Sibos 2012 – Day 3 Report: Payments and news from the exhibition

31 October 2012

The third day of the Sibos 2012 trade show in Osaka, Japan, saw a plethora of new launches and announcements from the exhibition floor, not the least of which was SunGard’s new enterprise reconciliation product for Microsoft’s Windows 8, which has itself attracted some attention from the trade floor, says Tom Groenfeldt. A payments report and the rise of non-cash online and mobile payments has also been much discussed.

SunGard has unveiled an enterprise reconciliation product at Sibos 2012 on the new Microsoft Windows 8 operating system (OS). The product has the potential to dramatically improve productivity in back office processing and, not so incidentally, the move could prove to be a major marketing bonus for Microsoft, in terms of increasing adoption. The Windows 8 OS seeks to cater for iPad-style touchscreen devices and traditional personal computers, using a mouse and keyboard with Microsoft enterprise applications. The associated Surface tablet, which uses the new OS and is Microsoft’s first move back into hardware for a number of years, has also been a hot topic of conversation on the exhibition floor at Sibos 2012.

In data intensive applications like reconciliation, a user can expand and collapse columns of data with a quick swipe to view summaries, aggregate information or drill down. According to Richard Chapman, SunGard’s director of product management operations, this is where the Microsoft Windows 8 link-up should come into its own, making their new enterprise reconciliation solution much faster than it would otherwise be just using a traditional keyboard or keyboard-mouse combination.

SunGard

A long-time Microsoft partner, SunGard’s Chapman knew nothing about Windows 8 when Microsoft first approached him long before this week’s Sibos trade show in Osaka, Japan. He and SunGard’s Don Tyson, the chief technology officer (CTO), flew to India to work with the Fractal Ink design studio in Mumbai on the new reconciliation launch.

“I haven’t had so much fun with a developer group in years. We started with a blank sheet of paper and asked what these things do,” he said.

Tyson and Chapman began working with tiles that update in real time so they can show when a limit is reached or a transaction fails. Several tasks can be running at one time, and since this occurs in a Microsoft environment, users don’t just monitor, they can go into the SunGard application and make changes.

Chapman had been thinking of this just as a management tool but after some time using it, he told Bobsguide that he realised that the combination of touch and type was much faster than just a traditional a keyboard and mouse. SunGard plans to test the product with a major bank soon, he says, and is actively looking for partners on the Sibos 2012 exhibition show floor. “This could be a phenomenal tool for clerks, not just managers,” he added.

SunGard has also worked closely on the development with Intel, which along with Microsoft, has invested time in the product development. SunGard's Chapman has a sleek Intel Ultrabook, which rivals a MacBook Air, which he is using in Sibos 2012 demonstrations on the show floor to show off the new launch.

Think of the implications. What does one call a reversal of the ‘consumerisation of IT’ trend if employees have cooler computers at work than at home? Take your own device into work – why bother when this could so much cooler? Will banks see trickle up technology with clerks passing their old computers to the front office?

Chapman expected reconciliation would be something of a quiet backwater when he first took the job three years ago. He arrived as regulators were pressing banks to provide more and better information, however, and the banks were trying to reduce costs and complexity, giving the arena more prominence. The need to provide more comprehensive views by consolidating reconciliation across silos has been paramount too.

SunGard has expanded the reach of reconciliation, at the request of a client bank he maintains, moving into derivatives, which turned out to be much more difficult than Chapman had first expected. The company has also provided more reconciliation information across internal processes.

Before the financial crisis, SunGard clients were expecting a huge surge in trading volumes, and SunGard built systems to handle the expected surge. Rather than a surge in a single line of business, however, banks have seen a surge in volume because many more business lines are now using the systems to reconcile requirements such as portfolios against general ledger accounting, or general ledger against a data warehouse. It is these new post-crash uses for reconciliation that SunGard is hoping to take advantage of with its new launch at Sibos.

Windows 8 OS

The new Windows 8 operating system and the Surface tablet that uses it have naturally been a keen topic of conversation at the ID03 Microsoft stand at Sibos 2012. The radical OS design overhaul mirrors the Windows Phone design that Nokia now uses for its OS, and indeed the latest iteration of the Windows Phone OS uses the 8 design, just as the Surface tablet does and traditional Microsoft PC devices will. Catering to all these different end points with the same basic tweaked OS, however, is not an easy task and must be considered somewhat of a risk for Microsoft.

Nevertheless, Microsoft’s Windows 8 has already attracted users to download banking apps from the Microsoft store. Bank of America, US Bank, and Chase have all launched apps for the Microsoft Phone. Bank of America has already seen its app downloaded 10,000 times, according to Microsoft. The new phone also offers Near Field Communication (NFC) for payments, something that the latest Apple iPhone 5 conspicuously lacks. Fiserv has an app for Windows 8 as well it says, although somewhat perplexingly it says that it won’t be announcing it at Sibos, delaying the unveiling until next week.

Microsoft’s famous tiles design, now adopted company-wide, allows Windows Phone handsets to show live feeds, Facebook updates and the like, even while the user is working on other applications. The tiles can also send location information and offers.

The demonstration at Sibos 2012 sparked much debate about how the payments world is being changed by new mobile smartphones, electronic commerce, mobile remittances and so forth and one of the discussion panels from the previous day, on the World Payments Report, was constantly referenced.

Payments Report

Except for Japan, host to the Sibos trade show this year of course, where credit cards remain a favoured form of non-cash payment, most of the rest of the world is moving towards adopting debit cards, according to the World Payments Report, which Capgemini, the Royal Bank of Scotland (RBS) and Efma, are discussing on their respective stands at Sibos 2012 after releasing the report on 9 October.

Other key findings in the report included continued growth in electronic e-payments and mobile m-payments. The report estimates that the number of online payments for e-commerce activities is forecast to reach 31.4 billion in 2013, after growing by a sustained 20% a year from 2009-2013.

The report analysts at Capgemini also believe the number of payments using mobile devices could grow even faster, by 52.7% a year to reach 17 billion transactions by 2013. With only 2.1% of all mobile users making m-payments at the moment, however, it is no wonder that the potential for additional growth is still huge.

Two other major themes highlighted in the 2012 report at Sibos include:

• The fact that the BRIC (Brazil, Russia, India and China) emerging concept is no longer valid in terms of payments. For instance, Brazil is now the second-highest ranking country by payment volumes after the US. There were 20bn non-cash transactions in Brazil in 2010, says the report, compared with 13.1bn in Russia, India and China combined.

• The relationship between regulation and innovation, with some regulation challenging innovation, was naturally enough another major theme. The UK’s decision to cancel the planned elimination of cheque payments, for instance, was cited as an example because it has retarded the possibility of adopting mobile m-payments as an easy alternative, claim some banks.

Panel Discussion

In a community panel discussion the previous day at Sibos about the World Payments Report and general payments trends, Jean Lassignardie, global head of sales and marketing for financial services at Capgemini noted that debit card networks don’t yet reach as widely as credit cards do. While debit card usage is growing, therefore, it may still take some time to attain the same level of global reach and connectivity. “Debit cards are limited compared to credit cards and are used only in certain retail outlets,” he pointed out to the Sibos audience.

“Japan still has strong credit card use, while everywhere else debit cards are growing,” reiterated Kevin Brown, global head for transaction services at RBS. He suggested the reasons for this are that non-cash transactions in Japan are for large value items; many merchants won’t accept debit cards for smaller transactions. Elsewhere in the world there is now a clear move towards debit cards, which now account for one out of three non-cash payments.

It is difficult to hone down exact reasons, he added, but it is certain that some consumer attitudes toward credit is driving the change, alongside debit cards ease-of-use for small transactions, whether contactless on a card or smartphone or not. Regulatory pressures have also cut back on the wholesale distribution of unsolicited credit cards.

Makoto Shibata, principal analyst for e-business and IT initiatives at the Bank of Tokyo-Mitsubishi UFJ, said that his bank faces different regulatory requirements across different jurisdictions, and they aren’t always in writing.

“It’s not just the legal requirements you read on the paper that are relevant. Sometimes we get guidance from the [Japanese] financial authority which may be rather strict, especially if we are to compete with other industries like retail or mobile operators.”

With the Google Wallet, Isis and numerous other potential bank competitors in the fast-growing mobile space the need to stay relevant is acute.

With 31.4bn e-commerce and 17.1bn mobile transactions predicted by 2013 in the report, RBS’ Brown was keen to discuss this point and the issue of disintermediation. “The numbers are not only significant,” he said “but a large percentage of that growth is coming from non-bank providers.” The implicit call to arms for all those at Sibos was clear to hear.

• Bobsguide is producing a daily Sibos 2012 show report all this week. Please visit our blog section to see the first day show blog and all the other preview material, blogs and opinions in the lead-up to Sibos, including our preview of the Innotribe and what JP Morgan thinks are the hot topics, among much else.

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