Digital Megatrends Online Platforms Are Tech-Blazers of Massive, Widespread Disruption

Digital MEGAtrends Online platforms are tech-blazers of massive, widespread disruption

Lewis Sun Managing Director, Regional Head of Product Management, Asia Pacific, Global Liquidity & Cash Management, HSBC

September 2018

RESTRICTED RESTRICTED - HSBC Digital MEGAtrends 1

The universe of disruption

Mobile Ecosystem

Apple Google

Cloud Amazon Microsoft Google IBM

Transportation eCommerce Hospitality Media Fintech Social Media & Subscription Advertising Uber Amazon Airbnb Apple WeChat Facebook Didi Chuxing Alibaba Priceline.com Netflix Alipay Instagram Ola eBay - Booking.com Hulu Paytm WeChat Go-Jek Rakuten - Hotels.com Spotify Twitter Grab Flipkart - Agoda Weibo - Kayak Ofo Snapdeal Snapchat Ctrip Mobike Lazada Expedia TripAdvisor RESTRICTED - HSBC Digital MEGAtrends 2

Disruptive platforms Reconstructed the business models to create new values

Business Platform Consumer

Retail Travel Mobility Catering

Baidu TTT-T---mallmall JD.COM Ctrip Qunar.Com DiDi mobike MMMeituan.com Delivery

WeChat eLong.com ofoofoofo Ele.com RESTRICTED - HSBC Digital MEGAtrends 3

Digital economy is driving the growth in China

Mobile Users: 695 mn vs Internet Users 735 mn $1915bn Mobile Payments: $790bn in 2016

China 42.4%

USUSUS

Rest of the World

$495bn 555 <1%

2016 2005 Global retail ee----commercecommerce transaction value (Source: McKinsey Global Institute) RESTRICTED - HSBC Digital MEGAtrends 4

Platform toplines at the stratosphere

250

+28% 11Y CAGR

200

+29% 150

+23% +7% 100

50 +88% +56% +53%

- Apple Alphabet/Google Microsoft Amazon Facebook Alibaba Tencent 2006 2016 Source: US SEC EDGAR Database; HKEx RESTRICTED - HSBC Digital MEGAtrends 5

China: Robust digital payment infrastructure is the core pillar of the booming digital economy

WeChat Alipay Pay

Duopoly in mobile payments and digital financial services

Payments IInvestment Microloan Insurance Do not fear. Relax.

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Consistently seek to make customers happy

Legacy (offline)

Today & Future (online) RESTRICTED - HSBC Digital MEGAtrends 8

HSBC’s approach to Digital and Innovation HSBC is transforming itself internally, developing new propositions whilst monitoring the impact of future technologies

Digital and Innovation

To be simpler, better, faster 3 core principles To connect customers to more opportunities To keep us and our customers safe and secure in a changing world 1. HSBC Digital 2. Client business 3. Applied Transformation model Innovation Innovations

3 pillar approach Alan Turing ASTRI Institute

FinTech Partners

Here & Now Next Generation Services Future Horizon Develop incremental improvements to current Bring new digital enabled propositions into market Test and learn new technology capabilities / traditional strengths using new technology RESTRICTED - HSBC Digital MEGAtrends 9

3 E’s to transform and adapt Bringing innovation to life: We continue to innovate both existing products and the next generation of propositions

eKYC EMPOWER

OMNI ENABLE

DART

Utility Settlement Coin

EMBRACE ISOISOISO RTP SWIFT gpi RESTRICTED - HSBC Digital MEGAtrends 10

EMBRACE: Real Time Payments | Real Time Treasury

UK SE

HG SEPA CH CN

US SP IT JP KO

MX HK BH TH SA PH BR MY NG IN SG VN SL

CH AU ID

Live, HSBC is Live, HSBC will Planned, HSBC Planned, HSBC Live, HSBC not Consultation participating participate will participate undecided participating underway RESTRICTED - HSBC Digital MEGAtrends 11

ENABLE: OMNI Managing omni-channel collections

Traditional Solution Value Propositions

Alipay WeChat Pay UnionPay Apple Pay Single service provider Locations provided with multiple POS Main office machines dealing with ABC Company multiple Locations Standard vendors Treasury Manager reporting Generating different report formats

HSBC Solution

One Smart POS Alipay WeChat Pay UnionPay Apple Pay

Locations dealing with Low integration a single platform and cost Main office one POS only deal machine ABC Company with HSBC Locations Treasury Manager Standard report format. Easy reconciliation RESTRICTED - HSBC Digital MEGAtrends 12

ENABLE: DART Digital Accounts Receivable Tool: Digitizing A/R

Value Propositions

Robust digital data

Streamlined AR matching

Prompt and timely funding RESTRICTED - HSBC Digital MEGAtrends 13

EMPOWER: PayMe RESTRICTED - HSBC Digital MEGAtrends 14

EMPOWER: Liquidity Management Portal RESTRICTED - HSBC Digital MEGAtrends 15

Technologies impacting the future of Cash Management Tracking and applying six key technologies

AI & Machine Learning Big Data & Insights BlockChain

Now – Help Desk Now: Track Payments Future: R3 Argent – Cross support of MI / AI Future: Payment routing, border; Utility Settlement Future: Create Payment scheduling, transaction Coin (USC) Consortium outliers detection and monitoring resolution

Mobile API Biometrics Now: Move Money; Now: HSBC Connect Now – Fingerprint Mobile Collections Future: Open Banking / authorisation; Voice Future: Push notification PSD2 Recognition and self service Future - Multi Factor & Continuous Authentication for payments RESTRICTED - HSBC Digital MEGAtrends 16

The Google etymology

googol 101010 100100100 1,000,000,000,000,000,000,000,000,000,000,000,000,000…,000

yotta 10 24 1,000,000,000,000,000,000,000,000

zetta 10 21 1,000,000,000,000,000,000,000

exa 10 18 1,000,000,000,000,000,000

peta 10 15 1,000,000,000,000,000

tera 10 12 1,000,000,000,000

giga 10 9 1,000,000,000

mega 10 6 1,000,000 We are somewhere here... kilo 10 3 1,000

hecto 10 2 100

deca 10 1 10

Source: https://graphics.stanford.edu/~dk/google_name_origin.html Important Notice

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