Sibos Day 1: The financial industry is going through a cycle of change

By Nicole Miskelly | 29 September 2014

It’s been six years since Sibos was last held in Boston and during this time the financial landscape has changed and developed. Today, Sibos is being held in Boston Exhibition Centre located in the booming financial district and financial experts and industry advocates have come from all over the world to share their insights, discuss current developments and suggest solutions for the challenges facing the financial sector. Over the last few years, the financial services sector has been shaken by digitalisation, the threat of new entrants and consumer and corporate demand. Because of this many organisations have realised that they need to innovate and according to the latest news at Sibos, solution providers are developing offerings in the areas of risk management, big data, reconciliation and cloud, etc and financial service companies are institutions are more willing to implement these systems than they were a year ago.

Financial services solutions providers are listening to their client (corporate and retail banks) needs and are providing innovative ways to make their businesses run more smoothly. Trading technology and transaction lifecycle management solutions provider, SmartStream Technologies announced the release of Version 2 of their TLM Exception Management product at Sibos today. This new version will provide a unified approach to exceptions management by creating a hub to manage processes on a single platform.  This new system will help to improve a bank’s balance sheet, reduce expenses and comply with regulatory requirements. In addition to this new offering, SmartStream also announced their contract with the US Securities and Exchange Commission last week. According to Ameya Bhakay (Pre-sales and Business Development Consultant, SmartStream) the Federal Government is going to use their TLM SmartRecs offering and envision using the system to examine banks and hedge funds in the market. Bhakay said, “SmartRecs is targeted towards the business community that does not want to get heavily into technology but wants to perform a quick reconciliation. Brokers, hedge funds and banks can use our platform.”

According to Bhakay data is a big challenge for their clients and SmartRecs is a unique solution which helps to combat reconciliation issues. “Data is one of the biggest challenges for our clients and we offer SmartRecs which has a set of features that no one else offers at the moment. Companies can use SmartRecs for one time reconciliation and also for recurring reconciliation and store data on the database. It features analytics to help business users understand what data they are working with to get the desired outcome. There is often a big gap between business and technology, however, SmartRecs helps to bridge this gap. With SmartRecs businesses can configure reconciliation and create reports which the technical team can leverage to understand and build accordingly.”   

In the area of risk management, Fiserv (payments solution provider) are offering solutions to legitimise user behaviour and indentify risk. According to Mike Urban, (Director, Financial Crime Management, Fiserv) in order for financial institutions to be successful they have to provide mobile and omnichannel banking services to their clients, however, with these new channels come new risks that are continuing to grow. Urban explains that just like making a branch safe, banks need to make the digital space safe for their customers. During a mobile transaction there are a number of factors that could interrupt the process and cause inconvenience and potentially losses for the institution. Malware on mobile devices is difficult to keep up with, the route could be redirected by criminals and financial institutions are constantly under attack by hackers on the internet.

Urban also said that at Fiserv, from a financial crime perspective they are looking at the ability to profile the legitimate user’s behaviour, time and date they log in, what types of activity they usually do, and their normal transaction patterns, etc. "We calculate this information into a mathematical piece of information which tells us about every customer and what they do when they interact with an institution. From this information we can identify when something seems unusual. Risk can be identified as an unusual log in, transaction, or destination and by understanding behaviours such as, how many other clients send money to a particular destination and how much money the destination usually averages can raise the level of risk in a particular transaction. All of this needs to be done in real-time and we provide this. We use data to find out all of this data, the key to big data is for the company to understand what data they have and what’s important.”

Solution providers are offering products in totally new service areas in order to provide the best results for their clients. Trading technology and risk experts, SunGard announced their two new offerings at Sibos today. The first, Corporate Actions BPaaS (Business-Process-as-a-Service) helps firms to manage data. According to Brendan P. Farell, (Executive Vice President, SunGard) a lot of organisations still do a huge amount of manual data processing because the data keeps changing and it isn’t standardised. “SunGard have been building solutions since 1996 and have become specialists in doing this. In the corporate actions space, customers are struggling to adapt to regulatory change, pressure on budgets on the technology spend which drives corporates to look further into business costs and why they are doing certain processes. SunGard host technology, run the technology and also provide them with products in the cloud. Our customers wanted us to use our own tools and people to process the data for their customers. We are now cleaning up and getting their data correct so that they can use it straight away.”

SunGard have also developed XSPosure, a cloud-based risk dashboard, which provides an easy to use representation of a firms corporate actions risk exposure. According to Farrell, “XSPosure enables customers to see the potential risk exposure in their corporate actions. This system is unique because no one else has approached corporate actions this way before and we are aiming at the management and risk side of corporate actions. You can see at one glance exactly where your risk lies (it is highlighted in red, amber and green).”

These new offerings highlight the advancement of technology and the variety of products available which could potentially change the way companies do business. We are living in a time of change within the banking industry and according to Penny Hembrow, (Vice President, CGI) the banking industry is going through another cycle of change. Post-financial crisis, the financial industry focused on restructuring, control, economic and corporate recovery. Today, we are seeing a new cycle of high innovation, new entrants coming into different areas of the market and rather than being product-led the banking industry is becoming more customer orientated, which is driving an enormous change. “In the transaction banking space, we recently completed a survey of corporates asking what they want from their banks and we are seeing a lot of change being driven in the investments and the customer journey. In the back-end banks are trying to restructure their cost base and trying to become more efficient, cut their infrastructure cost and innovate more services. The pace in the market has quickened and nothing can be done fast enough. At CGI it’s all about helping banks to accelerate change.”

So what do consumers want and how can banks give them what they want? According to Hembridge, “People and corporates now require omnichannel banking and what the banks have historically done is to only consider mobile. Banks needs to be able to combine a cross product in order to customise their offering.  Banks now have to put in new portals in place to create omnichannel capabilities to meet consumer demand.”

How will we be paying in the future? Urban believes that biometrics will be big in the future, such as voice and fingerprints recognition but they will mostly be used to reduce false negatives of authentication rather than using them to pay. He also thinks that a big theme in payments overall is real-time and the UK was one of the first countries to offer faster payments which other countries are developing at the moment.

 

By Nicole Miskelly, bobsguide Lead Journalist

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