Between the 22nd and the 25th of October, some 8,000 delegates representing leading names in financial institutions, technology partners and markets infrastructure from around the world descended on Sydney for Sibos, Swift´s flagship conference for the global financial services industry.
This annual forum invites discussion surrounding the developing trends, strategies and challenges that have the potential to influence the future of the sector.
Now that the stalls have been dismantled and put into storage for next year´s event, what do we know now that we didn´t one week ago?
Big tech is not set to shake up banking just yet
According to a Twitter poll of delegates on day one of the conference, only 3% of those responding thought that new market entrants from the giant tech community would be the main driver of opening the banking sector over the next five years. The greatest force for change is the consumer, with customer-led demand for openness, transparency and interoperability seen as the most important factors according to 38% of respondents. Technological change and fintechs were level pegging with a 14% share of the vote. An interesting takeaway, and yet fintech has played and will continue to play an integral role in facilitating a transformation in the way banks engage with their customers. In the UK, initiatives such as Open Banking and the Capability and Innovation Fund, Alternative Remedies Package have placed a much greater emphasis on collaboration between the banking and fintech sectors with the SME community set to benefit from a sea-change in the financial services open to them.
New behaviours are required to combat increased cybersecurity threats
With three to five percent of global GDP tied to financial crime, the threat from organised cybercrime is impossible to ignore and received considerable attention at the conference. Technology has a central role to play in developing new defences against this threat, however it must be applied universally. As data is increasingly shared across banking ecosystems, any one institution’s security is only as strong as that of the third parties it chooses to partner with. This new form of crime does not recognise any barriers or jurisdictions and therefore only greater collaboration between financial entities can provide any meaningful protection.
The future for Australia’s New Payments Platform looks bright…
Launched in February this year, the roll out of Australia’s New Payments Platform was in the spotlight at Sibos. Hailed as a world first, it enables real time clearing and settlement for both simple and complex payments, with the flexibility to include supporting text and documents. Take up among individuals has been strong with Osko, the first service to go live on the platform registering 2.5m users to date. This led Reserve Bank of Australia’s assistant governor Lindsay Boulton to sound the death knell for the cheque system. One of the platform´s chief attractions is its flexibility. Having seen enthusiasm among their retail customers, banks are beginning to explore how they can harness its potential with their corporate clients. Businesses are applying their own overlays to develop bespoke payment solutions to match their specific needs while central government has recognised the role the platform can play in delivering emergency funds to families or individuals facing crises.
…while the future of legacy banks is uncertain
Findings of another Twitter poll held on the final day of Sibos confirmed that the future of banks is by no means guaranteed in the eyes of the delegates. Asked what percentage of incumbent banks would exist in ten years´ time, 37% felt that only 60% would remain and just under a third thought that 40% had a future over the same timeframe. And while advances in technology were a recurrent theme throughout the conference, the human element is still a deciding factor in survival. Over a half of the respondents to the question “What is the biggest challenge for banks “to get ´from here to there´?” felt it lay in their talent and culture, followed by legacy systems and processes at 32%.
Technological innovation will undoubtedly be instrumental in shaping the future of the financial services industry, but it requires a cultural mindset and an openness among decision makers to accept change for its true potential to be realised. With challenger banks and service providers rapidly gaining ground, any legacy institution that does not evolve to meet the changing needs of customers, individual or corporate, will be left behind.