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The Future of Corporate ConnectivityFST Media Conference, Hong Kong

Andrew DavisMarch 2012

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Contents

1. Comparing and contrasting technology adoption betweensmall business and larger corporates

2. The evolution of the corporate treasury function

3. Is there a limit to how many e-channels we have? What do customers actually want?

4. How is the banking industry working together on innovation?

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What Is Meant By Corporate Connectivity?

The means by which a bank will make available transactional services to businessand corporate customers, typically by way of:

Browser-based platforms

Mobile (alerts, browsing and apps)

Interactive

e-Channels

Proprietary Host-to-host (H2H) connectivity

SWIFT-based H2H connectivity

ERP integration

Direct

e-Channels

In many cases there will be interoperability of function and processbetween both sets of platforms.

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Comparing and contrasting technology adoption between small business and larger corporates

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Corporate Office Environment

Standardisation

Control

Old Technology Constraining

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Corporate Headlines

Enterprises See One Tablet Request Per Every Three Smartphone Requests

In late 2011, Cisco surveyed 1,500 executives, middle management, salespeople and clerical staffs of medium to large business around the world about the use of tablets in the enterprise. What they found was that, on average, enterprise IT shops handle one tablet request for every three smartphone requests across the world.

The biggest want for IT managers was the ability to sync a tablet with an employee's desktop at 71%. However, about half (48%) said that their companies would never authorize a BYOD policy. Interestingly, nearly two-thirds (64%) of US respondents stated that employees were using personal devices without consent.

ReadWrite Mobile ArticleJanuary 2012

Worldwide clampdown on technology as businesses overreact to data breaches

This year’s research has highlighted a new phase in the social media journey as businesses across the globe clamp down following recent high profile data breaches: 68% of companies now monitor employee internet activity and 56% block access to some sites.

In addition, 87% of companies in the survey are so concerned about security and data loss that it’s preventing technology adoption; this fear is most evident in Japan (92%).

Clearswift Announcement September 2011

The research was conducted via an online survey of 1529 employees and 906 managers in companies in the UK, US, Australia, Germany, the Netherlands, and Japan. Respondents were screened for company size (250 employees or more) and for a mix of industry and functional specialties

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Small Business Office Environment

ComplexityOut of Control

Latest

TechnologyFlexibility

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Small Business Headlines

Apple iPad Usage Explodes Among Small Businesses

A Business Journals survey shows that iPad use has nearly quadrupled among SMBs over the past year, growing from 9 percent in 2010 to 34 percent in 2011, indicating that the iPad is the fastest-growing technology among SMBs.

"Our research has shown that for SMB owners, productivity and efficiency, which used to be the central benefits of technology, are now declining in importance compared to accessibility,” he explained. “Now, it's crucial that business owners have access to their business information and data, anytime and anywhere. The iPad, as well as smartphones and cloud computing, are all part of this new trend and are experiencing significant growth as a result of that need."

eWeek.com Article March 2012

Viewpoint: Small giants,international e-SMEs

Within just the last decade, a new breed of SMEs has emerged. Unlike ’traditional’ SMEs, which are primarily local in their outlook and customer base, these new SMEs are global operators that make extensive use of e-commerce solutions. Their avid adoption of technology has also allowed them to maximise the business agility inherent in their relatively small size to support their atypical business models.

Advances in globalisation and technology have now effectively “geared up” the traditional attributes of these SMEs so that they now have the opportunity to punch far above their weight. The end result is an organisation that is effectively an international e-SME.

FinanceAsia Article September 2011

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What Can We Conclude?

Major shifts are happening!

Divergence at some levels

Convergence at other levels

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A Lower Level View – Browser Platforms

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A Lower Level View – Browser Legacy

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Macro Level Trends

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Macro Level Trends – The Internet of Things

The Internet of Things is a concept that describes how the Internet will expand as physical items such as consumer devices and physical assets are connected to the Internet.

In the business world, processes and objects will move from being dumb to smart, from passive to autonomous. Objects will increasingly act as "users" of other systems.

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Macro Level Trends – The Internet of Things

Moving from monolithic business stacks to networked open supply chains

Dachis Group, 2011

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Why Does This Matter…. To A Bank?

Core ArchitectureCore Architecture

Processing EnginesProcessing Engines

CustomerCustomer --Facing PlatformsFacing Platforms Lead time for change: ~ up to 12 Months

Lead time for change: ~ up to 24 Months

Lead time for change: ~ up to 48 Months

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The evolution of the corporate treasury function

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What is Corporate Treasury?

• Corporate treasury manages a company’s cash flows in the most efficient and profitable fashion possible. It also involves forecasting future needs for funding and seeking the best alternatives for obtaining it and is key in determining the firm’s financial strategy and financial policy.

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How Corporate Treasury is Evolving

The ever-broadening role of the corporate treasury team…

• Bank Relationships and Account Management

• Local Processes

• Cash Forecasting

• Treasury Organisation and Technology

• Payment Optimisation

• Data Access, Frequency and Quality

• Communication with Business Units

• Regulation and Regulatory Changes

• Expansion into New Markets

• Supply Chain Optimisation

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How Corporate Treasury is Evolving

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The Digital Response

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Is there a limit to how many e-channels we have?

What do customers actually want?

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The Current Approach

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How Many e-Channels Can We Have?

As Many As Needed!

But the nature of the connectivity and interactionwith customers will evolve

The boundaries between interactive platforms anddirect forms of delivery will blur, resulting in wh ole

new forms of connectivity

Why?

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Why? Macro-Level Changes Now Underway

Digitisation of Everything

Management and Harvesting of Digital Assets

Enterprises will need to invest capital to improve

network capacity and reliability, rethink

process design

By 2020, hyperdigitisedindustries will account

for 25% of global developed countries'

GDP

Collaboration based technology will drive

new levels of engagement cutting

across traditional contact networks

• Each day, more iPhones are now sold around the world than there are babies born, 294 billion emails are sent. BYOD policies emerging in the workplace.

• By 2020, more than 230 billion devices will have internet connectivity. Machine to Machine connectivity will extend into business processes and supply chains.

The Social Enterprise

• Enterprises are realising the potential value of the big data they are accumulating and have access to technology to extract knowledge from the data and derive new forms of value.

• The tracking, management and optimisation of digital assets is becoming as important as the same requirement of physical assets. Next-gen analytics will incorporate pattern matching to optimise, simulate and predict. Virtual currencies will become mainstream.

• Social Media is extending into B2B processes, being used for identification of new supply chain partners, integrity/credit assessment checks, collaboration programs, gamification.

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Convenient and secure, 'always-on' access to

real-time banking

Transactional services delivered in a way that best suits each client,

relevant to their business processes

Capabilities that support and facilitate the

development of our client's own business

Why? Banking Evolution Driven by Client Need

Anywhere, Anyhow Access

Seamless Integration

• Mobile will move from novelty to supplementary to primary channel in many instances, as the power and user interface capabilities of the device mature (eg. use of voice technology for data mining & interpretation).

• Full transaction visibility will be offered at all stages of the lifecycle, configurable for pull and push on a real-time basis.

Business Growth Solutions

• Transaction services will be delivered at the ‘point of process’ for the customer based on an open network supply chain model, not as a standalone platform relying on bespoke, point-to-point integration. The result being a projection of convergence between ERP platforms and banking solutions.

• Banks will make use of API libraries to collaborate, construct and disseminate whole new service offerings.

• Far greater levels of data integrity and consistency will be provided, underpinning rich analytics and actionable information.

• The emergence of value added services that extend across and go beyond the financial supply chain (eg. B2B social media, management of digital assets).

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Where Could This Lead?

Broader Functionality

Right Channel / No Channel

Deeper Workflow

More Powerful Analytics

Dynamic dashboarding, pattern recognition,

predictive simulations

Break-up ofe-channels as

we know it

Banking services embedded within cloud

based platforms

Whole of Supply Chain banking models, B2B social media and

collaboration services

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How is the banking industry working together on innovation?

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SWIFT Innotribe

www.innotribe.com

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Innovation Management Process

7

ExCoSubset

BusinessCase & POC(virtual team incl.Innovation)

SWIFT fundedDevelopment(G3 to g6)

InnotribeEnablers

Pilot

ExCoSubset

Acceleration

Idea Generation Idea Incubation

Idea ExecutionProcess and Governance

Innotribe.com

Ideas

Innovation & MegaphonesScreen

Group ExCoMember

B.A.U.For existingGroup

Pitch(Idea & BusinessOwner)

NewIdeas

CSC(G2)

StopSWIFT involvement

InnotribeAdvisors

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at a glance …Activity Description In 2012

Community Events Events where innovators in the financial community meet and generate ideas

Mar -Innotribe@SOFA (NYC)Mar – Innotribe@Middle East Reg Conf (Abu Dhabi)

Apr – Innotribe for corporates (Bangkok)May – Innotribe@Russia business forum (Moscow)

May – Innotribe@Latin America Reg Conf (Rio)Jun – Innotribe special event (Belfast)

Oct – Innotribe@Sibos (Osaka)Dec – Innotribe@SOFE (London)

Startup Competitions Events where the financial community can meet the start-up community

Jan - NYCApr - Singapore

Jun - BelfastSep – Moscow (tbc)

SWIFT events Events to foster innovation within SWIFT Innovation challengeBrown Bag sessions (12)

TED@SWIFT (5)

Proof-of-concepts SWIFT internal short research projects 5-6 (examples include patenting inventions, security device design, etc)

Incubator Community projects 7-8 (examples include digital asset grid, myStandards etc)

Projects Projects carried out by the Innotribe team Innotribe.com & blogsInnotribe Enablers (community innovation champions)

Megaphones (SWIFT innovation champions)Banks for a better world

Workshops Innotribe team facilitated workshops SWIFT Global Sales ConventionSWIFT leaders meeting

Global Bank’s client meetingsInnovation gardens with key clients

Participation/Sponsoring to other events

Thought leadership TEDx NewWallStreet, TEDx Brussels, Techonomy, SXSW

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Disclaimer

This document is issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC). The information contained herein is derived from sources we believe to be reliable, but which we have not independently verified. HSBC makes no

representation or warranty (express or implied) of any nature nor is any responsibility of any kind accepted with respect to thecompleteness or accuracy of any information, projection, representation or warranty (expressed or implied) in, or omission

from, this document. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of or reliance on this document or any information contained herein by the recipient or any third party.

Any examples given are for the purposes of illustration only. The opinions in this document constitute our present judgment, which is subject to change without notice. This document does not constitute an offer or solicitation for, or advice that you

should enter into, the purchase or sale of any security, commodity or other investment product or investment agreement, or any other contract, agreement or structure whatsoever and is intended for institutional, professional or sophisticated

customers and is not intended for the use of private individual or retail customers. No consideration has been given to the particular investment objectives, financial situation or particular needs of any recipient. Recipients should not rely on this

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you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document. This document, which is confidential and not for public circulation, must not be copied, transferred or the content disclosed, in whole or in part, to any third party. The document should be read

in its entirety.

Copyright. The Hongkong and Shanghai Banking Corporation Limited 2011. ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic,

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Thank You

Andrew Davisandrewdavis@hsbc.com.au