Road to a Digital Economy (powered by HSBC) | Hong Kong FinTech Week 2023 - YouTube

Complementary takeaways specific to AI and Generative AI

Continued investment in new technologies is needed to stay ahead of innovation and meet evolving customer demands.

• Deploying AI across risk analysis, product development and trading is boosting efficiency and productivity at HSBC.
• HSBC is exploring applications of generative AI through tools to help investors navigate markets using conversational interfaces. Potential uses of generative AI include wealth management customer engagements through AI chatbots.
• Partnerships between banks and startups can help test applications of emerging technologies. A balanced, coexistence approach supports responsible innovation through collaboration instead of disruption.

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