Standard Chartered PLC (STAN) Earnings Call Transcript & Summary

Thank you again for joining Standard Charter's Innovation and Digitization event. This event is being brought to you in a hybrid format, and you will be joined by in-person guests at our office in London. During the entirety of the event, you will remain in this virtual room even as we move from session to session. You are welcome to submit your questions via the Q&A or chat tab. If you encounter any technical issues, please kindly drop a text to the moderator through the chat function, and we will reach out to you. We appreciate your patience while we wait for the event to begin. Thank you.

Good morning and good afternoon, depending where you are. Thank you for joining Standard Chartered's Innovation and Digitization event. My name is Niluka Ratnayake, and I'm the Regional Head of Investor Relations. We are pleased to be bringing this event to you live from our office in Basinghall in London and even more pleased to be hosting it in a hybrid format, where we have both an in-person and virtual audience. To those of you who accepted our invitation and who are with us today in Basinghall, thank you. For many of you, as it is for me, this is probably a first work setting in close to 2 years. To those of you who joined us virtually, a very warm welcome from everyone at Standard Chartered. Thank you for making the time, and we hope to make this a memorable experience for all of you. The format of today's event will be as follows: Bill will kickoff the event. It will be followed by 3 breakout sessions. They will be hosted by several members of Bill's leadership team who are joining us virtually from Hong Kong, Singapore, Jakarta, Dubai and Frankfurt. Kahina and Alex are here with us in London. The construct of the breakout sessions will be an opening, followed by a short film and questions and answers. Each segment will be about 30 minutes. Bill will be back for a short wrap-up, and the event will end with a question-and-answer session hosted by Bill, Andy and the presentation team. We will be taking questions from both sets of audiences on the topic of discussion today, i.e., innovation and digitization. Now I have a couple of logistical comments. Virtual audience, please remain right where you are for the entirety of the event. To our guests in Basinghall, you have been assigned a room for the breakout sessions, the details of which can be found on your badge. You will remain in the room assigned for all 3 sessions and will be ushered back to this venue for the close. So keeping to the spirit of today's event, we have tried quite a few things that are innovative or new to us. We are running today's event entirely PowerPoint-free. Hope you enjoy the new format. What we have done is that we have produced the key messages and factory document, which also has further details of today's program. This will not be used to run the event, but available for download at any time on www.sc.com/investors or you can scan the QR code, which is hopefully flashing on your screen right now. I guess, it's not flashing on the screen right now. It was, okay. Excellent. As I said earlier, we're bringing this event to you in a hybrid format. We also have 3 breakout topics and 3 tracks played in a loop, round robin style. So that's 9 shows. The round robins will have an in-person and virtual guests. They will also have speakers joining us virtually as in person. We're really pushing boundaries here. So why am I saying all this? I'm saying this because this is a call out to our evolution towards a culture of innovation and excellence right across the bank. You will obviously hear a lot more about this from Bill and our speakers. And finally, we have enabled live subtitles. Bear in mind, this is supported by artificial intelligence. So there will be some inaccuracies, and the time lag is typically 5 to 10 seconds. So that's it for me. With that, let's welcome Bill.

Hello, everybody. It is such a pleasure to be here. For those of you in the room, it's really, really nice to see you from the waist down. For those of you virtually, it's something I look forward to. Now we've got a pretty busy day. We've got a rich agenda here. The objective and what we want to do is to take you through something a little bit different than the conventional presentation that we might have around earnings or a strategy update. We want to talk about the way that we're using innovation to transform Standard Chartered Bank. Amongst the key things that we hope to get across is that our innovation agenda isn't something that's sort of off to the side. It's not something that we're doing in addition to the ongoing transformation of the bank. It's at the heart of the transformation of the bank. We know the banking is changing very fast. We know that there are tons of threats and there are tons of opportunities. The way we look at things from our experience now, and we've been at this for a few years, the opportunities are probably far greater than the threats. Some of that is particular to Standard Chartered. Some of that, I think, could apply to the banking industry more broadly. But what we know for sure is what we've been building over the past several years, what we will continue to build, and we'll obviously give you a lot of detail on both the status quo and the plans from here, is part of the process of fundamentally transforming the bank. We're very excited about it, and we thought this was a good time to lift the curtain a bit, what we've done, why we believe in what we've done and how we're going to progress this going forward. So we are going to talk about how we're transforming the bank through innovation. We're going to talk to you about how we choose where we want to play because, clearly, I think no one can play everywhere. And certainly, a bank of our size can't play everywhere. We made very deliberate choices. We're going to explain why we think we can win and, in fact, are winning. And then, of course, how we're going to do it. And we are convinced that we can win, and it's based on a few things. One is the fact that this is embedded deeply into our transformation agenda. It's not part of the culture. It's the way that we're thinking about being entrepreneurs and it's the way that we're thinking about being [ intrapreneurs ]. And at this point, we think we've got enough track record that obviously, we're intending to share with you today to say that the culture is, in fact, evolving in a fundamentally transformational way. Second is that our approach is differentiated. It's differentiated because we're a different bank, because of our footprint, because of our scale, or lack thereof in key markets, allows us to take a very different approach to the innovation agenda than you might see from some other banks. And then finally, of course, is the evidence that we're making good progress. And this isn't just what we're saying, this is what we're seeing from our customers. We're touching with our innovation agenda a very broad range of activities in the bank. Virtually, every client segment is affected, large corporations, SMEs, retail customers. We're executing through the platforms that we're building ourselves. We're executing through other people's platforms. We're agnostic. The key for us is that at every point to understand what the unmet customer need is to understand whether we have an advantage in terms of addressing that customer need and then addressing it. We're using a set of conventional tools. We're using a set of new tools, some of which we're developing ourselves, some of which we're bringing in from partners, some of which we're bringing in from vendors. But this combination of access to tools matched with our own experience is giving us an opportunity both to transform our own business, but also to develop new business models along the way. And we're doing that in a pretty regular way, and you'll be hearing about that. At every point along the way, we're linking our focus on innovation to our core purpose as a bank. So we always have inclusion and sustainability in mind. These are both areas where the opportunity to innovate is great. It's also an area where we can leverage our own innovative energies and focus into both greater societal good and value for our shareholders. We're quite ambitious in terms of what we're trying to do. We believe that we can generate over 50% of our income from this set of transformational and innovative activities, digital innovations and digital initiatives, innovations, the ongoing transformation of our core. And we're investing in this strategy. I'll talk a little bit at the end of my short comments now about the underlying financials to give you some color there. Now to date, our largest investments have been in the transformation of the core. It's been starting probably before I arrived, certainly accelerating after Andy and I really tucked in. We've been investing in addressing the technology deficits and the core capabilities that allow for rapid and agile innovation. Over the past several years, we've been shifting that balance from the transformation of the core to building on that core with many of the initiatives that you'll be hearing about today, whether they're discrete ventures or ongoing product innovations. What we're going to do today is to take you through this 50% with examples. We're going to try to give you some color why we think 50% is a reasonable aspiration for our bank, how we're achieving that. We're not going to get into big debates about what accounts and what does, and that's not the point. The point is we're fundamentally changing the bank. So we are approaching innovation in a different way. And for starters, we think innovation is about ideas and addressing unmet customer needs. It's not really about capital anymore, although obviously, it helps have capital to deploy in the right situations. We've taken a human-centric design approach to everything that we're doing. We've trained well over 2,000 of our colleagues in human center design techniques. This is part of the adaptation of the culture. But what we're also doing is making a series of investments that have to meet at least 1 of 3 key criteria. First is we're investing in things that are first-in-class or best-in-class. If it's not first-in-class ideally and best-in-class, it's hard to see how it can make a difference to us. Thankfully, we'll unpack all these, a lot of examples of that. Second is we're investing in things that scale fast or they can be scaled fast. We have a scale challenge at Standard Chartered. How exciting is it to be able to address that challenge with a few key well-executed initiatives? Third is we're disruptive with a purpose. You won't hear that from too many incumbents in markets, but we're prepared to disrupt if there's an unmet customer need. We'll disrupt ourselves, and we'll disrupt other incumbents. But always with a purpose, and that purpose is to address the underlying customer opportunity, which we see because of our presence in these markets. In many cases, we see it firsthand and we hear it firsthand from the clients. Progress is really encouraging so far. We'll dig into that in some detail. Now I know that what I've just said is somewhat contrary to the understanding perhaps by you or others of Standard Charter Bank or the banking industry more broadly. First-in-class, best-in-class, that does sound familiar. Scalable, that's what Standard Chartered has been doing for 160 years. This has changed. We have different opportunities, different tools. In fact, we've executed a different strategy, and we're obviously going to take you through that. We'll continue to be your father's bank. That's a very useful client segment. We're much more likely in the future to be your daughter's bank or your granddaughter's bank. Why? Because what we're building is future fit. What we're building is for the next generation so that these core network and wealth and other income streams that we've been so focusing on for the past few years are not only sustainable, but can accelerate from here. Very encouraged by what we've seen so far. Let's just take a few of these examples that I talked about, each of which will be discussed in the breakout groups in more detail with the people who are very much on top of these initiatives and ventures. First, first-in-class and best-in-class. What's that even mean? And then how are we deploying that? Let's take a look at our digital platforms. On the corporate side, our primary interface with customers is through something we call straight to bank. Straight to bank has been around for a while. Straight to bank next generation is a cloud-native, fundamentally transformational platform that allows us to interact with our clients not just on the products that Standard Chartered is offering, but as we build this out to become the platform occupying a disproportionate share of the corporate treasurers or the CFO's desktop. This is very exciting. We've now got 42 markets covered. We've got 72% of our cash clients migrated onto this platform. We have the time to market, 1/2 of the time to market for new products and services down to 8 weeks. We've got digital on-boarding for clients in the corporate space, which is quite unique, may be surprising, down to 30% -- sorry, up to 30% of our clients are digitally on-boarding. That's across 9 markets. So this is first-in-class, and what we're building is best-in-class. The tech foundations that we built are excellent. We've got real-time on-boarding in the retail business across 6 of our markets. That means somebody can go into the website, you have a live account funded in under 15 minutes. And our typical on-boarding rates successfully is over 80%. So industry-leading. Very powerful set of APIs, both in the retail and the corporate business. And this has allowed us to significantly increase the volume that we put through the machine. All this is enabled by our investments in this core tech platform, which is continuing to roll out. But we're very well advanced. We've got -- our core banking system now is deployed in over half of our markets by volume, fundamentally cloud-based, very, very exciting in terms of the ability to innovate off of those core platforms. The final point on first-in-class, best-in-class is, let's find what you say, what about your customers? How do they feel about this? And frankly, our customers are saying, "Yes, yes, your first-in-class and best-in-class." We look at Mox, top rated financial services app in Hong Kong, one of the top rated financial services apps in the world. Our wealth management application along with that business in China, consistent 5 star ratings, frequently the most downloaded financial services app in China. It's pretty striking. China is a big place. Top 3 wealth manager in Asia. This is supporting the message getting -- that we're getting from our customers. Nexus, which you've heard us talk about. It's the first fully scoped and fully scaled and scalable banking as a service proposition. We're starting in Indonesia. We're in production now, waiting for final regulatory approval to expand this thing broadly. But we will be first-in-class with this business model. Of course, we intend to be best-in-class, but we're going to have to let our customers judge that once we're up and running. Digital banks in Africa, consistently rated best-in-class in their markets. Other ventures that you'll be hearing about over the course of today, SOLV, our SME platform in India; CardsPal, a rewards and offering optimization program in Singapore. CardsPal is rated #1 in the lifestyle category in Singapore. It entitled Standard Chartered to have a #1 rated lifestyle app in Singapore for what's a really good app. And we understand what customers want, and unify that in a fun and relevant format, leveraging the data capabilities that we built and obviously leveraging the technology capabilities. The second of the criteria for investment for us that I talked about is scaling, scaling fast and scalability. This is absolutely key. We know that, in a number of our markets, we have suffered by being subscale, which may have worked at a point in time, but it doesn't work today. The opportunities that we've got both in the corporate and the retail space to get to scale quickly and efficiently and then have an efficient business at the back end are very exciting. Just a couple of examples. So you've heard us talk about Linklogis. Linklogis is a company -- we were around from the inception of Linklogis. It's a supply chain, deep, deep supply chain finance and financing companies set up in China to help our large MNC customers, understand their supply chains all the way through, provide associated financial services. We invested in them in the beginning. We were their largest customer, our largest partner for parts of their evolution. We've now set up a separate joint venture with them called Olea, which launched in Singapore -- or announced in Singapore just a few weeks ago to have -- to take the product offering further into digitized trade finance. This is the kind of partnership that we're creating. This is what's allowing us to scale much faster than we could ever scale organically. Mox, 175,000 customers in the first 12 months. The digital banks in Africa, 700,000 customers in 2 years. Almost as many as we raised that we've taken onboard in the previous 160 years or so. We will soon surpass that level. 75% under the age of 35. This is the future of our business from a broad financial services perspective, obviously, including wealth. SOLV in India, we've got over 90,000 small retailers, traders, wholesalers, manufacturers on-boarded in this platform. This is a platform. Standard Chartered is a participant in this platform, not the biggest. But what gives us the ability to scale to scale through SOLV? Well, we understand the constraints that our SME clients were experiencing. We developed a solution to those problems, which went way beyond Standard Chartered, tapping into finance, professional services, their own customers. We have Dell and Samsung as sort of core anchor customers who are feeding into the SOLV platform. These are some of the biggest distributors of product through these various same traders. So these are -- we're building an ecosystem. We're also building the platform that is exciting and growth. And even this morning, you may have seen we announced a partnership with Atome, which is part of the Advanced AI group, a data-driven fintech in Asia. We'll be partnering with them across 10 markets. This will allow us to aggressively scale credit products to small businesses and retail customers, including buy now pay later. We even have an acronym for this now, BNPL. So this is exciting opportunities. Why do people like Atome partner with Standard Chartered? Because we understand them, we can adapt technology very quickly, and we're a great partner. Final point on the scaling fast. It's not just scaling customers in a market, it's scaling across markets. The fact that we can reuse our entire tech stack for Mox in Singapore is exciting. The fact that we can roll SOLV, which was built for India, but roll that into Kenya, which is our next step, is exciting. And you'll hear many of these examples of scaling across markets. The addressable wallet through the partners that we already have onboard is super exciting. I just mentioned Atome, but Bukalapak at 100 million customers; Hong Kong Tel, 4 million customers; Trip.com, 1 million customers in Hong Kong, another 350 million in China. We don't have a partnership with them in China, but might we be able to do something at some point? Yes, of course. NTC, our partner in Singapore, 2 million customers go into their shops every day, fantastic opportunities to scale. The third point that I mentioned, disrupting with purpose. We're prepared to disrupt our own business. Mox is the obvious example of that. We're prepared to disrupt other incumbents. What's the point of disrupting? One, if you identify an unmet customer need and solve it, you've identified something that somebody else was going to get to eventually. If we get to it first, we get a chance to grab that share of the market in advance. We can also obviously learn tremendously, not just from what we build in Mox, but also our learnings in Mox can port over to the existing retail bank in Hong Kong and vice versa. We set up a disruptive, I'll call it, at the early stages of an ecosystem, but we have grand ambitions in digital assets or cryptocurrencies. Our Zodia Custodian starts with an unmet customer need, which is institutional investors owning cryptocurrencies, wanting to have an institutional quality custodian. But from there, we will build out into other opportunities, whether it's in marketplaces and exchanges or expect to be very involved in the rollout of whether stable coins or central bank digital currencies. This is all part of our willingness to disrupt existing business models by taking a differentiated approach. Same thing in the Atome population. We've launched Atome in -- which again, you'll hear about all those in detail. Atome in Singapore, which is, again, a fundamentally data-driven solution to customers for their health, wealth, lifestyle planning as they think about retirement. We take in a differentiated approach. It will be disruptive. It's already disruptive. It's super high rated. And so of course, there's opportunities to expand beyond that core market. I'd like to shift now from the 3 criteria we use for investing to why we think we can win and what are the advantages that Standard Chartered brings to the table. First of all, we are a regulated bank. We have experience with regulation. We have credibility with regulators. We get access to licenses that may not be forthcoming to nonbank players or bank players who are not in good standing. We leverage that. We're bringing bank quality and bank-grade data governance and security to our applications. We have a brand, a legacy, which is a good thing, right? And I think our clients trust Standard Chartered and the clients that we're going after, which we're talking about, multiplying our retail client base by time. A lot of these people don't know us, they probably know the brand. And this is somebody I want to bank with, if they've got the right platform for me. Obviously, we're building that. And we think we can win because we are actually shifting the culture of the bank towards one that is continuously improving and innovative. So how do we win? We've got 5 key things that we're focusing on. I'm just going to run through them quickly. First, we think we can win because we have invested in our core infrastructure, and it's now fit for purpose. It's fit for rapid and agile rollout of new innovations. Second, we have a special position as an incumbent. This position as an incumbent gives us the opportunity to disrupt with purpose and for the creation of value. We're big enough to be relevant to any partner or any marketplace. We see that regularly. We're small enough and hungry enough to be agile in terms of the way that we can step in and disrupt where necessary and appropriate. Third, we're building unique ecosystems. I mentioned the digital asset ecosystem that we're building. The cross-fertilization of knowledge across the ventures is very powerful for us. But there's many examples of that. our ability to transfer our knowledge in one African market to 8 other African markets. The ability to transfer our technology and knowledge from the African markets into the Middle East and South Asia, while also informing investments that we make in Mox or Phoenix or in our core bank. Leveraging the knowledge that we have about how -- about the challenges that our affluent clients face in our markets fundamentally informed the construction of our Autumn wealth retirement lifestyle and health planning app, but also the knowledge that we're getting from clients through the app is helping us to understand how to offer better propositions in the main bank. So the ecosystem that we're building between SC Ventures, which we'll be talking about, and the bank between geographies within markets, within asset classes is exciting and highly leverageable. Number four, we have SC Ventures. SC Ventures is a discrete business unit. Alex is sitting here in the front row. You'll be hearing from him in the breakout groups and Q&A later. We set up SC Ventures I think a little bit differently than other venture labs or innovation labs that's been set up. SC Ventures build some new things, build CardsPal, build SOLV, built nexus. Sc Ventures build things together with the bank. They collaborated in the construction of Mox. Nexus is fundamentally a joint venture, if you will, between our banking business in Indonesia and our venture tech team. The SC Ventures is investing typically in people who we've come to know well through partner relationships. So we know them. We like the product. We trust them. We think that our business, our relationship with them is in itself creating equity value for the start-up or the early-stage company, which we can benefit from, been quite successful so far. And then fourth, SC Ventures is a consulting arm. So people setting up ventures inside the bank will frequently go to some analysis team and say, "What do I need to know about this partner relationship, about this technology stack?" So it's an integral part of the bank, but still has the ability to be a completely distinct and separate incubator for great ideas. It's a key competitive advantage, and you'll hear more about that. And finally, I would say timing. The -- we have the ability to pace our investments in such a way that we can optimize for value. We're not serving a venture capital master. We're not serving as revenue to your shareholders. But not in a way that it requires us to do things that are destroying value or that are short-changing value. So those are the 5 underlying advantages that we think help us to win. If I could switch gears for a moment now and just switch into what does this mean for us strategically and what are some of the financial implications. Strategically, as I've mentioned now probably 3 or 4x, we're fundamentally changing Standard Chartered Bank. It starts from the core, and it works out from there. Financially, we expect this to have a meaningful implication for the shift of our business from the way we've done things for a long time to a new set of transformed businesses, digital services and new digital businesses. We've talked about the significant shift in our investment spend over the past 6 years where, went back 6 years ago, we were spending -- investing $700 million or so depending on exactly how you count it. Almost all of that was defensive. That was addressing historic issues in financial current compliance, technology deficit, et cetera. And we ramped up our investment aggressively and quickly, $1.6 billion now up to this year being $1.9 billion. These are cash numbers, right? Some of this is capitalized and amortized over 3 years. We're not going to get into the accounting. It normalizes over time, but a significant increase in investment. As important as the increase in spend and the results of that spend, which are really good -- not yet 100% complete, but really good underlying technical infrastructure. We have been shifting over the past several years from the relatively internally based transformational investments to new strategic initiatives. So we're at the point now where fully half of our annual technology spend, so about $1 billion, is in fundamentally strategic and differentiating investments. And that will continue. We expect to maintain that level of investment for the -- certainly for the next several years. The next 5 years is what you can see on this graphic. So the life-to-date investments that we've made in our ventures. So this isn't just SC Ventures. This includes Mox and Phoenix and the other ventures that we've talked about. It's about $600 million. That's what we've invested in these things so far, of which about $200 million has been invested in minority stakes in companies, almost every case, I think in every case, actually, where we have a strategic partnership of one form or other. Those are venture investments. We're targeting venture returns. So far, we're getting venture returns. So the value of that portfolio has roughly doubled since the time of investment. These are all early-stage investments, and we're talking about -- just to give you a couple of examples. We've taken a stake in [ Rosbank ] in Korea, which we're helping to build. We took earlier a stake in Ripple, which we were using and continue to work on cross-border payment solutions with. We took a stake in Bukalapak as part of our engagement with them on nexus. We've taken the stake in LINE Bank in Taiwan. So these are the sorts of things that we're talking about. We've also invested in compliance companies, like [indiscernible], where we were the primary customer at the outset. Our sponsorship of that investment created a lot of equity value in that company. We'll benefit from that through the stake, roughly doubled. Early stage, the opportunity for significant growth in the value of that portfolio, I would say, is very high. Obviously, we're not counting chickens. For the other $400 million, this is the ongoing investment in our ventures and the transformation portfolio. Here, we're looking for returns that are consistent with the return on capital for the bank. So we're not doing anything where we don't think we can generate well above cost of capital in terms of return, either through efficiency or through income. But we're also looking at a broad range of metrics that go beyond the pure money multiple or ROTE or IRR. We're looking, as I think we would, in any new economy venture at customer numbers. We're looking at the customer satisfaction indicators. We're looking at whether we're meeting these objectives of being first-in-class, best-in-class and disrupting with purpose. Our ambition is to grow our retail and SME business by a factor of 5 of 50 million-plus customers. Our ambition is to increase our payment flows by something like 50x from these ventures that we built relative to where we are today. We expect these investors -- these investments to be profitable, and we expect them to generate good returns and create some real shareholder value over time. The total expenses for these ventures that I mentioned, SC ventures and related joint ventures, is about $200 million or 2% of our expenses today. We expect this to grow meaningfully in the coming years. But the really important footnote is that our expenses will grow if we're successful. Obviously, if we're not successful, we won't be continuing to invest in these ventures. So we're backing success, got a very, very deliberate selection process, which clearly allows us to discontinue projects that don't generate success. So yes, there's expense pressure that comes from these ventures, but it's because we see tremendous opportunities based on success that's actually measurable. This dynamic is a key part of us getting to a cost income ratio of below 60% in the medium term. It's a key part of hitting our 10% return on tangible equity target. So unless you ever think otherwise, everything that we're doing is with a view to creating shareholder value. And the track record that we've built up, we think gives us an approach -- gives us an opportunity to do that in a foreseeable time frame. We're quite keen to increase and maintain a high level of transparency in this regard. Starting next year for 2022, we will be disclosing SC Ventures and related entities as a separate business unit. So you'll see the underlying financials that relate to this stuff that we're talking about today. Clearly, this is the beginning of a process of discovery for all of us, but in particular for you. We intend to continuously increase the transparency. So maybe just to wrap up for me and to talk a little bit about where we're heading. First, these ventures that we're talking about are a core part of the bank. Some of the ventures will remain at the core. They're just part of what Standard Chartered Bank is. Some of those ventures are, I would say, half in the core. So we've got things where we control the venture, but we don't have 100% ownership. We'll see how these things develop. Perhaps the best way to create value in those ventures is to lead them in a hybrid status. Perhaps the best way to create value is to sell them at some point. Perhaps the best way to create value is to buy them back in, which, of course, we get a commercial transaction with the other shareholders at that point. We're not averse to anything other than continuing to address unmet customer needs, creating the most value for Standard Charter shareholders in the long term. Some of these joint ventures are outside. Some of these ventures are outside of the core today. They're separate entities, either owned 100% by us or owned partially by us. And we'll look at how these evolve, whether they are best left outside, whether they're best left controlled by Standard Chartered or materially owned by Standard Chartered or whether we're best letting these things trade freely. So we're agnostic to that, always recognizing that the value for us comes from what we learn, the value that we can put into these things, which, therefore, creates shareholder value. I'd like to call out a key personnel change, all of which is public. Michael Gorriz, our Head of Technology and Innovation, who's been very helpful to all of us as we've driven through this, will be retiring at the end of the year. So a huge thanks to Michael for the contribution so far. Raul is joining us, Raul as a Head of Technology and Innovation. Raul comes from ING, where he's got a very, very deep and I think well-regarded track record. We're taking this kind of transformation agenda and turbocharging it. So Michael's retirement gives us an opportunity to take a fresh look at this. He'll be starting in just a couple of weeks' time. Super excited about what we can all do together. So what you'll hear about for the rest of the breakout sessions are how we're investing in our own foundations, how we're building new businesses, in particular businesses through partnership and that we can deliver at scale, and how we're developing totally new businesses, showing what's possible for the bank as a whole. You'll be hearing about this from my colleagues and our leadership team. We will then come back and take Q&A, recognize what we're trying to do is to rewire the DNA of banking generally, certainly rewire the DNA of Standard Chartered. We think we've got a pretty good track record that we can share with you today. Really looking forward to the engagement from all of you. So with that, I will hand back to Niluka, and we'll get ready for the breakout groups.

Thank you, Bill. It's now time for the breakout sessions. So a reminder to our virtual audience, please remain right where you are. So back again for the guests here in Basinghall, we have preassigned your rooms, which is shown in your badge. Please kindly make our way down the corridor to you allocated room. It is important that we try and stick to the allocated time, so please try and make your way as quickly as you can. Thank you, and see you later. [Break]

Hi, everyone.

Hi there, Judy. This is a session that is being broadcast on the webcast and is also being transcribed. At the end of the film, we'll take Q&A from both the virtual audience as well as the analysts present in the room. I will moderate the Q&A. So over to you, Judy, to kick off the Transforming Our Core session.

Thank you, [ Anand ], and good morning and good afternoon. Welcome. I'm Judy Hsu, CEO of Consumer Private and Business Banking. I'm joined by my colleagues, Sunil Kaushal, Regional CEO, Africa and Middle East; Kahina Van Dyke, I believe she's in the room, she's Global Head, Digital Channels and Data Analytics for Corporate, Commercial and Institutional Banking; and Marc Van de Walle, Global Head, Wealth Management. So in this session, we'll be talking to you about how we're using technology to disrupt our existing processes and transform how we serve our clients. This is what we call disrupting the core or transforming the core. So what better way to tell you our story than to share case studies that demonstrate the progress we've made to deliver some of these best-in-class digital banking services to our clients. Now these are all part of the growing evidence of success in the bank. But first, let me start with the most important question. What do our clients want in this rapidly changing digital environment? Well, they told us they want faster and simpler digital access to products and services 24/7. They expect solutions and advice to be personalized, to contextualize and tailor to their needs, and. They want seamless connectivity to global network and ecosystems. So for us to stay ahead of these expectations, we are driving innovation through a new technology architecture. So first, accelerating to cloud. Our core banking engine is already on cloud in 7 markets, and many more of our applications are on their way to be cloud-based. We are one of the first international banks to adopt cloud in such a scale, and we will now be able to innovate faster and deploy solutions in multiple markets rapidly. And you heard what Bill said. This is the reason why we believe we can win and generally sets us apart. Now second, integrating digital services and data analytics in our client platforms to help them make better decisions, better -- to help them better run their businesses. Here's an example. In CCIB, together with a multinational energy client, we co-created an [ institution ] that integrated their payments in FX digitally alongside dashboard analytics that help them improve business efficiencies and better serve their clients. This solution was designed for them in China, and it's being rolled out in 12 of other Asian markets. Very exciting. Third is co-creating new services with our partners. You heard a lot from Bill about our partnership strategy. And how we do this is through open banking and API connectivity. This strategy enables us to co-create -- again, co-creating with products and services that -- and integrate these products and services into our partners' ecosystems where we can then acquire and serve a large number of customers we may not have been able to otherwise. Now there are many, many such examples. And earlier you heard from Bill, we're very delighted to announce a multi-market partnership with Atome Financial. And together, we will be delivering personal banking solutions to many, many consumers across 8 markets across Asia. So now turning back to the 3 cases you're about to see. They all share some common things. One, they all support at least 1 of our 4 strategic priorities: network, affluent, mass or sustainability. Two, they all disrupt existing processes. For example, you're going to hear from Sunil. Sunil and his team use technology to fundamentally disrupt the customer acquisition process in Africa. And what we see is an exponential growth in our customer numbers on a scale that we've never seen before. Three, they all improve client experience. And you will see that when you hear from Kahina, and she's going to talk about how we have digitized our global banking platform to drive client experience and making it simple for our corporates to do business anywhere. And also, you're going to hear from Marc. He's going to talk about how we use events analytics to personalize wealth advice at scale. And this is why we're disrupting really to meet our client needs. And finally, of course, all drive efficiency and sustainability, especially in retail, the radication giver-based process, the shift away from physical branches, the use of data and analytics. They all improve our productivity, and they all help drive down cost and create room for further investment. It is really a virtuous cycle. So I will stop here. Do enjoy the film, and we'll be back afterwards to take your questions. [Presentation]

Hi. We're back.

Okay. Thanks, Judy. So we're now open for Q&A. If you got any questions in the room, please raise your hand and I will pass the mic over to you.

Alastair, thank you.

So it's scaling the African experience into the rest of your markets. How much is that informed what you're able to do back in the Asian business? So you found this very rapid scale up in Africa. Are they still substantially separate experiences because of markets with such different levels of development?

I'll take that question. The experience in Africa you heard from Sunil has been fabulous. We were able to scale our cost line market very quickly. Absolutely, we learned from that experience. We're not using the same technology, but we are absolutely learning from that experience in terms of the cost to serve in terms of the ability to really scale down our branch network as we scale up our digital acquisition and digital service. Across Asia, just given the size of each of the markets, if you think about Singapore, if you think about Hong Kong, India, we are proceeding with very similar digital or digitizing our services at both across straight through processing, straight through acquisition. But we are doing it in sort of different approach as we scale up these digital capabilities. In Singapore, we are doing it, on one hand, starting a digital bank following the first step of Mox. At the same time, in the core bank, we have been -- we've launched RTOB, which is real-time onboarding, and we learned that. And you heard from Bill, we have that across 6 Asian markets. So we've learned, in terms of the African experience, the ability to scale down some of our branch network, the ability to then work with partners to scale up some of our acquisition programs as well as using better analytics to cross-sell. These are the lessons we've learned. But just given the size of the market, we are proceeding with the markets separately and individually.

Okay. Question from Raul. Can you give your name as well, please?

Hi, it's Raul Sinha from JPMorgan. I just wanted to dig down a little bit into Africa and what's happened and maybe a question for Sunil. What happened to the profitability of the African retail business as you've added 700,000 new customers? And if you can touch upon how your cost base has changed as you've exited perhaps some of your branch network become more digital, what are you seeing there in terms of bottom line?

Thank you. Thank you. That's a great question. So the way we approach this was clearly on 2 fronts. One, how do we accelerate the top line and which meant clearly scaling up the acquisitions, which you heard about. As we speak, it is now over 750,000 customers on a base of, as I mentioned, about 1 million, populating the platform with all our products. I can give you a great example of wealth management, where we have fractionalized wealth management products. So you can go in and invest as low as $100 on that platform. That's been a game changer. Everybody felt, to be a part of a wealth management investment profile, you had to have thousands of dollars to invest. So that's really resulted in about 60% to 70% of our wealth management sales now coming through digital platforms. Our cost, which is the other metric, has come off. We are now tracking at about 1/3 in terms of cost of acquisition, which is significant, based on the -- compared to the legacy. And cost of servicing has come down by 2/3. So again, it's about 1/3 in terms of cost of servicing. And that's been achieved by digitizing, which is still work in progress, the entire end-to-end, which is the middle office, which I think, again, is going to give us significant benefits. And the services, we have put 70-odd most frequently used services on the platform. So the profitability, I don't know. The IR team, whether I can go into specifics, we don't announce Africa separately. But in terms of RoTE, it is tracking at a very healthy level, which is I'm happy to share it if I have to go ahead. But it's been a game changer in terms of the profitability. I need to mention here that we manage the business to deliver profits. So unlike, say, a private equity funded venture, fintech venture, which looks at different metrics in terms of just client acquisition numbers, our client acquisition has been targeted towards higher AUMs, ability to cross-sell and profitability. So we don't give away good money just to acquire customers, and that's resulting in -- along with all the initiatives around branch reduction, automation, et cetera, the benefit to the bottom line.

Can I just follow up and ask how the branch network has changed in Africa, if you can give us any numbers on that?

So the branch network overall in AME. So we were very clear that we were going to use the mobile channel as a primary interface. But having said that, we also realize that you need to have an omnichannel offering. So in terms of the brand, so we started reducing the branches upfront from 2018 onwards to create the investment space and also to really wean away the customers towards digital platforms. So in terms of the overall branches in, say, 2016, '17, we were at about 340-odd. We are, as we speak, in AME, about 144 branches. Our target is to bring that down further by a few dozen branches. Africa was 220-odd. We are now down to about 90, 94 branches. Again, we'll come off as we speak by December, it should be down by another 8, 10 branches. So -- but at the same time what we are doing -- so if I give you an example of, say, Uganda. While we have reduced our branches from double-digit 12, 13 branches to 3 now, we have provided customers through what we call agency banking access to 10,000 franchisees, where they can transact and do basic banking. So it is an exponential growth in terms of the touch points along with digital, which we have offered. And that's been a game changer. So next, again, on agency banking is going to be Tanzania, Botswana, Zambia and then Nigeria, and then we move to Ghana, et cetera. So it is not just about shutting branches. I think that's easy. But how do you really then create alliances where you have exponential growth in the touch points.

Okay. Can we go to Perlie next?

It's Perlie from KBW. So again, on the cost question. So I think your -- clearly, your offerings are very good on the front end, on the customer end, but a lot of the issues are actually on the back end because the legacy infrastructure, et cetera, which is much more expensive to run. So I hear that you are cloud based in -- for your core banking service in 7 markets. So for the more entrenched markets, so to say, Hong Kong and Singapore, when do you expect to move on to cloud, perhaps if you already have marks there utilizing those structures when they sort of grow in scale and sort of move off the legacy systems to those new infrastructure? How -- what sort of timeframe are we thinking of?

Kahina, can you take it while he just got tech issues.

For banking to cloud, we just completed India, which was a real success. And the following 2 markets will Singapore next and then Hong Kong. But before that already, if you look at our ability to digitize our whole front of back turns, we've done that. Right now, more than 70% of our client journeys are straight through and more than 75% of our client on-boarding is also straight through. Earlier, I talked about the RTOB, which stands for real-time on-boarding. What that does is the client's door website or user mobile, they can be on-boarded in 2, 3 minutes. So without having that migration to cloud, although that will be another game changer, we are already digitizing our front-to-back as well as our online -- as well as our on-boarding. In addition to that, we're doing a lot around digitizing our wealth.

Okay. We've lost Judy again. Kahina, do you want to step in for CCIB?

Sure. I don't know if this works, so I'll just project my voice. So cloud is, to your point, probably one of the most important enablers for real-time platform delivery at scale. And so what -- and I'll speak for the corporate side, and the way we have prioritized cloud rollout is where we think the highest number of transactions are going to be and the apps that need the cloud the most. So for example, with our APIs was one of the first global applications, API open banking that we moved to cloud because we were seeing such tremendous demand across the markets and across clients to connect to us through APIs. So I think it will continue. It is a top priority as I say. There is no digital without cloud. There's no digital at scale without cloud. So we -- that's the way we are prioritizing not just the markets, but also the applications where we're seeing the most demand.

Marc, do you want to add anything on the wealth side?

Yes. I can add a little bit on the wealth side. I think when we lost Judy, she was starting to talk about digitizing wealth management. I can give you a few numbers. About more than 90% of the transactions that are conducted in our core markets are captured digitally, and 70 -- more than 70% of them are actually DIY and straight through. So that's just an example of convenience that we can offer with our clients -- to our clients. We also have the ability for clients to chat securely with our RMs in our key markets. So this whole convenience aspect of the digitization has been taken care of.

Can we pass the mic to Manus, please?

I also just wanted to ask Marc a question. Did I hear Bill right, you've got the most downloaded financial [Audio Gap]. It sounds like an extraordinary...

I'm sorry, but I cannot hear the question.

Manus, can you just speak a bit louder, please.

Sorry, can you hear me now?

I can. Can you hear me?

Yes, I can.

Okay. I wanted to ask about your, your wealth app in China, please, because Bill was saying it's extremely well downloaded. I wondered if you could give us a bit more color on that, please.

Yes. I don't have the exact figures on the number of downloads, but it's also our wealth app there has -- I think it's the highest rated of all the wealth apps in China. So it's been really successful. And it gives the ability to clients to transact directly, mostly mutual funds and see their portfolio and so on. But I think when you come to digitize, one of the things is to bring the features. The other thing is to design them correctly. And Bill also spoke about human-centered design. This is something that we now do for all our digital products, right? We try to make sure that we have a distinctive customer experience, and our app is rated 5 stars in China.

I was -- sorry, I realized that I was disconnected.

Don't worry, Judy? Can we hand the mic over to Tom, please?

Okay.

Can you hear me okay? Hi, this is Tom Rayner at Numis. Bill spoke in his introduction about the investments in digitization is helping bring down the group's cost income ratio, helping it achieve its RoTE objectives. I wonder if you could give me a feel for how important transforming the core is in delivering those objectives versus the partnering with new ventures, building new business models and what you already have existing.

I'll start, and maybe I can also pass to Kahina to talk about the digitization transformation that she's leading in CIB. Bill talked about, obviously, the digitization really supporting, as we said earlier, reducing our cost to serve. That's one area. One of our challenges, obviously, through the market is scale, right, to acquire clients. Client acquisition is hugely expensive. But with the -- our strategy to work with partners, that substantially reduces our cost to acquire. And that to us is a new business model on top of the Mox or the Singapore digital bank or the nexus platform. In the core bank, right, we are also working with a number of markets -- a number of partners. In China, we're working with Ant financial. It's been very successful. In Hong Kong, this year, we launched Asia Miles with Cathay Pacific, although travel is a little bit challenged, but we expect that to come back. And earlier, I talked about our latest partnership with Atome. So these are all transforming the core in terms of our ability to scale our acquisition of clients. And the acquisition of clients we both partner, usually, a cost required in the consumer bank is anywhere from $150 to $300. But when we work with partners, that becomes almost nothing, right? The cost is to build that linkage, to build that partnership. So at this point, I'd like to invite Kahina to talk about the efforts of our digitization in the CCIB business.

Great. Thank you, Judy. So how -- I think the question was how important is transformation of the core versus the kind of ventures partners? Like how do we think about that? So I'm pretty obsessed with transforming the core. So that's what we do kind of every single day because in transforming the core and digitizing our network into a digital platform that delivers all of our products and services in a really efficient way, but really a smart way because what we're trying to do is for our clients. And no matter what market that they're operating in, there's a set of core services that they're looking for us, and we want it to be that it's -- we are taking up not just their desktops, but it is actually in the core services that we have the right when we win in digitizing those services. And we give them data dashboard, so they can see their accounts and help make their businesses more efficient. We then have won the right to offer adjacent products and services that can be delivered through partnerships. So for me, you have to get the core right in order to win the trust and the confidence to expand out with some of these other partnerships, especially on the corporate and institutional side because what I would say is on the retail side. There's already been tons of progress in the industry around retail. But on the corporate side, there is more trust and confidence required to win that business and win the right to extend out with partners. So yes, I think that's the primary focus and then that allows you -- enables you and gives you the licenses.

Can I have a quick follow-up?

Let me just add -- can I just add also on the Wealth Management side, if you don't mind, so thinking about the core versus the venture? I think the -- our core business in Wealth Management, we have about 2 million affluent clients across our footprint. And as Bill said, we're a top 3 wealth manager in Asia. That's actually a lot of scale, and we have an enormous opportunity to create a single wealth platform to service all of our client segments across all our geographies. And today, we're not there yet. We don't have exactly the same piece of technology in all of our markets and across all of our presence. And we're working towards that. And that enables us, when we get there -- and it's a journey, right? So that will enable us to have a more consistent customer experience. So when we design a digital product, it can be rolled out consistently. It also enables us to reduce our cost of operations, and it enables us to be much faster when we deliver new functionalities. So this is transforming the core, will make our core business much more efficient. Next to that, we have ventures that disrupt and acquire new types of customers and offer new types of services. So it's a sort of a 2-pronged strategy.

Yes -- okay. No, sorry. I just wanted to add a point back to sort of the -- a lot of questions on cost in the retail bank as well as our branches. We do have a plan to reduce our branches down to 400. And we won't be able to do that if we don't transform the core, if we don't bring a lot more of our products and services onto our digital channels and digital platforms. So absolutely transforming the core is critical to our ability to reduce our cost income down to that 60% target in the next 3 to 5 years.

Okay. We'll have to wrap up there. Thank you, Judy. Thank you, Sunil, Marc, Kahina, in the room. We'll have a short break before our next session. Thank you. [Break]

Hi there, Ben. Can you hear us?

Yes, I can.

Okay.

Hi, Greg.

Hi there, Mary. Hi there, Andrew. Okay. So this is the session -- just for the panel, this is the session that is being broadcast on the webcast and is also being transcribed. At the end of the -- after Ben's introduction and the short film, we'll take Q&A from both the virtual audience and the analysts present here in the room. And so over to you, Ben, to kick off the partnering for scale and extending reach session.

All right. Good morning, and good afternoon. And I am Ben Hung, CEO of Asia. I'm joined by Mary Huen, who is the Cluster CEO of Hong Kong, Taiwan and Macau; and also Andrew Chia, CEO of Indonesia, Australia, Brunei and the Philippines. So very happy to see all of you. As a bank, we are very privileged to have a long and established presence in some of the largest and fastest-growing economies in the world. And across the 21 markets in Asia, which I manage, there is no shortage of opportunities, in particular with the burgeoning growth of middle class, SMEs and intra-Asian economic flows. Now one of the challenges we face is a lack of scale in many of the markets. So the question becomes how we can scale up quickly and efficiently and reach segments that are beyond our current reach. One approach we are working diligently, as Bill mentioned, is to partner with established local market players who are already having significant client reach but who need access to banking services, which they themselves cannot provide. This is a key part of the differentiated approach, as Bill described, building and harnessing a unique ecosystem of partners around us. In pursuing partnership, we have taken a 3-pronged approach to the types of partnerships we are forging with. The first one is to partner with established local platforms. Now this model entails working with partners who have strong ecosystems, where they do have size, scale and skills. These will include examples like Linklogis, which is the largest supply chain provider in China, and around mass market, Tmall in SME, and Olea, which we just mentioned, and Kredivo on top of that, which covers all of our ASEAN markets, and Asia Miles in affluent, just to name a few. These are examples where we offer banking solutions to our partners' customers. That's the first type. A second type involves establishing virtual banks with large-scale local partners as disruptors to the banking industry. Now with these types of partnerships, we also need to look into different jurisdictions where they have different regulations. Some of these regulators will allow the majority shareholders to be a bank. I would say Hong Kong is an example, Singapore, an example, that's why we have Mox, and we will have Phoenix, which is SC Bank Solutions as an entity to address that market. There are other markets where the regulators stipulate that only fintech players can be the majority shareholder. And in these circumstances, we tend to take a minority interest, yet be a banking partner, where we can offer our subject matter expertise. And these would include the market in South Korea, where we have Toss, this is our third virtual bank in Korea, and also in LINE, also the third, 1 of 3 -- actually, only 1 or 2 launched so far in Taiwan. Now we aim to leverage also on top of that, across learnings, across these ventures, so that we can gain and share best practices. Now the third model involves our Standard Chartered of building and owning that very platform, where we also welcome other partners to join. Good examples would be nexus, where it plays in the whole e-commerce and mass market space, and SOLV, which involves an ecosystem around SMEs, and Autumn, which involves retirement and health and wealth in that aspect of the segmentation. All these examples you'll be hearing more about through today's event. Now these are just a few examples I've quoted, by no means exhaustive, but they are a selection that are currently, presently in train. And I hope that those also illustrate that Standard Chartered increasingly will be seen as a go-to banking partner and digital partner of choice across Asia. Now what we thought we would do is actually to play a short video, which highlights 3 examples from each of these partnership models and each, in their own way, having the potential to become primarily transformative for us and for the customers. Now first, obviously, is our Mox, which, in Hong Kong, we are -- Standard Chartered is the oldest bank here. But we are also now the youngest, when we include Mox, where we have strong partners to provide scale and disrupt digitally, with no physical branches, and also to allow us to address the needs of a different segment versus that of our mother ship. You also hear about nexus, which is a Banking as a Service business model, which Andrew is intimately involved in driving in Indonesia. Now this initiative involves in the mass retail space. Our partners there have tens of millions of customers that spread across Indonesia, and they have very, very rich data around their clients. And we effectively sit behind upon this mobile app almost invisibly as a starting point and are a click away for a more current account application. The rich client data will enable us to credit score each customer and complete the money laundering, AML, other checks and price and serve accordingly. And finally, you'll hear about, from me again, around Olea, which is a partnership with LinkLogis. Now LinkLogis is based in Shenzhen. And it's a top supply chain provider, which leverages on blockchain technology to provide deep-tier supply chain financing and payment solutions to SMEs. Now Olea is on top of that, a further partnership between SCB and LinkLogis, where we connect investors interested in this particular asset class. So with that, why don't we play the video, and then, after which, Mary, Andrew and I will be happy to take questions. [Presentation]

Okay. We're now ready for Q&A. Okay, Guy Stebbings?

It's Guy Stebbings at Exane BNP Paribas. In his introductory remarks earlier, Bill talked about how some of these investments were worth broadly double what had been spent on them. I'm conscious that the benchmarking is probably quite challenging for some of these businesses. If I think about something like cost, you could probably come to quite a wide range in terms of what they were. So are you able to shed any more color on how you arrived at those sort of valuations, how conservative or otherwise you might have been, and also, how meaningful Mox would be within that sort of calculation? Because it would seem to me like it probably is, whereas perhaps Mox is quite core to the business going forward compared to some other businesses, which presumably might be easier to sell off if that was the right strategy.

All right. Thanks for the question. Well, I think what perhaps Bill was referring to are probably those investments and perhaps in various external ventures, which there's an easy -- easier benchmarkable, I would say, price, for example, ventures which goes to Series A, B, C, D, et cetera. It's probably easier, for that matter, to those who have done an IPO. We haven't done necessarily the same approach towards some of the more, I would say, endemic type of, I would say, investments like Mox, which is still a little bit on the early days in terms of trying to apply for an evaluation. I think we are very, very keen right now at this juncture to try to invest and build scale and build relevance and build proposition before we reach even at that stage of applying a valuation, for that matter, wherever we want to do the kind of disposal, et cetera, et cetera. Right now, we are not at that stage. I don't know whether, Mary, you want to add anything to that.

Yes. Thank you, Ben. I think, yes, we haven't come to that stage. It is 1-year-old, Mox. So I think from -- it is important to recognize we are delivering a few things for Mox. Of course, for the immediate term, we focus a lot on building the right tech stack, expanding our products, bringing in clients, building the right client experience. And we're happy with the progress. So for the first year, we have seen very good active ratio. We have seen that we have launched a second product, the first being savings, the second being the Mox Credit. And after the launch of the second product, the client sign-ups go up by 75%. So put in mind that the 4 million base of Hong Kong Telecom and 1 million Trip.com, we do see the scalability is there. So this is the short term that we are building the experience. Second thing, there is a more longer-term opportunity for value creation, as Bill has explained, and we haven't come to that valuation yet. But more important, build -- bringing Mox experience to Credit is equally important for us because it is cross-organized. It is a cross-country experience of sharing, and it is a lift-and-shift model. So this is one of the important things that we have to bear in mind when we are building Mox. We are building a world-class tech stack, which is portable in many other markets, who can sign up other partners in their markets. So I think these are some of the longer-term value and the purpose of Mox besides some of the short-term goals that we are going after.

If I may just add, Ben...

Go ahead, Andrew.

Sorry, Mary. In the case of our investments, in Bukalapak, so -- sorry, that has been listed on the Indonesian Stock Exchange too, and from the time we invested, the investments would have more than actually doubled. But if I may just take your question at a bigger level, like especially in the case of Mox too, I mean, it is within the bank, but however, if you take a look at revenue in a similar kind, the valuation is something at the kind of billion. So that -- I think there's a lot of valuation that we talk about. But I think to Mary's point, it is still a very early stage for us. Thank you.

Okay. Andrew from Citi.

It's Andrew Coombs from Citi. 3 questions, all on Mox. First is on the 175,000 clients. How many are overlapping with the existing client base versus how many are new clients? The second, as you talked about further product rollouts, both in terms of lending, in terms of FX transactions, a broader wealth offering, I think, as well. So anything you can add there on the time frame for those new product launches and monetizing the customer base? And then the third question would be this lift-and-shift point that you mentioned. Obviously, you're preparing for the rollout in Singapore. How easy has that been versus what have the obstacles been? Presumably, there's regulatory differences. There's differences in terms of the offering that you're allowed to make. So just can you explain how easy has that lift-and-shift approach been in your experience thus far?

Okay. Thank you, thank you. So 3 questions. Well, 175,000, majority of them are new clients for 2 reasons. One is we have a partner base and we co-create the offers with the partner. So we have a fresh base to tap. Second reason is mainly Mox and our main bank has complementary strengths in banks, focused a lot on -- at the mass affluent and affluent. And when Mox is launched, we targeted at the digital-savvy younger segment. So we can see actually the majority of our clients, over 50% of our clients, are younger than 35-year-old. So to a certain extent, there's a little bit of cannibalization, we call that, but the majority of our client base are new to the Standard Chartered family. Second, product rollout, yes, we launched the first product in 2020. And then the second year, we're already rolling out Mox Credit, which is a one-click flip between one card, debit/credit. So building the first product is typically the hardest one to get things right, to get the foundation right. We have seen Mox Credit building on what we have, is having that rhythm. Third product coming is some of the FX and Wealth Management products. It depends on the time line that we're getting the license. We have applied for the license, but it depends on the time the license is being granted. I believe with the Mox Credit experience, building the upcoming product, it should be a lot more efficient from the earlier experience. Your third question is about lift-and-shift. I think the benefits that we have, the Mox team, 180 colleagues having that experience to build Mox. And some of our colleagues are actually supporting the Phoenix. So this is not only about the tech stack, but the capability and the experience of the team to move from the Mox, to helping the Phoenix. I don't think I can comment on how difficult it is. For every new digital bank building, I'm sure there is a lot of hard work required. But I think with the support from one market to the other and bringing the experience overseas, we have a lot.

Omar Keenan?

I realize this is a difficult question. But have -- would you give us any kind of indication of how much you think these new customers are worth? I mean clearly, all the products that you're planning to offer haven't been rolled out yet. And liability margins are very low. But if you can give us some kind of indication as to what these new customers sort of could mean to the Hong Kong business in the medium term, that would be very helpful.

Thank you for the question. I wonder if I can give you a specific answer to that. But I wanted to comment on your observations on the margin. Now most of the virtual banks, virtual banks in Hong Kong, majority of them are retail banks, and they are all launched in the last 12 to 18 months, where Hong Kong has experienced a low interest rate environment. That's why we will see majority -- and majority of the banks have built the first product as savings, the one-on-one. So with a low interest rate environment, having the first product as savings, it explains why the margin is affecting the P&L. So that's the short term. And then we see majority of the banks are starting to build the lending products, including Mox. And then with the Mox Credit, with one more engine to bring in the profits, we are seeing the active ratio and the cost per spend and the spend per customer in Mox Credit is higher than market average. Now without giving you exactly the number, I can tell you, spend per client is an indication of the potential balances of Mox Credit. So if we are seeing the metrics that we are having higher spend per card than the market average, it is a good sign. And then the third product that we are going to roll out is Wealth Management-related. In Hong Kong, the market penetration of the Wealth product from the deposit base is still relatively low compared to many Western markets. So that means $100 deposits, how much are we putting in the Wealth Management products, we still have a lot of space to penetrate. So I believe launching the third product going forward in Wealth, we are able to really tap the Wealth Management space. It is really hard to compare after the first year of launch of Mox to a difficult product. As I said, it is important for us to track 2 metrics. One is the scalability of the product and the base, where we have a good base to tap. And second is the client active ratio. We have seen Mox clients coming back to the app 15x -- over 15x every month. So every month, the client is visiting the app 15x above -- or above. So it is a good sign of order active ratio. So I know it is not a direct answer, an exact answer to your questions, but all I'm trying to say is all the indications, all the metrics showing us, we are on the right track to the profitability that we're expecting. I'll pause here.

Can we have Matt Clark, please?

Matt Clark at Mediobanca here. Just a follow-up to the earlier question on whether there was cannibalization with Mox. If you're not taking these customers from your own business, who are you taking them from? Which would be the natural home for your Mox customers that you're -- that are now going to you and your app instead?

Thank you. Well, I think our traditional bank share or penetration of the customer base is roughly 20-ish percent. So there is still 70-ish percent of customers to penetrate, right? So there are major banks here, our next-door competitors, local banks, foreign banks. So perhaps, there are also clients in Hong Kong Telecom. Hong Kong Telecom has 4 million clients. So in Hong Kong, we have roughly about 2 million clients. So we have a much bigger pool to tap than tapping our own base. So of course, as I said, part of our clients come from our 2 million customer base in Standard Chartered. The vast majority is coming from Standard Chartered and the partner base.

Okay. But there's not a specific subsegment of those competitor banks that you think you're taking customers from with Mox.

Sorry, come again? That's not what? Sorry...

There isn't a -- it's not a particular type amongst your competitors in Hong Kong. There's not a particular type of bank in terms of foreign-owned or Chinese-owned or incumbents that you're taking customers from. It's broad-based, do you think?

Well, typically, you can imagine the share that we are taking is quite similar to the existing share of the competition. So if you look at the competition, as I said, there are still 80% of the space there for us to tap. And particularly, if we look at the base, as I said, well, 50% of the clients are under 35 years old. So this is a younger base, where -- which we think is complementary to our existing bank, which we have a more mature affluent population.

Okay. Sorry, guys, we'll have to wrap up there. You have the chance to ask questions in the main Q&A hub. You can ask afterwards if you need to. Okay. Thank you, Ben. Thank you, Mary. Thank you, Andrew.

Bye.

Thanks.

Thank you, all.

Thank you.

See you again soon.

Thanks for the session.

Thank you. [Break]

Hello, hello, Simon?

Hi.

Okay. Simon, we're ready to start. So you're on the public webcast track. So can I hand over to yourself and Alex, who is in the room with us?

You can, indeed. So good morning, good afternoon, everybody. I'm Simon Cooper. I'm the CEO of Corporate, Commercial & Institutional Banking and also Europe and the Americas. And you've obviously got Alex with me in the room, who heads SC Ventures. He's going to join me for the Q&A session yesterday -- later. So what I'm going to do is introduce the session and then show a short film that showcases 3 completely new businesses that we're building to rewire banking across the following themes: SMEs; digital assets; and payments in the broader online economy. So you'll see SOLV, which is our B2B digital commerce platform in India; Zodia, one of our digital asset propositions that includes custody and crypto trading solutions.

We can't hear you, Simon.

And finally, Assembly Payments and CurrencyFair, an alternative payments model for the online economy. Sorry, I can't -- did you say something?

Sorry, you cut up, but you can carry on.

So first, let me just give you a little bit of background on SC Ventures. This is a 3-year-old discrete business unit within Standard Chartered. Its goal is to invest in disruptive technologies and to explore new business models that are adjacent to the core bank. A lot of what you'll see in this session and the others that you've seen, in fact, has been driven by the SC Ventures team. But their reach is also to be a catalyst for innovation more broadly in the bank through the entrepreneur program that Bill mentioned, through fintech engagement and as we co-create with clients. And as you have seen today, we're seeing the first fruits of this approach externally as we work alongside clients to help them grow and internally across our teams in both CCIB and CPBB. In just over 3 years, SC Ventures has received over 2,000 ideas and incubated more than 30 ventures across different high-conviction themes. And just to be clear, we're going into this with our eyes open. We know that not all of these ventures will succeed, but we're prepared to take thoughtful bets on the future. And I should also just stress, we're not building monolithic businesses. These are part of much bigger ecosystems that connect to each other and to the broader digital economy. When combined with our network, that gives us a significant opportunity to harness the power of scale. These are examples of what Bill says when he describes how we want to be first and best-in-class. And SC Ventures is a great catalyst to move us faster and to harness new ideas. So take digital assets as an example. I think there's growing recognition from our clients that digital assets are here to stay. In the face of increasing regulatory scrutiny is a great opportunity for us as a regulated institution to lead from the front. We believe that thoughtful coordinated regulation will support the increasing adoption by institutions of digital assets. And so we're making investments in capabilities that will give us the ability to respond flexibly to that client demand. And we're covering the gamut from our recent research on some of the best-known crypto currencies, to involvement in a number of projects around Central Bank digital currencies. If we double-click on Zodia, which is one of the case studies today, it represents our conviction that digital assets will eventually become a mainstream product for institutional investors. So with that conviction, we started by building Zodia Custody, to provide institutional-grade custody for crypto assets. And we did this in partnership with Northern Trust. We later announced Zodia markets, in partnership with BC Group, to build a digital asset brokerage and exchange platform. And along the way, we also invested in Metaco, which is a company that provides a secure digital assets infrastructure across the entire decentralized finance stack. So with Zodia, what we're doing is we're taking existing knowledge, existing experience and expertise, adding our global network and then applying technology to tap a new market in a new way. So I think this is a real opportunity to leverage our network and our relationships to provide easy access for institutional clients towards the fast-evolving market, all through a trusted regulated counterparty. We already have the client relationships and the track record, and this overlays a digital architecture to level up and scale up in new ways. I would also just point quickly to payments and foreign exchange, which are obviously core for our business. There's a rapidly growing payments wallet coming from an increasing cross-border trade in e-commerce. So we've combined our transaction banking and our financial markets capabilities to address this, investing and replatforming and to improve the client experience and then developing new APIs to improve our connectivity. This means we can deepen wallet share with existing clients, but that we can also expand our wallet share in areas such as fintechs and with new economic clients. We're looking for payments connectivity across our footprint. Then when you look at the SC Ventures angle, with a very strong conviction theme for e-commerce, we invested in the merged Assembly Payments and CurrencyFair, which addresses the pain points in the fragmentation of the payments ecosystem. Now I've been told I've got to shorten my introduction. So I won't go into some of the other of the many initiatives that SC Ventures is launching. But I would suggest that you check out CardsPal, which is now the #1 Google Play app in Singapore. And what's really interesting about that is it actually came from an idea from one of our entrepreneurs. So what I hope we see through the discussion so far is that we're committed to creating new, viable and scalable business models. Bill captured why we're positioned to succeed. It's our understanding of markets and regulation, our ability to combine the DNA of banking and technology and converting bank-grade governance and security into being an advantage, add to that, an ability to leverage intellectual property across our network and to build scale. So I suggest we watch the film and then come back for questions. [Presentation]

Great. Hopefully, you can hear me still?

Yes, we can. Unfortunately...

While Alex has a wardrobe that's a bit better than mine, I'm still wearing the same thing, sitting with the same picture behind me as I was on the video.

Okay. We only have time for 1 question before we have to go back to the main Q&A in the main hall. So has anybody got a short question? Happy to wrap -- okay.

Perfect. Good to see everybody, albeit remotely. Thanks very much.

Yes. So just quickly, so I know the scope for SC Ventures is obviously very wide and is vesting in new ventures as well as looking internally to improve processes. So just quickly, are you more focused on projects that would help Standard Chartered succeed in more of the established markets, whether it's London or Hong Kong, just sort of as having more additional capabilities for those products? Or are you trying to disrupt more and sort of set yourself up as the next Monzo or Starling or Mox in some of the smaller markets? You have 60 markets to play in. So just wondering where the focus is.

I'll take a stab at this, and Simon can add. I -- so the fundamental question is are we the rightful owner of what we're backing and investing in? And we won't back a venture where we don't have a significant competitive advantage. It makes no sense. One of the advantages is the fact we know how to operate in a regulated environment. A lot of the ventures are, in fact, regulated entities. And so we have an expertise, a DNA of building a compliant safe system, bank grade, I should say, is the word for it. Another aspect of this is our markets, meaning the knowledge that we have our markets, identifying client needs, the effervescence of technological innovation that is happening from India to China to all of our markets, it's a competitive advantage. And so the majority of the ventures we have backed are starting there. And -- but we're not constrained by it. So open minded as to where things go. An example, by the way, is we incubated Zodia in Singapore, but transported it to London because this is closer to where the clients are. So an example of a venture that is now in London. We're not constrained by any policy or anything like this. The question is a commercial one, which is are we going to create value for shareholders? And if so, are we the rightful owner of this venture? And if we're not, we shouldn't do it.

Just to add very quickly. Remember, from the wholesale side of the bank, it's Standard Chartered's network that's the huge differentiator. So the fact that Zodia's in India doesn't mean it's just helping us with our clients from India. So for SOLV, we were able to -- well, we were able to help at least 1 major multinational from -- in that case, the United States, helped with their supply chain in India. That adds value to us from a global relationship perspective. So it's wrong to just think of geography in such a discrete way, I think. You shouldn't -- yes...

Yes. Think of Linklogis, a partnership started in the bank. It's a China fintech, obviously. We've worked with them within the bank, ended up investing, the relationship grows. We've now just announced a JV. The whole point is it's a Singapore company in the JV, and we will take this JV across the footprint in different markets. So idea being to go from scale across markets as well as scale in individual ones.

Okay. We'll have to wrap up there. If we make our way back to the main hall, we can carry on with the Q&A there. Thank you all. [ Break ]

Okay. Welcome back, everybody. I hope you found the last couple of hours really useful. Thank you for a super level of engagement. We're a little bit over time, so we're going to go straight into Q&A. Reminder to everybody, this is being recorded. So to the extent that you have to leave or dial off, you can obviously get the whole story later, but we'd most welcome this last bit of engagement today. We talked about how we're fundamentally transforming. We talked about how we're differentiating ourselves and our strategic approach. And we've talked about the growing evidence of success. I'm going to be joined by Andy now. We have Kahina and Alex in the room. Shortly, our -- the rest of the presenters will appear up here on the screen. I will take questions online. You've got the instructions on how to do that, or Niluka can fill that in. Or obviously, we'll take questions in the room. So Andy, if you'll join me now we'll dive right into Q&A, and we'll probably go until 12:00 or so. We have the first question right here in Basinghall Avenue on a sunny day in London. We've got a mic coming.

It's Aman Rakkar from Barclays. I was just interested in regarding the partnerships. If you could give us a sense of how the economics differs from offering through partnerships versus directly banking with clients yourself. Is this high ROE fee income, low balance sheet business? Or are you kind of giving away a decent chunk of the value by virtue of not owning the primary relationship? I mean, particularly, I think the example that you gave in Indonesia was quite interesting. If you're able to quantify any of that, that would be really helpful.

So I'll give Andy that question, and I'm going to ask Andy to -- there are a number of questions that we picked up from the sessions we were listening in. I don't think we got everything, but we heard about it. I suggest that Andy tried to bring a bit of that stuff together now. Andy?

Okay. Right. So in the interest of time, I mean, this today was intended to be very much about sort of product, client. It wasn't so much about numbers. But clearly, the culmination of all of this is the endeavor to get the overall RoTE up to double digits. So ultimately, it does come back to financials. I guess the way I'd look at this is over the last 4 or 5 years, we've invested a huge amount in sort of standardizing and simplifying systems and processes within the business. We've now got much more consistency, which enables now to digitize and put platforms in that will be ubiquitous, that will span product sets, that will be much more intelligible for customers, will be easier for our staff, and a lot of what we're doing here is about that. Bill mentioned earlier, the cash investment we've been making, we have gradually increased over the last few years. It's about $1.9 billion of cash in IT each year. The proportion of that, that is going into these more forward-looking strategic initiatives is progressively increasing. We think just over half of that $1.9 billion will be on these strategic initiatives going forward. If you go back on average over the last 5 years, it was probably about half that level. So there is an absolute focus upon investing into new platforms, into the new ventures, government partnerships, [ commitment ]. And secondly, separately, but in a way, linked, we have been investing in selective equity stakes, about $200 million of those in pure equity stakes over the last 2 years, 2.5 years, we would expect that sort of run rate to go forward. Those businesses are largely early-stage investments. So we haven't crystallized, realized a lot of them, but a pretty conservative valuation of those would be roughly a doubling. That doesn't a feature in our numbers at the moment because of the way it's accounted but just want to get visibility on that. The expenses-wise, we will be investing more into the new venture areas. And the more they take off, the more we'll be doing that. We'll obviously need to look at the collective of the cash expenses for the business to make sure that by investing in the new businesses, we're still leaving enough for the core businesses to go forward. But a number of initiatives we heard here will both be additive to the customer growth opportunity and efficient in terms of running the business. The cost of acquisition of new customers is fundamentally lower, for instance, in Africa today than it was 2 years ago. Branch closures, more digital, it's taking the cost per customer acquired down about 2/3. And in that period of time, the profitability, as we've gone through this evolution to digital, has actually increased in the retail business in the Africa, Middle East region. So this year's profit in retail will be higher than pre-COVID levels, despite the fact we've seen interest rate reductions during that period of time. So that sort of thing gives us the confidence actually that we are on the right track. Eventually, it comes to your question on the partnerships. There will be different commercial arrangements with different partners. But generally speaking, it will be a small percentage of the income that would go to the referring partner, and then we will deal with all the economics behind it. So that typically either will be no upfront costs and a small sliver of the taking goes to the other partner. Occasionally, we will do a pay upfront, and then we'll take the full economics. But either way, the cost of acquisition will be much, much lower. And indeed, it has to be much, much lower because if we're going to get the times 5 increase on the retail customer base, we have fundamentally got to acquire customers at a different price point to the ones that we have historically acquired. I think eventually, I got to your questions.

Yes. Thank you very much.

It's Manus Costello from Autonomous. Bill, you talked about giving us some more visibility on SC Ventures in '22, which is exciting. I wondered if you have thought about any more fundamental restructuring of the group to help realize value? Because I know 1 of your peers in Asia, Siam Commercial Bank, had a pretty remarkable reaction when they reorganized the group. Is there anything more fundamental that you would consider down the line, given that the scale of that ambition, I think you were talking about 50% of revenues coming from these ventures?

It's a good question. Obviously, we've seen what other people have done or are in the process of trying to do. What we're trying to do is build value in Standard Chartered. We don't believe, you may tell us that we're wrong, that we can create value or at least realize untapped value simply by moving the deck chairs around and changing the shareholder structure in some way. Now that's it. If there's a different ownership arrangement for something that we think liberates value, we're more than happy to do that. And that's exactly what we're doing at SC Ventures. So we own 65% of Mox, we own 60% of our venture in Singapore, we own 100% of nexus, but as I mentioned, there's a referral payment that's obviously based on success that we're only making payments to the extent that there's income. We have a 5% stake in Toss Bank in Korea or LINE Bank. So we have many different ownership configurations that we think will maximize the value for us in each of the ventures. And we can easily see the ownership stakes changing. We could increase our stake in one, we could decrease in the other and package this up and take SC Ventures or some super set of ventures, including SC Ventures, package it up, sell it off and hope that, that increases the value for the whole. Remain to be convinced that, that's value creating. Now if we do the work and we think that somehow, that creates a different environment, a different culture, different partnering opportunities, different competitive dynamics versus the people we'd like to work with, then we'll look at that. It's not our preoccupation right now. Our preoccupation right now is build great stuff that meets -- that delivers against unmet customer needs, create value that way.

But we will pull out from, next year, the Ventures' activities and give them more visibility as a sort of entity in their own right. And we can see where we'd go thereafter, but we will give more visibility on them going forward.

Okay. It's Tom Rayner from Numis. On digitization, I think the benefits for retailer are fairly obvious, given the big numbers and the fact that you can increase scale quite effectively. Just wondering with the corporate side, is that quite the same because there's less customers with larger flows? I'm just interested in your thoughts around that. And also in the wealth management space, obviously, these digital offerings are very attractive to the younger cohorts. But I'm assuming that most of the wealth is currently sitting with the older sort of parts of the population that might not be so open to digital offerings. So I'm wondering how that might affect the -- how it progresses.

So we'll bring Kahina. Kahina and Simon can take the first part of your question. While they're getting up here, on the wealth side, as we talk about increasing the number of retail customers up to 5 million, obviously, we would expect to keep on going from there, a meaningful proportion of the incremental income from our mass client base will come from wealth products. It's quite small today. It's a growth opportunity from here. It's also the feedstock for our future premium, then priority, then eventually private banking client base. Where we're getting a high proportion of our new wealth clients, our new affluent clients in the bank are coming from our mass population. Something like 2/3 today are people who are upgrading from the -- from that less wealthy categorization. So -- but you're right. And Andy's point, if we have 5 million customers, they're going to be at a different price point. And we'll have to evolve that customer base into the wealth offering. But that's -- it's nothing but an upside and opportunity for us, especially given the cost of acquisition for those clients. And just statistically, a very small percentage of 5 million can be quite impactful over a few years to our wealth business. Kahina, maybe start, and then Simon can chime in?

Yes. So as we talked about actually in our session, corporate and institutional, in many ways, has been seen as kind of the last vestige of digitalization versus retail, which has been going on for a couple of decades just as an industry trend. But what is really interesting right now and why it's so exciting is that we are actually seeing our corporate clients and -- corporate and institutional clients kind of demanding technology because they are using data and digital in their businesses across industries. So you can see just as we talked about APIs, why are APIs important? Well, APIs are important because that's allowing us direct connectivity with our corporate clients. We are seeing demand. You saw the numbers, over 200 million and growing transactions through APIs. You couldn't even imagine that 2 years ago. And now we're at a point where whether it's Nigeria or Hong Kong, clients are staying connect with me via APIs. Show me all of my accounts via dashboards. Let me get real-time connectivity so I can make real-time decisions. And I actually think that there's tremendous value to be unlocked on the corporate side because of the size of the flows, the sophistication of the clients and leveraging data and real-time connectivity. Simon, did you want to add anything?

Yes, the only thing I'd add, Kahina, but you've obviously covered most of it, the -- I'm in the middle of my first business trip of 2021, which is very exciting. And I think every single client meeting that I have had has had 2 consistent themes. One has been sustainability, but the other has been digitization. And as we now start to pitch for business, and clients are asking us less about what's your product expertise. They're asking us much more about what is your plan for digital rollout. And that is what the real lever for the wholesale bank is in terms of digitization.

And Tom, we have a meaningful market share in the corporate business today. It's a very fragmented market. We have tremendous opportunities for share growth. And we also have tremendous opportunities to grow the number of clients that we deal with, most obviously, on the smaller and SME side, but also in multinational corporations, where we pick up more and more of their business. So the EVA impact of these investments on the corporate side are every bit as exciting if not more so, than the EVA opportunity on the retail side. Alex? Why don't you stand up, Alex? Just stand up so that the camera [ captures ].

Just add one last one, which is corporate clients are a major origination channel for new ideas to Ventures. Engagement leads into workshops, can lead into JVs and new venture initiatives. So it's a major interaction for us.

Great. Why don't you hand the mic back to Raul? Oh you got it. Good.

It's Raul from JPMorgan. I guess a broader question about capital allocation. There's a lot on your plate right now. You've got a very strong capital ratio as a bank. You obviously got a very big investment budget now into the strategic initiatives versus where you were. But we can point to a number of different banks, which are your competitors, which have got bigger budgets. So the question really is how do you decide that $1 billion is the right number? And if you look at your plate, you've got your marginal dollar that could go into buying back your stock, buying the assets of a competitor that's exiting some of your markets or putting it into a new venture that somebody came up with an idea for which might be worth a lot. So what is the highest priority for you as a management team?

Yes. So the priority for this portfolio that we're talking about today is very straightforward, first-in-class, best-in-class, scalable, fast, disruptive with purpose. That's it. And that's what we've been doing. I can tell you that the returns, we believe, on that portfolio are superior to the other options that we see in the market right now. Obviously, there are other things that are coming up from time to time. We'll adjust regularly. But if we can satisfy those 3 criteria -- and by the way, there's only a few things out of the millions of opportunities that meet first-in-class, best-in-class, fast-scaling and disruptive with purpose. Those are the ones that we go for. They're leveraging our core strengths. Everything else is going to go to somebody else. And if there's other opportunities for capital allocation, always looking at share buybacks, especially at the share price as a benchmark. The things that we're investing in are far superior than buying back our own shares in our opinion. And if you see any transactions from Standard Chartered in the weeks or months to come, it would also be far superior to buying back our own share. Otherwise, we'll buy back our shares.

It's Andrew Coombs from Citi. I guess I'll I'm just down the same theme. You talked about the 3 key points in terms of investment, as you said. So just trying to link that -- those 3 themes in with the financial aspect. You have the aspiration on the cost income and the RoTE in the medium term. When you look at your investments where you take a majority holding, are there specific financial targets for those investments? So is it the case if you need to breakeven by year x, you need to generate a cost of capital return by year y? Or are you thinking about it much more holistically in terms of there might be second order benefits to the rest of our franchise in these regions?

We're looking at it more holistically, and we're also looking at it at least with a substantial, if not complete lens, of the way the market is looking at these investments. So to the extent that we're building something that is preferred by customers to their existing mode of dealing in a particular set of products or dealing with a particular set of products -- problems, if we believe that we can deliver something that's differentiated, we believe that we can generate value from that, although it's not always crystal clear on day 1 where that's going to come from. The amount of capital that we've invested so far, actually quite limited. The success that we've seen off that capital that we've invested so far is a lot. And we've had a lot of success. It gives us a lot of confidence in knowing how to target incremental investment. We also had to build on what we've already got. Do we have an eye to where fintechs are trading in the market? Sure. Do we think that, that's the valuation that we're using for our calculation? Absolutely not. Absolutely not. We've got a good old-fashioned financial model that ultimately gets to EBITDA and discounted cash flows that we think is going to generate value. Have any of our ventures gone exactly according to the original financial plan? Absolutely not. I mean, let's just start with the fact that interest rates went to 0, and people traveling from Hong Kong went from everybody a lot to nobody at all. The only person that's used their Mox card for a cross-border transaction is me. And that's only because I can get into Hong Kong with limited quarantine. So -- but that's obviously going to change. And when we can tap into that 1 million person Trip.com partner that we've got, I mean how exciting is that? Yes, but it's definitely setting the financials back 2 years. Does that deter us from investing in great products? No. Did we pivot completely from travel product to credit product? Yes, we did. First credit card in the market, single card, 1 click, debit to credit, super exciting, completely differentiated and seamless, right? So, yes, we're creating value. It does not show up in the P&L yet.

I guess just staying on this, it's going to be a trickier part of the question, but you gave us some great examples, some real success stories today. But can you give us examples of something where you did invest and actually, after a couple of years, you decided actually, we don't see a way forward here and you pulled the investment?

Yes. So the number of things that we killed after a couple of years is 0, because nothing lived that long. But Alex, give you 3 greatest failures.

There's a lot, more than 3, really. So we tend to discontinue things quite early. The method we follow is specifically not one of building something and hoping they come later, having invested a lot up front. The method we follow is a lot nimbler, which consists in having a prototype, testing it, iterating it, testing it again, iterating again. And we'd like to think that the better ventures are the ones that have iterated the most as opposed to the best regional idea. So we only really invest once we know we're on to something, and that's something that's going to scale. On the back of which, we -- a lot of things never see the light of the day. And sometimes, it's the idea. Sometimes, it's a team. Sometimes, it's the product, the market fit. Something -- it can be a lot of different reasons why it doesn't see the latter the day, but the vast majority of ventures will never exist. The ones we're talking about today are the ones we think can scale.

Any write-offs in the investment portfolio?

Sorry?

Any write-offs in the investment portfolio?

No.

Aggregate amount of the $600 million that we've invested that is on the cutting-room floor. We've invested $600 million life-to-date in ventures broadly defined. What's the percentage of that that's been left on the cutting-room floor?

Cutting-room floor?

Cut that we've -- I know, he's French. I'm asking how many dollars have we spent -- how many of those $600 million have we spent money on, but then didn't carry onward?

Well, but it's an issue of the $600 million, they're the ones we've carried on with the -- I mean, again, we start very small. So meaning...

It's single-digit millions. It's just single-digit million...

So it's single-digit, good point. The idea is a very small outlay in the beginning. And then as we know we're on to something, as we know a platform is going to scale, then start investing and then invest materially on the successful ones.

So it's absolutely the right question. What are the -- what's it costing us to generate these successes? And so far, the answer is very little. And maybe we've got a little bit slow. And maybe we've left some greater deals behind because we discontinued or underemphasized some things that could have been great, maybe. But we're quite happy with the portfolio that we got. I know we're running tight. So we had a couple of other questions. If we have any questions coming in online, you'll...

Can I ask about the client growth target, please? Do you have the portfolio of ventures today that you need to deliver the 5x number? And is there any more color that you can potentially give us around -- is it more about banking as a service or digital banking? And can you just give a few numbers around that? That would be great.

Yes, we have the portfolio today. Clearly, that portfolio needs to be extended into new markets. So as we take Mox and roll it out into -- in Singapore, as we take nexus and roll it out into Korea as well into Kenya and 2 or 3 or 4 other markets from there, as we grow Assembly currency fair, which is a high-volume transaction with very high touch points, as we continue to accelerate the product offering in the African digital banks, so all of the pieces are there. There will be new pieces as well. For sure, there will be new pieces as well. But the $55 million, we just need to grow the existing business at the pace that we're growing it today. But rolling out to new markets, that's going to take both operating expense. So that $200 million that we spent last year is going to grow, and that will require incremental capital. Why are we talking about all this? Because we want you to know what we're spending your money on. And obviously, we want to get your feedback on whether you think this is what we should be prioritizing. Are others understanding whether we can generate value? So yes, we have the portfolio today, but it requires significant ongoing investment.

Bill, we'll now take a question from [indiscernible]. If we look across the wider fintech space, the number of new entrants have won tens and millions of customers despite having none of the competitive advantages that you alluded to in terms of brand licenses, et cetera, why do you think this is? And how might that change going forward?

Look, I think everybody has picked their niche. And there's some stunningly fantastic fintech companies out there that have addressed unmet customer needs. They've been highly reactive. They probably flew underneath the regulatory radar screen for some time, and then they get swept into the regulatory environment. Sometimes, in a low-touch way. Sometimes, in a very impactful way, as we're seeing, for example, in China, but only after tremendous value has been created. So I take nothing away from the fintech competitors. In fact, many of those are our partners. Those are exactly the systems that we're plugging into. But is there anything that prevents us from being as agile, as deliberate in terms of addressing or identifying and addressing unmet customer needs? No, there's nothing that prevents that. Do banks typically have the culture that is so customer obsessed and so focused that banks are going to take over the fintech world? I don't think so. I don't think so. I don't think banks generally have the culture, the focus or the regulatory latitude. But Standard Chartered, different. Our proposition is yes. Why are we different? Because we have no choice, right? We had no choice 5 years ago, and we have no choice today. I'm really happy with the choices that we've made. I think we've got a good track record of success. I don't know that we'll be the most agile and the most innovative organization in the world. But we're pretty good. And you combine that with the comparative advantages that we got, and we can win this game. That's our proposition. Yes?

Ian Gordon, Investec. Just in terms of the journey to a sub-60% cost/income ratio, how do you conceptually think about it? Clearly, you're generating additional cost headroom for the new strategy. Clearly, you expect scale -- efficient scale to deliver revenue uplift quickly. So are you asking the market to swallow any meaningful J curve? Or do you aspire to generate a pay-as-you-go?

Well, we are today in the high 60%. And in part, that is because interest rates have depressed the top line, but that is a fact. So I think going forward, we'll have 2 or 3 things play out. One is rates over time picking up, and everybody will have their own views on it, but that might be not immediate, but sort of later. Secondly, next year, we should have the benefit that the top line is unsettled by rates holding us back, which has been the case this year, and therefore, the true volume growth in the business should be more visible. And thirdly, progressively, is sorts of things we talked to you about today should cut in. So I think there is a momentum that is building rather than this being from the 1st of December, it'll all be clicking into place. We are very focused on the costs. You know we're very happy with the current year cost guidance. We have said repeatedly today that we want to get the balance right between investing enough expense to get these new areas to grow, but not stifling the core business of what it needs to also get the growth in there, and that's something which we are giving thought to at the moment. So the simple answer to your question, I don't think it's going to be entirely linear. I think a number of these will build. But I think if you put all of those together, and indeed, you do the math on our 10% [ royalty ], you pretty much -- depending upon your exact assumptions that have to get you around that number for everything else to lock in place.

If I can just be a little bit specific in a couple of cases, some of this came up in the Q&A in the room. The nexus as a business model, once fully scaled, we'll have an extremely low cost/income ratio. Because you've got very little cost to acquire, and you mentioned the small referral payments, extremely low cost to serve and entirely 100% ownership of the residual income. So that's a very low cost/income model. So at the outset, like today, that's not benefiting our cost/income ratio at all. In fact, it's having a negative impact because we're spending money on it. As we get to full scale, it dramatically reduces the cost/income ratio for our Indonesian retail business and obviously, as we roll that out for the rest of the bank. The African digital banks where we're closer to full scale today, right, we're close to the same number of customers in the African digital banks as we are for the rest of our African business, extremely low cost/income ratio, right? The cost to acquire, very low; cost to service, yes, little mentioned; costs to acquire, 1/3 of the conventional branch-based account. The cost to serve, 1/3 of the existing cost to serve. We're reducing branches along the way because those branches are no longer required by our customers. So that's further reducing the cost base for the business as a whole. That's driving the cost-to-income ratio for that business well below 60%. That's going to play out. As Mox gets fully scaled, as our Singapore-Phoenix operation gets fully scaled, much lower cost-to-income ratios. We are not going to offset that with much higher credit losses, right? That's -- now there may be slightly higher credit losses. There's no question when you're going at a different price point with a credit-led strategy or credit-embedding strategy. We'll have more LI, much more than offset by the income improvement that we're getting. That's our bet, right? And obviously, we'll see if we're right, but it's something that I think we'll all be watching a lot as things like buy now, pay later become the fad at the moment.

We'll take 1 final question. We have massively overrun. So anyone, a question?

Any more questions in the room, we'll take a question.

Excellent.

Yes. So I'm thinking about [indiscernible] you said in the last 5 to 6 years, you've already spent a lot of time sorting out the legacy system. And just how much is there left to do in terms of that? And obviously, 50% on innovative spend is a very, very good number. But I think most of the fintechs was, the challenger banks are probably on 70%. Is that something that you would aim for? And that's one. And the second one is, do you see a time when cost of service customers in the U.K. or some of the more entrenched markets could be reduced by 2/3, similar to the scale that you've seen in the African market as well? And what sort of time frame are you thinking that might be achievable? Because if I look at the scale, that's probably about a typical cost to serve as a current account is probably [ 150 ] for an incumbent by in the U.K. for a Monzo and Starling, installing for [ 50 ]. So that's sort of the difference we're thinking. So just wondering how you see that.

Thankfully, some of my old friends were not planning on attacking the U.K. retail market anytime soon, but good luck. The core banking systems are now rolled out in 2 of our 3 largest markets. So this is a cloud-based -- it's a proprietary application. All the migrations have happened smoothly so far. The big ones left are Korea and Hong Kong. We've left those for last, and that'll come in 2023 for 2 reasons. One is they're big, and two is they're on a completely different core banking systems today, whereas the other migrations were more evolutions within the core. So as we get out to 2023, we'll be fully migrated to cloud-based unified core banking system. That means when we -- when Kahina rolls out a new set of products for the CCIB client base, we only have to test it once. We don't have to test it 17 different times, which is what we had to do last year, 17 core banking systems, 17 testing protocols, 17 opportunities to screw up the migration and upset customers, right? So that's -- that directly affects the speed of delivery on the corporate side, also on the retail side. We are in the final stages of developing our third-generation mobile banking app. Footnote, Generation 1 and Generation 2 are best-in-class -- were best-in-class we've launched, continue to be recognized as leading. Not best-in-class anymore, but leading. Generation 3, we benchmarked against the existing mobile banking apps in the market. It's best in class, not #2, best-in-class. Now by the time we get out there, other people will have innovated. We'll see if we're still best-in-class. We will also be evolving our capabilities. So back end will be sorted, largely sorted this year. The remainder will be sorted over the next 18 months. The front end of retail, continuous improvement, but in very, very good shape, I think, for a first-in-class, best-in-class experience for customers. The stuff in the middle is mixed. So we still have meaningful proportions of manual intervention. We still have a population of employees that's long operational services, people, typically, are lower wages and, in short, automation at every point along the way. So when you hear some of the stats of 85% straight through or 70% straight through in core CCIB, products, et cetera, those are the successes. There's more that we can do and much more than we can do, which is why we're comfortable. Leave aside the increases in expenses that we're talking about in the SC Ventures just for a moment, which we're going to be very transparent about and we'll be talking about, which is why we've been able to keep our expenses flat for 5 years -- 6 years, while significantly increasing our investment and growing our income consistently over the past several years, because we do have plenty of productivity opportunities left. So we don't want you to think that we're sitting here with this perfectly oiled machine today, no opportunities for productivity from here. That's not the case. What we do have is a track record of delivering on those productivity commitments; delivering the end-to-end process; delivering the better and improving customer experience; and obviously, having that drive our income growth, drive the cost income ratio down and get us to the 10% plus, plus, plus RoTE. So exactly the right question, work in progress, encouraged so far. You guys have been really, really super engaged. Thank you for that. Thanks for coming. Thanks for coming here in person if you made it here in person. If you didn't, I hope you had a wonderful virtual experience on your nth video conference over the last 18 months. I look forward to seeing you in person going forward. And obviously, as always, the IR team and the rest of the team are all happy to keep on engaging asking -- answering questions and committing to more transparency. So thank you.