Sibos: New Digital Economy Places Customer Needs in Focus

As Australia’s banking sector continues to deal with fallout from Royal Commission findings of misconduct, Sibos highlighted a newfound focus on customer needs in the digitalisation push.

It was a quieter day on Thursday (25 October), the final day of Sibos in Sydney. Official figures put the number of delegates attending the four-day Sydney event – bankers, and representatives of market infrastructures, service providers, fintechs, industry associations and regulators – at 7,000, slightly lower than other years particularly when the event is held in the northern hemisphere.

The week was largely upbeat, themed ‘Enabling the Digital Economy’ and with some delegates noting a more confident air than perhaps some past conferences as the industry urged itself to focus on opportunities to do things better. The event was last held in Sydney in 2006. Next year, Sibos is scheduled to be held in London.

In keeping with this year’s theme, the ongoing rise of fintech was shown to be very strong, with local Australian fintech startups given an opportunity to showcase their offerings alongside other international innovators and service providers, and contribute their voice in a number of the panels and discussions. These included various sessions dealing with open banking, a well represented topic reflecting Australia’s regulatory driven plans to open access to consumer banking data to third parties starting from 1 July 2019, following the UK’s lead.

Under the Australian regime, accredited third parties will initially have the ability to ingest data such as account balances on behalf of consenting consumers from each of the major banks in order to aggregate information, provide users with more holistic views of their finances and create new services based on this information, for example. Open access to mortgage data will follow suit from 1 February 2020. Smaller banks will have an extra 12 months to adjust to each of the two phases. Other markets like Hong Kong will no doubt be watching Australia’s implementation of this regime closely.

Blockchain, or more accurately ‘distributed ledger technology’ (DLT), continued to find its way into Sibos this year, though the hype of previous years has subsided and discussions are now are more nuanced and equivocal. ASX (Australian Securities Exchange) had one of the largest and most prominent booths in the main exhibition hall and provided daily briefings on how its post-CHESS settlement and clearing system is intended to work from 2021, using Digital Asset’s technology and enterprise smart contract language DAML.

ASX also held a breakfast briefing offsite during the week, targeting both locals and its international peers, featuring Digital Asset CEO Blythe Masters. In contrast to ASX’s bullishness on DLT for settlement and clearing of equities, other infrastructures still seem have a wait-and-see approach to considering the technology’s application to settling and clearing in other, less integrated markets. This is despite a DTCC-commissioned report released just prior to Sibos announcing Accenture and R3’s findings that DLT is capable of processing transaction volumes as large as typical peak US rates over a five hour period.

In contrast, enthusiasm for all things artificial intelligence (AI) still seems to be on the rise and was noticeably widespread across the conference. Many exhibitors and speakers did their best to weave benefits of data, analytics, machine learning and AI into most topics, from compliance and fraud detection to customer interfaces and predictive analysis; however, again, this was nuanced with vendors and specialists in this area more often than not speaking of a need for ‘supervised’ AI or favouring terms like ‘AI-augmented’ analysis and investigation as an acknowledgement of the limitations of today’s technology and potential organisational risks that could arise from treating AI as a silver bullet.

No conference would be a Sibos conference without a discussion of payments. Earlier in the year, Australia launched its AUD 1 billion (USD 706 million) New Payments Platform (NPP), which provided a useful backdrop for many panel conversations and roundtables. The NPP provides real time payments and is jointly owned by the major banks and the RBA (Reserve Bank of Australia). Take up of the platform has been slower than expected.

For many national payment systems, the challenge across the industry is how to innovate and provide more value to end users, whilst at the same time acknowledging the commercial reality that payments between banks are often expected to be provided as a free service. Meanwhile, retail users are increasingly using a growing number of competing ‘techfin’ platforms which, often unencumbered by legacy systems and the traditional regulatory oversight that banks face, are driving further changes in customer expectations.

Other highlights of the conference included a Women of the World (WOW) networking event, and others discussions on diversity and inclusion hosted by the SWIFT Institute, the future of work in the context of the fourth industrial revolution, anti-money laundering and fraud prevention, data management and systems, and the rise of competition including from challenger banks.

Significantly, Sibos comes as at a time in the Australian market when local retail banks are dealing with ongoing fallout from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which is due to publish its findings in February 2019.

ANZ CEO Shayne Elliott, who featured in Sibos’ opening plenary cautioned that ‘turning up and being a bank is no longer a successful model’. In a world of disruption and a regulatory push to open banking, he said, consumer banks especially need to look increasingly at newer technologies and business partnerships centred on enhancing customer value and experience, one of the key failings of the Australian banks highlighted by Hayne.

Continuing the theme, the conference closed with an address by Professor Genevieve Bell, Senior Fellow at Intel Corporation, cultural anthropologist and technologist, urging delegates to put human needs back at the centre of technological advancement in the face of the fourth industrial revolution.

In her view, human and human structures are needed at the centre of this transformation in order to critically examine and manage emerging technological systems and business models, and ultimately ensure they support people’s needs. Commissioner Hayne would likely approve.

Matthew Chan GAICD is specialist in public policy. He advises boards and management in Asia Pacific on financial services strategy and operations. Matthew has worked as a practitioner in international capital markets, financial technology, FMCG and government policy, and is a regular contributor to Regulation Asia.

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