Review of days 1, 2 and 3 at SIBOS
Day One: Is it all about blockchain?
When blockchain first came to everyone’s attention at SIBOS three years ago, it was seen as a curiosity, primarily focused around Bitcoin. Then, there were many sceptics who cited security concerns and a general doubt that the technology could scale.
Fast forward to SIBOS 2015 and it is clear blockchain is not only here to stay, but is now seen as integral to the banking ecosystem.
One of the defining features of Day One at SIBOS was the change in conversation around blockchain, an acceptance of its relevance to payments, but also an understanding of its application in reconciliations and core operations. Blockchain is forcing banks to completely re-think their value chains, and is also opening up opportunities for collaboration across fintech, banks, new entrants and the regulators. Banks now understand they have lost the monopoly on transaction data, but they remain unclear on where the value now sits for their business models.
Part of the issue for the banks is the tendency to retro-fit blockchain into existing infrastructure and business models. In addition, blockchain is perceived as purely a competitive and technological issue. The debate today focused on the cultural and collaborative challenges that adopting blockchain asks of these ‘old’ models.
Day Two: The Millennials
Yesterday’s blog featured heavily on blockchain and its implications for Financial Services. In conversations with clients today, it’s clear that there’s still a lot of scepticism as to whether it will really be a disruptive or transformational development.
What is clear however, is that the majority of people I’ve spoken to have serious concerns around the distributed ledger (and what this really means!) as well as liquidity in a blockchain environment (if it goes wrong, what safety net is there?).
Today at SIBOS the focus was on the ‘Millennials’ (that’s everyone who’s 30 years old and under) and what they will bring to the industry. I attended a fascinating session of Innotribe (the innovation track of SIBOS), where we explored how this group is fundamentally changing the nature of banking relationships, through their use of social media and ready engagement with Fintech.
Many of the innovations we discussed, and services offered, didn’t feature a bank at all!
One of the biggest shifts away from the current focus on Gen X and Y groups, is the requirement for banks to provide ‘easy in – easy out’. Essentially, this means creating finance that can be accessed at a time that suits the individual, for a duration they dictate, via the medium of their choice.
It won’t surprise anyone to hear that the days of long term life policies and tie-in savings products appear numbered. As Millennials have an ever increasing influence on the Transaction Banking space, it’s clear that these business models and propositions will need to adapt rapidly to accommodate the increasing demand for flexibility and choice.
Consider that all this is happening against a background where the war on talent persists, regulatory pressures remain, and traditional banks focus on being seen as ‘safe havens’ by their customers and clients – and you can begin to appreciate the huge challenges the market faces.
In the face of all this, I do wonder if we are in danger of losing sight of the value of the ‘human’ touch in some of these relationships.
Day Three: The threats to the banking system
After two days focusing on growth opportunities and transformation in the industry, with blockchain, Fintech and new entrants at the heart of the debate, Day Three featured discussion on how geo-political events and cyber-crime could threaten it all.
I was surprised by how little cyber-crime had featured over the first few days; however it is clear that the systemic threat of cyber-crime is greater than ever.
Our increasing dependence on technology, the expansion of unregulated Financial Services providers and the now globalised and inter-connected nature of relationships, have added further complexity.
A sobering scenario was presented in one of the plenary sessions of a financial system ‘Armageddon’, where sophisticated cyber terrorists could disrupt the network to such an extent that financial services activity grinds to a complete halt!
A timely reminder of the heavy burden of responsibility, through being resilient and safe, any firm involved in financial services owes to its customers and society.