A RESEARCH PAPER PRODUCED BY FINEXTRA IN ASSOCIATION WITH MISYS MARCH 2017

TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD CONTENTS

01 Foreword...... 3

02 Introduction...... 5

03 The transition to open banking: how difficult will it be?...... 7 04 PSD2: opportunity to win big or disastrous drain on resources?...... 13 05 The power of partnership: the APIs have it...... 17 06 Internet of things: early days for the IoT...... 20 07 Conclusion...... 22 08 About...... 23 7 What should financial institutions be doing about blockchain right now? 25 01 FOREWORD YOU CAN’T DO OPEN BANKING WITH A CLOSED MIND

By Alex Kwiatkowski, Senior Strategist – 3 |

Banking & Digital Channels, Misys TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD

Transaction banking is being reshaped by many powerful forces, but if there is one which is concentrating minds right now it’s the revised Payment Services Directive (PSD2) – on the one hand 105 pages of dull legislative minutiae, on the other a harbinger of seismic change.

Despite the imminent implementation deadline of 1 January 2018, the final details of PSD2 are still being hammered out. Only in late February 2017 did the European Banking Authority (EBA) publish its final draft Regulatory Technical Standards (RTS) on strong customer authentication and common and secure communication in the context of PSD2: more legislative minutiae which attempts to balance the diametrically-opposed demands of incumbent banks and new entrants.

The complexity of achieving compliance with PSD2 should by no means be underestimated. It requires payment service providers to make substantial changes to their existing operational practices, in a timeframe which is now very tight.

However, while paying due respect to the compliance aspects, financial institutions that really want to get ahead are not handing the PSD2 project off to compliance and/or praying for a reprieve on the deadline. They have recognised the transformative nature of the regulation – and are running to embrace it.

PSD2 will foster choice and increased competition, by mandating the move to open banking and giving regulated status to providers of innovative payment initiation and account aggregation services. In this reshaped competitive landscape, it will be easier for new entrants to carve out a chunk of the highly lucrative – trillion dollar – payments business, and we can expect them to go after that attractive market with gusto. regulation, certainlyregulation, will. potential of PSD2, open APIs and the connected ecosystem. Because if Because ecosystem. they APIs the connected and open PSD2, of potential legitimised the revised by entrants, new can we be sure innovative that don’t, The researchThe paints tactical a pretty banks’ and picture of strategic positive is worth really restating now that the time it’s But this at point. approaches thinking closed the minds their to old, open and banks abandon for to accessible artificial intelligence (AI) capabilities and the rise of the Internet of (AI)of Internet and the rise the artificial capabilities accessible intelligence Things (IoT). order to shed light on how transaction banks and how on are viewing light alongside shed to PSD2, order as increasingly such with change drivers important of other in combination bank wins. withMisys Finextra has in collaborated in the research this on explored paper network integration and accelerate onboarding across transaction services. across onboarding accelerate and integration network pillars are the agileThese the new transaction of bank, agile the most and give them a single customer view, allow them to digitalise to them allow cross-business view, customer a single them give to needed intelligence transaction the data and deliver and workflows, third-party facilitate servicesand fintech solutions, and enhance relationship which data is the lifeblood of the bank. of is data the lifeblood which forward,Going transaction banks that will platforms technology need bill is making this model unsustainable in the current profit-squeezing bill is making in the profit-squeezing current unsustainable this model banking, open in of This will the caseenvironment. in more a world be even for purpose. The evolution has been a focus on best-of-breed solutions that that solutions best-of-breed has a focus on been evolution purpose. The for areas the bank. platforms disparate of These isolated are exactly for that a rising and risk maintenance and information, of Islands created have trade and treasury and trade services. client As to banks scale, adapt to needed be fit to not has proved this approach models, operating change or demands Historically, banks have taken two main approaches to technology across across technology to banks taken two main have approaches Historically, the varied services transaction banking. of First, one-size-fits-all cores and payments, cross-border of flavours different support to built were engines service oriented, digitally-focused and open structures.service open and digitally-focused oriented, Success here will also depend on taking the right approach to technology technology to will takingSuccess here on the also right approach depend vertically from cumbersome, aligned architectures– moving away more to not an encumbrance but an exciting opportunity; not purely as a tick-in-the- purely opportunity; an exciting not but an encumbrance not the future think as of about chance a to but creatively exercise compliance box within role secure it. to a leading banking how and The potential to grab new revenues is there for incumbents as as well upstarts incumbents for is there revenues grab new to potential The are that viewing as players PSD2 those progressive for only course – but of

4 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 05 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 02 INTRODUCTION The analysis which follows shows that corporate banks corporate that that are aware keenly shows analysis follows The which bankingon will the business, way a significant impact under have the changes positivity is deal a great there of and in thinking their these trends. about to hurdles of are there a number time, the theyAt same acknowledge of the plethora is identifying which among the least of which – not overcome will they can exploit bring them existing technologies exciting emerging and age. the connected for models business their as they reinvent value the most and how well-positioned they are to take advantage of the transformation the transformation of they take are to advantage well-positioned how and than the as – rather risking a result of business herald of these loss changes shift is that coming. paper in with main researchthe the The findingsinsights from are combined Finextra by hosted Misys and discussion during Swift’s Sibos a roundtable experts together from brought This session 2016. in in Geneva late conference (see the financialacross services topic to industry same tackle the globally box). such as PSD2 and innovations like open APIs and the Internet of Things (IoT) Things (IoT) of APIs the Internet and like open innovations and as PSD2 such digital in place an integrated find and their banks– are pushing embrace to all of the implications about discussion has much been There ecosystem. there date, to However, businesses. banks’ consumer-facing these for trends transaction opportunities – and – for the challenges has focus on less been bankingbanks’ in corporate this businesses world. connected researchof recent the findings carriedby Finextra presents out Thisin paper APIs open with PSD2, association how exactly Misys address to this question: corporate banks; how are viewed currently corporate being by the IoT and thinking; strategic and banks technology their these are into trends factoring It is clear that many of the change drivers regulation in banking the change of is many clear that – including It , Head of Concept Development and Digital Hub, Danske Bank Danske Hub, Digital and of, Head Concept Development , Senior Strategist, Banking & Digital Channels, Misys Channels, Strategist, & Digital , Senior Banking , Company Director, Copernicus, Company Bank Director, , Managing Director, Commercial Digital, Director, , Managing Lloyds Banking Group , Senior Advisor, Global, Senior Advisor, Payments ABN Amro, Abu Dhabi Islamic Bank, Bank of America Merrill Lynch, BNP Paribas, Brown Paribas, BNP of Lynch, America Bank Bank, Merrill Islamic Amro, AbuABN Dhabi Brother Harriman, Credit Suisse,Cyprus Development Bank, EBA, Erste Group Bank, Eurobank, Handelsbanken, JP Morgan, Nordea, Raphaels Bank, Saudi British Bank, Travelex SEB, Holdings, Unicredit. Sean Gilchrist Kwiatkowski Alex Michael Rossman represented table: at the of organisations Some the Kevin BrownKevin Mark Gervasini Nielsen EXPERT SPEAKERS FINEXTRA/MISYS AT SIBOS ROUNDTABLE: IoT and open banking, and trying to work out how technology can best technology be banking, how open trying and and out work to IoT thrive them in the digitalharnessed help world. to This is one of the many questions this report seeks to address in order to this to report questions the many in seeksaddress order of to This is one PSD2, of banks transaction for withinsights implications grappling the offer drone delivery for supply chain automation? What is distraction, and what is is distraction, what What and chain automation? supply for delivery drone disruption?” it: “How do banks decide where to focus their innovation? Should they set Should innovation? focus their to where banks do decide “How it: Should all on things blockchain? concentrate to or IoT on work teamstheir to examining or delivery AI even – or PSD2 robotics and they be accelerating As one of the expert contributors during the roundtable discussion – Alex discussion during the roundtable the expertof As contributors one Strategist, Banking Senior & Digital MisysKwiatkowski, – put Channels,

06 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 07 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 03 THE TRANSITION TO OPEN BANKING: BANKING: TRANSITION TO OPEN THE BE? IT WILL DIFFICULT HOW voted-for main facilitator – presumably reflecting the ‘poor starting reflecting‘poor the – presumably point’ main facilitator voted-for processes data systems, and banks’ in terms of legacy above, referenced The recent online survey online recent carriedThe Finextra bank 76 by among out whether indicate to respondents asked the world from around representatives banking more or open easier to make transition their would factors of a range picture, shown interesting The Figure in as difficult.results 1. an paint – low is relatively ‘showstoppers’ is the fear overall worth that of noting It open about feeling positive the largely – echoing non-existent not though banking expressed during the roundtable. the most and showstopper likely as both the biggest out comes Technology arms”. banks corporate is banks easy mean it for – including not does that However, is which the least of not reasons, of a range banking, open for embrace – to ways and can a third the IoT, talk participant. “We out cultural, about pointed starting our that forget point not driving let’s of but from data, insights new have make sure we to have “We said. he poor,” is quite organisations of in a lot whether down to comes the culture drive to this It the capability and change. it.” strategy the means the – and culture and a good execute to have we is coming – whether driven by specific initiatives such as the UK Competition as such UK specific driventhe initiatives by Competition – whether is coming in the banking by landscape, competition improve to Authority’s & Markets similar other and regulatory in approaches Europe as PSD2 such regulation fact by the simply or demand client by world, markets the around in different makes possible. it technology that As good. one banking for opening that is was a force alsoThere agreement news, good is rather perspective it “fromparticipant said a socio-economic Resistance is suggested futile, flexible”. making and banking accessible more by it” – inand, fighting point is no there and happen to is going – “it another with open be welcome an opportunity should and “it’s continued he contrast, Participants in the roundtable discussion broadly agreed that open banking agreed open that broadly discussion inParticipants the roundtable % % 11 % 17 % 19 25 % % 31 14 % 17 % 29 % % 21 34 % 64 % 52 % 37 % % 50 29 Not obstacle an The facilitator main % % % % 15 12 12 11 % 4 People Processes Regulation Technology Global concensus/adoption A showstopper An obstacle, but not difficult to overcome PLEASE WHETHER INDICATE THE BELOW FACTORS WILL MAKEORGANISATION’S YOUR TRANSITION TO OPEN BANKING EASIER, MORE OR DIFFICULT. FIGURE 1 proportions at either extreme (in fact an equal 10% each say they have either either they have say each an fact extreme equal (in 10% either at proportions in digital). investment monetised their scarcely significantly or digital so far – and the picture painted is reasonably positive. As positive. Figuredigital 2 is reasonably far so the picture – and painted the banks – with this on areshows, basically one ground the in the middle partially saying they have digital, proportion smaller and monetised biggest Indeed, elsewhere in the survey, the bank respondents were asked to to asked were the bank respondents in the survey, elsewhere Indeed, in investments their successful in been monetising how they have indicate be leveraged to help banks overcome legacy challenges and achieve their their achieve and challenges legacy banks overcome help to be leveraged goals. openness architectures, and the fact that so many powerful technologies, from APIsarchitectures, powerful many so that the fact and technologies, maturity reaching are blockchain, (AI)to artificialcanand to intelligence

08 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 09 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD % 45 % 40 % 35 % 30 % 25 % % 40 20 % 33 % 15 % 10 % % % 5 10 10 % 7 from digital revenues from digital to use digital to enable employee excellence, an encouraging 20% say that that say 20% an encouraging excellence, employee use digitalto enable to a partially they have say strategy 52% a healthy and is already fully developed, developed strategy. The people element is identified as the most positive factor in the context of in context the factor most positive as the is identified element people The ‘not is saying either it respondents of – with percentage openness the biggest question another the responses to Indeed, the ‘main facilitator’. or an obstacle’ in the survey digital the banks that suggest grasped of to the potential have it. are and making in progress exploiting good excellence, employee enable a strategy have respondents of 95% a massive shows, As Figure 3 (below) of revenues from digital of revenues from digital 85% of revenues from digital Scarcely: we of derive under 10% Fully: we deriveFully: over 85% of revenues Significantly: we derive between 50% and Partially: we derive between 25% and 50% PLEASE HOW EFFECTIVELY INDICATE BELIEVE YOU BANKYOUR HAS MONETISED THE OPPORTUNITY OF DIGITAL? Moderately: we derive between and 25% 10% FIGURE 2 % 60 % 50 % 40 % 30 % 52 % 20 % 23 % % 20 10 % 5 % 0 develop one plans to develop one digital to enable employee excellence We do notWe have a strategy and have no We have a partially-developedWe strategy We have a fully-developedWe strategy to use We do notWe have a strategy but have plans to PLEASE WITH INDICATE THE OF WHICH BELOW STATEMENTS ABOUT ORGANISATION’S YOUR STRATEGYTO USE DIGITAL TOENABLE EMPLOYEE EXCELLENCE AGREE YOU MOST STRONGLY. FIGURE 3 Processes, regulation and global consensus come out as the top three asthe most top out come Processes, consensus global and regulation in order. that factors, challenging However, as shown in Figure 1, 41% identify people as a challenge for the for as a challenge people identify as in Figure shown 41% 1, However, culturecritical. being about reflecting point transition, the

10 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 11 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD money gets ‘lost’ in the system. For me the question is, how can banks how is, make the question me For ‘lost’ in gets the system. money do, which they what of core atthe fortheir clients efficient the processes more to banks value do add how With all these technologies, of money? is handle a that’s client, your for are problems making If you reconciliation the client? failure.” tremendous (for consumers) to measure utility usage (for corporates). If banks don’t bring If banks don’t corporates). measure utility to (for usage consumers) (for we then types customer these twotogether, different for propositions their work will to them utilities bypass than see more banks enable apps build and done to be work is but there key, directly is definitely with Data consumers. together.” within the bring propositions to organisations banks successful for if they are not in outlook A third bleak a fairly painted a can you order why understand streamlining don’t processes. “Corporates and from Amazon canbook see the shipping and you trace check and and actually dealing with financial global institutions, you’re when but delivery, data. We can certainly do a much better job in terms of data consolidation and consolidation can data in terms of certainly better job We data. a much do analyticsdata this – and is our a real dashboards give to to us, opportunity for never often activities. have They payments their about them show to clients in way.” that thisseen presented data kind of the transaction from end banks is also better “connect for to a need There are “The silos certainly internal the things of that one another. said end”, to banks the retail the corporate but across just start not to need change, to rich a data into the thingsbanks of will that One as move as we well. happen bases will these customer for strategies is the payment that environment as in smart homes such meters propositions, end to end support – to converge The roundtable discussion focused a few times on the need for banks for to the need times focuseda few on discussion roundtable The in data an their of out processes their make the most if to they want improve banking, open laugh, talk I sort we of “When banking about open environment. one said own within our silos open to own our need institutions,” because we markets, in and capital data, transaction our banking,participant. “In have we of job I think bad really a fairly Do we theirs. do data? we share our they have that,” she continued. portalsalso and years all have things putting the internet and spent on “We their to consolidate places are different clicking a thousand clients now our Processes This echoed similar concerns raised about the opportunity for some players to to players This similar some the opportunity echoed raised concerns for about as banking such open from regulation for the mandates to closely less adhere landscape. skewing the competitive PSD2, The issue of standardisation and uniformity of approach in the open banking in the open uniformity and standardisation approach of of issue The “The participant: one Said as well. during the roundtable came up context with requiring a standard the CMA is not is it that main framework problem a different CMA The have has to admitted every that bank is going approach. will with there so the mandate, be do those that comply to how of interpretation ball.” play not the minimum do and regulation willregulation will drive, because technology be the driver.” Global consensus and adoption make better use of client data for innovative new services. new innovative for data client make better use of a red of is something regulation that viewThe was also expressed, however, banks most today, do think what you “If . about herring in debate the data participant. one said it,” actually of any be a bank do to to need don’t you is fundamentally analytics, data driven by “Innovation this the and challenges The the data. is not me for hand at So the issue banks’ models. of business core transformed. Google can being where track it’s isdata fundamentally open; true for It’s data. that they and manipulate they data sell that then and go you corporate for be the same to going every make it’s as – and well transaction you really changes is what not question I think the bigger Therefore, institutions. Regulation was also widely discussed during the roundtable, and during that and was alsoRegulation discussed widely during the roundtable, sword banks that the fact too a double-edged of view assession something it banking driving open in to many is obviously the move PSD2 was very clear. uncertainties timeframes challenging its the ongoing and – but markets qualify an and as both it an obstacle aspects implementation its of some about enabler. General Data the forthcoming of discussion was alsoThere considerable customers of will it the relationship how change (GDPR), Regulation Protection this will how and data, their to banks as as well to inhibit support in quest their Regulation

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04 they illustrate very clearly the industry’s transitioning view of PSD2, from view PSD2, transitioning of the industry’s verythey illustrate clearly negative to positive. a platform for us to get on the front foot, then that’s good – but actually – but we good that’s then foot, the front on get us to for a platform we do How respond. to intend we be thinking instead how should about do How past? in the we competed traditionally how differently from compete start we do we bring transparency what how to and to startwe innovate, to clients.” our real for value some add This us to willdo? enable then with two agreement of survey online level their banksThe asked indicate to and up opportunity open to is banks, a huge corporate PSD2 For statements: drain resources, is banks, a big on corporate PSD2 For and win business; new and results efforts. shown The in are Figure 4 cost compliance and (below) they would be competitively disadvantaged by it – that new entrants would would entrants new – that it by disadvantaged be competitively they would cherry- by them access disintermediate to the banks’ thereby and data be able services. During profitable past picking years,the banks’two the have views certainlyparticipant in this shifted,one effort, the as has but taken some out. pointed roundtable the end this at think and takes look mindset aren’t to these a new changes “It think, to Not because they can companies access other data, our the world. of worry to about have because they don’t lunch, our eat and can come then he carriedthe costs regulatory burden or service traditional by providers,” disagree to with tend view that “I creates said. if fear – although that is what The banks’ initial resistance to PSD2 clearly originated from their fear from their that originated banks’The clearly initial resistance PSD2 to PSD2: OPPORTUNITY TO WIN TO OPPORTUNITY PSD2: ORBIG DISASTROUS DRAIN ON RESOURCES? % 19 % 38 % 42 % 40 % 22 % 13 % 17 % 9 Somewhat agree agreeTotally the general sense during the roundtable – and broader industry discussions broader – and during the roundtable sense the general the home press to compliance beyond going is on the smart– that money innovation opportunity. open banking requirements is an opportunity to build leading innovation innovation is an banking leading opportunityopen build requirements to waslessfar a There directlyplatforms/apps.” compete withand the fintech ringing endorsement of the option an “… opportunity to build consortia driving strongly was that more even but data”, from open capabilities innovative at concern a compliance as “purely PSD2 of than the assessment supported will we guidelines until as are and this there a box-checking more it treat point exercise”. widely more been have probably would last that option years ago Two the truth, of these and findings corroborate as a representation acknowledged disagree it’s a huge opportunity. a huge disagree it’s these the results that two also as views huge indicate – PSD2 However, industry by drain as concurrently massive opportunity are – PSD2 and held direction, the negative in one the balanceparticipants, though is and tipping are still in the change evidence. of very much connotations a further said, banks that That fully are indication more the convinced of a that shows which is revealed in Figure 5 (below), PSD2 of potential positive meeting and “PSD2 agree with statement: respondents of the 65% significant Certainly, the data shows that PSD2 is viewed more positively than negatively: than negatively: positively is viewed more PSD2 that shows the data Certainly, 38% while 61% and withsecond, the and agree with78% the first statement totally agree with the negative 19% only totally agree with view, the positive totally drain 9% only while is totally a huge disagree 17% PSD2 Similarly, view. Partially disagree Totally disagreeTotally For corporateFor banks, PSD2 is a huge resources, cost and compliance efforts. For corporateFor banks, PSD2 drain is a big on opportunity to open and up win new business. PLEASE THE INDICATE DEGREE TO AGREE YOU WHICH WITH THE FOLLOWING SENTENCES. FIGURE 4

14 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 15 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD An opportunity to build consortia from capabilities innovative driving open data An opportunity to build leading innovation and compete directly with fintech platforms/apps a compliancePurely concern at this point and until there are more guidelines we will treat it as a box checking exercise % 20 % 65 % 15 opportunity where APIs will play a huge role – but if we don’t take advantage take advantage don’t if we – but role APIsopportunity will a huge where play will with will there there to,” them, who ideas of great out be others be able participant. one warned open banking and real-time payments strategy looking at the impact of these of the impact banking at strategy looking open real-time and payments with next most-agreed The banking business”. the whole on developments separately, are dealing with 23% that the two shows developments statement have to them for early is too it – say – 21% the smallestand proportion strategies. their developed through banks pursue could innovations possible what about ideas of A number participants and were discussion, the roundtable of camethese strategies out the innovation pursuing not of the consequences also that the fact clear on of opportunity the banks. be dire could “This world for a new creates This shiftsurveyof the in thinkingof the findingsanother by is also out borne project the PSD2 indicated respondents of 13% only that show which questions, proportion, biggest (The compliance. in of bank their was the head owned by owner.) as payments of the head the identified 40%, the survey to the bank that respondents shows In a similar Figure 6 below vein, other banking,are open thinking and alongside PSD2 strategically about as real-time payments. such developments – confirmed a combined they “have that – 56% proportion farBy the biggest

PSD2 AND MEETING OPEN BANKING REQUIREMENTS IS… FIGURE 5 Ittoo is early for us to have defined a strong strategy for PSD2 and open banking are looking We at real-time payments and open banking/PSD2 separate initiatives as have a combinedWe open banking paymentsand real-time strategy looking at the impact of these developments on the whole banking business % 23 % 21 % 56 in other banks. We have to have the right mindset and be able to move fast move to the right mindset be able and have to have banks.in other We us as in banks this opportunities for new remain relevant fast- to create to from we go canafter, newrevenues of set a is definitely There changing world. will services perform, traditionally which for actually banks compensate don’t concluded. he losses,” the threatened of some “We need to sit back and think about this in terms of how we join things up for things for join up we think this and how back in terms of about sit to need “We things do they that to them enable experiences, great to create to clients our care of the example “Take continued. he before,” do to able been not have just own their shopping, do to unable people elderly of are there lot where homes, this enable we cards Could their – using it carers relying PINs. and and do on to Often as way? can banks in is we a safer that do only limitation our happen to corporate kind of some create we could bank. our But of customers things for with UK banks, other and relationships forging by use incard care for homes, in care the financialneeds of people carers support to for way safer a creating If I am thinking those this, only will so then about not and homes? others, PLEASE SELECT THE STATEMENT ABOUT APPROACH YOUR TO PSD2, OPEN BANKING AND PAYMENTS WITHREAL-TIME MOST YOU WHICH STRONGLY AGREE FIGURE 6

16 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 17 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD % 7 % 16

% 44 % 39 % 80 1: Most important1: % % 49 45 % 13 % 7 2: Second2: most important smart objects 05 THE POWER OF PARTNERSHIP: PARTNERSHIP: OF POWER THE IT HAVE APIS THE banking, APIs, cloud and apps as the technology that will that as the biggest the technology apps have and banking, APIs, cloud services customers added corporate their the value they provide on impact years. during the next five be crucial to unlock these new revenues, the roundtable participants agreed, the roundtable be crucial revenues, unlock these new to will “There be some than rather later. the banksand sooner act to need value more create together we how about negotiations and discussions tough interest,” common and overlap that have we where clients, our towards the when kicks wait until in PSD2 to in ridiculous 2018 seems “It one. said and now with have we engaging what about it’s now: is ongoing discussion start and the creating going, thenegotiations get Let’s APIs today. open using clients.” our to experiences will that value deliver of also confirmedAPIs. As survey online central role the The respondents open through rankedcollaboration they fintech clearly shows, Figure 7 below Alliances – partners as fintechs with such will non-traditional – including banking, APIs, cloud and apps Fintech collaboration through open Blockchain transaction mechanisms 3: Least3: important AI or machine learning conjunction in with VALUE-ADDED SERVICESVALUE-ADDED DELIVER YOU TO CORPORATE YOUR CUSTOMERS THE DURING NEXT FIVE YEARS? (PLEASE RANK) WHICH OF THE OF WHICH FOLLOWING EMERGING TECHNOLOGIES WILL THE HAVE BIGGEST THE ON IMPACT FIGURE 7 Though this may be true, said another, he cautioned against over-reliance against over-reliance cautioned he this be true,Though another, may said advisory for in market the differentiating to comes it “When alone. data on products, with With complex clients. the relationship about services, it’s suppliers than need – corporates data just more for is a requirement there during important these It’s with business. their of an understanding in-depth where picture in terms of a nuanced there’s that understand to discussions value banks demonstrate for to be will easier data may it and bring value, than segment.” the larger segment the smaller through to data On AI, the consensus around the table was that, the challenges for banks’ for was the challenges that, theOn AI, table around the consensus architectureslegacy notwithstanding, they can already start extract to value the main on heard something “I today. technologies of suite from this broad analytics suggesting predictive that Sibos at here stage will into come not It ridiculous. “That feels attendee. one said years,” 10 another ownits for While I recognise is available. technology The months. like 10 be more should is no there complexities, people and are there that technical complexities analytics predictive of banks takefundamental advantage why reason can’t pretty soon.” propositions for corporate customers. In contrast to previous years, previous the to In contrast customers. corporate for propositions saying am not “I muted. was discussions relatively the blockchain of tone every in Singapore Sibos last year at is distraction, a total but blockchain was because it at – understandably, blockchain was about conversation use are there more participant. “Now one said the peak hypeits of cycle,” see banks defining, We hard work. to way hascases given the hyperbole and than we rather what – and testing the technology selective and prototyping you proposition a blockchain have didn’t if that you a year ago, told were is more becoming is blockchain clear that it inmonths, be 12 irrelevant would banking in the areas finance.” tangible corporate trade and of scoring the higher proportion of first and second rankings, blockchain first the second of and and proportion scoringhigher the hype third rankings. the extensive around of place Given proportion highest the past two three to for more years, AI that the fact blockchain is considered is perhaps services customers corporate added value for to contribute to likely think to asked were the survey said, surprising. That slightly respondents office a back is clearly blockchain and applications, customer-facing about infrastructure play. in the context discussion AI and Both blockchain featured in the roundtable new compelling banks develop to for looking technologies enabling of The other two options – AI and blockchain – were ranked closely, with AI ranked – AI – were closely, two blockchain and options other The

18 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 19 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD their customers have in them as in them guardians have data.” their of customers their could come from customers, warned one participant. “If we think we participant. “If warned about one from customers, come could insurance reduced have you insurance – where box like black concepts are doing you what monitoring box a black car have your if you on premiums – of and thisbe that the could side the flip But great. that’s people some – for lead that So could wrong. are doing you what you the utilities tells same – is it sensors when up go house your on insurance Could premiums penalties? to much? too are out because you enough on coming isn’t heating your show willConsumers they inhibit are giving could that data ask whether away or value, they the Is data are offering them givingthem. providers their to limiting the trust futures? This to their is critical comes banks it for when Another concern about financial institutions’ – and corporates’ – use of data of data – use financial – corporates’ and institutions’ about concern Another

Don’t know Don’t butNo, it will the in near future significant it’s think weNo, don’t or relevant to our activities Yes % 33 % 13 % 28 % 26 06 survey results and the roundtable discussion evidenced the fact that the IoT is the IoT that the fact evidenced discussion survey results the roundtable and benefits tangible banks deliver to empowering in terms of stage an earlier at customers. corporate their to their influencing see the IoT respondents of 59% that shows Figure 8 (below) A in the near future or (33%). (26%) banks’ thinking, strategic now either banking corporate their to relevant is not the IoT believe proportion smaller is it that the sense reinforcing know, don’t 13% a noticeable – and businesses in this context. IoT very for days early If predictive analyticsIf predictive online both the then benefits, are already delivering INTERNET OF THINGS: THINGS: OF INTERNET IOT THE FOR DAYS EARLY IS THE INTERNET THINGS OF INFLUENCING THE STRATEGIC THINKING YOUR IN TRANSACTION/CORPORATE BANKING BUSINESS? FIGURE 8

20 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD 21 | TRANSACTION BANKING IN AN OPEN, CONNECTED WORLD need? If we talk just to Treasurers, we will pick up the enterprise resource will the enterprise we up talk If we Treasurers, pick to just need? all the not business possibly but example, frictions system for (ERP) planning ask, are to having we the right dialogues have withfrictions. the right We people for our customers?” to corporates, not many of them are them actually of many real-time, fussed that not corporates, about to in a together data their and “They money their want one. said example,” for they canway in an handle, STP automation process, with of the rate highest are we talking ask whether is to important the right people to they can It get. within theylearn want? to what corporates our to understand the the firms right linkagessupport we into got we that “Have is contact of point I suspect core our take to us? this is going journey where those are the people whether I wonder and still the Treasurer, the CEO and should we whether – or relationships our be building should we with whom they what out find to positions of range in a broader people to out be reaching even yet have one clear definition of the IoT to work “I am struck work with. to always IoT of the clear definition one have yet even picturesof showing loves “Sibos said. he IoT,” of definitions the numerous by smart fridges connected or about just not it’s me, for fridgesconnected – but something doing and collecting from sensors data about it’s tablets, or phones efficiency trace improve and track and to it using with example for data, that chain.” in activities supply and like payments are distractions which and technologies which determining When customer of through the lens the question at looking disruptions, talk you “When participants suggested. the roundtable is key, requirements Indeed, as one participant in the roundtable pointed out, the industry doesn’t the industry doesn’t out, pointed participant in theroundtable as one Indeed, 07 new entrants want a slice of the lucrative payments business, and they and will business, payments the lucrative of a slice want entrants new all still to disposal their It’s all strengthen assault. at their to the tools muster transaction incumbent natural their advantages, home press to but for, play thinking ensure customer and to banks technology align business, must their will openness that than change rather bring, of the wave highthey on ride it. engulfed by being connected world. explores, course. As of the paper consideration the only is not Technology transaction banks cultures, also tackle legacy must their bring their the digital deepen and along curve up with broaden and them, employees determine to in order with customers, corporate their relationships their forward. going relevance their cement bestexactly to how will technology in that a battleground be a key doubt is no there But tech-driven Innovative, regulation. by reshaped landscape being competitive confirm the widely-held belief that open banking open – is and that that belief coming confirm the widely-held as view positively, it must transaction banks relevant stay to with ambitions an opportunity be exploited. to services, and models business asThis new means thinking about creatively survey that The results them. show underpin to needed the technology well Legacy sword. a double-edged in of this is something technology context architectures data and systems are on certainly the banks but back: holding maturing, and are from emerging technologies exciting many so side, the plus banksfor is also facilitator a great technology that AI to IoT, APIs to to cloud and in an open increasingly themselves for carveseeking roles to new out The outcomes of the discussions and research that have fed into this paper this into paper fed research and the discussions have that of outcomes The CONCLUSION

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