Digital banking and sustainable products are viewed by leaders as key to resilience.

The year 2020 saw a rapid shift in financial institutions and customers’ adopting digital tools for their financing needs—a trend expected to continue well into, and even beyond, 2021. Moreover, the rise of environmental consciousness amongst consumers meant that the future of banking will be one that is both technology-driven and  sustainable.

These facts are well-known to HSBC Singapore that is no laggard in either the field of digitisation or green financing—in fact, on the contrary.

“2020 has shown us how we need to be agile to weather through unforeseen circumstances and support our clients in times of need. Both digital and sustainability have shot up in the ranks of importance amongst businesses in Singapore,” Cherie Teng, Head of Corporate Banking at HSBC Singapore, told Asian Banking & Finance.

“Indeed we’re now seeing the decision-making process on these issues extend further than just the treasury functions. CFOs, key individuals and board members of businesses are now prioritizing the resilience of their businesses—digital banking and sustainable finance lie at the heart of building a stronger future,” she added.

Earlier in 2020, the bank launched the HSBC SME Green Loan, making HSBC the first bank in Singapore to offer green loans designed for SMEs. The service reduces the time, costs, and complexity that SMEs associate with green financing, giving them a more accessible way to grow their operations whilst heading firmly towards a sustainable future.

“We hear from our clients that they often want to play a role in the sustainability agenda, but don’t know how or where to begin,” Teng said. “That’s why we’re supporting businesses in accessing easier finance which is specifically allocated to green or sustainability-linked projects.”

The pandemic also drove the take-up of digital services amongst HSBC Singapore’s commercial banking customers. Teng shared that 94% of the bank’s commercial banking clients are now on digital channel offerings on HSBCnet, whilst the number of PayNow Alias registrations more than tripled (239% up) since 1 April 2020.

Asian Banking & Finance caught up with Teng to learn more about her thoughts about the changes in the finance and banking space—and where the future of banking, as well as that of HSBC Singapore, is headed.

Could you walk us through trends you’ve observed in the digital payments space in 2020?
Those who had not already enabled online transactions prior to the pandemic may have found themselves grinding to a halt; this has prompted an unprecedented change in the way banking is now conducted.

At HSBC, 95% of our Commercial Banking clients have made the switch from manual to digital, not just on the payments front but also with their collection methods and other working capital functions of their businesses, so that they can monitor these transactions from their end as well.

Prior to COVID, cheque payments were still a commonly used payment method in certain segments of the market. Whilst this has dropped in recent years, largely due to government efforts to go paperless, there are still businesses that have struggled to make the shift. 

The pandemic, partnered with the government’s efforts, has spurred digital payments take-up not just in Singapore but across the region. What trends or developments do you see happening in the digital payments space in 2021 and beyond?
There’s no doubt that digital will continue to dominate in payments, whether for local or overseas payments. Indeed, the total value of digital payments in Singapore is expected to exceed US$21b by 2024, growing by 9.2% annually.

For companies conducting payments, they typically have to consider a myriad of things – whether they are performing salary GIROs to their employees or liaising with their overseas suppliers which often means they are juggling different currencies and different time zones. 

There are different kinds of enhancements and support mechanisms that businesses can adopt to monitor their funds to and from different stakeholders locally and abroad, whether through PC or their mobile devices as well.

The use of PayNow Corporate, for instance, allows digital payments to quickly be made via a QR code without the need to obtain bank details from beneficiaries. Such initiatives are practical, cost effective and meaningful solutions to help keep businesses transacting with their customers.

Moving forward, we definitely see that there is going to be an expectation for this level of ease and convenience, no matter the dollar, denomination, or currency.

Apart from digital payments, what other online banking initiatives and activities have seen a massive surge since February 2020?
Whilst going digital could be as simple as reviewing a business’ customer-facing online channels, there’s a grave mistake in thinking that it only applies to what stakeholders see.

Treasury and procurement functions across sectors are quickly needing to adapt to use digital to ensure business continuity, not just in the payments space but in every aspect of the corporate ecosystem.

Digital also supports the ability to trade, enabling businesses to digitally send instructions on letters of credit and guarantees, apply for trade loans and upload invoices for receivables financing. With many customers in business continuity planning mode we are seeing increased use of the ability to download digital copies of documents from business’ overseas suppliers’ banks.

In the past few years, especially in 2020, consumers and businesses alike have become more conscious of their environmental impact. How has this affected the banking industry?
Finance will play a pivotal role in transitioning Asia towards a more sustainable future.With the upcoming transfer of significant wealth to the millennial generation in Asia over the next decade, the new generation of investors are also more socially conscious and environmentally friendly than their parents.  It is therefore not a choice for businesses anymore to incorporate green financing into their businesses, it is highly essential to stay relevant and competitive in order to make a difference in the market and be distinguishable.

HSBC recently set out an ambitious plan to prioritise financing and investment that supports the transition to a net zero global economy – and helps to build a thriving, resilient future for society and businesses. At the heart of the plan is a pledge to reduce financed emissions from our portfolio of customers to net zero by 2050 or sooner, in line with the goals of the Paris Agreement.

In Singapore, HSBC has delivered a total of US$1.2b of sustainable financing and investment as of the end of 2019.

How do you see environment, social, and governance (ESG) factors changing Singapore and the region’s banking industry in the next few years?
Singapore is raising the bar through the build of its green financing infrastructure and capability. Indeed it is participating in global and regional forums to discuss common language in what is considered ‘green’ so that consumers, investors, regulators, companies, and financial institutions are defining environmental objectives, measurement and performance criteria in the same way.

There is also a lot of collaboration in Singapore to build industry capabilities; HSBC Singapore is a founding partner of the Singapore Green Finance Centre – Singapore’s first research institute dedicated to green finance research and talent development.

We’re also seeing initiatives to bring green and sustainable financing into the mainstream of business and society. Just last 24 November, the Monetary Authority of Singapore announced the Green and Sustainability-linked Loan Grant Scheme which we believe will support financial institutions’ endeavours in developing verified sustainable financing frameworks catered to SMEs, thereby allowing FIs to better support SMEs.

In HSBC Singapore, we launched our Green Deposit Account for corporate clients to finance green initiatives such as renewable energy, energy efficiency and biodiversity conservation, providing a simple way for entities to support environmentally beneficial projects.