WRAP-UP EDITION
Sibos Issues I Sibos 2019 London I 23-26 September
Opportunity Following Learning to Is uncertainty Mobilise the in an uncertain the customer’s share in the the new power of the world lead information age normal? network page 6 page 12 page 18 page 26 page 32 PUBLISHER’S LETTER
Publisher’s letter Contents page
Sibos 2019 London in numbers From London
TOTAL PARTICIPANTS MALE 72% FEMALE 28% 11518 8293 3225 to Boston
UK/NORDICS 32% 4778 41% 3733 Dear Sibos delegates
How do you measure the success of an event like Sibos? At SWIFT, we are delighted that Sibos 2019 in London was the biggest ever, in terms of attendees and exhibitors. Sheer volume is only one indicator, of course, and it cannot be relied on alone to assess quality of experience. As such, we also count the number of delegates attending individual sessions (plus their engagement with and ratings of panels and presenters), as well as the amount of contact AMERICAS details exchanged. As part of our commitment to the environment, we are 14% also putting more effort into calculating (and reducing) the carbon footprint of the conference and exhibition. But you may have different metrics, such as 1567 the number of business meetings arranged, or giveaways collected on the last day. Personally, I keep a tally of the times I see old friends meet and embrace, APAC catching up for the first time since their last Sibos. 13% 1440 An important part of the exercise of keeping score is to keep track from year to year. For each new Sibos, we hope to improve the delegate experience in as many ways as possible. In London, for example, we introduced the Spotlight stage, which brought a range of burning issues to the exhibition floor through high-powered keynotes. We’ll spend the next few months analysing feedback and planning how to apply lessons learned in London to Boston and other 680 375 332 152 future events. Publisher: Chantal van Es, SWIFT Managing editor: Alan Rowan, SWIFT For all that, each Sibos is unique. Held as late summer was turning decisively Sibos Issues is written and produced by to autumn, Sibos in London could not compete with the warm spring sunshine Making Markets on behalf of SWIFT we enjoyed in Sydney. Similarly, Boston may struggle to replicate the buzz of Advertising contact: a city more than ten times its size. But, as those of us who attended on one of Stephanie Gerniers, SWIFT; [email protected]; the three previous occasions that ‘Beantown’ has hosted Sibos, Boston has a +32 2 655 4734 welcoming vibe that keeps us all coming back for more. Not for nothing is one Legal notice: of its most famous exports named after a bar called Cheers! SWIFT © 2019 Reproduction is authorised with acknowledgement of source. All other rights reserved. 170000 51 150000 8958 SWIFT, the SWIFT logo, Sibos, Accord, SWIFTReady, Best wishes Sibos smart badge kiss / Sibos TV interviews Total number of trees planted Hours of respite funded via the and SWIFTNet are registered trademarks of SWIFT. Photographs feature SWIFT employees, customers Chantal Van Es bump – digital contact exchanges Honeypot Children’s Charity and partners. Head of Sibos
2 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 3 SIBOS IN NUMBERS PUBLISHER’S LETTER OPENING PLENARY Sibos 2019 London in From London to Boston Opportunity in an Numbers uncertain world
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PAYMENTS LEVERAGING DATA GEOPOLITICS & REGULATION Following the customer’s Learning to share in the Is uncertainty the new lead information age normal?
page 12 page 18 page 26 Deutsche Bank Corporate Bank
CYBERSECURITY HUMAN ELEMENT SECURITIES Mobilise the power of Keep it simple, Tech-led revolution the network stupid Everything is in flow
page 32 page 38 page 44 Connecting you to the world of corporate banking
COMPLIANCE INNOTRIBE CLOSING PLENARY Register at db.com/flow Balancing act The future is ours Building for the to decide long term
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4 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 5 OPENING PLENARY Contents
PAYMENTS Following the customer’s lead
Opportunity The AI revolution will in an change jobs that we do not usually think of as being uncertain prone to automation. world Dame Minouche Shafik, London School of Economics and Political Science
How can financial service providers and systems whilst also working with The finance thrive in a world which is not only existing international ones. Shafik warned hyper-connected, but also increasingly that current tensions could lead to China industry can uncertain and unpredictable? To explore taking a more isolationist path. “I would the risks, Roula Khalaf, deputy editor like to think cooler heads will prevail,” and must of the Financial Times, asked Opening she said. Plenary guest speaker Dame Minouche respond to new Shafik, director of the London School Policy consequences of Economics and Political Science, Expectations of lower economic growth challenges. to outline the global context for the are having inevitable policy consequences. economic headwinds faced by the In September, European Central Bank financial industry. (ECB) president Mario Draghi reduced the bank’s already-negative deposit rate to Shafik started by pointing out that the -0.5%, while also committing to a further slowdown in global trade that is now programme of quantitative easing from acting as a brake on global GDP growth November. began before US-China tensions erupted into a trade war. But she added that Noting that the action was well within the integration of China into the global the bank’s inflation-targeting mandate, economic and financial ecosystem Shafik called for a shift in focus toward remained one of the most significant issues fiscal policy. “Monetary policy, as we know, for governments and businesses, alongside simply creates demand; it does not solve a general rise in protectionism. the supply side and the growth side of the Sibos 2019: economy,” Shafik said. “There is really a Opening Plenary – To date, she said, China has been “riding need for more fiscal activism in Europe but Dame Minouche Shafik two horses”, building its own institutions also in other countries.”
6 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 7 There is a need for more fiscal activism in Europe but also in other countries.
Dame Minouche Shafik, London School of Economics and Political Science
The ECB’s challenges find an echo not only she said. “However, voluntary approaches the answer involves supporting evolving users, providing stability, security and in the US, where Federal Reserve chair are not enough. It is great that there are client expectations through an increased innovation. “Our number one priority Jerome Powell has faced political pressure enlightened leaders of corporations but, in focus on resilience, collaboration and remains supporting the integrity and to cut rates, but also more broadly. the end, if you want a consistent approach innovation. stability of the global financial system,” Shafik noted a growing threat to the across an economy, you will need changes in he said, before outlining the development independence of central banks. the rules and laws.” Anyone who SWIFT Chairman Yawar Shah began his of SWIFT gpi, the continued rollout address by highlighting the rapid pace and adoption of the Customer Security “In markets like Turkey and India, it is Among many areas where governments of change in the payments sector. Cross- Programme, and developments in SWIFT’s essentially a fiscal problem,” she said. and companies could work together border payments volumes might be financial compliance offering. “Governments want to spend more and more closely, Shafik suggested employee ignores the showing healthy growth, in terms of flows they want lower interest rates, and they retraining, an increasingly urgent issue and revenues, but there is little room for “You are very well aware of Customer want central banks to deliver lower interest when AI and automation are predicted to complacency, he suggested, with M&A Security Programme. It is a framework rates so they can spend more. That is a have a widespread impact on jobs. fundamentals activity reaching unprecedented levels at to protect, detect and recover,” said much more old-fashioned problem, but it is the same time that new entrants and new Shah. “SWIFT also continues to make very real at the moment.” “We are used to thinking about technologies are changing the face of the significant investments on your behalf in manufacturing jobs changing, where industry, notably Facebook’s Libra “and the financial crime compliance. We continue Brexit was mentioned, both in terms of workers are replaced by machines,” Shafik does so at emergence of crypto-assets”. to accelerate and innovate, with The KYC its possible economic consequences, said. “The AI revolution will change jobs Registry, the Sanctions Screening service but also as one of many examples of the that we do not usually think of as being “This change should not make us lose sight and Compliance Analytics tools.” trend towards populism that has been prone to automation, such as accountants, their peril. of the real work needed to safeguard risk felt in different guises around the world. lawyers and doctors. Increasingly, parts of and compliance, ensure absolute integrity Shah then handed over to SWIFT CEO Discussing the factors that created the professional jobs will be automated.” Yawar Shah, SWIFT and resilience and provide efficiencies,” Javier Perez-Tasso to explain the conditions for populism to flourish, Shafik Shah cautioned. “With all this excitement, cooperative’s vision and priorities in said she favoured a ‘reset’ of capitalism. Evolving expectations anyone who ignores the fundamentals does supporting innovation by members. “We Against this backdrop, what strategies so at their peril.” have an extremely resilient core and huge “It is welcome that corporations are thinking and capabilities will help banks and other opportunities to innovate to allow you, about wider stakeholders such as employees service providers across the finance sector In these unpredictable times, said Shah, ultimately, to grow market share,” he and the communities they work operate in,” to thrive in the long term? At least part of SWIFT’s role is to stand firmly behind its noted.
8 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 9 Banking for a better world
Not only does financial exclusion exacerbate social exclusion, poverty and inequality; it is also bad business. In her Spotlight presentation, ‘Why financial inclusion matters for your business’, Inez Murray, CEO at Financial Alliance for Women, made the point that the financial sector is leaving money on the table by not servicing women. Just providing unbanked women with access to a bank account could generate US$24 billon for the global economy, she said.
To serve women better, Murray said that banks need to facilitate their access to finance, information, networks and recognition: “Create something of meaningful value for women, please don’t just paint things pink.” inclusion? Tania Ziegler, head of global Improving rates of financial inclusion benchmarking for the Cambridge Centre also means understanding and including for Alternative Finance at Judge Business all demographics in the world of finance. School, sees a role for all the technological Futurist Chloe Combi addressed the advances currently revolutionising the challenges that face Generation Z – 12 financial sector: mobile/internet; cloud to 23 year olds – noting that this cohort computing; AI/machine learning/big data New grew up in the shadow of the global analytics; and blockchain. “These four financial crisis. “The industry can offer groups of technologies are underpinning technologies are much better online services to provide the new financial world,” she commented. financial information,” Combi advised. “They overlap and create a new “Platforms represent engagement with ecosystem.” underpinning the Collaborate and compete of connecting providers and users at scale this generation; YouTube is huge. There’s a Remarking on rapid growth and change is fairly similar,” he observed. gap for an expert to fill here.” For French, digital identity solutions offer new financial in both the payments and securities the best opportunity for financial services markets, Perez-Tasso explained the To highlight the cooperative’s commitment Enabling financial inclusion is one of to address the unbanked, citing India’s implications of the many new ways to to innovation, Perez-Tasso cited the today’s critical challenges, according to developments in this regard. “This is a world. They It is our job provide banking services being explored ongoing adoption and evolution of SWIFT Conan French, senior advisor for digital place where governments, the financial by bigtechs, fintechs and incumbent gpi, focusing in particular on recently- finance at the Institute of International sector and the digital economy can work overlap and financial service providers. In this new unveiled gpi instant, which connects the gpi Finance. “The excluded need products on new models and ecosystems,” he said. and evolving environment, financial infrastructure and its users to domestic real- and services that meet their needs, where “This can be portable and relevant across to offer the institutions must collaborate and compete time payment systems. With trials already they are geographically, with interfaces industries, enabling simple customer create a new to offer the most compelling customer having proved gpi instant’s ability to facilitate designed for them,” he said. onboarding and yet preventing financial channels, the best client experience and account-to-account transfers, Perez-Tasso crime.” ecosystem. industry a to execute faster than ever before. These was able to confidently declare: “There will Which technologies offer the greatest help front-end dynamics require the market’s be international payments in seconds.” in the development of services to increase Tania Ziegler, Judge Business School underlying infrastructures to be more agile and connected, but no less secure This is not the limit of SWIFT’s ambitions, best-in-class and reliable. however. “Our vision is to become an instant global network for cross-border Responsible innovation resilience, security and compliance, backed The levels of uncertainty and “When I think about SWIFT in this context, transactions,” Perez-Tasso said. “This Underlining Shah’s earlier point, Perez-Tasso up by very strong oversight,” he said. unpredictability highlighted at Sibos platform. it is our job to offer the industry a best- means creating an even more efficient said the pursuit of faster and more efficient 2019 by Shafik and others mean that no in-class platform,” Perez-Tasso said. and interconnected payment system that processes still had to be tempered by Innovation must not only be responsible, organisation can take anything for granted. Javier Perez-Tasso, SWIFT “You can rely on us and focus on the enables our users to transact from account appropriate risk management policies and but customer-centric. When we roll out No, not even SWIFT. As Perez-Tasso noted, front end, on acquiring new customers to account anywhere in the world in an procedures. “It’s basically about responsible something new, we check that it brings alternatives are available to banks and and growing market share through new instant across all the world’s currencies, innovation. Our platform is reinforced with customer value, that you trust the fintechs. How we respond, will determine services.” Having operated as a two-sided with full transparency on fees and FX rates. a major focus on cyber controls, on fraud technology that lies behind it, that we our future. Or, as SWIFT’s CEO concluded, platform for the financial industry long Instant, frictionless and as seamless as prevention and detection capabilities, on support it well and that it can scale. That is “There is clearly a deep transformation before anyone was talking about platform domestic payments: that is what we are compliance tools and data analytics. We are what being a grownup fintech is all about,” underway in our industry, which is an
economics, Google or Amazon, “Our model working towards.” focused on maintaining the highest levels of Perez-Tasso added. opportunity for us all.” n
10 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 11 PAYMENTS OPENING PLENARY Opportunity in an uncertain world
LEVERAGING DATA Learning to share in the information age
We want to build a Following world where anyone can pay anyone.
the customer’s Manish Kohli, Citi lead
With open banking encouraging a swathe of to banks presented by the bigtechs’ With payments new entrants to the payments market, what extensive reach, as did Deutsche Bank steps can banks take to avoid atomisation, CEO Christian Sewing in his ‘Views from franchises under or worse irrelevance, at the hands of the top’ address. fintech and bigtech rivals? Sibos 2019’s threat, business payments-focused sessions presented “Names like Google, Amazon, Facebook plenty of opportunity for soul searching, and Alipay, with their vast potential client models must evolve in but also optimism. bases, market capitalisations and data analytics capabilities, are already taking the open banking era. The topic of customer-centricity was market share from banks, not only in the discussed throughout the week, but retail area.” With the commercialisation nowhere more so than in Tuesday’s Big of customer data fundamental to the Issue Debate, ‘The future of banking’. For success of platform models, Sewing said Benoît Legrand, chief innovation officer at the banking industry “needs to catch up ING, the future of banking and payments in terms utilising our vast stores of client requires the customer to be placed at the data – this is a priority for us at Deutsche centre of innovation. “Customers lead Bank as it certainly is for many of our by their choices,” he said, suggesting peers.” banks’ business models need to consider more fully the customer value of their Standard Chartered CEO Bill Winters took product offerings. “By being an integrated, a similar stance. “The key for banks is interconnected platform we can enable our to understand the banking needs of our customers.” customers and create our own compelling ecosystems,” said Winters in his ‘Views Bigtech threat from the top’ address. “The banking Today’s banking customers are also industry has gone to great lengths to customers of the bigtech companies rebuild some of the trust that had been Sibos 2019: that dominate the consumer space. previously damaged, and it is still a large Big Issue Debate – Kristo Käärmann, co-founder and CEO competitive advantage of ours. We must The future of banking of TransferWise, noted the challenge ensure that this translates in to data.”
12 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 13 Banks need Customers lead to catch up in by their choices. terms utilising Benoît Legrand, ING our vast stores of client data.
Christian Sewing, Deutsche Bank
Victoria Cleland, executive director of “We need to think of unintended of whether disruption would destroy, needs, typically requiring banks to allow UK’s open banking ecosystem, according to banking, payments, and innovation at consequences,” she explained. replace or encourage upgrades to existing API-based access to their systems by third- Gulamhuseinwala, with some already live. the Bank of England, said new market infrastructures. “We want to build a world party providers of new data-led services. And whilst only the UK’s top nine banks entrants, such as TransferWise, should For Citi’s global head of payments where anyone can pay anyone as if there are mandated to participate, 80 others be allowed to join existing payments and receivables, Manish Kohli, the is no country or currency [difference], Like instant payments, open banking is have volunteered, giving the initiative 99% systems, thus supporting consumer disruption caused by new players and seamlessly,” Kohli said. happening at different speeds around customer reach. choice. But she cautioned that this should new technologies is already having a the world. Littlejohn contrasted Europe, not come at the expense of robust and beneficial impact on incumbents and their On the subject of infrastructure, Kohli where open banking is driven largely by the Momentum is strong, but new horizons well-regulated market infrastructures. customers. But he also raised the question pointed to the huge progress being made second Payment Services Directive, with beckon. Gulamhuseinwala cited a 2019 on domestic instant payment schemes the US, where initiatives are more industry- report1 which makes clear open banking around the world: “This is a sustainable led. “There is a spaghetti of contracts for current accounts is not enough. The key for path that the regulators like that we can between big fintechs and banks” in the US, Expanding the concept to other financial all go down together,” he said, admitting noted Littlejohn, adding that India is top products, including mortgages, pensions banks is to that the pace of adoption is currently ranked globally for the design of its open and insurance, will drive more competition inconsistent, with many countries still banking ecosystem. and better consumer outcomes. lacking real-time infrastructure. If batch Gulamhuseinwala confirmed the UK’s understand the payments meet real-time payments, the Delegates were also offered an in-depth intention to expand open banking to open customer still has a batch experience, he view of the UK’s open banking efforts from finance and beyond to utilities. banking needs of noted. Imran Gulamhuseinwala, trustee of the UK’s Open Banking Implementation Entity. Connected banking Customer empowerment Launched in 2008, the final 10% of the With banks opening up their systems and our customers The current flow of new services, UK’s open banking implementation remains infrastructures, fintechs have already technologies and competitors into crucial, said Gulamhuseinwala. “The biggest developed a variety of new offerings. In and create payments is being facilitated in many action list to complete is not just around his Spotlight session, Andrew McFarlane, markets by open banking initiatives. technology development but also user managing director, financial services at Speaking at a dedicated Spotlight experience,” he commented. “The nine Accenture, identified 40 fintechs active compelling stream, Gavin Littlejohn, chairman largest banks in the UK must have app-to- across banking, payments, lending, of the Financial Data and Technology app functionality.” Association, described open banking as the ecosystems. 1 https://www.openbanking.org.uk/ empowerment of the customer to make use Around 300 non-bank service providers, wp-content/uploads/open-banking- Bill Winters, Standard Chartered of their financial data to better meet their not all fintechs, have applied to join the report-150719.pdf
14 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 15 No need for science fiction We can get a as Team Asimov wins 2019 much better Student Challenge understanding of our clients through data.
Marie-Laure Gastellu, Société Générale
Samuel Wincott (centre), aka Team Asimov, flanked by SWIFT’s Nancy Murphy and Peter Ware
Samuel Wincott, aka Team Asimov, won the mortgages, savings, wealth, insurance, and Responsible for emerging payments and Seamless ecosystems Digital technologies such as AI, cloud and 2019 SWIFT Institute Student Challenge, personal finance management. business development at Citi’s Treasury Trade services for corporates face similar APIs are revolutionising not just banking, which asked competitors to devise artificial and Trade Solutions business, Tony challenges and opportunities to the current but every aspect of our commercial intelligence-based solutions to improve “Banks have customer trust, but are more McLaughlin provided a global bank’s account world: optimising data flows to and personal lives. In facing up to the fraud detection and prevention in instant exposed than ever to losing customers,” perspective on the service developments deliver client value. “We are working with multiple challenges and opportunities of payments. This was the fourth year that McFarlane said. “25% of customers are being enabled by technology innovation some of the largest ecosystems globally,” delivering innovative financial services SWIFT has run the challenge, and Wincott, “Good data is pioneers and will switch banks and 35% say and greater collaboration. “Publishing said Philip Fellowes, head of global in this new era, banks have in their a computer science student from Cardiff they trust non-FIs, according to Accenture APIs is the 21st century equivalent of liquidity and cash management in Europe favour both the trust placed in them University, beat a field of five to claim the the foundation data.” Overall, McFarlane suggested banks building a branch on a high street,” he at HSBC. “Tough clients want a slick user by customers and their experience of £20,000 prize. that don’t engage in the ecosystem will lose noted, in a session highlighting the role experience.” working as a community. The message that 29% of their customers. of API standards, two of which have been came through loud and clear throughout The starting point for Asimov was of artificial published to date. When providing trade services, banks are a Sibos 2019 was that collaboration and recognition that, as 99.987% of electronic With the ‘atomisation’ of traditional trusted third party, with privileged access partnerships – with other banks, third- payments are non-fraudulent, the current intelligence.” banking well under way, banks need to The first, explained McLaughlin, is the to client data. “We can get a much better party providers, and even end-users – are store of data for use in the detection of embrace connected banking. To do that SWIFT Pay Later API standard, which allows understanding of our clients through this essential to playing a role in the ecosystem fraud by AI systems is inadequate. “You can’t Samuel Wincott successfully, MacFarlane said, they must any bank to offer instalment lending at data, and can then bring specific solutions,” of the future. n learn about fraud from non-fraudulent data,” prioritise openness, engage with point of sale. “We must defend lending, it is commented Marie-Laure Gastellu, deputy noted Wincott in his 10-minute presentation. The use of GANs by payment providers ecosystems, deliver relevant customer the heart of banking. The point where the head of trade services at Société Générale. This means well-established classification could greatly augment the quality of insights and look for partnerships that consumer is looking to access credit has The barrier to generating data-driven procedures, whereby transactions are data which AI systems use to determine support the creation of an ecosystem moved to platforms. Can you lend there?” insights in the world of trade is the sheer pooled into either fraudulent or non- potentially fraudulent transactions. As that serves client needs. “The real he asked fellow bankers. volume of paper generated by every fraudulent buckets, are critically flawed. Wincott observed, “Good data is the change of culture will come from trade transaction. Therefore, back-office foundation of artificial intelligence.” partnerships – it’s the Lego approach of A SWIFT Pre-Authorisation API standard streamlining and investment in tools such Wincott hit on the solution of looking at building together,” commented Kim has also been created, which allows a as artificial intelligence (AI) is critical. synthetic but statistically realistic data Crucially, this approach does not breach Fournais, CEO and founder of Saxo Bank, payer’s bank to earmark funds for a drawn from existing pools of information. privacy rules as underlying transaction in his Spotlight session. purchase in advance, guaranteeing that “Confluence of new technology will He identified at least 30 different models, data stays locked inside the vaults of each the future payment will be honoured. “The empower trade ecosystems,” noted David but ultimately turned to generative payment provider. Thus, any provider can McFarlane added that digital identity is banking community has to come together Rutter, CEO of R3. “However, the siloed adversarial networks (GANs), machine trade, or share, its stock of GAN-generated the glue that holds all of these concepts at SWIFT to develop API standards,” approach of banks to issues such as AML is learning systems that have been used, for synthetic data with any other, each together: “Then you can layer in consent McLaughlin noted. “Open banking on its holding the industry back. AI in isolation is example, to generate highly lifelike but advancing its stock of information while management.” own is not enough.” of limited use.” artificial human likenesses from real faces. proprietary data remains untouched.
16 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 17 LEVERAGING DATA PAYMENTS Following the customer’s lead
GEOPOLITICS & REGULATION Is uncertainty the new normal? Learning to share in the information
age Building a standardised, flexible data architecture will transform the capacity of banks to serve customers.
At Sibos 2019, the banking industry from data, using APIs to support its faced tough questions around its role transfer between systems, and industry- as a custodian of data. For customers, wide programmes to facilitate seamless trusting that data can be managed communication, such as adoption of securely by banks is now as important as the ISO 20022 (See outbox) standards the institutions’ ability to manage money framework for interbank messaging. securely. More than ever, no bank is an island. Data exchange is fundamental to In this effort, security and quality are new service offerings. partners. Automated systems, including machine learning and artificial intelligence “Why don’t I bring my data to the bank, and algorithms, offer great opportunity for trust that they will know what to do with added value, but errors in data result in it?” asked Andreas Weigend, former chief errors in decision-making. scientist at Amazon and author of ‘Data for the People’, speaking at Tuesday’s Big Issue Speaking in the ‘Views from the top’ series, Debate, ‘Cloud, AI and privacy’. “Like I bring Lance Uggla, CEO of IHS Markit, noted my money to the bank, and hope that I get that the range of information in scope it when I need it, should we trust the banks to be machine readable has changed or the tech companies with our data?” dramatically. “Firstly, the quantity of information has increased, secondly the Banks’ ability to handle customer data quality has increased and finally the types with care is just one side of the coin. of data [have grown],” he said. “We have so Big Issue Debate – Banks must trust other firms, particularly many unstructured forms of data.” Cloud, AI & privacy: third-party cloud providers, if they want Building blocks of a to tap into the near limitless capacity Banks need to handle the dynamics of universal collaborative to leverage and optimise data. They scale, quality and range flagged by Uggla, platform? must create pathways to derive value but these are limited by cost, analytics and
18 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 19 Should we trust the banks or the tech companies with our data? interoperability. Technology is overcoming Cybersecurity concerns have abated, Access to data is in part being driven by Andreas Weigend these hurdles, but compromises must but financial institutions are still finding regulatory factors, such as open banking still be made, forcing banks to negotiate their comfort level with governance in initiatives. These require banks to offer these tensions in order to thrive in the cloud services. “What we measure from access to account and transaction data information age. a risk perspective is, who is accountable through standardised APIs, to facilitate to investors?” said Paolo Pelizzoli, competition. Let’s also look at the “While we think about the challenge of chief operating officer for International privacy and AI let’s also look at the ethics New Payment Platforms at Mastercard Andrea Melville, head of commercialisation of data,” said Samik Chandarana, head of Operations and Technology. “Is it partially and propositions for Global Transaction ethics of data. data and analytics, applied AI and ML at the cloud provider? Is it partially the Banking, Lloyds Banking Group, said that JP Morgan’s corporate and investment software vendor? Is it partially the Amazon-like service level expectations make Samik Chandarana, JP Morgan bank, during the Big Issue Debate. “Are we operations folks?” APIs vital to meeting emerging demand. allowed to use the data that we have, for some of the purposes that we want?” There are also clear tensions between the “With APIs, you can go inside an existing commercial models of cloud providers and process and create something that has Comfortable in the cloud the service demands of users. Portability an ultimate client benefit by being faster Much progress has been made in a short between cloud providers was also queried and simpler,” she said, speaking on time. Previously, the cost of managing data by panellists, with Pelizzoli observing, “As the panel, ‘APIs: The connective tissue within on-premise servers in proprietary we move, we have to have the ability to enabling platforms and creating thriving data centres generated considerable capital move back from the cloud, in a situation ecosystems.’ “That’s how we are going to expenditure, before banks began adopting where regulation forces us. Can we pull it be competing going forward.” cloud-based models to access capacity on back in?” demand. Even where no regulatory mandate exists, Moorthy made the case for a standard open banking is increasingly understood “If someone were to lay down a business set of tools that can work across cloud and accepted by banks as boosting case ten years ago with an opportunity for providers, to support portability and competition and choice. “I don’t think it US$100 million, they would block US$50 ease integration. “That will make our needs to be regulated on the consumer million just for hardware purchase,” said lives much easier,” he said, predicting the or the commercial side; you can see the Hari Moorthy, global head of transaction commoditisation of cloud provision. market coming to embrace it and to drive banking at Goldman Sachs, speaking at the out inefficiency,” said Tom Durkin, global ‘Cloud debate’ panel. “The capital expense Open vs closed head of digital channels, Global Transaction for fixed and illiquid assets was the biggest Banks are also sharing data with other Services at Bank of America Merrill Lynch. drawback. The economics of starting a institutions, fintechs and service suppliers, business have fundamentally altered as a as their value propositions are increasingly Nevertheless, there is potential for result of the cloud.” built on collaboration and aggregation. resistance, for example due to security
20 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 21 Even the most advanced organisations don’t have access to the talent they need.
Nuno Sebastiao, Feedzai
fears. Andrew Smith, head of technology at ClearBank, noted that multiple APIs communicating within and across organisations are a potential risk. The economics of I can envision “Each one of those [connections] is an attack point for a cyber-criminal,” he said. “You have to be really conscious having my own about how you are securing that [chain of starting a business have connectivity] via end-to-end encryption.” data vault, that Smith also reported that many institutions fundamentally altered as a are expressing an interest in using less I can open up security to reduce friction. “My engineer could hook up and start making a payment to the world if I within minutes; that’s great – or that’s what result of the cloud. [some businesses] think,” he said. “But Hari Moorthy, Goldman Sachs your pain point is going to be securing the want to. input. Security has to be the number one Lance Uggla, IHS Markit fundamental.”
Built in trust To establish the levels of trust needed to leverage data, banks must be effective in their selection and management of people, they are data scientists. Even the most need to have a repeatable pipeline of how processes and technology, Sibos delegates advanced organisations don’t have access you move data from the source systems in were told. to the talent they need.” a reliable and scalable way.”
Speaking on the ‘Data science and the As well as recruiting talent, banks must Selecting the right architecture is in itself future of banking’ panel, Nuno Sebastiao, assess how to build robust data science crucial for supporting trusted management co-founder and CEO of data science anti- into its processes, supported by APIs, of data. By automating decision-making, fraud fintech Feedzai, said: “There are only cloud and related technologies. Michael it is possible to use smart technology that 10,000 data scientists in the world that can Curry, vice president of regtech at IBM, never actually ‘reads’ the data it processes, actually call themselves data scientists; said, “There is no artificial intelligence (AI) which offers protection from exposure to on LinkedIn you will find 100,000 claiming without information architecture (IA). You third parties.
22 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 23 Flexible standards key to ADVERTORIAL value-added services How data can drive banks to deliver a better client experience As its reach expands further across the payments landscape, the ISO 20022 message framework is being expanded and adapted to help banks transmit Ileana Sodani, head of international sales – EMEA & more sophisticated instructions between counterparties, customers and market APAC, and Dee Sommerville, global head of client infrastructures, to better support provision of value-added services service and experience, Asset Servicing, BNY through greater interoperability. Ileana Sodani, Dee Sommerville, Mellon, explore opportunities for differentiation. BNY Mellon BNY Mellon “One thing all standards need to be is flexible. Without flexibility, we can’t move At Sibos 2019, both fintechs and the large executives and infused at every level of the certain investments or quantify the non- with the times. When additional data ‘BigTech’ firms were more prominent than organisational structure. This means having financial impacts of others is dependent on elements are needed or created, such ever. These firms have built their franchises a clear sense of direction, in terms of the regular and granular data exchange. as legal entity identifiers, we’re stuffing on using data intelligently to enhance the experience provided over the lifetime of them into some narrow generic file,” client experience, and financial services the client relationship. But it also entails a Opportunity and risk warned Lisa Iagatta, director of account providers can draw on their example to flexible attitude to means and mechanisms, The pace of technological innovation is only management for investment services create an ecosystem available at one for example using agile development one of several factors driving unprecedented at Fiserv and chair of standards body touch – fast, transparent and seamless. At processes to accelerate or change direction. levels of change across the sector. As such, ISITC, speaking on the Standards Forum a time of intense pressure to drive down survival depends on building differentiated panel ‘How ISITC standards help create a fees and costs, client experience must be Supporting client choice client experiences to deepen relationships thriving, hyper-connected world’. the key driver for a firm’s strategy and What does this look like in practice? and penetrate new markets, expanding investments. Only the fittest – and most Across wholesale and retail payments strategies and operating models to combat ISO 20022, the financial messaging innovative – will survive. franchises, banks are using digital fee and cost pressures. standards framework, is creating this assistants to automate responses to facility. Having been adopted in a growing which will facilitate mapping between the People, process and technology routine queries, using AI-driven tools to BigTechs have undoubtedly played their number of payment market infrastructure FIX messages used in securities trading How do we define client experience? Is it enhance quality of service from support hand effectively, but there is no inherent renewal projects in recent years, it is and the ISO standard. the ‘googlification’ or ‘amazonation’ of your desks. Borrowing from the experience reason why financial service providers being rolled out from November 2021 to business? A click-and-go experience with all of consumers, corporate treasurers are cannot deliver superior client experiences replace SWIFT’s existing MT messages, to Jim Northey, chair of ISO Technical information at your fingertips? For a bank tracking transactions via mobile apps, even as well. There is a great opportunity, but become more widely used in payments Committee for Global Financial Services to provide its own brand of data-driven to authorise large payment flows. also a risk for those who lag. Banks must between correspondents. In addition, a Standards (ISO TC68), said at the ISTIC Without client experience, there must be unity of place client experience not just at the centre key element in supporting its increased panel, “I took the [standards group] purpose across operating infrastructure, Self-service is taking root. Treasurers want of their data strategy, but also at the very use has been the evolution of ISO 20022 to create a semantic representation flexibility, we business model and internal culture. raw data feeds sent to bespoke liquidity heart of their culture and organisation. n to expand to cover securities activity, because we felt that was going to drive management portals to support real- from pre- to post-trade activities such as us to a point at which we could pull this For starters, financial service providers time visibility of cash positions globally For more insights on navigating the reconciliation. together.” can’t move with must be able to adapt nimbly to a fast- on a bank-neutral basis. Banks with asset digital future visit bnymellon.com/sibos changing technology landscape, positioning management arms want to incorporate NAV Integrating business-level semantics for the times. themselves to optimise innovation both and other inputs using APIs that interrogate the FIX protocol across the ISO 20022 internally and through fintech partners. systems at prescribed intervals. This allows messaging model is currently underway, Lisa Iagatta, ISITC But at the same time, they must recognise clients to integrate data from custodians the impact of new technology on client with other sources and run it through third- preferences within different segments. party analytics in pursuit of alpha. An open platform architecture should be “There has been a breakthrough in enable banks to become the safe place embraced to provide the most optimal To continually enhance the client making more efficient versions of these for data – for itself and its customers – as client experience in a fast-changing experience, financial service providers must
technologies,” said Qiang Yang, chief AI Weigend proposed. technological life cycle. Firms must also complete the feedback loop by providing BNY Mellon is the corporate brand of The Bank of New York Mellon officer at WeBank, during the Big Issue possess the data governance, infrastructure clients with the ability to enrich their Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally. Products Debate. “Homomorphic encryption, for As befits a data visionary, Uggla outlined and tools to collect, analyse and enrich data data. As investors show deeper interest and services may be provided under various brand names and in various countries by subsidiaries, affiliates, and joint ventures of The Bank of New example, allows computation to be done the concept that awaits: “In the future I generated (and demanded) by clients, to in sustainable investment choices, for York Mellon Corporation where authorized and regulated as required within each jurisdiction. The material contained in this document, which in such a way that computational engine can envision having my own data vault, better understand and anticipate needs. example, wealth and asset managers are may be considered advertising, is for general information and reference purposes only and is not intended to provide or construed as legal, tax, may not have to know what is being that I can open up to the world if I want to, using data to meet emerging demand. At accounting, investment, financial or other professional advice on any matter, and is not to be used as such. This document, and the statements computed.” or I can expunge it from the world if I want Making the right technology investments the individual level, this can mean using contained herein, are not an offer or solicitation to buy or sell any to, and I can participate in data exchange and developing an effective transformation apps to understand the evolving priorities products (including financial products) or services or to participate in any particular strategy mentioned and should not be construed as such. The Despite the many challenges, it is clear that may add value to something I am strategy relies on the vision, culture of millennial investors, for example. For views expressed within this article are those of the authors only and not those of BNY Mellon or any of its subsidiaries or affiliates. that the tools and skills are available to engaged with.” n and leadership displayed by senior institutional clients, the ability to screen out © 2019 The Bank of New York Mellon Corporation. All rights reserved.
24 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 25 GEOPOLITICS & REGULATION LEVERAGING DATA Learning to share in the information age
CYBERSECURITY Mobilise the power of the network Is uncertainty the new normal?
A brief survey of today’s geopolitical landscape would lead many to conclude Firms must adapt to a that banks and their customers face considerable risks in the near-to-medium fractured but fluid future. term. But opportunities also came to light in Wednesday afternoon’s Big Issue Debate, ‘Navigating an era of renewed great power competition – New challenges for countries, markets and investors’.
Even so, panellists concurred with There are solid and moderator Dean Garfield, vice president for public policy at Netflix, that we are entering largely uncharted waters. enduring arguments
Reshaping the terrain for maintaining According to Elizabeth Rosenberg, senior fellow at the Center for a New American global flows. Security, the unique characteristics of this “new era of economic competition” Elizabeth Rosenberg, stem partly from the willingness of the Center for a New American Security US to reach for “coercive tools”, such as sanctions and tariffs, often against other large economies. But the particular qualities of the US’s chief rival are also reshaping the terrain. “China is the biggest economy the US has faced in competition since it became the world’s biggest economy,” she said. “China has different values and economic and political systems, and that is seen by Big Issue Debate – many in the US as a threat.” Navigating an era of renewed great power competition
26 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 27 It’s difficult We need to to see how find a way to you can stop connect the the digital Chinese and revolution. international Gerard Lyons, Netwealth Investments markets.
Charles Li, Hong Kong Exchanges and Clearing
Ming-chin Monique Chu, lecturer now starting to see more institutional at short notice, whilst innovating faster to Chu said there is potential for China’s Refinitiv. Li acknowledged the timing was investors in China’s capital markets. “The in Chinese politics at Southampton relationships emerge,” he said. meet new needs. evolving cybersecurity protection rules not ideal, revealing that HKEx had intended Chinese market is like a round pipe; and University, agreed that US-Chinese to hike costs for foreign firms. Already, to unveil its offer soon after March 31, 2019, our [international] market is like a square “antagonism” is one of the defining Heightened volatility “Some companies have become savvier differing regulatory approaches to the scheduled date of the UK’s departure pipe: it doesn’t fit. We need to find a way to factors of our time, noting the current China’s rapid growth has clearly reshaped in dealing with US commerce and banking data privacy and digitised commerce from the European Union. “We had connect them,” he said. US administration’s perception of China geopolitical dynamics. But its future path laws,” said Rosenberg, noting the growing have given rise to concerns over the wanted to do this for quite a while. But we as a threat both to US interests and is far from certain, nor is it the only force ability of commercial actors to limit the possible development of parallel, siloed thought Brexit would create uncertainties Paradigm shift? the western liberal world order. As well reshaping the established order. As such, impact of government-imposed restrictions. infrastructures, replacing global networks. we could do without,” said Li, admitting Long-running issues such as Brexit might as its rapid economic growth, China we’re unlikely to witness the passing of a But geopolitical tensions will outlast the Rosenberg acknowledged the risks posed that the ongoing lack of clarity on Brexit make us feel we are living in a period of also represents a challenge due to baton from one superpower to another, current US administration, with politicians by tougher cross-border barriers. subsequently forced HKEx to take a “now greater political uncertainty, but is this its authoritarianism, its state-centric panellists agreed, orderly or otherwise. too becoming more “creative” in their or never” approach. minor turbulence or a more significant development model and its Sino-centric use of sanctions and other tools. “We’re “There are solid and enduring arguments paradigm shift? Dr Angela Gallo, lecturer world view. “China’s accession to the Rosenberg suggested that heightened probably at the beginning of the curve,” for maintaining global flows” in sectors Although its bid timing has been hampered in finance at Cass Business School, pointed World Trade Organisation was predicated geopolitical volatility would prevent the Rosenberg added. with substitutability and flexibility, she by political realities, HKEx’s underlying to some tangible measures in her SWIFT on the expectation that it would eventually re-emergence of rigid power blocs, arguing said, whilst political tensions might lead to strategic reasoning was also driven Institute presentation, ‘Living in an era of give up its interventionist approach, but that fluid “coalitions of the cautious” Despite recognising ongoing challenges, fragmentation, for example in the high- by them. With many firms considering political uncertainty’. the opposite has turned out to be true,” would coalesce among countries with Lyons focused on upside potential. “Trade tech sector. “Certain sectors will see more retrenchment behind domestic borders, she observed. specific, time-limited objectives. As further wars are undesirable, but it’s difficult to see disaggregation, but wholesale de-coupling and polarisation growing between east In particular, Gallo looked at risk insurance evidence of complexity, Lyons flagged how you can stop the digital revolution,” he that forces the rest of the world to choose and west, Li made the case for global data, noting that Germany and Spain had US-Chinese relations were placed into the interdependencies between China’s fast- said, emphasising the scope for innovation is not realistic.” market infrastructures to underpin these both been included in broker BPL Global’s context of other global developments by growing private sector and international to energise low-growth economies with two “centres of gravity”. “Our idea for the top ten countries for credit and political Gerard Lyons, chief economic strategist investment institutions, also pointing to the ageing populations. “Low productivity has Disruptive impact transaction is a simple vision, but a big risk insurance claims by value over 2016- for Netwealth Investments. The two forces unleashed by the fourth industrial been the challenge in the west.” Speaking earlier, Hong Kong Exchanges dream,” he said. 18, taking positions normally reserved for interlocking themes of the west-to-east revolution and demographic change and Clearing (HKEx) CEO Charles Li offered emerging markets countries. shift of investment and the political in sub-Saharan Africa and the Indian Lyons called on banks to fund growth a case study on the disruptive impact of Despite geopolitical tensions – and the and economic aftershocks of the global subcontinent. whilst maintaining vigilance against political uncertainty, during his ‘Views from fate of individual M&A initiatives – there The fact that large, traditionally stable financial crisis should be viewed, said concentrations of risk, stating that growth the top’ session. remains an opportunity to channel countries are showing signs of turmoil, Lyons, alongside challenges to the post- Many geopolitical factors are influencing and exports would thrive through continued US$27 trillion of Chinese assets into the turning away from multilateralism WWII institutional framework. “There business planning, but keeping out of sharing of innovation and protection In mid-September, HKEx launched a international finance markets. The task is and toward state-centred reforms and has been much talk about the need for the crossfire of trade tensions is perhaps of intellectual property rights. “But if (subsequently abandoned) takeover bid complicated not only by capital controls, economic nationalism, suggests the the International Monetary Fund and the the most urgent. Greater agility will geopolitics erects barriers to the flow of for the London Stock Exchange Group, but also transparency reforms which, emergence of a new reality, said Gallo. World Bank to change – and indeed they be required to reappraise and redirect information and intelligence sharing, that despite the latter’s management being explained Li, have left no meaningful Further, developments such as Brexit have – but with the rise of China we’re investments, facilities and supply chains would be a cause for concern.” focused on buying market-data provider institutional intermediation with retail frustrate efforts to anticipate resolution,
28 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 29 Technology central to corporate response
How to offset the rising cost of trail. Historically, the breadth and Flexibility and resilience trade in an increasingly uncertain diversity of supporting players The interplay between geopolitical geopolitical environment, where has thwarted fuller automation, risks and technology-driven sanctions and tariffs are imposed but technologies including efficiencies was also explored in with greater regularity? Importers AI, robotics, optical character ‘Slowbalisation and its impact and exporters are paying for recognition and blockchain are on global corporates’. Against protection via credit insurance and offering new hope. a backdrop of slowing trade letters of credit, but trade finance growth and increased friction experts are exploring new cost- While Mendoca called for minimum in the international trading efficiencies too. standards to support automated system, Amazon Core AI chief screening and KYC processes, economist Pat Bajari claimed According to Vinay Mendonca, Binns suggested the emergence machine learning and other global product head, propositions of non-bank trade platforms digital technologies could drive a and structuring, trade and could remove barriers to supply new wave of productivity gains. receivables finance, HSBC, firms chain finance. “I want our bank to Although he identified significant inevitably face higher trade costs connect to all these platforms so scope for new efficiencies in many as they seek new markets to that we can finance clients’ supply industrial sectors – including avoid tariffs. “In this environment, chains. Banks need to be more finance – he admitted implementing digitisation of trade becomes open and to work with platforms,” the changes needed to deliver critical,” he told Sibos delegates. he said. more accurate, data-driven decisions was no easy matter. James Binns, global head of trade In a separate session, panellists and working capital at Barclays, flagged a number of shortcomings “You need collaboration between said the sophistication of 3D in existing trade-related platforms, people with a number of different printing is increasing the viability of including limited interoperability, skills, including those trained in the more localised supply chains. Cross- reliance on stale information, and use of data. You also need strong border trade will become more lack of reach to smaller banks and leadership because the process focused on intellectual property corporates, as well as other parties can be frustrating. But there are and licencing revenues, he argued, involved in the trade process. Anne- too many inefficiencies that need requiring banks to develop new Cecile Delas, global head of trade addressing for these efforts to fail,” In this environment, tools. and treasury solutions at Natixis, said Bajari. There is no expiry date for echoed calls for common rules digitisation of trade becomes Banks are already combining with and standards. “Each platform has Banks and their corporate clients peers, platforms and fintechs to value individually, but they will all are already adjusting, co-panellists critical. this uncertainty. tackle the inefficiencies stemming be more powerful if they interact,” insisted. Matthew Davies, head of from trade’s traditional paper she said. transaction services for EMEA at Vinay Mendonca, HSBC Dr Angela Gallo, Cass Business School Bank of America Merrill Lynch, said clients with complex cross-border supply chains are rationalising. environment, including regional Steffen Diel, head of global “Firms are looking at how best models and local supply chains,” he treasury at SAP, said that meaning institutions and investors cannot of 30-50 years could well be shortened to set themselves up for the new remarked. large corporates needed to simply sit tight. “There is no expiry date for through today’s rapid news cycles and ensure they had sufficient this uncertainty,” she said. social media. “We’ve never had such flexibility and resilience to
velocity,” she said. n withstand headwinds. “I need Equally, banks should consider the risks of a real-time view on liquidity, retrenchment very carefully, counselled across country and instrument Gallo, noting that such a policy by exposures. Technology should facilitators of globalisation could become be able to provide this, by self-fulfilling. Instead, banks will need to calculating scenarios quickly and improve their resilience to shocks and their There are too many on the fly.” ability to innovate, she said, whilst playing close attention to regulatory developments, national and global. inefficiencies that need
Gallo acknowledged that her conclusions addressing for these efforts were somewhat downbeat, but offered one reason for optimism. Asked how long the to fail. swing from globalism to nationalism might last, she said typical historical cycles Pat Bajari, Amazon Core AI
30 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 31 CYBERSECURITY GEOPOLITICS & REGULATION Is uncertainty the new normal?
HUMAN ELEMENT How do we deal with sophisticated Keep it simple, stupid cybercrime and the general noise as well, while enabling digital transformation? Mobilise the Siân John, Microsoft power of the network
A hyper-connected world does not have to be a dangerous one.
“Cybercrime is becoming much more First, the Big Issue Debate, and the threat mainstream,” Siân John, EMEA and itself. “We are operating in an ever more APAC director, cybersecurity strategy, digitally connected ecosystem, where we Microsoft, told a packed plenary room are exposing ourselves to greater points at Sibos 2019’s Big Issue Debate on of vulnerability simply because we are cybersecurity. doing more business on a global level through complex supply chains,” said Sir ‘Have new business models created a Rob Wainwright, senior cyber partner, perfect cybersecurity storm?’ was the Deloitte. Sophisticated cybercriminals work central question. And along with the alongside, and sometimes in partnership answer (spoiler alert: yes, the advent with, malicious state actors – and both are of real-time services and open banking equally keen to target banks. make it harder to protect assets against cyberattacks), the panel gave us an in- “Traditionally, their attack vector has depth analysis of the threat, a closely been narrow, aimed at governments and argued array of defensive strategies military installations, but in the last three and even a measure of reassurance. or four years, malicious state actors have The sentiment was common across this expanded their activities. They now also year’s cybersecurity sessions: as the steal money and commercial secrets,” said lights came up, we felt that we knew Wainwright, citing recent examples where what to do. Perhaps the week’s take-away the estimated pre-detection ‘take’ from Sibos 2019: Cybersecurity highlights was as simple as: we have the tools and cybercriminal activities ran into billions. the defensive measures; with the right attitudes, the right thinking and the right But we shouldn’t focus all our attention on connections we can handle this. – to use Wainwright’s phrase – the top end
32 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 33 of the cybercriminal economy. “From our Cybercriminals don’t take time off. And modelling of threats enabled defensive our birthdays, cats’ names, favourite customers’ point of view, the question is: how some are already inside your organisation. measures to be precisely targeted. actors, et cetera, as our passwords. Not do we deal with sophisticated cybercrime “We invest in insider risk management. even Dave would do that, of course, but and the general noise as well, while enabling Some 60% of attacks are a result of insider But a successful know-your-criminal password security remains a point of Our focus is on digital transformation?” said Microsoft’s activity,” said Andrew Gray, group chief risk strategy isn’t enough on its own. Legault vulnerability judged worthy of mention. But We’re all looking John. Cybercriminals’ motivations and officer, DTCC, the US post-trade services continued: “It’s important to investigate not all ‘traditional’ cybercriminals are as understanding techniques evolve, often rapidly, but banks utility. “Everyone is a risk manager,” Gray even blocked activity. Sophisticated actors unsophisticated as they might seem – an at how we evolve have to deal with some unchanging realities. added, going on to discuss the potential won’t reveal their most sophisticated tools apparently full-blown attack might be an As John observed, every organisation, vulnerabilities represented by critical third early on. They’ll escalate as needed.” A initial probe. A further dimension to this the adversary. however secure, will contain at least one and fourth parties. clumsy attack, easily blocked, may be is that cybercriminals don’t need to attack our approaches employee capable of clicking on even the just the beginning – although not every us directly, to attack us. Cheri McGuire, JF Legault, JP Morgan most obviously suspect link. “There’ll always States do it; sophisticated criminal criminal has the capability to escalate. chief information security officer (CISO), to third-party be a ‘Dave’,” John warned. networks do it; mainstream criminals One encouraging point, made by several Standard Chartered, said, “It’s even more and malicious insiders do it. And speakers, is that most of what we’re facing critical that we make sure that we have Likelihood, intent, capability naïve employees like Dave sometimes hasn’t evolved significantly. Echoing proper configurations and that our APIs risk. In a Wednesday morning Spotlight session, inadvertently facilitate it. How do we John’s point about “mainstream noise”, are as rock solid as we can make them. Cheri McGuire, Standard Chartered ‘Why is cyber risk the most critical risk defend ourselves? “Our focus is on Wainwright said, “Cybercriminals are still The opportunity is to make sure we have that FMIs are managing today?’, Dave understanding the adversary,” said JF using traditional malware, re-utilising the right protocols and standards in place, was joined by a more sinister partner Legault, global head of cybersecurity those tools to steal as much personal data, and that we’re adopting those – to build in cybercrime. Moderator Oisin Lunny, operations at JP Morgan. “We look at including banking credentials, as possible, security and privacy in – as we’re adopting adjunct professor, UX-driven business likelihood, intent, and capability of the dump it onto the dark marketplace the APIs.” at Barcelona Technology School, cited a different adversaries to see how they could for onward sale into fraud. The illegal member of the intelligence community’s target financial institutions – ourselves, acquisition and exploitation of personal Our partners, customers and suppliers – definition of a cybercriminal. “People others, utilities, partners. We then monitor data is still what’s driving the bulk of indeed every party in our extended network think of cybersecurity as analogous to for that activity,” Step one: know what’s out cybercrime.” – are vulnerable, and it’s in the hyper- securing your car. These days, it’s as if you there. Through detecting and monitoring connected nature of banking that we are have a serial killer in the boot of your car. criminal activity, banks can develop content Complex supply chains actively engaged in broadening our range He’s crazy, and he’s trying to get at you, to detect and respond to threats, said By the end of the week, we had all been of interactions. As Wainwright suggested, all the time. It’s relentless,” said Lunny. Legault, later explaining how detailed reminded, multiple times, not to use our supply chains are complex, and getting
34 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 35 “The same, but very different”
The means of communication are increasing exponentially.
Dame Stella Rimington
Not strictly billed as a cybersecurity be understood and utilised, compared to session, Dame Stella Rimington’s ‘Views the 1970s, when she joined the service. from the top’ presentation gave us an Back then, interception meant steaming insight into the way state actors have open letters with a kettle and a knitting always used information – stealing it, needle or listening in on landlines. “The trading it, copying it – to gain strategic means of communication are increasing advantage. The former head of MI5, exponentially. The job now is to keep Britain’s domestic intelligence service, pace to make sure they are capable of reflected on how technology innovation intercepting all these platforms,” she had changed the tools and techniques of said, noting also the enabling role of more so. No wonder McGuire suggested important to ensure every participant our cyber-intelligence team, to have their her craft of information gathering and legislators. In place of following suspects that we need to focus not only on what in a simulation – and by implication, knowledge of the payments business.” On analysis. “They’re the same, but very on foot or by car, surveillance has gone we’re doing, but on how we’re doing it. Gray a live incident – is fully briefed on the the one hand, it’s important to hire the different,” she said. digital too, while eavesdropping no Linear thinking made a similar point, telling the Spotlight situation and their potential role in it. talent required for the job, but on the other, longer involves drilling holes in walls to audience, “We can do everything possible When designing simulations, Peterhoff this shows the importance of flexibility, Focusing on three core tasks – insert hidden microphones. “The world I to protect ourselves and recover, but we’re said her firm often introduces unexpected doing what’s necessary to counter threats interception, surveillance and grew up in seems a long time ago. But it is no longer part of a system, so we need to think of elements – a key person is absent, for as they arise. eavesdropping – Rimington pointed isn’t really, it just shows the speed with the whole system. What are our customers example, or a board member is on a plane. out the expansion in potential of which technology has advanced,” said enough. doing, what are our service providers To anticipate and manage cyberattacks Banks are typically mature businesses with communication channels that needed to Rimington. doing? What would happen if management effectively, attitudes need to change, established – indeed, tried and tested – Daniela Peterhoff, Oliver Wyman was distracted across multiple incidents?” Peterhoff insisted. “Linear thinking is no procedures for maintaining security. In the longer enough. There’s always something context of cybersecurity, this means, first, In the same session, Dr Daniela Peterhoff, more you can do,” she said, advocating a they can be predictable, and second, they Shared oversight on Wednesday, Steve Silberstein, CEO, FS- co-head of EMEA corporate and multi-faceted approach capable of seeing can be resistant to change. The old perimeter fences have been ISAC, made a similar point in his Spotlight institutional banking and global head of potential vulnerabilities across an entire breached; for sound business reasons, session, ‘Cybersecurity intelligence sharing: market infrastructure, Oliver Wyman, infrastructure. “We believe you need “We quite often see people trying to every bank’s gates are open. As McGuire How do we overcome the legal barriers?’ presented some sobering statistics. systemic thinking for cybersecurity.” use the controls they’ve had in place for said, “We’re all looking at how we evolve “An army of one will not win the cyber-war. “We have seen a 15% increase in cyber- fifteen, twenty years. They take new ways our approaches to third-party risk, The challenges are great, and we can’t do attacks – and CISO budgets – over the past Strengthen and freshen of working and try to route them through because it’s now fourth-party and fifth- it alone. Now is the opportunity to start three to five years. We see one in three Being part of a network can be a source their existing control frameworks. As party risk as well.” designing security for the digital channels
organisations being affected by insider of vulnerability, but internal connections people adopt open banking, cloud and of the future.” n attacks and two out of three organisations and external partnerships along the digital mobile workforce, they still ask, how do I fit Effective cybersecurity requires effective being affected by cyber-attacks overall. We supply chain can also be used to strengthen this into my existing on-premise perimeter oversight of the whole ecosystem – estimate there were approximately 5.09 and freshen cyber-defences. Citing an environment?” said John. And the answer suppliers, customers, suppliers’ suppliers, billion breaches in 2018,” she said. uptick in wholesale-payment attacks in is, of course, that they can’t. “One of the customers’ customers, all parties. A 2016, Legault said, “One of our first steps biggest conversations we have is, do you further point: effective oversight is shared Peterhoff also described her experience was to go to our internal business partners actually need to look for a new control for a oversight. Wainwright said, “The sharing of of participating in end-to-end simulations and ask if they had anybody looking for new way of working? How do you do that in threat intelligence in a systematic way will across market infrastructures. It is a new job. We wanted to bring them into the new world?” John continued. be an important part of the future.” Later
36 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 37 HUMAN ELEMENT CYBERSECURITY Mobilise the power of the network
SECURITIES Tech-led revolution Keep it simple, The more financially stupid literate people are, the more control and
In a world where technology is moving at Life is complicated enough; confidence they will have. a rapid pace, the human element cannot Jo Harris, Barclays be underestimated. Shifting behavioural technology should be used and economic patterns are not novel, but the generations now coming of age to strip away opacity. do stand apart. These young people are not only the most tech savvy ever; they also grew up in the shadow of the global financial crisis. The challenge for financial service providers is to capture their interest with products tailored to their digital nature, but they must also gain their trust.
These themes were explored in Thursday’s Big Issue Debate – ‘Banking Perspectives: Understanding the Next Generation of Customers’ – as well as several Spotlight sessions throughout Sibos week. The key message is that technology is only part of the solution. Mobile apps are important, but the industry must also Big Issue Debate: Banking perspectives play an educational role. Competition is – Understanding the next generation of tough, with the challenger and neo banks customers snapping at the heels of their mainstream counterparts. Nevertheless, there is time for banks to secure their future by offering better targeted products, more digital-friendly channels, value-added services and convincing evidence of
38 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 39 empathy and connection to this fast- Up for the fight make a concerted effort to find out what Education, education, education maturing and demanding cohort. Use of social media was also highlighted the young generation wanted.” Panellists advocated wider educational by Combi as having a significant effect programmes for students at schools and In some ways, Gen Z, born since the on consumer habits. Gen Z are curators Traditional banks may still be on a learning universities in order, as Combi noted, to mid-1990s, are not so different. They of their own media – creating content curve but they are fighting back. Jo Harris, better prepare them for the “realities of want good health, security, money, and a themselves, downloading information, e.g. head of Millennial Finance at Barclays, life outside of the classroom”. Croswell, Don’t allow place to live, according to Chloe Combi, photos and videos – as well as consumers. Gen Z do not who described herself as being on the agreed, adding, “Gen Z do not appear to be consultant and futurist, who gave a They are also more socially isolated, able to Millennial/Generation Z cusp, said “new educating themselves about finance and Spotlight talk and participated in the Big interact with friends online, order food from entrants would help to keep the banks the best way of managing their money.” Issue Debate. But many are still scarred Deliveroo and watch streaming services honest”. Envisaging a future full of new She suggested devising programmes technology by the financial crisis, with negative such as Netflix, without leaving the house. appear to be providers, products and services, Harris whereby financial institutions go into impacts on their faith in traditional banks. said incumbents were getting up to speed schools to provide guidance directly. “Some children canvassed at the time of Given this backdrop, it is no surprise that and warned “against writing them off.” “Some fintechs have started to do some to become a the crash stated that their lives had been upstart providers are stealing a march on educating work aimed at educating people on how ruined by it,” she said. established players. Unencumbered by Major banks that already offer a full suite to avoid payday loans,” said Crosswell, legacy systems or cultures, new entrants of products may hold an advantage over but she acknowledged the difficulties of Further, the traditional coming-of-age have quickly developed products – mobile newer competitors, said Harris, adding that enacting curriculum changes. complicating journey – leaving home, getting married, apps, social media-friendly user interfaces themselves Barclays has developed services to help having children, buying a flat or house – and personal finance capabilities – that younger people access their offerings and Financial education can also be passed “has been turned on its head”, Combi said. cater for the younger generation’s specific to understand how to manage their money. down the generations, said Combi, factor. “The statistics indicate that, in 2020, the requirements. As Charlotte Crosswell, about “Our view is that the more financially advocating “more collaboration between average age of moving out of the parental CEO, Innovate Finance, explained, “Banks literate people are, the more control populations that are ‘great with tech’ Julia Hobsbawm, author and broadcaster home will be 28 for women and 31 for men. are doing a lot of work around trying to and confidence they will have,” she said, and those that are ‘good at saving’. “It’s It’s almost impossible for adults in their understand consumers’ needs, but are pointing to the bank’s Money Mentors common for the media to pit generations twenties who still live with their parents finding it hard to make predictions about finance. programme, which offers informal one-on- against each other, judging baby-boomers to think about settling down and having the future. New entrants had an advantage one sessions with specially-trained staff against snowflakes, but this is not very Charlotte Crosswell, Innovate Finance children of their own.” in that they could almost start afresh and via video calls. helpful,” she said. Cross-generational
40 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 41 Today’s pioneers, tomorrow’s leaders
Inspirational women are never hard to find. They appear in all walks of life, although many have faced steep challenges in reaching their goals. Despite their Kindness is an essential differences, career choices and personal circumstances, they all share resolve and commodity in an purpose. Dame Kelly Holmes, a double Olympic champion, personified this drive when she told the audience her effective corporation. own story in Thursday’s António Horta-Osório, Lloyds Banking Group ‘Views from the top’ session. She explained that she was a strong, resilient woman for whom nothing would stand in the way of her goal of becoming an Olympic champion.
Too many people forget to “pat themselves on the back”, said Holmes, remembering, especially in times of difficulty and self-doubt, the progress they have made so far. As an individual athlete, Holmes succeeded on her own, in many respects, overcoming adversity and injury to achieve her goals interaction can work both ways, panellists Firms should implement the old 1950s future, has increased average training through sheer determination. suggested, noting that the younger military design principle KISS, also known hours per head by 50%, with a target of To her, reaching peak generation is not the only one interested as Keep It Simple, Stupid, said Hobsbawm. delivering 4.4 million hours by the end of performance was about ticking in cutting-edge tools and better customer Networking and sharing ideas in person 2020. Over 2.1 million hours have been off boxes and having a clear service. should not be underestimated. Managers delivered to date. sense of purpose. To succeed, should not rely solely on email or online Holmes said it was necessary to Author and broadcaster Julia Hobsbawm, connections, but use quality face-to-face Sharpening the skillset is only part of set the bar high, have an “I’m moderator of the Big Issue Debate and or voice-to-voice time to discuss projects, the programme. Horta-Osório said the the best” mindset, and exhibit Talent Accelerator Route) than in the past, there is a more flexible environment Spotlight speaker, emphasised the nature new ideas or solve problems. “The most bank also embedded support for mental passion and “fire in the belly”. scholarship programme, still a lot to do,” said Mary for all genders to promote of human interaction, regardless of important person in the room is not the health, tripled paid paternity and doubled moderated by Julia Streets. Duncombe, a STAR Scholar opportunities, purpose, industry and generation. If relationships machine, but you,” she added. maternity leave. “Kindness is an essential However, while personal The programme, launched this from Bank of America Merrill continual development with colleagues, family members and commodity in an effective corporation, ambition is key, networks, year, is designed to support Lynch. “A report from the IMF and respect. For women in friends are conducted mainly via Sharpening the skillset so providing employees with the support mentors and role models diversity by encouraging the (International Monetary Fund) particular, the concept of messaging apps, text, social media or email: To that end, last year the UK’s Lloyds they need is the correct course of action,” can also significantly help next generation of female last year found that women sponsorship resonated widely. think again. “Being a pro-social human Banking Group embarked on a four- he added. n move the dial forward. leaders. It comprises 30 accounted for less than 2% Louise Wong, vice president, is about being in the physical, not virtual pronged strategy designed to put the These themes were women from 17 countries, of financial institutions’ chief global clearing and FX product world,” she said. individual at the centre. Although it highlighted by both Sandy including the UK, Sweden, executive officers and less sales specialist at JP Morgan, includes digitising the group, maximising Toksvig, the British-Danish South Africa, China and than 20% of board members. spoke for many: “We need the From a business perspective, companies existing capabilities and providing a writer, broadcaster, actor, Australia, aiming to benefit It is well known that we make senior managers who have can better target customers, increase leading customer experience, the fourth comedian and presenter, from the learning and better decisions when there is gone before us to support and profitability and have a more productive leg – transforming ways of working – is speaking at Wednesday’s networking opportunities at diversity.” sponsor us. We appreciate the and innovative workforce if the human underpinned by the bank’s largest-ever women’s networking Sibos. STAR programme because element is more appreciated. In other investment in its staff, according to event, and throughout While each STAR scholar it has allowed people at our words, artificial intelligence, robotics and group chief executive António Horta- Thursday’s lunchtime Chat “Even though progress is shared their individual level to come to Sibos for the machine learning are important, but “don’t Osório, speaking in his ‘Views from the & Connect session, which being made and there are experiences, they collectively first time, network and meet allow technology to become a complicating top’ session. The programme, which focused on the STAR (Sibos a lot more women working believed banks need to create clients.” factor,” Hobsbawm said. aims to equip staff with skills for the
42 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 43 SECURITIES HUMAN ELEMENT Keep it simple, stupid
COMPLIANCE Balancing act The role for a regulated governor becomes even more important in a decentralised network.
Jo Van de Velde, Euroclear
The possibilities and limitations of the CEO panel session, ‘Getting ready for Despite the barriers, technology innovation dominated the new world’. securities-focused sessions at this year’s digital transformation Sibos, with service providers looking to Transparent and instant Tech-led generate new efficiencies and insights in Nevertheless, advocates point not only is realising its support of evolving buy-side priorities. With to DLT’s potential to eliminate post-trade business models across the sector being matching and confirmation processes potential. reshaped by margin pressures, regulatory between securities market participants, but developments and the need to deliver a also its role in facilitating the tokenization differentiated client experience, technology of assets. revolution is a critical part of any conversation about the future of post-trade securities services. Vic Arulchandran, chief operations officer of Nivaura, a London-based While many experts believe that distributed start-up that utilises DLT alongside other ledger technology (DLT) can make a digital technologies, described how his significant contribution to the efficiency firm has assisted in the issuance of a of post-trade securities processes, it is fully tokenized and compliant private often perceived as a solution in search of a placement in the UK. “We believe that problem. Several speakers noted a distinct there is a lot of opportunity for investment cooling in enthusiasm toward DLT-based banks to clear and settle on some sort of solutions compared with Sibos panel distributed ledger technology,” he said sessions four or five years ago. during ‘DLT – Taking a bite out of the securities industry?’, held in conjunction “There is still the potential to transform with the International Securities Services but not to disrupt, as we thought about five Association. years ago. The scale required to change the whole industry is just too large and there Growing interest in this area is reflected in Sibos 2019: is no business case for it,” said Phil Brown, the fact that the association is releasing a Securities highlights CEO of Clearstream Holding, speaking in paper in November, titled ‘Crypto Assets
44 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 45 Clients are not ready to invest on a Imagine a Wall 10-year horizon. Street treasurer Thomas Zeeb, SIX Group trying to fund 130 million trades a day. You’d tie up massive amounts of capital.
Michael Bodson, DTCC
– Moving from theory to practice’, which 400 million of write-offs, and then you’re potentially negative impact on market network to ensure legal accountability will include recommendations relating The last mile of manual processing going to have to spend another US$300 liquidity of a move to T+0 settlement. It and adherence to participation rules and to the issuance, settlement, safekeeping, million to re-connect to me,’ it would be is standard market practice for market- compliance,” pointed out Euroclear’s Van asset servicing and will address legal and is still unaddressed. a very short conversation,” said Michael makers to take unfunded positions de Velde. regulatory implications, as well as issues of Bodson, CEO of the Depository Trust and and use the T+2 settlement window interoperability and standards for market Michael McGovern, Brown Brothers Harriman Clearing Corporation (DTCC). to hedge the order, but this much- Acute pressures participants. needed flexibility would be curtailed by Despite the lack of consensus and range of Cost and complexity clearly makes immediate settlement, as might netting challenges faced by infrastructure renewal, DLT is also transparent and instant, wholesale migration of the securities opportunities, thus adding cost to liquidity speakers were under no illusions about noted Jo Van de Velde, head of the market infrastructure to DLT unrealistic. provision. the acute pressure to reduce costs. “The product, strategy and innovation unit But market participants are willing to back industry has been struggling since the at Euroclear, allowing participants to new technology-led initiatives with more “We do about 130 million trades a day and regulatory changes of 2008, so I feel there “share and access one golden source of precisely defined objectives and timelines. we net these down to about three million is more momentum for the industrialisation truth to achieve simultaneous consensus and settle in two days. It’s a very efficient of some of these problems,” said across a data store that is distributed to Swiss market infrastructure operator SIX process. Imagine a Wall Street treasurer Clearstream’s Brown. multiple participants, reducing the risk of Group, for example, has developed its trying to fund 130 million trades a day. information distortion”. exchange for digital assets, SDX, in parallel You’d tie up massive amounts of capital,” These cost pressures are also driving to but separate from existing facilities, warned DTCC’s Bodson. investment in artificial intelligence Wholesale migration? according to Thomas Zeeb, SIX’s head of (AI), machine learning (ML) and natural Panellists willingly accepted the theory, securities and exchanges. “Clients are Speakers also flagged a number of language processing (NLP). Increasing back but pointed to the caveats faced by DLT not ready to invest on a 10-year horizon. regulatory barriers to DLT’s wider adoption, office use of these methodologies is taking adoption in practice. Firstly, if the securities They are driven by the business case and including the absence of consistent off, particularly in reconciliation, according infrastructure were to be re-engineered short-term returns,” he observed. Due to legal treatment for digital assets, and to speakers in the session, ‘Technology around DLT, it would entail enormous be rolled out across 2020, SIX intends SDX the evolving and fragmented nature of implications in post-trade: Where AI meets expenditure across the sector in the hope to be an end-to-end platform for trading, regulation around data protection, cyber back-office operations’. of bearing fruit in, say, 10 years’ time. settlement and asset servicing of digital security and privacy across jurisdictions. In today’s uncertain business climate, assets, including a DLT-based, distributed Indeed, could a DLT-based market “We see ML, which incorporates elements justifying such spending would be central securities depository (CSD). infrastructure lead in time to a new model of NLP, as the ‘killer app’ for the back exceedingly difficult. for market oversight? office. For the most part, we have mature Liquidity risks automation around assets, asset servicing “If I were to go to [JP Morgan CEO] Jamie Further arguments advanced against “Similar to the role played by exchanges, and settlement cycles, but inevitably there Dimon and say, ‘We’re going to replace DLT include both the levels of process clearing houses and CSDs in today’s is a last mile of manual processing that is our existing platform with a new platform, efficiency and reliability achieved by capital markets, the role for a regulated still unaddressed,” said Michael McGovern, you’re going to have to rebuild your ongoing investment in the existing governor of the network becomes even head of investor services, fintech, at Brown platform, so you’ll probably have US$300- securities market infrastructure, and the more important in a decentralised Brothers Harriman (BBH).
46 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 47 Investing in information
Will the dollar still deliver in the new world order? ML has already had a “profound impact” on reconciliation, McGovern asserted. For Reports of the demise of the primacy of example, BBH’s legacy rules-based systems the US dollar are greatly exaggerated, could detect unmatched breaks in trades according to David Bloom, head of FX with an 82% accuracy rate, but running strategy at HSBC. Presenting his thoughts new ML-based systems bumped detection on ‘FX and the new world order’, one of rates up to 95-96% immediately. several highlights during the first ever ‘FX Day’ at Sibos, Bloom suggested that BBH has also used NLP-based clustering the appeal of the dollar, which may be techniques to identify anomalies in pricing diminishing for some, needs to be set in sources when calculating NAVs for clients context of the alternatives. “The dollar and has reduced false positives to less than is the king, but it’s London that wears 1%. The ability of automated routines to the crown,” he said, referring to the UK efficiently identify both pricing anomalies capital’s dominance as a dollar trading and their underlying causes offers scope centre. for significant cost savings over existing manual workflows, panellists suggested. Machine learning The euro, for example, offers exposure to an economic region “mired in recession “Our industry suffers with a massive and massive political infighting” and a number of people that still do can be used maximum return of minus 0.5%. For all its reconciliation,” agreed Tom Castelyn, global structural faults, the US dollar, in contrast, head of custody at BNY Mellon. “Once you There is overall growth in demand has been offering 1.7% for 12-month start using some of the more intelligent to better tune money. reconciliation tools you find patterns and for data. breaks that give you better resolutions, smart rules The dollar may still be king, but The dollar is but they also give you better analytics that David Schwimmer, London Stock Exchange Group some time-honoured principles of FX show you how these breaks can be avoided markets are very much challenged by in the future.” and find new the king, but the emerging new world order, Bloom The evolving role of data in the securities the number of individuals who need access admitted. In particular, the threat of New use cases markets was underlined by David to a desktop, but at the same time there patterns. tariffs is changing the fundamental it’s London Panellists also commented on the Schwimmer, CEO of the London Stock is overall growth in demand for data,” he influences upon currency values. increasingly widespread use of ML and John Kain, Amazon Web Services Exchange Group (LSEG), during his added, noting the increasing demand for AI tools in the securities markets for that wears the ‘Views from the top’ conversation with data to support sustainable investment Bloom reminded his audience that the compliance purposes, including fraud ex-Financial Times reporter Jeremy strategies. current US trade deficit with China is not detection. John Kain, head of worldwide Grant. The group is in the process of dissimilar to the trade deficit it had with crown. business and market development, capital As experts observed throughout Sibos finalising the acquisition of market data Do such major strategic acquisitions Japan in the 1980s. Back then, rather markets at Amazon Web Services, cited week, effective deployment of new David Bloom, HSBC provider Refinitiv. Schwimmer placed suggest a different role for exchanges than implementing tariffs, the US chose the development of ML-based surveillance technology-enabled initiatives not only the acquisition in the context of the in future? Not necessarily. Schwimmer to depreciate the dollar in conjunction capabilities by the Financial Industry requires investment in new platforms and globalisation of financial market structure said: “We support global financial stability with the UK, West Germany, Japan and down. Investors can no longer afford to look Regulatory Authority, the self-regulatory tools, but also in recruitment, training, and the need to augment the LSEG’s and sustainable economic growth. We France through the so-called Plaza Accord. simply at growth differentials and hope to organisation for the US securities market, policies and processes. New sorts of people traditional strengths in equities with a work with companies, asset managers, The major difference between these two understand currency values, he stressed. to support transaction surveillance. will have to be employed and new forms of greater presence in FX and fixed income, governments and individuals to allocate eras, said Bloom, is that now the US is governance erected to properly manage but also flagged the changing nature of capital, fund innovation, manage risk and obliged to operate unilaterally, rather than “Smart rules generate too many false and optimise the new service offerings. As data consumption. create jobs. We’re an engine room of the multilaterally, and has opted to impose positives to be efficient. ML can be used soon as one question is answered, several capital markets and, therefore, of the tariffs. to better tune smart rules and, more more are posed. n “The desktop is now one of five economy and we take our responsibilities importantly, to find new patterns,” he distribution channels for data,” explained very seriously.” The increased politicisation of world explained, going on to suggest that use Schwimmer, also citing electronic feeds, economies, alongside quantitative easing, cases would continue to emerge across the cloud, third-party and on-premise negative interest rates, bilateralism and industry. “The technology is real and the channels. “There is a structural decline in nationalism has turned the world upside price points continue to come down.”
48 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 49 COMPLIANCE SECURITIES Tech-led revolution
INNOTRIBE The future is ours to decide Balancing act
In an increasingly real-time world, technology is helping to keep customers safe and satisfied.
Speed is of the essence, when it comes to and open banking is putting particular meeting today’s client expectations, but pressure on payments providers. financial service providers do not want to put their collective foot on the accelerator “At the macro level, there is a government if it means sacrificing security or increasing imperative that wants payments to move exposure to criminals. The challenge for faster and enable corporates to have banks and market infrastructure operators is better access to money. We are also in to find the right balance between enhancing the world of the internet where everyone the customer experience, protecting their expects things instantaneously and the systems and assets from criminal intent, same is true of the flow of money,” said and complying with regulatory requirements Nilixa Devlukia, head of regulatory at the aimed at preventing financial crime. The UK Open Banking Implementation Entity, task of achieving this balance – against a during the panel session, ‘Opposing forces: backdrop of technology innovation, but also How banks are aligning compliance needs spiralling compliance costs and mounting with real-time payments’. pressure from regulators – provided the common thread throughout Sibos 2019’s These trends are not new in the UK, said compliance sessions. Devlukia, but we are now seeing a marked evolution of the services that sit above the Firms are developing their own models payment rails. “This is part and parcel of and capabilities, but also forging open banking and the agenda of innovation partnerships with industry groups and and competition, not just in the UK but also technology providers to find the most from regulators around the world,” she said. efficient and effective solutions across their anti-money laundering (AML), know As well as instant and interoperable your customer (KYC), sanctions and fraud payments services, banks are expected detection obligations. to provide a seamless, secure and smooth onboarding experience, whilst All areas of the industry are looking to implementing thorough KYC checks. Sibos 2019: improve their financial crime compliance According to Mike Winn, head of business Compliance highlights processes, but the drive toward real time services, global banking and markets
50 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 51 We’re seeing growing use of robotics for data aggregation.
Lee Hale, Deutsche Bank
Banks are looking at how to balance their risk Siloed data is a fundamental management agenda with their client experience nut to crack. agenda. Mike Winn, HSBC Katie Jackson, Deloitte
at HSBC, banks are increasingly alert several areas of compliance, notably a holistic view of transactions whereas maturing approach by compliance teams. the de-risking problem and it is something to the difficulties imposed on clients sanctions, major banks have invested historically they had had to consult multiple “Five or six years ago, we were all trying we should continue to discuss,” she said. by the changes to banks’ customer- heavily, often building sizeable, complicated systems,” he said. “We all know transaction to figure out how to interpret regulation “Collaboration has been good, but we facing processes demanded by evolving infrastructures and labour-intensive monitoring is a highly inefficient process. and understand what does good CDD still do not optimise the way we connect compliance requirements. “Banks are now processes in an effort to deliver on But now the move is toward more (customer due diligence) look like. We to reduce financial crime. There are still looking at how they can balance their risk regulatory requirements. Lee Hale, global analytics-based platforms,” Hale added, have collectively come together to create US$1.5 trillion of illicit funds going through management agenda with their client head of anti-money laundering and explaining how Deutsche and other major a risk-based approach which we can align financial institutions. We are probably not experience agenda. This issue is coming to sanctions at Deutsche Bank and panellist on UK-regulated banks are sharing analytics towards. And we have moved from the view giving ourselves a fantastic report card, the fore, especially in the corporate sector,” the ‘Looking ahead – Designing compliance and data via Joint Money Laundering of ‘whose fault is it’ to ‘how can we get but it is not due to lack of effort. We need said Winn, during Wednesday’s session, for the future’ session, acknowledged that Intelligence Taskforce, the UK’s public- better’ and that’s an important mindset to to find a better way to connect and one of ‘KYC utilities: What does success look like?’. “huge amounts” had been spent in the past, private information-sharing initiative. achieve,” she commented. the challenges is being more effective in but indicated that smarter use of technology sharing information.” Lessons learnt would improve efficiency and effectiveness. Heidi Toribo, global head of banks and Despite this progress, Toribo, along with Although progress has been made in recent broker-dealers at Standard Chartered, other participants, acknowledged the need One of the biggest and ongoing obstacles years, panellists stressed the increasing “We’re seeing growing use of robotics for suggested that the improved deployment for further effort, especially around data is siloed data. A lack of global connectivity pressure to improve performance. In data aggregation, providing analysts with of technology was being accompanied by a management. “We still have not solved across internal systems could lead to a
52 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 53 Pooling expertise to In many leverage AI jurisdictions we do not ‘look through’ our Rather than customers’ modelling accounts to outliers, we those of end- should be investors, yet we modelling are exposed. behaviour. Mark Gem, Clearstream Salla Franzen, SEB
Despite the hype about AI, participants of how they can improve their overall on the panel ‘Embracing artificial compliance regime.” bank not realising that a single customer screening processes to manage sanctions efforts of securities market infrastructure technology, questions of culture and intelligence – How is AI augmenting is operating multiple accounts in different compliance more efficiently. This is helping operators and securities services providers. collaboration were frequently raised. compliance practices?’ willingly To get the most out of AI in compliance, geographies, according to Katie Jackson, Standard Chartered to meet its regulatory The International Securities Services Forging stronger links with industry bodies concurred that its potential to strengthen said panellists, managing data is critical, partner at Deloitte. “Criminals do not hit requirements faster, identify false positives Association (ISSA) recently published and joining utilities are increasingly seen controls across the financial crime but not sufficient. “To unlock the the national borders and stop,” she added. more quickly and reduce the number and updated compliance principles for as key elements of a robust compliance compliance spectrum is enormous. technology, you need high quality data,” “Siloed data is a fundamental nut to crack frequency of stopped payments, said securities custody and settlement, intended infrastructure, as well as strong ties within Specifically, AI offers the ability to rapidly said Salla Franzen, group chief data if we want to stop these criminals.” Sullivan. “With faster payments, you are to help firms to manage the financial crime firms’ own four walls. and reliably scan vast quantities of scientist at SEB. According to Franzen, under pressure to prevent financial loss in risks that can arise between securities data, identify patterns and behavioural the bank initially made slow progress Close collaboration real time,” she said. issuers and ultimate beneficial owners. Clive Gordon, head of the financial crime anomalies, detect changes in motivation because multiple teams were separately Although firms are at different stages of specialist supervision unit at the UK’s and provide clues about fraudulent asking similar questions of the same development, most are leaning toward a At an industry level, panellists also all Mark Gem, chairman of the risk Financial Conduct Authority, told the activities. It can also analyse the data set, based on slightly different greater use of artificial intelligence (AI), pointed to the advantages of utilities committee at Clearstream and leader ‘Designing compliance for the future’ connections between individuals and areas of expertise, such as fraud, market machine learning and robotics to streamline, such as SWIFT’s KYC Registry, which has of the ISSA working group on financial panel that the most effective firms from a organisations to identify suspicious surveillance or rogue trading. When standardise, automate and enhance over 5,500 financial institutions in 220 crime compliance, emphasised the compliance perspective are not necessarily activity. they pooled their expertise, they were processes within the compliance function. countries and is now opening the door to need for service providers to tune their the best resourced, but rather those in quickly able to develop more effective Panellists said changes are needed from an corporates. Speaking on the KYC utilities KYC due diligence programmes to take which the business owns the risk. “They According to Patrick Craig, financial programmes for compliance monitoring. operational perspective in how compliance panel, Jeff Gontero, executive director of account of the hyper-connected nature do not see it as simply a compliance issue crime technology lead at EY, some staff cooperate with teams from other global financial crimes compliance at JP of securities market intermediation. “We that goes down to the second or third line,” firms are only just testing the water, “We discovered that, rather than modelling divisions to prevent financial crime. Morgan, insisted that more work is required need to recognise the fact that in many he added. in terms of applying AI to compliance, outliers, we should be modelling behaviour, on standardisation. Although he supports jurisdictions we do not ‘look through’ our while others are already incorporating because if you can understand typical At Standard Chartered, the compliance industry utilities and initiatives such as customers’ accounts to those of end- A strong compliance culture, Gordon said, robotics, machine learning and natural behaviour from many perspectives, team already works closely with its cash the Wolfsberg Correspondent Banking Due investors, yet we are exposed – as a matter is best achieved by inviting a wide range of language processing. “They are using that knowledge will help you detect the and trade counterparts to understand the Diligence Questionnaire, Gontero argued of AML legislation and sanctions controls parties to sit at the compliance table. “They the techniques in control processes to outliers,” she explained. risks and opportunities of faster payments, that the onboarding and renewing of clients – to the actions of our customers’ end- not only have to be able to talk to each take costs out and are already achieving according to Patricia Sullivan, global is unnecessarily encumbered by differences investors,” he observed. other, but also understand each other’s 20-30% savings,” he said. “However, it is co-head of financial crime compliance. in local and regional regulations. differences and have an end-to-end view of the third group of financial institutions Informed by this collaborative approach, Whilst all the compliance panels at Sibos the systems,” he added. “This way, if one that are the disrupters and are looking the bank is utilising technologies such Industry-level collaboration is also 2019 highlighted the potential efficiency part of the business makes a change, they at the technology differently in terms as AI for name screening and other supporting the financial crime compliance and effectiveness benefits of digital will not come unstuck.” n
54 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 55 INNOTRIBE COMPLIANCE Balancing act
CLOSING PLENARY Building for the long term
Building the next generation of financial services will challenge our understanding of The future humanity and technology.
“How far do we want to go with this?” perhaps, terminators and intergalactic asked Gerd Leonhard, CEO, The Futures trading empires) if we let it happen. Agency, first speaker in Tuesday morning’s is ours to Securing identity session, ‘Humanist vs Technologist’, which addressed the “avalanche” of technological But there was a lot of ground to be covered change heading towards us. “Technology is before we got as far as those imagined changing us,” Leonhard continued. “If you outcomes. On Monday, we discussed can be superhuman, would you not want to identity. “Trust and identity are wicked be superhuman? Who decides what is the problems,” said Don Thibeau, executive decide director at The Open ID Foundation, right thing to do?” in the session, ‘The future of identity’. The answer to that question was almost “The problem with identity and access- simple. We do. We decide how we want management solutions is that once they’re the future to be. But we must be careful solved, they become more brittle over time. not to cede control of our own future to That’s certainly the case with knowledge- our own technology. Innotribe’s theme based authentication,” Thibeau continued. for 2019 was the evolution of trust in a Passwords are not the answer – “Passwords digital future. How do we trust each other, are the cockroaches of identity,” said and – by Tuesday – how do we also trust Thibeau – and knowledge isn’t a reliable the machines around us? By the Innotribe test – you’re not the only one who could Closing session on Thursday afternoon, know (or find out) your date of birth or we were ranging through possible futures other personal data. foreseen by sci-fi authors and film-makers, from Robert Heinlein’s ‘Stranger in a But there’s an opportunity here, as well Sibos 2019: Strange Land’ to James Cameron’s ‘The as a challenge. Thibeau – followed by a The future of money Terminator’. Anything’s possible (except, series of speakers on the Discover Stage,
56 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 57 Identity The future and access- doesn’t have to management be dystopian. solutions Jennifer Schenker, The Innovator become more brittle over time.
Don Thibeau, The Open ID Foundation
situated across the Discover Zone from production. “Let’s stop using the word Evidence for the latter course was session ‘Responsible and explainable AI the main Innotribe Stage – spoke of trust,” Young said. “Let’s talk about provided on the Discover Stage, in sessions in financial services’, and the Innotribe standards and structures for securing accountability and trust frameworks.” In including ‘Payments – the human face Stage’s lunchtime Sensemaker session, identity in future. In her ‘The true meaning the future, she suggested, banks will build of technology’ and ‘Solving the problem ‘AI for social good’. In his presentation, of identity’ session, Kaliya Young, Identity out their own trust frameworks – and of financial exclusion in Southeast Asia’. ‘Artificial and natural intelligence – are Woman, gave us a clear description of by now, we weren’t surprised that her Back on the Innotribe Stage, Templeton two heads better than one?’, Eng Lim Goh, how a secure identity structure could example was a project already begun: the responded to Leonhard: “This debate goes CTO for high performance computing & work. “You are in the business of helping Pan-Canadian Trust Framework. back to the very earliest days. Stonehenge AI at Hewlett Packard Enterprise, argued people manage their money. You could, gave us a calendar; I’m sure people were for a partnership between humans in future, through new technologies and Enter the machines debating back then whether that would (better at emotional intelligence) and open standards, get into the business of Discussions of identity continued on the change what it meant to be human.” We’re artificial intelligences (they can handle helping people manage their data,” said Discover Stage and in Innotribe’s end-of- in no more danger from our technology the number-crunching). “Humans need Young, having already noted that past day ‘Curated Networking’ session. Then, now, Templeton suggested, than at any to be there,” said Dr Goh. Then Pascal – actually, still current – authentication on Tuesday morning – enter the machines. point earlier in history. “Our first debate Coppens, innovator, nexxworks, challenged methods are not only unreliable, but also And the humans. The focus for the day, was whether to come down from the trees. us. Outlining ‘China’s new normal’, very expensive. said day anchor Jennifer Schenker, Would we lose our monkey-ness? We ended Coppens said, “If we want to learn from founder and editor-in-chief of The up liking the result in the long run,” he the innovators of tomorrow, but we don’t Banks could, in a new sense of the term, Innovator, would be the “blurring lines” said. Part of the genius of Innotribe is this trust China, how are we going to learn from become ‘databanks’; the individual (or between man and machine. “Will machines ability to address serious subjects with companies such as Tencent and Alibaba? other entity) holds her own identity augment us, or replace us; will machines humour. “The one thing that perhaps we That is the paradox.” data (in a bank), which in future can be know us better than we do ourselves; how could all agree on,” said Schenker, closing authenticated (by the bank) without should we handle the ethical issues that a lively, entertaining, and substantive Who’s driving? disclosure. This is the concept of self- the implementation of AI presents?” she discussion in which little was agreed, Wednesday began with ‘The future sovereign identity, which returns control asked. First up, Gerd Leonhard debated “is this. The future doesn’t have to be of money’. Discussing the process of of private data to its owner, thereby with Brad Templeton, chairman emeritus, dystopian. It’s up to us.” innovation, Tony Fish, Founder, AMF addressing a range of present-day issues. The Electronic Frontier Foundation. One The future depends on whether we Ventures, contrasted the “approval” Young moved on from her account of played the ‘humanist’, the optimist; the Technology may be bringing us the environment in which banks operate, that (blockchain-based) technology to other played the ‘technologist’, but in future, but it’s also bringing a range with the “forgiveness” environment announce that the future is already here. the course of a fascinating hour, it wasn’t of ethical issues, moral questions, use technology to dehumanise, or inhabited by non-bank innovators. “We She cited a number of examples – including always clear which was which. “The future challenges to our humanity. Nowhere have to seek approval, so we lag behind; the Alberta Credentials Ecosystem depends on whether we use technology is this more evident than in the field of to rehumanise. others can power ahead,” said Fish. and CULedger – where self-sovereign to dehumanise, or to rehumanise,” said artificial intelligence (AI), as reflected This was not unequivocally accepted by identity systems have already gone into Leonard. in Tuesday morning’s Discover Stage Gerd Leonhard, The Futures Agency other panel members, who also noted
58 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 59 Payments innovation at the It’s better to Hackathon be proactive than to play the ostrich.
Jean-Pierre Mustier, UniCredit
the power of inertia. “In the US, cash still Innotribe was not the only platform for simple act of logging in hasn’t kept pace has a huge impact,” said Scarlett Sieber, discussion of the challenges of innovation with fintech innovation – we’re back to chief strategy and innovation officer, CCG for banks, non-banks and regulators talking about identity management here. Catalyst, citing a recent Federal Reserve on Wednesday. On the plenary stage, And in ‘Data for the people and people for Bank of San Francisco survey: 34% of UniCredit CEO Jean-Pierre Mustier the data’, Andreas Weigend, author and ex- transactions by under-25s in the US are acknowledged that customers are Amazon chief scientist, posed a question still cash-based. “I don’t see cash going benefitting from the new ideas being that unambiguously took us back to away any time soon,” said Sieber. brought to the banking sector by fintechs, Monday: can I bring my data as well as my and called on banks to capitalise through money to the bank? Opportunity, anybody? Perhaps the medium – the cash, the strategic partnerships with innovators. It may be worth making a note of the term crypto-currency, even the state-issued “It’s a positive ecosystem,” he said. “It’s ‘identity custodian’. digital coin – isn’t the message after all. better to be proactive than to play the Leda Glyptis, CEO at 11FS Foundry, said, ostrich.” Mustier agreed with the Future of Finally, where else at Sibos than at the This year’s Innotribe achieved a distributed competing “to craft API mashup solutions “What used to be the regulatory layer Money panellists that the pace of change Innotribe Close, could you find Captain Kirk, architecture all of its own. There was the to future industry challenges relating to – we’re told, and then we do, what is also posed significant challenges for Obi-Wan Kenobi, ‘Provoke’ author David Innotribe stage that took attendees on a security, identity and payments”. permitted – has now become an intensely regulators, noting the need for consensus Birch, Breaking Banks founder Brett King, deep journey to the future of finance and moral layer, about access, permission, of the ethical use of data and a post-PSD2 Sarah Connor and the Cyberdyne Systems technology, situated at the heart of a two- Competing, in fact, to have an idea, to fungibility. We’re not sure anyone is levelling of the playing field between banks Model 101 Terminator? It was, in short, a level Discover Zone packed with stands for refine it, and to bring it to a point at which driving that conversation. Change is and non-banks in sharing data. spectacular run-through of all the possible fintechs, banks’ innovation labs and other it could be presented on the Innotribe coming from a million directions.” Banks futures that the human imagination, via innovators. There was the Discover Stage Stage on Thursday. All from a Monday should at least recognise the need for Over to you sci-fi, has offered to us. “It’s up to you what that bridged that future to the present by morning start. Five teams, five ideas, one moral leadership in the context of tech- Through Innotribe’s Wednesday agenda, future we get,” said King, closing with what showcasing innovation that’s happening winner: Optipay, a cross-border payments driven change. “We should get faster, presenters and delegates spoke about had in fact been the theme of the week. today, with its own programme of speakers currency-optimisation mechanism. the regulators and legislators should get tokenisation, cryptocurrencies, AI and “It’s all up to you.” n and panels, and there, just beyond, was Optipay’s Josephine Windsor-Lewis, Form faster, because we don’t want what is trust. ‘Contrarian arguments: payments the Sibos Developer Park, which hosted 3, said afterwards, “The Hackathon was the most fundamental component of our is just a killer app for identity’ gave the teams competing in the 2019 Sibos an amazing experience. It was so much social infrastructure to be determined us Innotribe’s first formally scheduled Hackathon. fun collaborating with so many different by accident, which is largely what is argument – and yes, it delivered a full, developers from different companies. happening now,” Glyptis continued. Back frank and fascinating exchange of views. Five teams of developers, drawn from Bringing together all our different ideas on Monday, Thibeau had forecast the On Thursday, in ‘Privacy – fintech vs companies across the world, representing a made for great innovation.” appointment of the first chief identity consumer login’, Eric Sachs, partner broad cross-section of the financial services officer; perhaps the chief moral officer director of PM for Identity, Microsoft, sector from old to new, big to small, isn’t far behind. discussed the awkward truth that the
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Sibos 2020 Boston 5-8 Oct 2020 Building for the long term
Wrapping up Sibos 2019, the Closing Strong customer Plenary session took in the key themes of the week by bringing together the relationships will rely application of innovative technology and the nurturing of trust-based relationships. on innovation, trust Guest speakers encouraged delegates to think about how service providers across and sustainability. the finance sector can better serve their users, thereby earning the opportunity to grow their business over the longer term.
First, Cate Kemp, SWIFT’s head of UK, Ireland and Nordics, kicked off proceedings with a video review of the week’s highlights, observing, “It was never more true that the future is incredibly uncertain. But what we have learned together this week is that it is going to be truly exciting, with innovation at the heart of it.”
Co-host John Ellington, SWIFT’s deputy chair, underlined the importance of new tools and capabilities, but reminded us about the ends as well as the means. “It is not just about technology; it is very much about people too,” he said.
Sibos 2019: Closing Plenary – Thomas Kurian, CEO of Google Google Cloud CEO Thomas Kurian Cloud, then offered his insights into
62 Sibos Issues 2019 Wrap-up edition Sibos Issues 2019 Wrap-up edition 63 Every time Trust is you make what enables something us to take more the risks convenient, that fuel you make it innovation.
Rachel Botsman, more useful. Saïd Business School
Thomas Kurian, Google Cloud the development of cloud services, Cloud platforms offer financial institutions sophisticated tools to protect against fraud customers and regulators and evolve the emphasising their role in empowering the capacity to manage tasks that require and other malicious behaviour. There are technology to solve problems like this.” users of financial services. With the considerable data processing power, such also concerns from customers that over- digitisation of financial products, he as regulatory reporting, risk management reliance on suppliers within an ecosystem, Contextualising trust suggested, the evolution of technology and accounting. Interaction between including cloud providers, could result in Fellow guest speaker Rachel Botsman, has never been more integral to the value cloud providers, peers and counterparties ‘locked-in’ relationships. author of ‘Who Can You Trust?’ and trust that banks and financial institutions is facilitated by APIs, which provide the fellow at Oxford University’s Saïd Business provide to customers. connecting layer of a new collaboration- Kurian acknowledged that regulators School, built upon Kurian’s comments centric ecosystem. also worry about concentration risk, around communication between banks “It really changes the way that financial as cloud becomes the primary model and customers by focusing on the concept institutions can think about creating Open banking environments, in which for technology use among financial of trust. products, pricing them, managing risk competition is driven by API-based institutions. “The more open cloud can associated with them, distributing them integration between established banks be, the easier the adoption, because “We often talk about trust in generalised and reaching customers to deliver and new start-ups, have been driven in people have low risk using cloud-provided ways, i.e. ‘I don’t trust this person, I don’t experience in a fundamentally new way,” some markets by regulation. But they are technology,” he said. “We have invented trust this company’, but it’s not a helpful he said. increasingly seen as fuelling innovation and something that we have brought to market way to talk or think about trust,” she differentiation among market participants that lets a customer build a workload observed. “If I said, ‘Do you trust that Uber Enhanced experiences themselves. once, they can run it without change in will get you from A to B?’, many of you As firms engage with digital tools to their data centre, they can move it to would have clapped. If I said, ‘Do you trust enhance the experiences they deliver, “We see this ecosystem as empowering the Google or any other cloud provider, and that Uber treats its drivers fairly?’, you may new risks are emerging, Kurian noted, consumer,” said Kurian. “It allows consumers they can manage it in a consistent way.” have given me a different answer.” such as cybercrime, which require further to access their financial information from technological solutions to be developed. their devices, whether from one or different Opening up in this way further broadens Botsman’s point, that trust is highly financial institutions. Every time you make the appeal of cloud for financial service subjective and contextual, led on to the “There has been anxiety about data something more convenient, you make it providers, as they can train staff on question of how to build more trust, or more security, locality of data, regulatory risk, more useful for them. Similarly, we see one technology rather than different accurately, how to be given more trust. etc, but as cloud companies have invested many financial institutions now taking their technologies from each provider. in data centres and software capabilities to core systems and exposing things not just “When we ask someone to take a risk, to protect data, and to build very advanced to consumers, but also from one financial “It gives them choice and most importantly try something new or to do something cybersecurity capabilities, financial institution to another.” lowers risk because you manage all these differently, this is a ‘trust leap’,” she said. institutions increasingly look at cloud as environments in a single, consistent way,” “Whenever you ask someone to try a new a new platform to deliver products in new Greater convenience and access must, Kurian added. “For us as a technology product, service, or system you are asking ways,” he said. Kurian argued, be accompanied by more participant it’s important that we listen to them to take a trust leap.”
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Tailoring finance to suit customers is targets. The significance of this is reflected not only about the delivery of products, in the extensive burning of the Amazon but also the products themselves. The rainforest by farmers preparing land for green bond industry, for example, has commodities from beef to soya, at a rate grown exponentially over the last two of 80% higher than the same period last years. Last year, US$182 billion of green year. bonds were issued, according to Nigel Beck, group head of environmental and “This has been picked up by consumers,” Yawar Shah, SWIFT Javier Pérez-Tasso, SWIFT social risk and finance at Standard Bank, he said. “Consumers want to make sure during his Spotlight presentation, ‘What the products that they use are ethical and does the burning Amazon have to do with sustainable. They want to make sure the sustainable trade finance?’ steak they eat didn’t result in the de- forestation in the Amazon. This brings into “That’s 77% more than two years prior,” sharp focus the sustainable trade finance.” he said, drawing further optimism from the fact that US$120 billion of green bonds Multinational companies are having to had already been issued in the first half of respond to consumers, from transparency 2019, on grounds that activity is typically in their supply chains to using drone stronger in the second half. technology to assess any adverse impact on biodiversity, but they will need the This appetite, he argued, is indicative of a support and expertise of their financial wider trend for social bonds, sustainable partners. “Financial institutions are in Cate Kemp, SWIFT John Ellington, SWIFT derivatives, and sustainable trade finance, the position to provide sustainable trade in which incentives are offered along the finance and sustainable supply chain supply chain for meeting sustainability finance,” Beck confirmed.
While some trust leaps can seem quite little trust is required, but trust enables will ultimately increase trust in finance. small, such as asking customers to switch people to place faith in systems despite Leaders in the industry must therefore from paper to digital banking, Botsman not fully understanding them. “Trust is assess carefully who they are giving their noted that others can be intimidating, with what enables us to take the risks that fuel trust to, and also ask if they are behaving firms often underestimating the leap they innovation, which enable society to move in a way that is really trustworthy. are asking the customer to take. While the forward,” she said. combination of finance and technology “Every time we go through that process, has been demanding leaps for some time, Botsman then deconstructed a commonly every time you ask those two questions, such as when people first used an ATM repeated statement in finance and we are in our own small way taking care of machine or credit card, “People are being regulatory circles – “We will build more society’s most precious yet fragile asset: asked to leap faster and higher than ever trust by becoming more transparent” – by trust,” she said. before, and many products and services fail explaining that transparency removes the because people are not ready to take the need for trust. As such, secrecy is not the With the roles of trust and innovation trust leap.” enemy of trust, deception is. “However, explored so thoroughly, all that remained transparency does very little to treat the was for SWIFT chairman Yawar Shah to Whenever a business asks for a customer’s root cause of deception,” she added. warmly thank the closing speakers and for trust, Botsman asserted, it is essentially SWIFT CEO Javier Pérez-Tasso to confirm dealing with two steps; the known, and the Instead, Botsman proposed that London’s status – with 11,572 participants unknown. “The space between these two trustworthiness can be assessed via a two- – as the biggest Sibos ever, before asking things is what we call risk. [It] is made up part formula, made up of capability traits, the London Contemporary Voices choir to of the likelihood of something happening which relate to how a person does things, simultaneously raise the roof and lower
and the severity of that thing happening,” and character traits, which explain why a the curtain. n she said. “In any situation where we have person does things. “The most important a choice, we can either reduce the risk of trait, particularly in the context of financial the situation, or we can try to increase services, where we have seen trust break Consumers want to make sure someone’s trust.” down, is the trait of integrity,” she said. the steak they eat didn’t result in Trust is what enables someone to move Increasing integrity from the known to the unknown, Botsman Defining integrity as being honest about argued, acting as the social glue between the alignment of intentions and motives de-forestation. the two points. If there is very little risk, with another person, Botsman said that Nigel Beck, Standard Bank or if the outcome is known, then very increasing integrity, not transparency,
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