Like many others in the payments and bank technology space last Thursday I attended the SWIFT Business Forum in London. It was a fantastic day with a number of informative sessions on all of the key topics and trends that are dominating the industry right now. For a comprehensive insight into the day check out the agenda and the Finextra SWIFT Business Forum London – Live Blog. Clearly, there was a lot going on! In this post, I would like to share with you the sessions that I attended and my key takeaways from the day….
My day at the SWIFT Business Forum in London…
- Kicked off with Opening Remarks by Arun Aggarwal – SWIFT UK, Ireland & Nordics Managing Director
- Followed by a Keynote speech by Sir David Clementi – former Governor of the Bank of England and now Chairman of Virgin Money and World First
- Next was an insightful session on Harnessing Disruptive Technology in Financial Services
- Before lunch, I attended a session all about SWIFT Corporate Treasury Management where SWIFT outlined various SWIFT for Corporates initiatives and focus areas
- During lunch there was a SWIFT KYC (Know Your Customer) Registry Update – which looked really interesting, but the tool, launched in December 2014, is currently focusing on Financial Institutions (FI’s) and will be available to corporates at a later date
- The Corporates forum session – Are Banks Meetings the Needs of Corporates – was a lively debate with views and opinions from both corporates (Vodafone and Schneider Electric) and banks (Citibank and HSBC)
- After which I quickly ran, a little late, into the ISO 20022 In Practice session
- I stayed back and went to the “A Journey into the SWIFT Cloud” session – an overview of the SWIFT Alliance Lite 2 (AL2) connectivity offering
- It was getting towards the end of the day now and next up was the closing plenary on Real Time Payments – Strategies for Success
- Lastly Arun Aggarwal closed up proceedings…
So, what did I learn from the SWIFT Business Forum in London?
1. Fintech IS Disrupting Financial Services….
Right from the outset Arun was focussing on the disruptive innovation and spoke about this being an “era of unprecedented change”, referring to the explosion of disruptive technologies entering the financial services, and asking the rhetorical question if the entry of technology companies into the financial services was a “curse or opportunity”. Arun reaffirmed that London was a leader in the fintech revolution and as such the SWIFT Business Forum in London was “at the right place at the right time”.
Arun acknowledged that the financial services industry is “ripe for transformation”, but at the same time expressed some reservations explaining that the financial services industry is not the same as the newspaper, travel and taxi business. Arun went on to say that it remains to be seen if the “new masters of the universe will really transform the industry”. The focus on innovation, fintech, Silicon Valley continued as Arun shared that this was the “New age of industrialisation” where traditional financial services faced a “ferocious challenge” to the conventional way of doing business. Arun Aggarwal highlighted the following challenges facing banks:
- Operation excellence – basically reducing costs…
- Agility – calling for out of the box thinking that is at the heart of many new start up / fintech companies
- Simplicity – outlining the challenges of legacy systems, and of being too big to manage
- Collaboration – sharing costs within the industry to delivery new and innovative solutions
- Partnership – within the industry and with new fintech companies
- Regulation – ensuring compliance, but also sharing that currently regulation is “a bit of a firewall for new entrants”
2. Sir David Clementi Is A Pretty Cool Guy…
So this was really interesting for me… David comes across as an old school kind of guy, but actually he is Chairman of Virgin Money and World First – 2 companies that are challenging incumbents and doing things differently. David gave some really insightful observations into the 2 companies that he Chairs and some industry based anecdotes that reinforced his message:
- “..the quality of customer service matters, not the wizardry behind it..” on his shake up of the legal profession some years ago. But a timeless lesson applicable across industries, including financial services
- Entering the industry today with new technology systems is in many ways easier than adapting legacy systems….
- ….and often small is good – as it allows you to target completely and ruthlessly on your niche, giving challengers the ability to keep things simple and focus entirely on looking after your customers and their journey with you
3. Disruptive Technology is Dividing the Financial Services Industry…
There were some clear differences in opinions and thinking amongst the panel, for me this made it the most interesting session of the day with a panel from HSBC, Metro Bank, Barclays, SWIFT and Earthport. Following are my key takeaways:
HSBC – Christophe Chazot – (Head of Innovation):
- Explained how banks need to be like Amazon and be able to sell and offer everything related to financial services
Metro Bank – Craig Donaldson (CEO):
- Believed there would be consolidation in the financial services industry since many of the large conglomerates are trying to be all things to all people, and new business models are able to take advantage of weaknesses in niche areas
- Called for incumbents to be humble and leverage technology more
- Believes that “parts of banks will survive but segments will be eaten away”
Barclays – Usama Fayyad (Chief Data Officer):
This guy was interesting….
- Explained how the new technology landscape is changing, and that banks are lagging behind
- Believed that banks should not concentrate on survival rather on changing – especially since banks – such as Barclays – have been around for over 300 years and have adapted and re-engineered what they do
- Gave various industry based examples on new comers and innovation – for example, in China AliPay last year had transaction volumes greater than all of the combined global credit card transactions
- Shared how banks have an intimate and unrivalled insight into their customers that they need to utilise correctly
- On innovation – explained how you don’t need a department of innovation, instead you need some agitators to shake things up and that innovation should be driven by the customer and business demands
- On Bitcoin – expressed his interest not in Bitcoin itself but the underlying blockchain technology and looking forward how it could be utilised to bridge the gap between the technology and banking / regulatory environment
Earthport -Daniel Marovitz (President Europe):
- Called for “partnership [with fintech companies] not a war” – highlighting how in the pharmaceutical industry research and development is carried out by innovative companies and how these companies are in turn either acquired directly by the larger pharmaceutical giants or their products are
- On innovation – believed that innovation was a fundamental part of an organisations culture and posed the question “is innovation what you do, or what you are”?
SWIFT – Gottfried Leibbrandt (CEO)
- Called for some calm, explaining people want security from banks and how “the last time banks got really innovative, the whole system blew up!”
- On innovation explained how even though legacy can be cumbersome, financial services can utilise their history and knowledge to their advantage highlighting how the credit card network and technology enables payments globally, quickly and securely. Gottfried goes on to say how the credit card technology is now being leveraged by Apple Pay who are “making something new of it”
- On failure explained how SWIFT have a zero tolerance policy for failure in what it was doing right now, but shared how they innovate and experiment internally
4. SWIFT Are Increasingly Targeting Corporates…
This was an interesting session hosted by Neil Gray (Corporates Business EMEA, SWIFT) and Andre Casterman (Global Head, Corporate & Supply Chain Management – SWIFT – aka George Clooney look-a-like)…
The guys ran through various SWIFT for Corporate statistics highlighting how corporates are a key market for SWIFT and their “value proposition”. The important things to note were that corporate membership is increasing and will continue to be a focus area for SWIFT as part of the SWIFT 2020 strategy. The following products were highlighted:
- SWIFT Ref – A global reference data utility that ensures up to date SWIFT BIC and IBAN information enabling straight through processing
- 3SKEY – A multi-bank digital identity solution
- BPO – Bank Payment Obligation
5. Corporates and Banks Have a Love/Hate Relationship…
A lively session with a whole host of issues and questions being debated. For me Philip Hong (Head of Channel Services, Citibank) covered in his opening the most important points from a corporates perspectives:
- Automation – The need for automation to drive efficiency – both in terms of payments and reconciliation
- Standardisation – Gaining value through centralisation, referring to the evolution of SEPA
- Mobility – Providing customers with a multi-platform experience so that corporates can utilise the channel they desire
- Fraud management – highlighting the rise of social engineering attacks by fraudsters claiming to be the company CEO…
- Information – referring to the importance of data to enable reconciliation, forecasting and providing multi-banking visibility
There was also an interesting point from Vodafone’s Treasurer (Neil Garrod) on how the XML format contained information, previously unavailable, and concerns around how that may be used by authorities. HSBC’s Head of Innovation (Charles-Henry Dubarry de Lassale) explained how new standards (such as SEPA) and technology bring new risks.
6. ISO 20022 and SWIFT Cloud – Zzzzzzzz…
I don’t want to sound like a know it all, but I didn’t pick up anything too interesting about ISO20022 or the SWIFT Alliance Lite 2 tool. We have covered ISO20022 in SEPA for Corporates quite a bit, so nothing new to report here. I may do a post on SWIFT Alliance Lite 2 versus SWIFT Service Bureaus in the near future, look out for that…
This was a useful refresher nonetheless…
7. Real Time Payments Will Take A Long Time…
Again, I have posted on faster payments and real time payment systems around the world quite a bit recently. Still it was interesting to hear what some of the industry leaders had to say. Some of the notable points included:
- Real time payment systems need to be available 24/7 which introduces huge risk when you consider the technical systems involved – they cannot be down at any point for maintenance / upgrades
- All components of a real time payment system need to be available 24/7 – if they are not, the process breaks down
- So far real time payments systems have been confined to national systems, but if we consider a cross border real time payments system scenario there is additional complexity due to the need to comply with anti-money laundering and sanction regulations
- Often the consumer is more exposed with real time payments since the payment is instant and there is little room for recourse – although it was recognised that pattern based learning would help protect the consumer
For more information about the SWIFT Business Forum in London session on real time payments check out Global real time payments are finally pulling into the station – 40 years late
SWIFT Business Forum…
For me, the SWIFT Business Forum was all about Disruptive Innovation and how, if at all, the banks could deal with the rise of the fintech sector which is eyeing up the opportunities in the financial services sector. These are clearly interesting times and how the financial services sector deals with the fintech and Silicon Valley start ups remains to be seen. In the words of Daniel Marovitz (Earthport) the banks need to consider “what is a bank?”. It will be interesting to see how the themes and questions continue to be debated over the coming months and how the landscape changes over the next 12 months… Overall, I think everyone agrees that the clear winner in all of this will be the customers.
Were you at the SWIFT Business Forum in London, and if so I would love to hear your insights and key takeaways from the day below…