The Power of Data Podcast
Episode 35: The Digital Revolution
Guest: Sameer Sawhney, Senior Managing Director and Co-Head of APAC at Greensill
Interviewer: Sam Tidswell-Norrish, International CMO, Dun & Bradstreet
Hi, welcome back. You're joined by me, Sam and Sameer Sawhney, Senior Managing Director and Co-Head of APAC at Greensill, welcome Sameer.
Thank you, Sam. Good to be here. Looking forward to this chat with you.
You're in Singapore. I'm in London. It's another virtual podcast, thanks to Coronavirus. I'm just starting my day I've been on my morning run had my coffee, and you're just about to get into the cocktail hour, so we'll keep it punchy. But it's great to talk to you and you and I have known each other for a while. I've always been an enormous admirer of the breadth of your career. You've done everything in financial services. Can you tell our listeners a little bit about what you've done over the last couple of decades?
Look so born and brought up in India in Delhi, I did my chartered accountancy, which is a professional degree, and I did with Ernst and Young and then join banking. I always wanted to get into banking. So I joined ANZ Grindlays Bank as a management trainee in 1995. For six months, we used to go through every division in the bank to get a better sense of what the bank does, anything from operations to front office. And then I joined copper banking A couple of years later, I got an opportunity to move to Standard Chartered to do something around foreign institution investors like Morgan Stanley and Credit Suisse who were coming into the country to invest in the markets. So I wanted to understand that better so I joined Standard Chartered. And then I spent about 12 years at Standard Chartered, and I got an opportunity to work in different parts of the world; Middle East, I worked in London, I worked in Hong Kong, covering Northeast Asia, and worked in India and Southeast Asia. And worked across multiple divisions, predominantly in wholesale bank, which I thought was fantastic. Then I got an option to join back and ANZ which was just about looking at restarting the presence and building it up in Asia because they had sold it off to Standard Chartered actually, in 1999. And Mike Smith had just joined us who used to be the CEO for HSBC, Asia, and he wanted to build the Asia franchise back up again. So I joined them as a Head of Coverage, ran the wholesale bank for them for Asia, Pacific, Europe and Americas also run the Global Copper Bank for a period of time and then the of my career, which was about eight years with them, I was a CEO for Singapore and Southeast Asia. I had had done lots in banking and there was more to look at. So I went and ran one of the largest NBF C's in India. And that was also for two reasons. One, I had never worked in India since 98 word count them many times and is to do business there. But also to get to know India a bit better the mid-market level, because as foreign banks, we traditionally deal with all the large corporates, and also the NBF Sea which I joined was the leading NBF seas, which is non-banking, financial companies for infrastructure. And I really think that that is going to be something which the governments will have to take more seriously. And I wanted to get my arms around that did that and then came the opportunity with Greensill. So I met with Lex, you know, Lex can sell an ice popsicle to an Eskimo and here I am, in Greensill since October 2019.
It's really interesting to hear you talk about your transition from the banking sector to the non-banking financial sector. Now, it has been a big trend for a number of people we've spoken to on this podcast that interestingly, when you talk to an accomplished bank, who's spent time in Asia, all roads lead back to Stan Chart, I've come to realize that. We actually had Bill Winters on the podcast not so long ago, which was a fascinating conversation and the Asian market is about to go through a really interesting time in the global market. And it would be remiss of me not to ask about the topic that's on everyone's mind, which is affecting people and businesses globally. And I'm sure it's the same for you in your world. So how do you see Coronavirus affecting Supply Chain Finance? But now and in the medium and longer term?
Very apt question Sam and the widest is having creating significant challenges for individuals for businesses and for governments. Right. So nobody's getting spared on this right now. And that's across multiple issues. Asia is a very vibrant economy. But it's also built around trading. This huge amount of exports and imports and supply chains which are built within Asia to each other and also to the west, which is Europe in the US, I think with the current issues clearly is going to have an impact on the businesses. Because of the demand comes down, it will then create challenges across how the supply chains will work. How will you keep the supply chains active in terms of making them financially viable, because the supply chains always have the large companies and the smaller companies, and it's usually the smaller companies which get hurt the most, because the ability to raise financing goes down and the cost of financing for them becomes exorbitant. And hence, you know, I think there is a tremendous amount of effort which has been put in by various central banks and companies like yourself, as to how do we ensure that we are able to support the MSMEs amongst other big customers that we deal with so that they are able to maintain their ability to withstand this pressure, and also to be able to retain the status as an active supplier to some of the large companies and hence the supply chain to keep on running as it used to be in normal circumstances. So look, I think China is coming back and you're seeing some huge amount of clothes coming back up to about February levels. I think they will push it harder, but other big economies like India, and some the other issue in common, including Singapore, a lot in lockdown. So it doesn't mean that the factories are not working. But I'm fraction of what the actual manufacturing usually goes off. So look, I think it's going to be interesting how this goes, it is going to be challenging. But I haven't seen so much will and support by the central banks and governments as we have seen this type.
Yeah, we've been doing a lot of work with governments and various different government agencies. And I think the rallying support for businesses is being truly incredible. Now, perhaps they're not moving fast enough. But this is totally unprecedented. While we're on the topic of supply chains, it's never been so important to know, a whole range of supplies and even your supplier supplies. But we learned in 2008 the financial system is fragile in its nature. How do you think the global credit landscape will evolve?
Look, I think you are in the business of information. And the first principle of lending is to know your customers. And I think you can never forget the principle whether it's good times or bad times. But I think it becomes even more acutely important when the times are tough, not from the fact that whether the customers surviving or not, but it's more about how you're going to support the customer. Because end of the day, we are very invested in ensuring that the customer is able to get through these tough times, because not only does he survive, we also get paid back. So it's selfish as well.
Look, I think we are today better presented compared to maybe a decade because just the sheer amount of data that you have today and the different sources, so collecting data, getting real time information as to what's happening both on a financial non-financial basis is today, I would say relatively easier compared to what it used to be. And also with the transparency which comes along with it. Also, you have more trust that what you're seeing the data which have been given or you're considering is actually accurate. And those things become very important, as you're taking credit decisions saying how are you going to be able to fund or provide credit to these suppliers or the big buyers to be able to run the business successfully? So look, I think there is never a perfect answer. Could we get more information that we The answer is always yes. But I think the data which we get including D&B, which is a big partner for us, where we source data from, and also what we're getting from various government and other sites, allows us to be able to be more nimble and far, much more dynamically better prepared as compared to working on static data, which might be three months old, and hence, you're taking decisions in the past, which actually have no relevance today. So just following up on that, Sam, as we are users of data at D&B, with your data, you're the center of the whole action, right? So what trends are you guys seeing from how you're collecting data and how it is being used by your customers?
It's a really, really good question. So there's absolutely no doubt in my mind that this pandemic is gonna stand out as a world changing event and how much of a world changing event really depends on government and businesses reaction to it. But I think regardless of what industry you're in, geography or size, it's going to be a challenge for everyone. And the good news is D&B, I mean, we've been around for 178-179 years. That's a really long time, and we've helped clients weather, all sorts of events, financial crises, wars, pandemics, natural disasters, and Coronavirus is no different. Okay, so what are we doing? Well, we're working with governments around the world to understand the scope of economic impact. Now our data provides relevant emphasize to help prioritize emergency management and support businesses. And we've got a team of data scientists, you can almost imagine them in white jackets in the labs who are there crunching numbers and building algos and lending their skills to help organizations across both public and private sectors. And we've got a team of economists who were there adjusting country risk ratings all the time. But one of the important things you got to bear in mind, every business intelligence firm that has scores and ratings is having to review their practice and amend and I'm really proud of the D&B team for how quickly we've been addressing this. Our scorecards use historical data to, as you'd expect to predict future likelihood of things, whether it be slow payments, whether it be business failure, and we use data from over 30,000 sources, it's not trivial stuff. But some of that data. And key sources of that data are from company account reporting, trade payment data, corporate linkage, data, county court judgments, for example, that help signal these events. And subsequently, many of these areas have been given dispensation to slow down – courts, a sharp HMRC and Treasury have allowed people to file returns in a delayed fashion. And this stuff impacts scores. And so to complement our existing scores and models, we're developing a new COVID-19 impact index to support our clients, which is going to be a market leading capability to really help understand the exact impact of what's going on. But Sameer it's not just the data. I'm really intrigued to talk to you today about how the world's gonna change. So If you think about 2008, you were right in the crux of it, I assume. I was just starting my career at Barclays Capital. 2008 saw an inflection point. It was really the rebirth of the financial technology, industry. An industry that had been ticking along in the background, but it really catalyzed the growth of financial technology. And that was because there was a forcing function. And there are a number of forces at play there. I think 2020 is going to be the same. But this isn't just financial services. This is the global economy. And we are being forced as humankind into a bottleneck to use digital services. I really think this is the inflection point for digital. There is an irreversible trend that we are going to be seeing that's going to change the way we live. I was speaking yesterday on a webinar, and I called it digital singularity because it really feels like it's that moment in time that's irreversible. We are all impacted by how much we are consuming digital capabilities, I'm using the houseparty app with my parents. I couldn't have I couldn't have imagined that before. And it's going to dramatically alter the way we work. It's going to alter the way that companies operate. There are going to be huge changes in policy to all sorts of things from debt to stock buybacks, the exit calm to benefits, there's going to be a burst of use in online services, what's gonna happen to the high street and bricks and mortar shopping? It's going to alter the way we live. Is there going to be an ongoing social distancing? What's going to happen to the restaurants, airlines, trains, entertainment, what's gonna happen to sports? You and I love sport, cricket, it's in our family. You know, my brother in law is a professional cricketer. What's gonna happen to his world? I'm really intrigued. How do you think the world's gonna change?
That's a billion-dollar question. Yeah, look, and I think you've actually articulated some of the things that we are facing may very well but look, I won’t suggest that I had the answer, but I can just share with you some of my thoughts based on my personal experiences and what one is exposed to by speaking to other colleagues and the businesses that we deal with. I think it's going to have a significant shift. And it's much different than 2008. Because 2008 was more of a financial crisis. And the government's came in put equity into the banks, and it could be brought together in a few months’ time. And then there was a bit of repair. But life went on, it did not impact the common man on the street other than reading the headlines of the world was falling over. I think this time, it is going to significantly change how we live life. One what we take for granted, we all thought we could go anywhere and nothing stops us now we have to rethink that. And I think we will actually become a bit more forgiving for if certain things don't happen and also be appreciative of what the world actually affords us today.
I think secondly, from lifestyles and how people consume services or buy services is going to change. I think, you know, today my mother who's 75 years old, who would stay away from ATM cards or from doing things on the net today has become quite comfortable with it. Do you think she's going to go back to going to a branch and filling paper forms? The answer is no. So this whole leap, I think, which we had to take, which would have taken years for certain generations to become used to the way they will buy and how they will use technology than human aliens knowing so that was on an issue. It was stuck in the middle. I think that that thing has just suddenly got a 10-year boost in terms of how they're gonna do and I think this has a significant impact, if I bring it just to financial services. I think it has a significant impact the financial services companies willing to rethink their model, it can't be based on you know, big physical branches which show strength. I think it will be built around agility, it will be built around customer value, it will actually give smaller firms, new tech FinTech companies, including people like us the ability of actually competing with the big boys and winning by providing better services at better rates and in a much better delivery model as compared to what people used to get earlier. It is going to drive transparency people I'm going to demand why am I paying what I'm paying? Or why am I getting what I'm getting? And you will have to answer that. So I think it is good to have a profound impact for businesses. I'll give you an example. When I was in India, a few months back before the whole lockdown happened, and India went for the demonetization. In India, a significant part of purchase and sale was on cash basis. And after demonetization, you can go to any guy who's basically pushing a trolley with some fruits on it, who's willing to take money through a phone today, right, he's using a phone app, the behaviors are changing very quickly. And I think that is going to now percolate down not only how we consume, how we buy, but also how businesses are going to really find ways to be able to move at that pace, and also the cost structure which are coming up. Does that answer it, Sam?
Yeah, it does. And it's a great answer. I think the point you make on the generational boost. We have we have literally skipped 10 to 20 years where we're going to be waiting for a generation before us to catch up with technology. And you're right this has been a catalyst for that. My wife and I, you know, I was she a doctor and we were talking last night over dinner about how it's going to affect how the healthcare system, for example, is there going to be a dramatic increase in spending on public health care and what's gonna happen to telemedicine now? Yeah. Is there going to be consolidation in the system? Are we going to move to a single payer system in some markets? What happens to universal access all this stuff is now a very real conversation that couldn't have been happening before. And that's just one industry and it's happening across every industry. One of the things that I've been fascinated to see is how governments are reacting to economic revival. In the UK, various different industries have been appointing different groups of people to chair different industries. So Steven Catlin, for example, is chairing the insurance and reinsurance industry in the UK. President Trump has created 15 or so economic revival industry groups with some of the most recognized world leaders involved in those groups. What are you seeing happening in Asia around preparing for the economic revival that's gonna have to happen?
Most of the governments are learning from each other and also trying to ensure that they are taking a lead on this as compared to the private place. And what I see in Asia is both government and private place working together, which is actually quite unique and much, much more powerful. I’ve not seen that much in the past. But look, so there is a - the central banks which are supporting the banks and ensuring that the banks give enough moratorium or capacity to the borrowers to pay them back. Right, because the factories have been shut, people have been able to go to work and look, I think there will be a rise in unemployment, no doubt about it. How much that number is going to be? I don't know.
Secondly, I think there are a lot of industry groups who are saying okay, how could we actually create support systems for people both in terms of them being able to get certain motivators but also to upskilling them? So one thing which I have, which always actually very proud of Singapore is how they are not giving you just cash dole outs and saying, okay, here you go, and you can buy some more groceries. They're doing a bit of that. But they're actually saying, you know, we'll make money available to you, and use this as an opportunity of getting some new skills, or upgrading your skills. Because sometimes you get complacent, right? When things are there just things never going to end and you never add to yourself as much as you can and the opportunities you have. So I think that is coming through and again, I think just the sheer internet and the availability of these tools to you today over the net is far much easier for you to actually go and access those tools and you could do otherwise.
And I think lastly, the private industry like for us, I'll take Greensill's example right and Lex is very passionate about solving for first equals the two eyes which is the money which gets lost between invoices which are yet not paid and inventories which are still lying in the warehouses or in the shipping lanes but have not reached the end customer right so there's a lot of cash, the money stuck between inventories and invoices, whatever number who the knows number you believe is that anything from 11 to $15 trillion. If you can release that money, you can imagine how productive it can be for the industries and how it unleashes a new source of capital. Now we were talking to Lex and his one view was that actually one community, which provides the highest working capital to companies is employees, because you work for 30 days, and you get paid off within 30 days, whereas a company's actually accruing your salary on a daily basis. So we recently bought a company called Earned. And in fact, we've used the technology for NHS in UK where we are making salaries available without any cost, both to the employer or the employee on a daily basis. So the day you check out from your workplace and your salaries got accrued, we'll make it available to you. Now it's your choice whether you take it daily, you take it weekly, you take it bi weekly, but our viewers if you have earned something, why should you need to wait for 30 days? Why can't it be available to you when you need, then you're going and spending on a credit card and paying 24% interest or whatever the number is today these days. So I think similarly what we are doing We're here in UK, we are baking to use the same capability in other markets. I think the other place also are coming through trying to find ways how to assist both businesses and people, because they're the biggest asset of a business to be able to sustain, learn, and use this as an opportunity to, you know, get better. So, you know, every negative has a positive. And I think one has to focus on the positive than just worrying about what's going to happen, because it will happen. It's only what you do today, which can change it.
You’ve spoken there about a number of different bridges, you’ve talked about the public/private sector, I have to call out the World Economic Forum. I think unexpectedly they're doing an incredible job of being the convening platform. A COVID action platform is something that we've been a part of, and it brings together public sector organizations and private with 500 CEOs every week. In fact, we had a call just yesterday on it. And then you talk about upskilling. Another really important point is we reached that digital singularity, digital skills and never been so important. And one of the incredible comparisons between 2020 and 2008, which really puts things into perspective for you on the severity of this is unemployment. Unemployment in 2008-2009, was about a fifth lower in the United States than it is currently today in this pendant, digital skills and upskilling is going to be such an important area for companies to focus on. And I love the point that you just mentioned there the Earnd app when I saw the announcement and saw like speaking on the news about it. I mean, I was clapping at the TV. It's so important, why should companies not have cashflow issues? When the people in those companies do, particularly in the health service? It's antiquated to think that human beings get paid every 30 days? Why can't they learn as they go? It's critical, I think, for the survival of the economy to create cash flow for individuals on a daily basis. So hats off to Greensill, you guys are doing a really wonderful job both for businesses and for the people. Let's talk into a couple more questions and then I'll let you get back to your cocktail hour in Singapore.
Also top of mind at the moment really the world's micro businesses in sole traders, small and medium enterprises. They're the lifeblood of almost every country's economy in the UK alone and 99% of the company landscape is made up of MSMEs. And the current situation with Corona is bought a significant amount of concern for most of these businesses. Many need a lot of support. Are the micro businesses are the sole traders of the small businesses being best served by the improving technology, and what do you think could be done? You guys are at the forefront of it what can be done to further improve it to really help these folks?
Well, that's a great question. And I think it's even more important to answer this question today than it was before the widest centers. So there are two parts to it. Let's first take about supply chains which if you have any big company, which is today buying various parts from different suppliers, you'll always have a mix of some very large suppliers who are big companies with themselves and very small suppliers who form part of your MSME. Generally what we have seen the traditional lenders, which is predominantly banks, they always wanted to go and cherry pick right, so because nobody wants to onboard thousand suppliers because that's an expensive, a very tedious process, everybody wanted to go to the big suppliers and onboard them and make money available to them. A) sometimes they didn't need the money because they couldn't do it themselves. B) if they needed it, they were there was much more supply than demand from their side, but the guys who really need it, because that is what keeps them alive and actually gives them the growth capital, other smaller suppliers. And hence I think what we have done in Greensill is use technology to make it possible for us to not having to differentiate between the big and the small because it is tedious to onboard. A technology platform we use today allows us to onboard each and every supplier I think that's a big distinction factor for us and hence we have very, very large manufacturers are the second largest or largest manufacturer of aircrafts in the world and big pharmaceutical companies. We do not differentiate between a big and a large supplier, we basically a funding a sale of goods or services. That is what we're doing. Until the time there is a supplier who has sold to a buyer, and we understand that flow, and we have done a credit, we will make money available. And I think that is very, we have used technology exceedingly well. And the power of that is you can actually go to any industry, which today could have a supply chain of hundred to 10,000 and the system works, right. So we have taken me that whole latency and the issues of physical and use technology to get over that hump. And I think that is something which is helping us create a point of differentiation but more importantly, also be today eligible for helping many companies and we couldn't have been if he was still on paper mode.
Getting on to your MSME site. Look, I think the micro finance is a sector which is one of the most critical sectors and there's a lot of work which has happened for various for actually usually on the side, but what has not happened is that this still way dependent on face to face kind of a model as compared to using technology. So we are now working with a few of these firms saying we have the technology not only to connect, but also to be able to disperse. And to collect from these guys without a physical need to be there. We already had some good success in some of the markets we are in. And for the customers in Australia, we have actually onboard close to about 1700 suppliers, which is huge. And we want to now use this technology in other markets as we're getting into India, we're getting into China now we just recently got a China license; we will be applying for India license. We're looking at doing businesses in countries like Indonesia and others, which have more requirements for this maybe then some of the other larger OECD markets. So look, I think the good part is we have tested technology, the technology exists, and we can use it. But it's also the central banks and I'm gonna say this and I think RBI today has created actually one the best payment stacks in the world. So has PBOC, which allows open API's, which allows us to actually tap into those payments tax systems and be able to collect and pay on a digital basis, which was not available to us till about two, three years back. So I think the investments done by the central banks, the technology we have developed, is now working hand in hand to be able to reach a very large population at a click of a button. So, look, lots of work to be done. It's nowhere close to solved. But I think today we have far more tools to be able to become much more powerful in getting through this in a more meaningful manner, as compared to where we were two years back and I think next two years, we will look much miles ahead of where we are today.
And tell me what do you think it means for the India landscape? So, if you implement as technologies and you work hand in hand with the RBI and other state-owned banks, what kind of power can you unleash for the India business community?
Oh look, it's, I would even not hazard a guess because it's massive, right? Because today, now again, I'm not a research analyst, but whatever figures you read, at least 50% of the Indian population today is on daily wages, right? These are your entrepreneurs who today run an auto or a car or run a small shop, for them to be able to get paid for the work they do is incredibly important. At the end of the day, for some families, that is a difference between whether they're going to have dinner or not. So I think it's of immense value. And I think which is why the amount of effort which has gone into creating this large payment utilities via the government side, be it all these new payment companies like PTM and the others that we trade with, they have created infrastructures today which has made it possible for people to generate value in terms of cash, or like have cash, which is available to them instantaneously, which earlier just by if you sold something send invoice by the time it came back even on the fastest basis used to take a week. Now that week is a difference between your business running and you've been able to grow it or actually not being able to afford to run that business anymore. And look I think India's example, which is massive population, huge amount, big country, but the same is applicable to most of Asia, and Africa.
Sameer, we're running out of time, I for one am super excited to see what you do and what Greensill do, particularly in Asia, as you said, the opportunity there is, is enormous and I can't think of a better person to help bring this positive change, but for your business and for the society and economy that you're going to be serving there, than you. So I’ll watch from the sidelines, and if I can help that part, it's gonna be a privilege. Before we go to the most important question of the day, it's really not the most important question. I shouldn't say that at a time like this. But a question that I've been thinking about for a while, when are we going to get back to live sports?
First of all, thank you for your praise, appreciate it. And I think, Sam, given what you guys are doing at D&B and what we want to achieve at Greensill, which is to be able to bring financing to everybody who deserves it at a reasonable price, I think both of us as institutions have a role to play and lots to do together. So I'm hoping that will happen as we go forward in terms of when will it all get together? I, you know, again, it's a question which I can only take a hazard a guess. But look, I think there is tremendous amount of will to be able to start getting the economies to open up again, but at the same point time I think we have to ensure that the people are safe and they don't get into a health crisis in a bit of us being making to do it.
So look, I think A) we are all learning now how to deal with the new normal, which is you know, how to use zoom, how to use some of the other tools that you have and are able to carry on with work by the same point time I think that we hope that things will start coming back to some kind of normalcy, I don't know we could go back to where we were last December but some kind of normalcy in the next few months. And I'm sure everybody wants that to happen. But same point time, you know, we at, especially a Greensill feel that it has to be done when things are right and our people and communities if so we'll see how it goes.
Absolutely. Look Sameer, I know I'm standing between you and your weekend, although knowing you, you’ve probably got –
A few more obstacles.
And an hour on your Peleton bike. Once you've done that, have a wonderful weekend. But most importantly, thank you. Thank you for your partnership. And thank you for that incredible 30 minutes of knowledge. I've certainly learned a lot. And there's a huge amount for us to think about this. And I appreciate it. And I look forward to speaking to you again soon.
Thank you very much. Thank you for having me and I look forward to speaking again. Thank you, Sam.