“All the major banks are transforming into tech companies”
Leaders from the financial sector recently gathered for the annual Sibos* (SWIFT International Banking Operations Seminar*) event, which was held in London for the very first time. Taking place at ExCel*, Sibos 2019 was attended by more than 11,000 delegates along with more than 200 exhibitors on the show floor.
'Thriving in a hyper-connected world' was the main theme for this year's event, recognizing the challenges and opportunities that mass digitization and data-driven relationships present for financial organizations. The aim was to explore the impact of new technologies and identify the culture, skills, and working practices that businesses need to implement in order to maximize the potential of both human and machine capabilities. Tying in with the main theme of hyper-connectivity, several key topics emerged at Sibos 2019, with data being top of the list.
As the quantity of data produced has increased radically, the quality of data is improving all the time. The challenge is to bring together siloed datasets in order to extract value while also maintaining privacy and security. Not only do banks have internal datasets sitting in different silos, they also have access to external data – by combining the two they can build a better picture of their customers. There is great potential in using data in new and innovative ways, such as sharing it with other industries. Fintech start-ups have been ahead of the curve when it comes to unlocking the power of data and have largely proven to be partners to traditional banking organizations, rather than competitors. This was clearly evident at Sibos 2019, with a number of major banks showcasing their tech accelerators.
The financial sector has always been a heavily security-focused industry for obvious reasons. But with the ever-expanding amount of data now involved, staying ahead of cybersecurity threats is now more challenging than ever. At Sibos 2019, there was much discussion around the issue of how to securely share data between different organizations in order to deliver a better view on financial crime and fraud. This not only involves what banks do with their customer data, but also how they share that data within secure networks to allow them to work more effectively.
The arrival of Open Banking regulations has had a major effect on the security conversation. This year's Sibos showcased how different geographies are dealing with data, new regulations, and the opportunities they present. For example, Australia is moving towards stronger consumer data rights, with the four major banks set to make customers' data available to third-party fintech firms from 2020 when requested. There's also an element of reciprocity involved, with the data shared between the banks and third parties. A panel discussion at the show highlighted the importance of APIs in helping to make banks more friction-free by harnessing data in real time.
While always a hot topic at Sibos, faster payments was a particular focus in 2019. The volume of payments data is exploding because it's not just people initiating payment transactions anymore, but also machines. The time taken to process these payments is decreasing as the industry moves towards the goal of real-time payments. The challenge is to balance this with security. This ties in with one of the show's main themes of enhancing digital ecosystems. For example, the expansion of SWIFT's gpi (Global Payment Innovation) platform is enabling faster and more transparent payments and is gradually moving towards universal adoption.
Digital Ecosystems in Banking
Also touching on the ecosystem theme, one issue which was discussed extensively at Sibos was China and its banking system. The focus was on how having two different financial frameworks across the globe will play out in future and the challenges it could create. Also relating to ecosystems and standardization, Blockchain made something of a comeback at Sibos 2019. Now that the hype has died down, there was more discussion of how this technology could effectively be used in real-world use cases.
The Potential of AI
The use of Artificial Intelligence (AI) is becoming more common in the FSI world, with organizations now successfully using the technology for specific business uses cases. AI is all about maximizing the value of data, enabling organizations to make better decisions. Also highlighted at Sibos 2019 was the importance of the human element when implementing new technologies like AI – by improving the efficiency of certain processes, AI can help to reduce reliance on human workers for time-consuming tasks.
"At least half of jobs will be changed in a fundamental way over the next 10 or 20 years, because of AI," said Dame Minouche Shafik, Director of the London School of Economics and Political Science, speaking at the event's opening plenary. "I think what's different about the AI revolution is that we're used to thinking about manufacturing jobs changing – that workers are replaced by machines. The AI revolution will change jobs that we don't normally think of being prone to automation. We need to think about what roles will be complemented by automation and develop those skills in the next generation".
What's clear is that FSI organizations can only thrive in the hyper-connected world if they have a strong digital infrastructure in place. As we move into 2020, the focus will be on responsible innovation – using technology to improve banking operations while also ensuring security, resilience, and compliance.
"All the major banks are transforming into tech companies," said Mike Blalock, General Manager, Financial Services Industry at Intel. "They have to have a good foundation of tech to be able to provide these services and there's a big opportunity for them because they have the brand, trust, and customer base to be able to do that. This year's Sibos highlighted the importance of this journey and how we need to speed it up. The banking world is evolving quickly and technology needs to be right at the heart of this change."
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