May 23, 2024 • 26 mins
Unlock the future of financial transactions as we sit down with Manoj Dugar from HSBC at the pulsing heart of Money 2020 in Bangkok. This episode promises a deep dive into the seismic shifts occurring within real estate payments as we navigate Singapore's bold moves to establish itself as a trailblazer in smart city development. You'll discover how the scrapping of corporate checks is just the beginning and the crucial role blockchain technology is playing in reshaping how we think about security and efficiency in property transactions.
With the construction industry perched on the cusp of a digital revolution, we examine HSBC's strategic pivot in response to Singapore's evolving market demands, under the watchful eye of the Monetary Authority of Singapore. The conversation meanders through HSBC's innovative journey from trade finance to real estate ventures, highlighting the Enbridge project's success in merging cross-border payment platforms and regulatory collaboration. Learn how HSBC's past blockchain escapades are charting a new course for future fintech solutions and what this could mean for your next property investment.
Finally, we broaden our lens to reveal how the advent of QR codes and bilateral payment corridors is revolutionizing digital transactions across Asia. Delving beyond real estate, we explore the potential for these innovations to transform sectors like healthcare and insurance, where transparency and secure digital identity verification are paramount. Tune in for an insightful forecast on how banks might harness blockchain for global data and identity portability, and how this could redefine the financial landscape. Remember to leave us a stellar review on iTunes and stay tuned for more enthralling discussions at the Money Pot.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Manoj Dugar (00:03):
This is Essential Audio.
Rachel Morrissey (00:13):
Welcome to the Money Pot.
We are here live at the AsiaShow in Bangkok, thailand, for
Money 2020.
This is amazing.
This show has been so cool sofar.
I'm Rachel Morrissey.
I am one of the co-hosts andthe executive producer of the
podcast.
I'm also head of content forthe US show and I am here with
(00:34):
the content manager from the EUshow, miki Tesfaya.
Hi Miki, how are you doing?
Micky Tesfaye (00:40):
Hey Rach, very well, thank you, we've got to
stop meeting like this, huh.
Rachel Morrissey (00:44):
I know we really do.
We really do.
We have a great guest todaythat is going to talk about
something that is so completelyunique.
This situation is everythingthat is interesting to me about
what's happening in fintechright now, so I want to
introduce Manoj Dugar and Iprobably still messed it up,
(01:04):
even though he taught me how tosay it like three times, and he
is the Managing Director andRegional Co-Head of Global
Payment Solutions in AsiaPacific for HSBC.
So we are not talking about astartup today.
We are talking about atraditional player and they are
doing something kind ofrevolutionary Just to kind of
(01:25):
start this off.
He is based in Singapore and wegot a note and I noticed from
him that he is working on asolution to a real estate
payment issue in Singapore.
So Manoj, we're going to startthere.
Talk to me about this problemthat you guys have encountered
(01:50):
within Singapore real estate andwhy a solution is needed so
quickly.
Manoj Dugar (01:55):
Sure, Thanks, Rachel and thanks Micky for
having me at the podcast,Excited to be here at Money2020
and speak to you guys.
As you rightly said, I'm basedin Singapore, been there for the
last 10 years, but, moreimportantly, we've seen
significant evolution of digitalpayment in the Singapore market
landscape.
As you know, Singapore wasrated recently by Institute of
(02:16):
Management Development as thefifth smartest city in the world
.
So the progress which we'remaking on the digital payment
space, whether it's the hawkercenter payments which you're
doing, the subway paymentsyou're doing, the instant
payment rails which are built upsignificant progress by the
regulator there and the adoptionas well.
However, there are blind spots.
There is no doubt about it.
(02:36):
As in any other jurisdiction,you see blind spots and which we
evidenced in the real estateindustry as well, where the
processes were manual, werefragmented, physical checks were
still prevalent.
Yes, we're talking aboutphysical checks.
So the Monetary Authority ofSingapore has come out with a
guideline that they wouldeliminate corporate checks by
(02:59):
end of 2024-5.
So it was important for us towork with some of the players in
the industry to help in theirdigital transformation agenda
and address this challenge.
Rachel Morrissey (03:08):
So this is the part that's interesting to me,
because I'm from the US, mickeyis from Ethiopia, he lives in
the UK.
We are from two differentworlds when it comes to checks.
I do not have a checkbook Ihave not had a checkbook in
years, in fact but my husbandhas a checkbook and he thinks
I'm nuts, and everybody I knowthinks I'm nuts because almost
(03:29):
everybody in the US still needsa checkbook, specifically around
things like real estate, whereeven when an individual is
putting down a security deposit,that's a check.
You know a security deposit,that's a check.
Or when you make your firstmortgage payment yes, you can
(03:53):
automate them later, but that'sa check.
There's still checks in the USand I'm always like this is the
most ridiculous thing in theworld.
But then I find out that inSingapore, which I consider way
ahead of the game in paymentsand in digital adoption, this is
a problem you guys are facingtoo, and I think it's
interesting.
Why is the Singapore governmentphasing this out?
(04:16):
Why have they decided this isan area that they are like?
No more of this.
Manoj Dugar (04:20):
Yeah, I would say it's not only in Singapore.
Across geographies, you willobviously see adoption of
digital payment infrastructureand more so, you see, in Asia.
Overall, it's not that fixedchecks have got eliminated, but
has reduced dramatically overthe years.
Just look at Singapore, forexample.
We reduced the number of checksfrom almost 60 million to now
(04:41):
19 million transactions.
From almost 60 million to now19 million transactions.
So which is like a 70%reductions in terms of check
volumes.
Given the demographics, agingpopulation, the requirement for
financial inclusion Sometimeschecks do exist, potentially,
but there has seen a significantreduction, as a result of which
the cost of processing thesechecks does tend to increase.
(05:02):
It makes sense for thegovernment and for the country
to try and see how wecontinuously move on the path in
terms of demising these checksas well.
That's one, and second isreally the investment which has
happened in the digital paymentinfrastructure uh, the building
out of the real estate payment,the instant rails in singapore
10 years back, 10 plus yearsback.
The building out of walletcapabilities, interoperability
(05:25):
of QR codes.
Clearly, there is significantinvestment into our digital
payment infrastructure and youwould want to ensure that you
are reaching to a largerpopulation to see adoption of
digital payment infrastructure.
So you'll see the path ofreduction.
On checks, it's challenging,not that it doesn't completely
get eliminated, but obviously onthe corporate side we do expect
(05:46):
elimination and that's theright path to try and uh work
towards 2025 deadline toeliminate corporate checks, not
individuals.
Micky Tesfaye (05:52):
Yet that's interesting okay um, yeah, very
interesting, I guess, to comment.
What I'm interested to find outis because you mentioned,
singapore introduced real-timepayments uh rails 10 years ago
or something like this, right?
Um, so why did you guys, whenit comes to solving this problem
(06:12):
around corporate check usageand the kind of need to phase it
out, why are you kind ofturning to blockchain?
Because, I guess, to rachel'searlier point, um you not to
burst Rach, but I've neverwritten a check in my life.
Rachel Morrissey (06:27):
Yeah, go ahead , be that way, baby.
Micky Tesfaye (06:30):
But I guess in the UK part of that is because
we have real-time payments thereand for transactions like
mortgage transactions, evenlarger payments you could do
direct bank-to-bank transfers,instant transfers.
So I guess how come blockchainis the solution you've
identified for this specificproblem?
Manoj Dugar (06:52):
So, Micky, we obviously service a large
breadth of client base, rightfrom small medium enterprises to
mid-market to largeinstitutional clients across
60-plus countries, and one ofthe clients we were working with
was property enterprisedevelopment in Singapore in the
real estate sector, and this gotaccentuated during COVID era,
(07:13):
where the real estate industrywas significantly impacted with
the way the processes were run,because it was manual, because
it was fragmented, multiplestakeholders involved.
I'm not talking about the endconsumer, but it's just within
the real estate ecosystem, whichwas quite fragmented there, and
hence it was important for usto try and figure out how do we
address the challenge,especially when they have a
(07:35):
timeline ticking of meeting theMAS guideline of 2025,
elimination of checks, and theyobviously embarked on digital
transformation.
We are at the forefront as faras technology innovation is
concerned.
Digital adoption is concernedat the client end, and hence it
was a great opportunity for usto partner with them and
identify solutions to digitizethat process and, more
(07:57):
importantly, we spent fairamount of time with the client
understanding their as-isprocess, what the end-to-end
workflow is, how some of thesmart contracting and,
potentially, blockchain solutioncould help address that
challenge and mickey to yourpoint the reason we chose
blockchain.
Because of the fact that therewere multiple parties which were
involved in that workflow, theprocess was fragmented.
(08:20):
It was important to bring theminto the same ecosystem and
that's where the blockchaintechnology really helped
digitize the workflow from ourperspective.
So really, covid accentuated it.
Most of the clients are goingthat path as well.
The solutions could varydepending on the industry, but
in this particular case, giventhe fragmented nature of the
payment processes, given thenumber of parties involved, the
(08:40):
solution really fitted in well.
Rachel Morrissey (08:43):
So I want to go back just a little bit and
unpack a little bit of what yousaid there, because you had a
client specifically that sawthis new rule coming down.
They understood how vital itwas to make this change.
Can you tell me a little bitabout how this whole problem
came to you guys' attentionspecifically, why you guys
(09:07):
decided to tackle it and thatkind of that story that you had
with this client?
Manoj Dugar (09:12):
Yeah, sure, as I was saying, probably COVID
accentuated it.
Where the construction industrydid get impacted because of the
physical nature of the workflowmanual, not a transparent
process, some elements wereopaque as well, fragmented
nature.
So the client came to us.
We banked all segments of thoseclients because they would want
(09:34):
to see how we could potentiallyhelp in the digital
transformation journey, meet theMAS guideline but, more
importantly, also improve theunderlying workflow and
transactions as well.
So and we support many of theseclients who are getting into
the digital transformationjourney, given all the
developments which is happeningon the technology side, on the
(09:54):
platform side and whatever theregulators are doing as far as
some of these rails areconcerned as well.
So it ticked all the rightboxes and that's the reason we
we supported this what's thegeneral size of this market?
Rachel Morrissey (10:06):
Like as far as the volume of transactions,
what's the general size of it?
Manoj Dugar (10:13):
I'm not sure the specific number at this point of
time, but clearly you've seensignificant growth in the
Singapore franchise, becauseSingapore is becoming a hub to
many of the growth happening inthe other parts of the region as
well.
Right, but you've clearly seena big shift from physical to
electronic, which I talked aboutin terms of 70% reductions.
But, more importantly, thevelocity of transactions have
(10:34):
also increased.
Given the changes in businessmodel at the client end, a lot
more transactions are becomingsmaller in size, but the volumes
are increasing as well.
So there has beendisproportionate growth of the
electronic transactions inSingapore and other parts of the
world as well.
Micky Tesfaye (10:50):
Interesting, very interesting, I guess, maybe to
kind of transition forward,because there's something I was
thinking about, which is We'vetalked quite a bit about the
client-side demand, theregulatory demand for the check,
the elimination of checks, andwhere you guys come in From
(11:10):
HSBC's perspective, from theperspective of deploying a
blockchain technology.
One of the things Rach and Iwere talking about is that a few
years ago, I did an interviewwith someone from HSBC building
some blockchain-based solutions,and it reminded me around 2016,
(11:31):
.
Around that time, a lot of thework in big banks was being done
for trade finance for tradefinance especially, but other
similar areas where there wasexactly the same types of issues
you described right Multiplestakeholders, manual processes,
huge opportunities for mistakes,need for transparency and all
(11:54):
of these things.
Early experimentations allowedyou as a big bank to then move
fairly quickly to react to a newset of emerging opportunities,
driven by the regulator, forexample, in this instance.
So maybe the trade financepiece is something that keeps on
(12:15):
going parallel, but how doesthat inform your ability to
react to this and meet someclient needs?
Manoj Dugar (12:21):
True and, miki, partly.
You addressed the answer inyour question itself.
When you think about like five,six years back, am I right?
It was more about concepts.
It was more aboutexperimentation which you were
talking about it as well.
So we've clearly seen theadoption of the technology over
the last four, five years andnow it's more about used cases
(12:43):
and commercialization and that'sthe path which we are embarking
on.
So clearly, while some of thoseexperimentation was successful,
now we are looking at morecommercializing with real used
cases and this was a real usedcase which had similar
characteristics, if I could say.
But clearly we could adoptthose technology and implement
(13:03):
that because of the work whichwe've done in the last four,
five years using the technology.
Uh, and obviously it's gettingbetter and better with some of
the smart contracting, with someof the programmable way of
money movement.
Uh, it's obviously enhancingour proposition as well.
Uh, to your point, yes, nowit's real used cases where we've
seen the adoption in theindustry, and real estate was a
(13:24):
great example where we adoptedthis and implemented the
solution.
Rachel Morrissey (13:28):
So, when it was more conceptual and, as you
mentioned, you've been doingthis work for the past four or
five years what are theindustries or what other use
cases have you seen that youactually learned from that you
ended up using in this solution.
Learned from that you ended upusing in this solution.
Like, what other kind ofexperiments were you doing that
ended up in this solution, that,as actually you can see
(13:50):
immediate.
Manoj Dugar (13:51):
So, rachel, I think the way we look at some of
these technologies.
A couple of aspects One,obviously, working with clients
in terms of identifying some ofthe problem statements and what
are some of the used cases.
So the real estate was oneexample.
In some cases, we actually workwith regulators in terms of
adoption of this technology aswell, and we believe that this
technology, from a paymentperspective, can really help
(14:13):
transform the cross-borderpayment space.
So the work which we are doingon Enbridge, for example, is a
great example right Now.
If you're in Thailand, forexample, now for my 2020, and if
a person from hong kong and myfriend, alan, he just flew down
from hong kong to thailand, heforgot to carry cash, which is
the right thing he did, but hestruggled to make some of the
payments there, but he could usehis qr codes to make payments
(14:37):
in thailand as well.
That's the enbridge platformwhich I'm talking about, which
really really enabled Hong KongFPS linkages, hong Kong FPS to
the Thailand Prompt Pay, quickPay linkages, which really
adopted this technology.
So my point is that we workwith regulators in some of these
used cases.
There are commercial used casesand my partners in the
(14:59):
securities and the tradebusinesses are also adopting
some of these tools andtechnologies in multiple of
their client-used cases as well.
Micky Tesfaye (15:08):
So the Enbridge project, that's a blockchain or
distributed ledger project,right, yeah, so that's actually
super fascinating.
So is that what is poweringthis current program or project?
The real estate?
Manoj Dugar (15:22):
So both of them have an underlying technology
which we are leveraging as well,some of the build which we've
done on the underlyingtechnology to facilitate
cross-border transactions andpayments.
There's some of theseunderlying technologies being
used in these solutions as wellbecause ultimately, it's
bringing all the partiestogether, though the payments is
not embedded yet, so it has anopportunity to embed some of the
(15:42):
payments piece, potentiallyalso From a cross-border
perspective, because this ismore domestic in nature.
The real estate, what Ireferenced in terms of the used
cases which we are usingblockchain technology.
There are some elements ofcross-border also which is being
used.
Micky Tesfaye (15:57):
Got you.
So the information is what'sbeing transferred right now, not
the payments.
Is that a way to think of?
Manoj Dugar (16:02):
it.
Yes, most of your negotiationprocess, settlement process,
information flow transparency iswhat is being flowed into this
infrastructure as well.
Micky Tesfaye (16:15):
Fascinating.
Rachel Morrissey (16:17):
I didn't know about that.
I find the QR code revolutionin Asia really interesting
because of this, the solutionsthat it can provide for
cross-border payments,especially throughout Asian
markets.
But I mean, as an American, Icome here and you know I
downloaded my Grab app before Icame and I set it up and then,
as soon as I landed, it wasuseless to me because my eSIM
(16:41):
wouldn't let me have theidentity that I had set it up
under, and so I couldn'ttransfer it and use it.
And then the other part that Ifound really fascinating is,
obviously, I put a card in theback end of the grab app, right,
um, instead of a bank, right, Ididn't do a bank to bank, I did
a, I did a credit card, causethat's, I'm an American and
(17:02):
that's how we think.
And, um, as soon as, so, I getinto the taxi and I can't pay
because I don't have any Thaicash on me.
And then the guy was like oh,no problem, and he hands me a QR
code and I'm like I don't thinkyou understand, I can't, I
(17:26):
didn't have the right apps orthe right setup in order to
really participate in thepayment system, and I'm looking
at it going.
This is really interesting whatit would do for travel, or what
it would do for cross-border if, uh, if, if it was, have it had
a wider adoption, even, and Iso, when you're saying you can
(17:46):
come from hong kong and pay, I'mlike if only, um, you know, on
the, when mentioning hong kong,right, that just reminds me.
Micky Tesfaye (17:55):
But like singapore, hong kong, I guess
they're super interesting from areal estate perspective too,
given like the like limit pricey, yeah, and but given like that
kind of, you know, geographicallimit.
So I'm just wondering as, justwondering beyond the check piece
, how much is this kind oftokenization element going to
come into the real estateindustry and how much is things
(18:16):
like this going to drive thatprocess forward?
Rachel Morrissey (18:21):
Well, and what other Asian markets would this
be most attractive to?
Next, like Hong Kong andSingapore, are these finite
spaces, right?
But there are other Asianmarkets that are more developed
and less developed in this area,and so I'd be interested in
that too.
Manoj Dugar (18:39):
Yeah, I'll let you talk, sorry, since you talked
about the QR code and thedigital payment space.
Clearly that's one area whichis still being worked upon, I
would say because they're justnot about uh technology.
But there are underlyingregulations policy advocacy,
which needs to be addressed,liquidity, which needs to be
addressed to make it a lot moreinteroperable and have a same
(19:01):
experience as you would have inthe domestic infrastructure.
You would want to have the sameexperience in the cross-border
space as well.
So some development stillhappening.
There are bilateral corridors,uh, which have kicked off, am I
right?
So singapore has kicked offwith thailand, singapore has
kicked off with malaysia,singapore has kicked off with
india as well.
So some of the end consumer toconsumer workflow.
(19:21):
You could use some of these qrcode to make cross-border
transactions.
From our perspective.
To answer your question also isthat obviously we've seen the
adoption because there was areal problem in the real estate
industry, but we believe thatthere could be opportunities
across other sectors as well andwe are in discussion whether
it's potentially likee-marketplace or healthcare or
(19:44):
insurance industry, where thereare multiple parties involved.
There are certain transparencychallenges as far as the
workflow is concerned.
We believe that there could beadoption of these tools and
technologies, and that would becity agnostic or country
agnostic potentially as well,but early days.
It obviously requires a lot ofselling, not only to the, to our
(20:06):
clients, but to the ecosystemparticipants, the used cases as
well, and leverage some of thedomestic infrastructure because
that's a lot more matured as faras cross-border.
That's where some work stillneeds to happen before we reach
the end state.
Micky Tesfaye (20:20):
That's so interesting, especially the
healthcare.
That's exactly what I was goingto say, yeah especially the
healthcare one and, to yourpoint, Rich around the identity
piece right like.
Rachel Morrissey (20:29):
I guess that's one of the areas where secure
identity kind of well, that'sthat's part of why I was so
curious about this is like Imean, why would?
Why would a QR code really needthe identity piece that it?
You know why?
Why would the grab app, uh, allof a sudden question my
identity when it's it'sinstalled, it's it's set up and
(20:52):
everything, but all of a sudden,because I have to transfer a
SIM, like I, you know, I have togo from one SIM to another SIM
inside my own phone which hasall of the information inside of
it that the connectivity onthat side is also a little odd,
right?
The fact that I had to set upready to go and the fact that
(21:13):
all of a sudden I wasn't meanymore is kind of an
interesting part of thisequation, and I think about this
, the tokenization all the time,because it does depend so much
on identity, depends so much onon this part of the of the
structure working, uh, from frommarket to market to market.
Manoj Dugar (21:34):
True, uh, and that's why you see a varied
payment infrastructure in manyof the markets in asia.
It also depends upon the endconsumer behavior, the
demographics of the country, theadoption of credit cards, as in
probably in the US, but it maynot necessarily apply in across
most of the markets here in Asia, especially when you think
about the ASEAN region, wherecredit card may not have been
(21:56):
penetrated.
Banking has not penetrated tothe end consumers, to the end
people in the country as well.
So clearly that's where walletsand QR codes have got adopted
as well.
So you have some elements ofbanking which is done through
those channels and that's whysome of those channels have got
a lot more prominence in thesemarkets compared to markets like
(22:20):
Singapore or UK or US.
Rachel Morrissey (22:22):
Right.
Micky Tesfaye (22:24):
I mean wow, what can I say?
Rachel Morrissey (22:26):
I know it's really fascinating.
So you were talking about itbeing used in other industries
like healthcare and things likethis.
What's the client response thatyou guys have had?
How excited are they about thenature of this solution and
what's going on with that?
Because I find this sort offascinating, because this has
got to be kind of blowing theirminds.
Manoj Dugar (22:48):
True.
So obviously we've spoken aboutthis over the last five, six
months since we launched thisProject Epsilon, as we call it
in the real estate industry.
It's got many of our clientsinterested and we've got more
engagements now in terms of someof the real use cases, but I
would say it's still early days.
We obviously have to roll itout across real estate industry
(23:11):
because that's a burning needright now.
Other industry would require alot more deep dive to be done so
that at least the solution fitsthe end-to-end ecosystem
players as well.
It's early days, but we believethat it has the potential to
scale up.
Micky Tesfaye (23:24):
That's excellent.
Yeah fascinating, I guess, justlike to one other future gazing
question, and it's honestly noteven maybe relevant.
But now that we started talkingabout identity, I'm super just
like fascinated with this pointyou made earlier around Enbridge
and the use of it not to movepayments but identity.
So is there an opportunity forbanks like HSBC in the future to
(23:48):
kind of start leveraging theseblockchain technologies for data
portability, for things likeidentity portability around the
world, so that rich so I can payfor a taxi.
Rachel Morrissey (24:01):
Rich can.
Micky Tesfaye (24:03):
She's able to have identity.
Rachel Morrissey (24:05):
So I can get to my hotel without.
That's all I care about.
Manoj Dugar (24:08):
Just to address your question, Enbridge is
supporting payments on across-border basis, especially
in trying to make some of thedigital technology in these
markets a little moreinteroperable as well.
So it's more about settling ona cross-border basis using the
underlying blockchain technologynot necessarily the identity
(24:29):
piece at this point of time, butsome work to be done on that to
bring it applicable for theidentity management.
Rachel Morrissey (24:36):
Okay, well, that's about it.
That's about our time today.
I am so thankful that you camein to talk to us about this.
This is so interesting to us.
Like I said, miggy lives in amore sophisticated area.
I'm just stuck with my good oldcredit card and my load of debt
, but I'm really grateful.
(24:58):
Thank you so much, manoj, forcoming in and talking to us.
Manoj Dugar (25:00):
It's a pleasure to come and speak as well.
Given the potential that thissolution has and the technology
has, we clearly want to see theadoption of that across
industries as well and countries.
Rachel Morrissey (25:10):
Yeah, I am looking forward to seeing this.
I mean, I think I live in NewYork, so the idea that this kind
of technology I mean to me thishas much broader implication
than just Singapore If we usedsomething like this in the
States, if this ever gets tothat point, which it will
eventually.
But when you live in a placelike New York and you, you
(25:33):
understand how these real estatemarkets in these very tight
areas work, which New York andSingapore have that in common,
you can kind of see, oh, there'shuge amount of potential right
here, um, and then you see itglobally.
It's really interesting.
So, thank you so much forcoming in.
That's it for this episode ofthe money pot.
We love our listeners and ifyou would go to iTunes and give
(25:56):
us a review, make it five starsso that people can find us.
Yeah, come on.
And if you would like toparticipate in Money 2020's
Money Pot at the shows, go aheadand email us at podcast at
money2020.com.
As I said, thanks again fortuning in.
We love our FinTech nerds.
This is Essential Audio.
Rachel Morrissey (00:13):
Welcome to the Money Pot.
We are here live at the AsiaShow in Bangkok, thailand, for
Money 2020.
This is amazing.
This show has been so cool sofar.
I'm Rachel Morrissey.
I am one of the co-hosts andthe executive producer of the
podcast.
I'm also head of content forthe US show and I am here with
(00:34):
the content manager from the EUshow, miki Tesfaya.
Hi Miki, how are you doing?
Micky Tesfaye (00:40):
Hey Rach, very well, thank you, we've got to
stop meeting like this, huh.
Rachel Morrissey (00:44):
I know we really do.
We really do.
We have a great guest todaythat is going to talk about
something that is so completelyunique.
This situation is everythingthat is interesting to me about
what's happening in fintechright now, so I want to
introduce Manoj Dugar and Iprobably still messed it up,
(01:04):
even though he taught me how tosay it like three times, and he
is the Managing Director andRegional Co-Head of Global
Payment Solutions in AsiaPacific for HSBC.
So we are not talking about astartup today.
We are talking about atraditional player and they are
doing something kind ofrevolutionary Just to kind of
(01:25):
start this off.
He is based in Singapore and wegot a note and I noticed from
him that he is working on asolution to a real estate
payment issue in Singapore.
So Manoj, we're going to startthere.
Talk to me about this problemthat you guys have encountered
(01:50):
within Singapore real estate andwhy a solution is needed so
quickly.
Manoj Dugar (01:55):
Sure, Thanks, Rachel and thanks Micky for
having me at the podcast,Excited to be here at Money2020
and speak to you guys.
As you rightly said, I'm basedin Singapore, been there for the
last 10 years, but, moreimportantly, we've seen
significant evolution of digitalpayment in the Singapore market
landscape.
As you know, Singapore wasrated recently by Institute of
(02:16):
Management Development as thefifth smartest city in the world
.
So the progress which we'remaking on the digital payment
space, whether it's the hawkercenter payments which you're
doing, the subway paymentsyou're doing, the instant
payment rails which are built upsignificant progress by the
regulator there and the adoptionas well.
However, there are blind spots.
There is no doubt about it.
(02:36):
As in any other jurisdiction,you see blind spots and which we
evidenced in the real estateindustry as well, where the
processes were manual, werefragmented, physical checks were
still prevalent.
Yes, we're talking aboutphysical checks.
So the Monetary Authority ofSingapore has come out with a
guideline that they wouldeliminate corporate checks by
(02:59):
end of 2024-5.
So it was important for us towork with some of the players in
the industry to help in theirdigital transformation agenda
and address this challenge.
Rachel Morrissey (03:08):
So this is the part that's interesting to me,
because I'm from the US, mickeyis from Ethiopia, he lives in
the UK.
We are from two differentworlds when it comes to checks.
I do not have a checkbook Ihave not had a checkbook in
years, in fact but my husbandhas a checkbook and he thinks
I'm nuts, and everybody I knowthinks I'm nuts because almost
(03:29):
everybody in the US still needsa checkbook, specifically around
things like real estate, whereeven when an individual is
putting down a security deposit,that's a check.
You know a security deposit,that's a check.
Or when you make your firstmortgage payment yes, you can
(03:53):
automate them later, but that'sa check.
There's still checks in the USand I'm always like this is the
most ridiculous thing in theworld.
But then I find out that inSingapore, which I consider way
ahead of the game in paymentsand in digital adoption, this is
a problem you guys are facingtoo, and I think it's
interesting.
Why is the Singapore governmentphasing this out?
(04:16):
Why have they decided this isan area that they are like?
No more of this.
Manoj Dugar (04:20):
Yeah, I would say it's not only in Singapore.
Across geographies, you willobviously see adoption of
digital payment infrastructureand more so, you see, in Asia.
Overall, it's not that fixedchecks have got eliminated, but
has reduced dramatically overthe years.
Just look at Singapore, forexample.
We reduced the number of checksfrom almost 60 million to now
(04:41):
19 million transactions.
From almost 60 million to now19 million transactions.
So which is like a 70%reductions in terms of check
volumes.
Given the demographics, agingpopulation, the requirement for
financial inclusion Sometimeschecks do exist, potentially,
but there has seen a significantreduction, as a result of which
the cost of processing thesechecks does tend to increase.
(05:02):
It makes sense for thegovernment and for the country
to try and see how wecontinuously move on the path in
terms of demising these checksas well.
That's one, and second isreally the investment which has
happened in the digital paymentinfrastructure uh, the building
out of the real estate payment,the instant rails in singapore
10 years back, 10 plus yearsback.
The building out of walletcapabilities, interoperability
(05:25):
of QR codes.
Clearly, there is significantinvestment into our digital
payment infrastructure and youwould want to ensure that you
are reaching to a largerpopulation to see adoption of
digital payment infrastructure.
So you'll see the path ofreduction.
On checks, it's challenging,not that it doesn't completely
get eliminated, but obviously onthe corporate side we do expect
(05:46):
elimination and that's theright path to try and uh work
towards 2025 deadline toeliminate corporate checks, not
individuals.
Micky Tesfaye (05:52):
Yet that's interesting okay um, yeah, very
interesting, I guess, to comment.
What I'm interested to find outis because you mentioned,
singapore introduced real-timepayments uh rails 10 years ago
or something like this, right?
Um, so why did you guys, whenit comes to solving this problem
(06:12):
around corporate check usageand the kind of need to phase it
out, why are you kind ofturning to blockchain?
Because, I guess, to rachel'searlier point, um you not to
burst Rach, but I've neverwritten a check in my life.
Rachel Morrissey (06:27):
Yeah, go ahead , be that way, baby.
Micky Tesfaye (06:30):
But I guess in the UK part of that is because
we have real-time payments thereand for transactions like
mortgage transactions, evenlarger payments you could do
direct bank-to-bank transfers,instant transfers.
So I guess how come blockchainis the solution you've
identified for this specificproblem?
Manoj Dugar (06:52):
So, Micky, we obviously service a large
breadth of client base, rightfrom small medium enterprises to
mid-market to largeinstitutional clients across
60-plus countries, and one ofthe clients we were working with
was property enterprisedevelopment in Singapore in the
real estate sector, and this gotaccentuated during COVID era,
(07:13):
where the real estate industrywas significantly impacted with
the way the processes were run,because it was manual, because
it was fragmented, multiplestakeholders involved.
I'm not talking about the endconsumer, but it's just within
the real estate ecosystem, whichwas quite fragmented there, and
hence it was important for usto try and figure out how do we
address the challenge,especially when they have a
(07:35):
timeline ticking of meeting theMAS guideline of 2025,
elimination of checks, and theyobviously embarked on digital
transformation.
We are at the forefront as faras technology innovation is
concerned.
Digital adoption is concernedat the client end, and hence it
was a great opportunity for usto partner with them and
identify solutions to digitizethat process and, more
(07:57):
importantly, we spent fairamount of time with the client
understanding their as-isprocess, what the end-to-end
workflow is, how some of thesmart contracting and,
potentially, blockchain solutioncould help address that
challenge and mickey to yourpoint the reason we chose
blockchain.
Because of the fact that therewere multiple parties which were
involved in that workflow, theprocess was fragmented.
(08:20):
It was important to bring theminto the same ecosystem and
that's where the blockchaintechnology really helped
digitize the workflow from ourperspective.
So really, covid accentuated it.
Most of the clients are goingthat path as well.
The solutions could varydepending on the industry, but
in this particular case, giventhe fragmented nature of the
payment processes, given thenumber of parties involved, the
(08:40):
solution really fitted in well.
Rachel Morrissey (08:43):
So I want to go back just a little bit and
unpack a little bit of what yousaid there, because you had a
client specifically that sawthis new rule coming down.
They understood how vital itwas to make this change.
Can you tell me a little bitabout how this whole problem
came to you guys' attentionspecifically, why you guys
(09:07):
decided to tackle it and thatkind of that story that you had
with this client?
Manoj Dugar (09:12):
Yeah, sure, as I was saying, probably COVID
accentuated it.
Where the construction industrydid get impacted because of the
physical nature of the workflowmanual, not a transparent
process, some elements wereopaque as well, fragmented
nature.
So the client came to us.
We banked all segments of thoseclients because they would want
(09:34):
to see how we could potentiallyhelp in the digital
transformation journey, meet theMAS guideline but, more
importantly, also improve theunderlying workflow and
transactions as well.
So and we support many of theseclients who are getting into
the digital transformationjourney, given all the
developments which is happeningon the technology side, on the
(09:54):
platform side and whatever theregulators are doing as far as
some of these rails areconcerned as well.
So it ticked all the rightboxes and that's the reason we
we supported this what's thegeneral size of this market?
Rachel Morrissey (10:06):
Like as far as the volume of transactions,
what's the general size of it?
Manoj Dugar (10:13):
I'm not sure the specific number at this point of
time, but clearly you've seensignificant growth in the
Singapore franchise, becauseSingapore is becoming a hub to
many of the growth happening inthe other parts of the region as
well.
Right, but you've clearly seena big shift from physical to
electronic, which I talked aboutin terms of 70% reductions.
But, more importantly, thevelocity of transactions have
(10:34):
also increased.
Given the changes in businessmodel at the client end, a lot
more transactions are becomingsmaller in size, but the volumes
are increasing as well.
So there has beendisproportionate growth of the
electronic transactions inSingapore and other parts of the
world as well.
Micky Tesfaye (10:50):
Interesting, very interesting, I guess, maybe to
kind of transition forward,because there's something I was
thinking about, which is We'vetalked quite a bit about the
client-side demand, theregulatory demand for the check,
the elimination of checks, andwhere you guys come in From
(11:10):
HSBC's perspective, from theperspective of deploying a
blockchain technology.
One of the things Rach and Iwere talking about is that a few
years ago, I did an interviewwith someone from HSBC building
some blockchain-based solutions,and it reminded me around 2016,
(11:31):
.
Around that time, a lot of thework in big banks was being done
for trade finance for tradefinance especially, but other
similar areas where there wasexactly the same types of issues
you described right Multiplestakeholders, manual processes,
huge opportunities for mistakes,need for transparency and all
(11:54):
of these things.
Early experimentations allowedyou as a big bank to then move
fairly quickly to react to a newset of emerging opportunities,
driven by the regulator, forexample, in this instance.
So maybe the trade financepiece is something that keeps on
(12:15):
going parallel, but how doesthat inform your ability to
react to this and meet someclient needs?
Manoj Dugar (12:21):
True and, miki, partly.
You addressed the answer inyour question itself.
When you think about like five,six years back, am I right?
It was more about concepts.
It was more aboutexperimentation which you were
talking about it as well.
So we've clearly seen theadoption of the technology over
the last four, five years andnow it's more about used cases
(12:43):
and commercialization and that'sthe path which we are embarking
on.
So clearly, while some of thoseexperimentation was successful,
now we are looking at morecommercializing with real used
cases and this was a real usedcase which had similar
characteristics, if I could say.
But clearly we could adoptthose technology and implement
(13:03):
that because of the work whichwe've done in the last four,
five years using the technology.
Uh, and obviously it's gettingbetter and better with some of
the smart contracting, with someof the programmable way of
money movement.
Uh, it's obviously enhancingour proposition as well.
Uh, to your point, yes, nowit's real used cases where we've
seen the adoption in theindustry, and real estate was a
(13:24):
great example where we adoptedthis and implemented the
solution.
Rachel Morrissey (13:28):
So, when it was more conceptual and, as you
mentioned, you've been doingthis work for the past four or
five years what are theindustries or what other use
cases have you seen that youactually learned from that you
ended up using in this solution.
Learned from that you ended upusing in this solution.
Like, what other kind ofexperiments were you doing that
ended up in this solution, that,as actually you can see
(13:50):
immediate.
Manoj Dugar (13:51):
So, rachel, I think the way we look at some of
these technologies.
A couple of aspects One,obviously, working with clients
in terms of identifying some ofthe problem statements and what
are some of the used cases.
So the real estate was oneexample.
In some cases, we actually workwith regulators in terms of
adoption of this technology aswell, and we believe that this
technology, from a paymentperspective, can really help
(14:13):
transform the cross-borderpayment space.
So the work which we are doingon Enbridge, for example, is a
great example right Now.
If you're in Thailand, forexample, now for my 2020, and if
a person from hong kong and myfriend, alan, he just flew down
from hong kong to thailand, heforgot to carry cash, which is
the right thing he did, but hestruggled to make some of the
payments there, but he could usehis qr codes to make payments
(14:37):
in thailand as well.
That's the enbridge platformwhich I'm talking about, which
really really enabled Hong KongFPS linkages, hong Kong FPS to
the Thailand Prompt Pay, quickPay linkages, which really
adopted this technology.
So my point is that we workwith regulators in some of these
used cases.
There are commercial used casesand my partners in the
(14:59):
securities and the tradebusinesses are also adopting
some of these tools andtechnologies in multiple of
their client-used cases as well.
Micky Tesfaye (15:08):
So the Enbridge project, that's a blockchain or
distributed ledger project,right, yeah, so that's actually
super fascinating.
So is that what is poweringthis current program or project?
The real estate?
Manoj Dugar (15:22):
So both of them have an underlying technology
which we are leveraging as well,some of the build which we've
done on the underlyingtechnology to facilitate
cross-border transactions andpayments.
There's some of theseunderlying technologies being
used in these solutions as wellbecause ultimately, it's
bringing all the partiestogether, though the payments is
not embedded yet, so it has anopportunity to embed some of the
(15:42):
payments piece, potentiallyalso From a cross-border
perspective, because this ismore domestic in nature.
The real estate, what Ireferenced in terms of the used
cases which we are usingblockchain technology.
There are some elements ofcross-border also which is being
used.
Micky Tesfaye (15:57):
Got you.
So the information is what'sbeing transferred right now, not
the payments.
Is that a way to think of?
Manoj Dugar (16:02):
it.
Yes, most of your negotiationprocess, settlement process,
information flow transparency iswhat is being flowed into this
infrastructure as well.
Micky Tesfaye (16:15):
Fascinating.
Rachel Morrissey (16:17):
I didn't know about that.
I find the QR code revolutionin Asia really interesting
because of this, the solutionsthat it can provide for
cross-border payments,especially throughout Asian
markets.
But I mean, as an American, Icome here and you know I
downloaded my Grab app before Icame and I set it up and then,
as soon as I landed, it wasuseless to me because my eSIM
(16:41):
wouldn't let me have theidentity that I had set it up
under, and so I couldn'ttransfer it and use it.
And then the other part that Ifound really fascinating is,
obviously, I put a card in theback end of the grab app, right,
um, instead of a bank, right, Ididn't do a bank to bank, I did
a, I did a credit card, causethat's, I'm an American and
(17:02):
that's how we think.
And, um, as soon as, so, I getinto the taxi and I can't pay
because I don't have any Thaicash on me.
And then the guy was like oh,no problem, and he hands me a QR
code and I'm like I don't thinkyou understand, I can't, I
(17:26):
didn't have the right apps orthe right setup in order to
really participate in thepayment system, and I'm looking
at it going.
This is really interesting whatit would do for travel, or what
it would do for cross-border if, uh, if, if it was, have it had
a wider adoption, even, and Iso, when you're saying you can
(17:46):
come from hong kong and pay, I'mlike if only, um, you know, on
the, when mentioning hong kong,right, that just reminds me.
Micky Tesfaye (17:55):
But like singapore, hong kong, I guess
they're super interesting from areal estate perspective too,
given like the like limit pricey, yeah, and but given like that
kind of, you know, geographicallimit.
So I'm just wondering as, justwondering beyond the check piece
, how much is this kind oftokenization element going to
come into the real estateindustry and how much is things
(18:16):
like this going to drive thatprocess forward?
Rachel Morrissey (18:21):
Well, and what other Asian markets would this
be most attractive to?
Next, like Hong Kong andSingapore, are these finite
spaces, right?
But there are other Asianmarkets that are more developed
and less developed in this area,and so I'd be interested in
that too.
Manoj Dugar (18:39):
Yeah, I'll let you talk, sorry, since you talked
about the QR code and thedigital payment space.
Clearly that's one area whichis still being worked upon, I
would say because they're justnot about uh technology.
But there are underlyingregulations policy advocacy,
which needs to be addressed,liquidity, which needs to be
addressed to make it a lot moreinteroperable and have a same
(19:01):
experience as you would have inthe domestic infrastructure.
You would want to have the sameexperience in the cross-border
space as well.
So some development stillhappening.
There are bilateral corridors,uh, which have kicked off, am I
right?
So singapore has kicked offwith thailand, singapore has
kicked off with malaysia,singapore has kicked off with
india as well.
So some of the end consumer toconsumer workflow.
(19:21):
You could use some of these qrcode to make cross-border
transactions.
From our perspective.
To answer your question also isthat obviously we've seen the
adoption because there was areal problem in the real estate
industry, but we believe thatthere could be opportunities
across other sectors as well andwe are in discussion whether
it's potentially likee-marketplace or healthcare or
(19:44):
insurance industry, where thereare multiple parties involved.
There are certain transparencychallenges as far as the
workflow is concerned.
We believe that there could beadoption of these tools and
technologies, and that would becity agnostic or country
agnostic potentially as well,but early days.
It obviously requires a lot ofselling, not only to the, to our
(20:06):
clients, but to the ecosystemparticipants, the used cases as
well, and leverage some of thedomestic infrastructure because
that's a lot more matured as faras cross-border.
That's where some work stillneeds to happen before we reach
the end state.
Micky Tesfaye (20:20):
That's so interesting, especially the
healthcare.
That's exactly what I was goingto say, yeah especially the
healthcare one and, to yourpoint, Rich around the identity
piece right like.
Rachel Morrissey (20:29):
I guess that's one of the areas where secure
identity kind of well, that'sthat's part of why I was so
curious about this is like Imean, why would?
Why would a QR code really needthe identity piece that it?
You know why?
Why would the grab app, uh, allof a sudden question my
identity when it's it'sinstalled, it's it's set up and
(20:52):
everything, but all of a sudden,because I have to transfer a
SIM, like I, you know, I have togo from one SIM to another SIM
inside my own phone which hasall of the information inside of
it that the connectivity onthat side is also a little odd,
right?
The fact that I had to set upready to go and the fact that
(21:13):
all of a sudden I wasn't meanymore is kind of an
interesting part of thisequation, and I think about this
, the tokenization all the time,because it does depend so much
on identity, depends so much onon this part of the of the
structure working, uh, from frommarket to market to market.
Manoj Dugar (21:34):
True, uh, and that's why you see a varied
payment infrastructure in manyof the markets in asia.
It also depends upon the endconsumer behavior, the
demographics of the country, theadoption of credit cards, as in
probably in the US, but it maynot necessarily apply in across
most of the markets here in Asia, especially when you think
about the ASEAN region, wherecredit card may not have been
(21:56):
penetrated.
Banking has not penetrated tothe end consumers, to the end
people in the country as well.
So clearly that's where walletsand QR codes have got adopted
as well.
So you have some elements ofbanking which is done through
those channels and that's whysome of those channels have got
a lot more prominence in thesemarkets compared to markets like
(22:20):
Singapore or UK or US.
Rachel Morrissey (22:22):
Right.
Micky Tesfaye (22:24):
I mean wow, what can I say?
Rachel Morrissey (22:26):
I know it's really fascinating.
So you were talking about itbeing used in other industries
like healthcare and things likethis.
What's the client response thatyou guys have had?
How excited are they about thenature of this solution and
what's going on with that?
Because I find this sort offascinating, because this has
got to be kind of blowing theirminds.
Manoj Dugar (22:48):
True.
So obviously we've spoken aboutthis over the last five, six
months since we launched thisProject Epsilon, as we call it
in the real estate industry.
It's got many of our clientsinterested and we've got more
engagements now in terms of someof the real use cases, but I
would say it's still early days.
We obviously have to roll itout across real estate industry
(23:11):
because that's a burning needright now.
Other industry would require alot more deep dive to be done so
that at least the solution fitsthe end-to-end ecosystem
players as well.
It's early days, but we believethat it has the potential to
scale up.
Micky Tesfaye (23:24):
That's excellent.
Yeah fascinating, I guess, justlike to one other future gazing
question, and it's honestly noteven maybe relevant.
But now that we started talkingabout identity, I'm super just
like fascinated with this pointyou made earlier around Enbridge
and the use of it not to movepayments but identity.
So is there an opportunity forbanks like HSBC in the future to
(23:48):
kind of start leveraging theseblockchain technologies for data
portability, for things likeidentity portability around the
world, so that rich so I can payfor a taxi.
Rachel Morrissey (24:01):
Rich can.
Micky Tesfaye (24:03):
She's able to have identity.
Rachel Morrissey (24:05):
So I can get to my hotel without.
That's all I care about.
Manoj Dugar (24:08):
Just to address your question, Enbridge is
supporting payments on across-border basis, especially
in trying to make some of thedigital technology in these
markets a little moreinteroperable as well.
So it's more about settling ona cross-border basis using the
underlying blockchain technologynot necessarily the identity
(24:29):
piece at this point of time, butsome work to be done on that to
bring it applicable for theidentity management.
Rachel Morrissey (24:36):
Okay, well, that's about it.
That's about our time today.
I am so thankful that you camein to talk to us about this.
This is so interesting to us.
Like I said, miggy lives in amore sophisticated area.
I'm just stuck with my good oldcredit card and my load of debt
, but I'm really grateful.
(24:58):
Thank you so much, manoj, forcoming in and talking to us.
Manoj Dugar (25:00):
It's a pleasure to come and speak as well.
Given the potential that thissolution has and the technology
has, we clearly want to see theadoption of that across
industries as well and countries.
Rachel Morrissey (25:10):
Yeah, I am looking forward to seeing this.
I mean, I think I live in NewYork, so the idea that this kind
of technology I mean to me thishas much broader implication
than just Singapore If we usedsomething like this in the
States, if this ever gets tothat point, which it will
eventually.
But when you live in a placelike New York and you, you
(25:33):
understand how these real estatemarkets in these very tight
areas work, which New York andSingapore have that in common,
you can kind of see, oh, there'shuge amount of potential right
here, um, and then you see itglobally.
It's really interesting.
So, thank you so much forcoming in.
That's it for this episode ofthe money pot.
We love our listeners and ifyou would go to iTunes and give
(25:56):
us a review, make it five starsso that people can find us.
Yeah, come on.
And if you would like toparticipate in Money 2020's
Money Pot at the shows, go aheadand email us at podcast at
money2020.com.
As I said, thanks again fortuning in.
We love our FinTech nerds.
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