It’s been twelve years since Sibos was last held in Singapore and this year the financial services conference is back in the thriving financial hub, which is home to over 7,000 multinational companies, just as it celebrates 50 years of independence. In the last few years the financial landscape has changed and developed in ways that many in the industry could never have imagined.
Alongside digitalisation and new players which have shaken the industry to its core, traditional players have been forced to get to know their customers better to understand want they want from service providers and develop innovative products to keep up with competition. At Sibos last year, many companies were in the initial stages of understanding what their clients want from them, at Sibos today these same companies have gained a better understanding of client expectations but are now facing the issues that come with digitalisation such as data breaches, implementing new technologies and the threat posed from cyber attacks.
The morning Sibos sessions concentrated on innovation in banking and technology trends in financial services. Collaboration was a major theme and the general consensus is that banks are now coming together to look at new topics and collaborate more. “It’s all about collaboration,” Rakesh Parmer said during the first session of the day, ‘Technology trends in financial services’.
Speakers during this session also touched upon data analytics and questioned how good the banking community is at understanding data. These industry experts said that banks need to 1) understand data and 2) be able to explain the value of data, and highlighted that the real challenge is not the data, but how the data is used. According to Steve Ellis, EVP, Group Head Innovation Group, Wells Fargo, data analytics is fundamentally the biggest area that banks should be focusing on. “If banks do not get good at data analytics, then they will not be significant players in five years time. Part of this is getting the data organised around the customer, but the other part is understanding how to leverage it and create a better customer experiences.”
When speaking about the current disruptive landscape, Ellis said that banks should think of themselves as information companies not financial service companies and that he views disruption as an opportunity rather than a threat. “I see disruption as an opportunity because a lot of it focuses on the customer experience and the competitive push from non-traditional players is good because it encourages traditional players to do more.”
Ellis says that at Wells Fargo they are keeping up with changes by encouraging innovation both internally and externally. “We are spending a lot of time looking outside of the company, we have an accelerator programme which entails matching up emerging companies with a business partner, and will work with them to bring their technologies to fruition. We have also formed a group called ‘The Innovation Group’ with consists of dedicated staff members who are trying to transform the company by bringing up the voices inside the company and leveraging the voices outside of the company.”
Ellis says that the key innovation banks should be working on in the future is Application Programme Interfaces (API’s) “I think banks should be working on API’s and micro-services and banks have to deliver their services wherever their customers are.”
Ellis also believes that in the future there will be less cash. “We have been spending a lot of time thinking about what the industry will look like 10-20 years from now and there is no doubt in my mind that there will be much less physical cash, and due to the changes that start-ups are making to the front-end, the physical footprint will also start to look different for the banking industry.”
The biggest game-changing new technology up for discussion on the day was blockchain and distributed ledger, and Rashik Parmar, Lead IBM Cloud Advisor at IBM said that banks need to understand what role they play in multi-organisational processes and that moving around money is all about trust, and open ledger has the ability to provide trust. Many banks are working with blockchain and distributed ledger, whether this is through researching how to use this technology or actually putting a blockchain strategy together and testing how it works.
During the Innotribe ‘New Kids on the block (chain) platform’ session, which was overflowing with banking delegates keen to hear how blockchain technology can be used to transform their business, a questionnaire revealed that 25.6 per cent of the audience are actively doing something with blockchain technology. Session moderator, Mark Buitenhek, global head of transaction services at ING said that the industry is now moving from complete disbelief to engagement and Dan O’Prey, CMO at Digital Asset Holdings believes that distributed ledger technology offers more of an opportunity to incumbent financial institutions.
During this session, which featured a panel made up of start-ups, non-profit agencies and banks, Adam Ludwin, CEO of Chain.com said that blockchain enables the future of money and one of its benefits is that it is designed to send a digitally native asset to you, rather than a copy.
During the session it was evident that the start-ups do not agree on how blockchain should be used, which is making it harder for banks to understand which approach they should take. “The start-ups all had different visions which demonstrates the dilemma that banks have,” said Simon Taylor, VP Blockchain R+D at Barclays.
Taylor, who previously worked closely with start-ups behind the scenes at the Barclays accelerator, says that banks are no longer questioning why they should use blockchain but how and believes that this technology has the ability to change various challenges facing the banking industry such as transparency and efficiency. “In the short-term, blockchain can change some of the headaches around reconciliation such as transparency which regulators are asking for more often. Secondly, existing work flows could be made more efficient by using pieces of the blockchain technology and thirdly we will start to see start-ups building products within these new opportunities.”
Taylor says that Barclays is currently asking themselves how they can use blockchain technology. “Barclays recognises the benefits of blockchain and the approach we are taking is asking ourselves how can we engage with our internal subject experts, how can we influence and talk to governments and regulators and make sure that they are aware of it, and finally how do we experiment.”
In the future, Taylor says he would like to see blockchain used to change the structure of banking relationships. “I would like to see blockchain be the reason we rethink the relationship between the governed and governing or the institution and the individual. If done right it changes accountability and transparency and means that instead of trusting an institution, we would trust but verify.”
With such promise of innovation, what is stopping banks and start-ups working more closely together? According to Neal Cross, CIO of DBS Bank in order to innovate, large organisations need to get over their own egos. “The biggest barrier to innovation in large organisations is ego, staff thinking that they know what’s best for the customer.”
In Innotribe’s ‘The future of money: A burning platform’ session, where credit was named as “the next big trend”, banks were challenged to enage in co-opertition (competing and collaborating) when start-up founder and CTO of Kreditech, Alexander Graubner-Mueller accused the bank panellists of not offering anything innovative themselves. “I’ve heard a lot about innovation, but haven’t heard anything innovative.”