Sibos – 2019 – A review
The week-long Sibos 2019 at ExCeL in London has been a memorable event in many ways. Some of the highlights of the technology conference:
Chantal Van Es, head of Sibos, who welcomed the delegates to London for the annual technology event had aptly summarized the event this way: “We are proud to welcome thousands of delegates from more than 150 countries to the city for what proved to be an extremely successful and memorable Sibos. With over 11,000 delegates, hundreds of exhibitors and sessions packed with inspiring speakers, Sibos remains the place to be to shape financial services into the future.”
The week-long technology extravaganza at ExCeL, London (23-26 September), held for the first time in the city, had truly surpassed expectations with record number of delegates, 600 speakers and some 300 plus exhibitors. Regulars at Sibos described this year’s event as something unprecedented, delivering record-breaking numbers. The organizers in fact saw an average visitor increase of 20% when compared with events hosted in other European cities.
True to this narrative, Sibos this year in London had been a memorable event with sessions that highlighted issues like open banking, collaboration with fintechs, cyber security, countering frauds, AI and machine learning in providing security for banking transactions.
DISCOVER - A NEW CONCEPT
The core of all activities was Discover, which reflected the continuing integration of innovation, new technology and collaboration within the financial and banking sectors. Banks were displaying their work and ideas across a range of areas and these banks indicated that they understood the value of having that talent in-house and are creating their own technical knowhow. There were indications of higher levels of collaboration not just between fintechs but between the bigger banks themselves in areas like fraud, KYC, standards of information exchange and APIs.
The innovators presented to the Sibos audience forward looking topics that are relevant to the financial services community - topics such as data and trust, financial inclusion in emerging markets, cybersecurity, AI and ethics, tokenization, trade finance, etc. As usual SWIFT’s evergreen initiative Innotribe initiative was very much visible enabling collaborative innovation. At the Innotribe sessions, delegates were in fact traversed into the future with incredible presentations by speakers who are experts on their own.
SWIFT BECOMING KEY
Javier Perez-Tasso, CEO of SWIFT, who addressed the delegates at the opening plenary, said at SWIFT, use of technology continues to evolve at a rapid pace and in the financial services industry, global payments and securities markets continue to grow rapidly and shifts in technology are creating massive change. Big dollar investments, particularly in transaction banking and cross-border payments, he said, have opened up many new ways to provide banking services. He also touched on big technology platforms like Alipay that are driven by open banking and global credit card players that are expanding beyond retail and into business segments. He said it is SWIFT’s job to offer the industry a best in class platform so that financial services players can rely on the platform and focus on the front end. He talked about gpi, using which more than half of all international payments are now reaching the beneficiaries within minutes and real time becomes the industry standard for domestic payments.
OPEN BANKING BRING SPEED
Open Banking was at the center-stage on Day 1 of the event. One of the star presentations was by Lisa Robins, global head of transaction banking at Standard Chartered. She explained how payments used to take months, but now customers can send money in seconds cross-border and can get it done much cheaper. She highlighted the buzzwords in the banking domain like APIs, blockchain and consortia,
technologies that can support payments and are current. She also mentioned about StanChart’s collaboration with Ant Financial and the evolving blockchain solution which allows payments to be made between Hong Kong and the Philippines. “It is not just payments that are instantaneous, incentives are instant too. With technology, you can speed up payments and provide curated value-added experiences for clients,” she said.
She maintained that when collaborating with fintechs, banks can develop multiple APIs and offer a frictionless experience on one curated platform that manages procurement and financing, maintaining value as a trusted supplier. In the past, we were providers, now we are curators, and this has only been possible through API mashups.
POWER SHIFT
Sofia Ericsson Holm, head of strategic partnerships & open banking at Nordea, who spoke at the session, said the rules of the game in the financial services industry have changed and there is a power shift from the producer to the consumer, but also to the platform and “this lies outside of PSD2”. She added: “It is not easy to be a bank that has been around for a long time today. It takes three times the cost to develop something in a bank compared to other industries, and five times more to get to market.”
Andrew McFarlane, managing director of Financial Services at Accenture, spoke on the challenges that banks, fintechs and consumers alike face in open banking. He said: “In the future, all banks will offer their retail customers account aggregation services - and large corporates effectively already have open banking through their treasury services. We really feel where the future battleground will lie in the small business and small corporates space.”
Imran Gulamhuseinwala, trustee of the Open Banking Implementation Entity, the body that has overseen development and delivery of open banking in the UK, said it is still very early to say where banks are with open banking in the UK, which is an experiment. 2020 will be the year for adoption in the UK, and there is a lot of discussion on how to extend open banking from just current accounts.
Tony McLaughlin, managing director, Citi, stressed on the need to collaborate and develop the capabilities to embed services in platforms via standardized APIs. “We live in a world of platforms and it’s only just started. Financial services will be embedded in digital platforms – that’s for sure. But the question is: who will provide those financial services? Will it be the banks? fintechs? Or the big tech platforms themselves?”
CYBERSECURITY TOO FOCUS
Equally importantly, cybersecurity and its critical role as the foundation for all industry innovation was a theme that delegates lapped up at various sessions. A dialogue between Andrew Gray, group chief risk officer at DTCC, and Dr Daniela Peterhoff, co-head of EMEA Corporate & Institutional Banking & global head of Market Infrastructure at Oliver Wyman on the most critical risks that financial market infrastructures are managing today was the highlight of the sessions. Peterhoff noted that Oliver Wyman has seen a 15% increase in cyber attacks, alongside a similar increase in cyber budgets over the last 3 to 5 years. Two in 3 firms have been affected by cyber attacks, she said, and one in 3 organizations have been hit by insider attacks. The world is becoming increasingly digitized with evermore interconnected and seamless processes, the pace of innovation having increased, the significant increase in technological complexity and the attacks themselves increasing in sophistication were all reasons for this complex situation.
Andrew Gray stressed that, due to their position in the financial services ecosystem, the stakes are even higher for FMIs than for other players. He said that there are often no other substitutes for the critical services they deliver, so if an FMI was attacked and went down, the whole system is down. And that raises the bar for FMIs, he said.
AUDIENCE POLLS
One highlight of the session was polls asking for the audience’s input on how their firms were dealing with the cyber threat. The final poll, asking what the greatest technology risk firms face, delivered a surprising result. The majority of the audience thought that legacy software is the greatest source of risk to firms; while cloud technology risks were second highest, Peterhoff had expected that the cloud would have been of greatest concern to delegates.
CYBERSECURITY STORM
There was a session titled ‘ Have new busi ness models c r e a t e d a perf e c t cybersecurity storm?. The panel discussion was moderated by CEO of the Information Technology Industry Council Jason Oxman with Microsoft’s Sian John, JP Morgan’s J.F. Legault, Standard Chartered Bank’s Cherie McQuire and Deloitte’s Rob Wainwright participating. The panelists discussed how the threat landscape has changed in recent years, how cybercrime is becoming more mainstream and how financial organizations are trying to manage their digital transformation while defending against cybercrime. They felt one of the major contributors to the reduction
of fraudulent activities is the effective use of data and artificial intelligence (AI).
According to John of Microsoft, phishing techniques are getting more sophisticated. While Hollywood movies frequently depict those creating these attacks as cybercriminals operating in isolation, the reality is quite different – networks of social engineers are manipulating users to click on links through their extensive expertise in social engagement, he said.
He felt AI and machine l earning technologies can detect phishing attacks within seconds, blocking t hem and allowing human experts to investigate the attack more closely. Rather than replacing humans in this field, AI can augment the human experience and provide more effective prevention techniques.
Two ethical hackers from SWIFT’s Red Team - Daryl Kellison and Hubert Toussaint - held a live demo, which put the spotlight on the malicious activities of the hackers themselves.
The sessions on cybersecurity left everyone realizing that security is the bedrock for every institution, and firms must do everything in their power to prevent, detect and secure.
ZERO OPERATIONS
One new concept that found mention in deliberations with new age bankers was the move towards ‘zero’ operations. The concept meant that by standardizing their operation flows and making a considerable investment in upgrading their end-to-end software solutions, these banks are hoping to dramatically reduce their internal processes. This largely meant reductions in front office trading activity or mid-to-back office automation improvements through Robotic Process Automation (RPA). The process is now moving towards full digital process automation (DPA) rather than piecemeal fixes across single point issues. However, much of the success will depend on how best they are able to get the right balance between full automation and effectively managing exceptions and the advisory element of corporate banking which will always have an element of personal touch.
The week-long event appropriately with the theme ‘Thriving in a hyper-connected world’ l ooked at the challenges and opportunities that mass digitization and data-driven relationships present for the financial services sector as a whole. There were 5 sub-themes - Enhancing digital ecosystems, Leveraging data, Keeping ahead of cybersecurity threats, Adapting to geopolitical and regulatory priorities and Exploring the human element. Besides, the deliberations also touched on how critical human and machine collaboration capitalizes on data as the lifeblood of the modern financial services ecosystem.
The d i s c u s s i o n s , d e l i b e r a t i o n s , networking, insights into what technologies are about to do and how the financial services sector is shaping up, had a very appropriate conclusion. Thomas Kurien, Google Cloud CEO, shared his insights on technology and the future at the closing plenary drawing on his experience and deep knowledge of engineering, enterprise relationships and large organization leadership.
“As digital technology has advanced in a number of different ways, it is really changing the way that financial institutions can think about creating new products, pricing them, managing risks associated with them, distributing them and reaching customers to deliver an experience in a fundamentally new way,” Kurien said, maintaining that “As digital advances, we see that financial institutions have now got enormously capable tools at their disposal to change the kind of products and experiences they deliver. But at the same time there are new risks that are emerging all the time.”
USE OF CLOUD
He pointed out that financial institutions around the world are moving much more aggressively to use cloud. There was a period of time when there was anxiety about data security, locality of data and regulatory risk. But, he said as cloud companies have invested - like Google - in data centers and software capability to protect data to build very advanced cybersecurity capabilities and other things, financial institutions are increasingly looking at cloud as a new platform that they can use to innovate and to deliver experiences in new ways and to connect the products to consumers in new ways.
Kurien also discussed open banking. He said: “APIs or the ecosytem is seen as a tool to empower the consumer and to put the consumer at the center and allow the consumer from his device to be able to access his financial information whether it’s from one or many different financial institutions and get a unified view of what the financial situation looks like. I think that’s enormously empowering the consumers. It simplifies and makes financial transactions much more convenient for them. And every time you make something more convenient you make it more useful for them.”