Along with 1300 people last week, i visited the SWIFT Business Forum in London – it was a great day with a number of well informed panel discussions and insights into the hot topics dominating the industry. My main focus was of course payments. There are plenty of overviews from the various sessions at the SWIFT Business Forum in London, one of the most detailed is the Finextra Swift Business Forum London 2016 – Live blog. Over the bank holiday weekend i was looking through the rough notes i made from the SWIFT Business Forum, and in this post i thought i would share some of the themes.
1. SWIFT Business Forum – Build The Future
In the introduction to the day Javier Pérez-Tasso, SWIFT’s Americas and UK region Chief, announced the theme of the day was “Build the Future”.
Javier talked about:
- Compliance and resilience in the wake of growing cyber threats and endless regulation
- Innovation – focusing on how digitalisation is driving the Fourth Industrial Revolution
- Fintech – on the emergence of the UK and in particular London as a dominant global fintech hub
- Infrastructure – highlighting how sexy innovative retail payments solutions are being supported by some pretty old systems, and how some underlying infrastructure changes are happening that will support the front end innovation
- Legacy – and the challenges between adapting and building from scratch
He finished with a nice quote by Gordon Moore, Intel founder, from 1965 where he talked about the pace of change – “Change has never happened this fast before, and it will never be this slow again. This shouldn’t come as a surprise”.
2. Eileen Burbridge – British Treasury’s “special envoy” for Fintech
This lady was pretty impressive, and ‘performed’ particularly well given the various microphone issues. I made the following notes from Eileen’s opening keynote:
- Eileen talked about dressing down for the occasion “to look less corporate” – it kinda reminded me of a post i wrote about looking innovative..
- She talked a lot about “sparking” – “sparking” technology, “sparking” conversation – it’s a cool concept, what is going to “spark” next?
- The financial sector has always been at the forefront of technology and innovation
- To understand that both technology and innovation are not new to financial services, but to note the difference in the industry right now are the newcomers – in particular the diverse profile of the newcomers – from various sectors, established and emerging markets, new user groups (various ages/social and economic profiles) — and what is driving these newcomers — technology!
- Within 10 years we will not talk about digital as a distinct sector, rather everything around us will intrinsically be digital
3. SWIFT Business Forum – Plenary Panel – Build The Future
Next up was a really interesting panel debate featuring:
- Andrew Hauser – a risk assessment director at the Bank of England
- Gottfried Leibbrandt – the chief exec at SWIFT
- Marion King – payments director at RBS
- Blythe Masters – chief exec of Digital Asset Holdings – a blockchain company
- Daisy McAndrew – a journalist
The guys made some noteworthy points:
Marion – Payments need to be made safely, securely and in real time
- Instant payments ain’t anything new, Faster Payments have been available in the UK since 2008 – I didn’t know that!
- BACS was launched in 1968 – whaaatt, BACS is 48 years old….!!
- Regulatory change and Legacy will drive change
- Her mantra was moving money safely, securely and in real time
Andrew – “We Cannot Afford to be Ubered”
Presented the banks point of view, and made an analogy between banks and a building site:
- Investors are needed to help transform a building site
- Architects are responsible for the vision, design and stability of the construction
- Plumbers are responsible for the underlying infrastructure, the drains and water supply to the site
- Health and safety inspectors must protect and secure the building site, its employees and visitors
With that analogy in mind, Andrew explained how:
- Change is going to happen whether banks like it or not and….
- A lack of change is dangerous and harmful to the overall financial system and in fact creates instability
- There are 5 trends from a traditional bank perspective that need to be addressed:
- Resilience – financial providers, such as banks, need to be stable
- Convergence – how to enable flexibility that can manage the merger of retail, domestic, international demands
- Real time – many central banks right now operate 5 days a week – consumer demand is 24/7
- Data and analytics – how can data be used safely and in a trusted manner
- Access – who should have access to the financial system
Made some great points about:
- Finding the right conditions and applications for technology. Explaining how contactless technology is over 12 years old, but it was only when the right application was found (Transport for London) did the technology start to gain traction and widespread popularity
- How often what starts as technology questions quickly grow into wider questions about the industry and the ability to do things in news ways
Blythe – “Representing the industry eating everyone’s lunch”
Blythe nicely set the scene of the current financial environment – depressed revenues, volatility, illiquidity, rising costs due to the regulatory burden, unpredictable market conditions, new technologies attacking incumbents and increasing cyber-threats. With this as the back drop, Blythe proposed that using and enhancing a shared financial infrastructure was actually a really interesting proposition.
She acknowledged that changing the wheels of a fast running bus is difficult but explained how change could happen through Regulation, Network Effect and Collaboration which would enable a framework for change
In response to a question about banks not understanding technology and the fintech revolution Blythe explained that is oversimplifying the situation. She went on to say that Goldman Sachs employs around 10,000 engineers and that you could say that Goldman Sachs is a financial technology company!
On why there is so much hype around fintech, Blythe explained that the “intensity of the focus is because of the intensity of the need”. Nice!
Gottfried – “3 ways to go broke: Gambling, Women & Engineers”
Gottfried explained how in and amongst all of the disruption:
- The underlying business processes has changed very little
- Technology is expensive, especially if you get it wrong – and that is where he used the above quote about 3 ways to go broke!
- Infrastructure – often new infrastructure is added alongside the old infrastructure – he gave the example of airports citing the current arguments around expanding Heathrow Airport versus creating an entirely new airport elsewhere – and the similarities with banking
4. SWIFT Business Forum – The Future of Payments
This was another panel debate with:
- Wander Rutgers, Head of Banking, Transferwise
- Carlos Sanchez, CEO, Orwell Group
- Richard Martin, Head of Cash Management, Barclays
- Matt Loos, Executive Director and Senior Product Manager, Treasury Services, JP Morgan
- Christian Sarafidis, Chief Marketing Officer, SWIFT
Key Payment Trends
Carlos kicked off by talking about converging trends:
- Customer frustration with payments – for example international payments
- Payment simplification – the need for payments to disappear, be seamless – perhaps be embedded into something
- Bank stress – lack of liquidity, rising regulatory and compliance costs, the cost of maintaining existing rails and the need to build new rails
Wander spoke about a perfect storm for fintech companies:
- The failure of big banks to innovate particularly when it comes to international payments
- Payments regulation has enabled newcomers to enter the market
- Customers are ready to look beyond their traditional banks
- TransferWise is able to collaborate and work with banks to deliver a simpler solution
Wander questioned “if you can send an email to Gautemala, you should be able to send a payment there too”
Richard welcomed competition from fintech companies, and believed that this will ultimately drive the banks forward:
- But at the same time spoke about collaboration between banks and fintech companies
- Continued the theme about seamless payments by stating that “payments will be a hygiene factor”
- Barclays are evolving their products – for example Pingu started life as a Person to Person mobile payment application and is now business to customer and business to business
Matt pointed out the need for integration:
- There are several – around 50 – initiatives to build new rails – such as faster payments which is great. But they serve a domestic market and the challenge is how to link these so that they become cross border
- Through international / cross border ties, the industry can grow
- Often telecoms is highlighted as an industry where collaboration has happened between different partners, but Matt explained that there is a huge difference between payments and telecoms – if a phone call is cut off, you redial and continue; if a payment goes missing, you have a problem!
Christian asked how the industry could work better together, here is how the panelists responded:
- Matt – banks need to share information between each other in a more secure way. His mantra was together we are stronger!
- Carlos – highlighted how collaboration within the telecoms industry enables you to make a telephone call anywhere – banks need to do the same. Also, Regulation – without making it mandatory, nothing changes!
The Need for Start Ups…
On why we need startups, the panel agreed that start ups:
Richard acknowledged:
- That banks provide a broad spectrum of services whereas fintech companies utilised technology to provide laser focus in niche areas
- Start ups force banks to innovate
- Collaboration with fintechs keeps the customer happy!
Wander explained:
- That startups are lean, technology focused and disciplined competely to give the customer what they need
- How the culture drives start ups – a complete focus on delivering a innovative product, continuous improvement of the product, serving the customer right way from the shop floor through to the CEO – this culture is difficult for banks to replicate
1 Thing That will Change in Payments in the next 5 Years:
- Matt – Transparency
- Richard – Speed – the move to real time and anytime, any place, anywhere
- Wander – Adoption of people using non-banks for financial services will become the norm
- Carlos – Convenience – e.g one time onboarding will give access to multiple services