By KBC Associate 
Manish Kohli, head of Global Payments Solutions at HSBC, discusses the bank’s digital-payments strategy and how it is innovating in transaction banking. HSBC was named one of Global Finance’s Most Innovative Banks.
Global Finance: Open banking is on the rise. How does HSBC see its role evolving in this new ecosystem?
Manish Kohli: HSBC is a major player in the open-banking and open-finance ecosystem. We’re the world’s largest transaction bank and have a global footprint that spans the numerous jurisdictions and clearing systems that are driving the open-banking agenda.
We are reengineering our processes by integrating advanced digital solutions, from automated cash management to robust API connectivity. So we automate manual processes and integrate systems to improve efficiency and risk management.
Collaboration is key, because we see open banking as a catalyst for a more client-centric ecosystem. This collaboration starts with our clients as they help shape our product-development road map.
We also collaborate across clients’ treasury tech stacks and have live API integrations with partners such as SAP, Oracle, Kyriba, and FIS. This ensures we are providing clients with an end-to-end solution and staying focused on incorporating technology into payment solutions that support our clients and their treasurers with the real-time information they need to make more-informed cash management decisions.
GF: What is HSBC’s strategy for incorporating emerging payment technologies such as digital currencies—including central bank digital currencies (CBDCs)—andhow do you see these impacting your payment solutions?
Kohli: Whilst CBDC maturity varies greatly by market, it will play a critical role in the payments solutions of tomorrow, which is why we continue to research, test, and invest with various central banks globally.
Currently, HSBC is involved in pilot projects with central banks in markets including the UK, France, Singapore, Hong Kong, China, Thailand, and the United Arab Emirates, and with the Bank for International Settlements’ Project Agorà.
Our tokenization platform for digital bond issuance, Project Orion, has led the way in the digitalization of capital markets infrastructure. HSBC was also one of the first financial institutions to complete proof-of-concept use cases within the Project Ensemble Sandbox, the Hong Kong Monetary Authority’s CBDC project to accelerate tokenization.
GF: How is HSBC utilizing data analytics to gain deeper insights into customer behavior within digital channels? And how are you using these insights to drive innovation in client service?
Kohli: We process numerous transactions per second, generating a wealth of data. This data is used not only for retrospective analysis but also in real time, powering intelligent payments solutions. The insights gathered from millions of transactions help us to not only improve our own processes but deliver tailored, actionable advice to our clients ranging from choosing the fastest or cheapest route for international payments to risk-mitigated strategies for currency management.
Our innovative analytics tools can detect when a payment is made in an alternative currency. This allows us to offer customers the option to secure the best rate. The use of AI and API integration further ensures that insights derived from data immediately support payment decisions.
We’ve established a dedicated Treasury Solutions Group, which conducts gap analyses and recommends best practices to improve treasury operations.
GF: Beyond incremental improvements to existing digital channels, what “moon shot” or disruptive digital banking or payment solutions is HSBC investing in?
Kohli: We don’t underestimate the importance of incremental improvement, given that we operate in a heavily regulated, market-driven ecosystem that spans numerous regulators, central banks, and payments partners.
We are focused on building innovative solutions that enable our clients to transform in the digital economy. In recent years, we’ve made significant investments to develop digital solutions that help accelerate the pace at which money moves globally. Our most recent innovative solution, Digital Merchant Services, has enabled HSBC to become a digital-merchant acquirer for cards, local e-wallets, and real-time payments, helping our merchant clients with seamless payment collections at scale and to grow their business efficiently.
We’ve invested $30 million in building a next-generation liquidity engine, and our use of AI allows us to provide real-time, data-driven insights during transactions. For example, through FX Prompt, our systems can instantly advise customers on the best currency option, ensuring they secure the most favorable rates, making our payment solutions smarter and more agile. Tomorrow’s moon shots will be the result of ongoing collaboration with numerous stakeholders in the ecosystem, persistent investment, and continuous R&D.