SIBOS – A final thought?
One week on, a final reflection on SIBOS.
I find after SIBOS one often needs to let the hubris fade a little before you can really glean any insight into what was really interesting and relevant from the four days.
One reflection from SIBOS this year was how far the dialogue had moved on in relation to fintec.
At SIBOS in Boston, fintech featured heavily, but not in the main sessions where regulation still dominated. This year fintech, and whether this was going to ‘disrupt’, ‘transform’ or was now considered ‘BAU’ was interspersed with the more traditional sessions.
When asked to summarise SIBOS 2015 I would highlight the following themes which I think will drive much of the agenda in 2016:
Balancing the ‘millennial’ debate
Discussions around ‘millennials’ and their likes, dislikes, wants and needs were a daily occurrence at this year’s SIBOS. It is clear that this generations preferences are shaping the future of the financial services sector and challenging many traditionally held views on the roles of banking and financial services.
However, speaking to several clients it was clear that the mood in some areas was that the voice of the millennial generation was perhaps being disproportionately heard in many of the key debates. In fact, some felt this was drowning out some of the more serious debate around cybercrime and the systemic risks to the financial system this could pose. One only needs to look at what happened to Talk Talk last week to realise how real the cyber threat is.
In the middle of the maelstrom of technology and innovation, a very human challenge is the need for different generations to learn to listen and respect the views of others in the wider debate on the future of Financial Services.
Block-chain fatigue already?
Excitement and exasperation in equal measure, the mere mention of the term would split a room!
Although many recognised the potential benefits of the distributed ledger technology and its application to reconciliations and potentially trade, many felt the technology was still un-proven, with many big regulatory and trust hurdles to overcome. One concern I didn’t really hear being fully addressed yet was how block-chain would cope with a failure, where would the liquidity in the system come from and where would responsibility lie for resolution?
That said, it’s an exciting development for the industry and many of these concerns could be simple growing pains. Indeed just the other day Nasdaq announced their own block-chain platform. What I find really fascinating about the topic is that many block-chain enthusiasts already believe many of these issues are being addressed and if that really is the case, and adoption gains momentum, it is a technology that could genuinely disintermediate the banks, rendering their concerns far less relevant to the whole debate.
Customer – Client – Correspondent?
With the implications of conduct risk, the rise of co-opetition and general confusion as to whether fintec and challenger banks were friend or foe, it was clear that the landscape is a complex mosaic like never before.
Trust still needs to be established and when you add to this obligations such as senior manager regime and the demands of ring fencing in the UK market, it’s no surprise many of the bankers maybe a little cynical in the face of fintech enthusiasm and millennial ‘simplification’.
Although these macro themes were present in the majority of conference sessions, the banks continue to be fully aware of the need to focus on the fundamentals of providing liquidity, being safe, and striving to meet multi-jurisdiction regulatory obligations, where standards are still not aligned.
It’s an environment characterised by huge opportunity, but one challenged by geo-political threats, cyber-crime and on-going regulatory and prudential obligations. As one client nicely put it to me, for banks to really seize these opportunities they need to firstly “truly disrupt themselves”.
As ever, the only real conclusion is that of course some banks will rise to these challenges, and the successful ones are likely to be those that collaborate extensively across every area of their business. This includes working with clients (or customers!) much more closely, and having a less narrow definition of what a correspondent relationship really is.
The debate also needs to be less polarised. To be a successful business in Financial Services, we need to stop viewing this as a ‘fintech – challenger – bank’ type problem and it’s down to the Millennials, Gen Y and X and the Baby Boomers to work together to break down these siloed perspectives.
Otherwise, I’ve no doubt an innovation may truly disrupt the industry from a source that doesn’t even have its routes in Financial Services, thus rendering some of these artificial distinctions largely meaningless and irrelevant to the future of the industry.