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TechTalk / Treasury & Capital Markets
Future of banking lies in hyper-personalization
Insights into how Asean is embracing financial technology, and how banks can leverage data to tailor services to meet clients’ specific needs and goals
Tom King 3 Oct 2024
Shayan Hazir
Shayan Hazir

Financial technology has spread dramatically since the pandemic forced the world to go digital four years ago. Today, its presence is felt in ordinary people’s lives and across the financial services industry. Banks have digitalized most of their services from payments and cash transfers to processing loans, arranging debt issuances, and providing blockchain-based supply chain finance solutions. Virtual lenders are now making money, while super apps are integrating more financial services into their platforms.

Asia has become the centre of many of these breathtaking developments. This is particularly true in Southeast Asia, which is embracing fintech innovations with much enthusiasm. Speaking with The Asset in Singapore recently, Shayan Hazir, chief digital officer for Asean at HSBC, pointed out that each market in the region has its own distinct characteristics.

“Wallet proliferation, for example, is huge in Southeast Asia. In markets like Indonesia and Malaysia, digital wallets are crucial because they can solve any efficiency gaps in local payment ecosystems, while in Singapore its instant payment networks make digital wallets less relevant," Hazir shares.

HSBC, as one of the region’s largest banks, plays a crucial role in supporting fintechs and helping them expand regionally, Hazir says, adding that Singapore acts as a "jump point" for fintechs to access the region’s youthful, digitally savvy population. With 680 million people across Asean, many of whom are early adopters of digital technology, the region is a fertile ground for fintech innovation.

Hazir highights his own bank’s collaborative approach to fostering innovation: "We work closely with the Singapore FinTech Association to arrange delegations, like the one we did in the UK to help Singapore-based fintechs access the UK market."

This global connectivity, he notes, is one of HSBC’s biggest advantages. "We are present in all core fintech ecosystems around the world – New York, London, Hong Kong, Singapore, and Dubai – so we can make the introductions and connect fintechs with the right stakeholders."

Collaboration is key

ZA Bank, Hong Kong’s first and largest digital bank, recently announced it has become the first among the city’s eight virtual lenders to declare a monthly net profit. In Singapore, meanwhile, digital bank Trust Bank says it has grown rapidly and now serves over 800,000 customers.

While Hazir acknowledges that digital-only banks offer innovative, tech-driven solutions, they don’t necessarily pose a threat to traditional financial institutions like his own. "They don’t have legacy infrastructure, which means they can innovate faster, but they also face significant challenges in achieving profitability.”

“Digital banks and traditional banks can co-exist, however, by meeting different customer needs,” he explains. “Traditional banks excel in serving large, multi-jurisdictional clients, while digital banks can cater to tech-savvy consumers seeking quick, efficient services."

However, he emphasizes that the real opportunity lies in collaboration, rather than in competition. “We are working with fintechs to improve customer experiences, streamline processes, and develop new products. The fintech ecosystem is incredibly dynamic, and partnerships are essential to keep driving innovation."

Leveraging blockchain

When asked about the impact of blockchain technology, Hazir is quick to mention Project Epsilon, a workflow integrated payment tool developed in collaboration with a customer. "Managing invoices from hundreds of suppliers for large real estate projects is incredibly complex. We leveraged blockchain to create a workflow that simplifies this process," he says. Project Epsilon represents a practical use of blockchain technology, streamlining operations and reducing time-consuming processes that traditionally require multiple parties.

He says HSBC is also actively exploring opportunities in digital assets, pointing to blockchain’s potential to "revolutionize multi-party models" such as mortgages, which have seen little innovation. "If we can leverage blockchain to bring all parties involved in a mortgage onto a trust chain, we could significantly reduce the time it takes to process a mortgage," Hazir explains.

Responsible use of AI

Artificial intelligence (AI) has been heralded as a game changer across industries, and banking is no exception. Yet, Hazir is cautious in his optimism, stressing that the technology is not as ubiquitous as it might seem. "There’s a great hype behind AI, but actual direct-to-customer use cases are still few and far between," he says.

While AI’s potential is immense, especially in streamlining services, HSBC is taking a measured approach. "For us, it’s really important to first address the risks, the governance, and the implications before we roll things out." The responsible use of AI is key, particularly in a highly regulated industry like banking, where safeguarding customer data and maintaining trust are critical.

Hazir credits Singapore’s financial regulator, the Monetary Authority of Singapore (MAS), for its collaborative efforts in shaping responsible AI governance through initiatives like Project Mindforge. “MAS plays an excellent orchestration role in bringing together banks, tech players, and fintechs to identify risks and develop frameworks around responsible AI,” he notes.

Project Mindforge’s first iteration focused on generating AI-related white papers, and the second phase, Mindforge 2.0, now involves the insurance sector, Hazari says, highlighting Singapore’s proactive stance in making AI both safe and scalable across industries.

Leveraging data

A significant trend Hazir sees on the horizon is hyper-personalization, driven by the vast amounts of data banks hold about their customers. While many industries, like streaming services, have already mastered personalization, banking still lags behind. Hazir believes that the future of banking lies in delivering highly tailored financial services, much like how Spotify curates music experiences.

"Imagine a world where your bank app is so personalized, you feel like it was made just for you," he says. "We should be able to leverage data to provide unique experiences, whether it’s personalized investment advice or tailored spending recommendations."

But personalization in banking comes with additional challenges. "Unlike listening to music, financial products need to account for a customer’s unique financial situation, including things like credit scores and risk tolerance," he notes.

Hazir mentions the concept of "generative personalization", where AI could generate customized financial products for individuals based on their specific needs and lifestyle. "The ultimate goal is to have products that are created for you, tailored to fit your lifestyle and financial goals, and seamlessly integrated across your accounts," he explains.

Embedding innovation

Perhaps one of the most exciting aspects of Hazir’s role is fostering a culture of innovation within HSBC. The bank’s "GeniusworX" initiative, for example, encourages employees to submit their ideas through an internal competition, where they have the opportunity to pitch solutions and receive funding to bring their ideas to life.

"We run regional ideation competitions that allow anyone in the organization to step up and propose solutions. We then fund the best ideas and work with the teams to develop them into real products," says Hazir.

This embedded innovation model ensures that HSBC’s culture remains agile and responsive to the evolving needs of the financial services industry. "We’re not just innovating for the sake of it. We’re solving real problems that our clients face, and that’s where the true value lies," Hazir concludes.