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Recharging Global Finance: Five Major Takeaways From Sibos 2021

Sibos 2021 gathered many of the financial services sector’s leading thinkers and doers to discuss major and emerging issues facing the global community of finance and technology professionals.

Building upon last year’s all-digital conference, Sibos 2021 hosted a series of virtual panels and presentations from Oct. 11 to 14 that explored this year’s theme: recharging global finance. A diverse group of finance and technology experts – including chief executives and influencers from around the world – contemplated how to reassess strategies and accelerate change after unprecedented disruption from the COVID-19 pandemic.

Nevertheless, the ambitious program still provided a platform for addressing many of today’s most pressing issues and offering ideas for how the financial ecosystem can reemerge stronger than before. Here are five major takeaways from this year’s conference.

Author

Michael Walsh

Senior Writer, Global Content Strategy

Takeaway 1

The global economy is vulnerable to climate crisis

Noel Quinn, group chief executive of HSBC, delivered the opening keynote. He said COVID-19 was a massive wakeup call to the fragility of the global economy to a natural event.

“We’re very fortunate in an extremely difficult set up circumstances that there is a road out of that natural event. It’s called the vaccines. There may not be a return path out of a natural climate event,” Quinn said. “We have to wake up to the fact that sustainability … has to take a more prominent role going forward than maybe it has done in the past.”

Quinn explained that HSBC has been around for 156 years – seeing the world’s industrial landscape change many times over. He believes that kind of revolution will occur again in the next ten to fifteen years. He said entire industries will need to replatform their base technologies and transform their business models (e.g., carbon-heavy businesses becoming carbon-neutral), which will require significant investment.

“So, I look at this not through the risk lens first, but through the opportunity lens,” he said. “This is an opportunity for us as an institution – with our footprint in the emerging markets – that has to go through so much change, to be part of that change and to lead that change.”

To live up to climate commitments, Quinn said HSBC is dedicated to funding its clients transition from their current business models to more sustainable ones – rather than withdraw from fossil fuels and similar industries. But if a client is reluctant to change, he said, one must reserve the right to move away from that client.

“We’re not too late, but we have a lot of work to do and I’m optimistic that the world is rallying behind that objective.”
Noel Quinn, Group Chief Executive, HSBC
Takeaway 2

Banks need to rethink what it means to be a bank

During a “Meets the Experts” panel later on Monday, Siam Commercial Bank and Publicis Sapient unveiled SCB Tech X, a platform-as-a-service provider that will serve SCB and other banks in the region.

Trirat Suwanprateeb, the chief executive officer of SCB Tech X, explained that the Thai bank’s previous attempts at digital business transformation involved adding modern technological capabilities into the current banking structure – but didn’t change the paradigm or take enough risks.

“It’s required to rethink, ‘What does it mean to be a bank and how should we compete in the new world?’” he said.

Suwanprateeb said SCB Tech X will deliver innovative digital technologies and capabilities to create value and develop new businesses – meeting the needs of consumers and competing globally. They want this joint venture to be among Asia’s best fintech platform players, helping to bring the next generation of banking services in Southeast Asia.

Jonathan Sharp, the chief technology officer of SCB Tech X, said they are modernizing the core banking architecture of their digital banking services, deploying platforms directly in the cloud, investing in accelerators and developing new products quickly.

“We’ll be able to offer our food ordering and delivery services, our online travel agency services, our blockchain-based loyalty services for that next wave of SCBX customers who want to capture their own market opportunities in the region,” Sharp said. “In that sense, we really are transforming into much more than just another fintech or another system integrator for that matter. We see Tech X as the region’s fastest moving platform-as-a-service company.”

Dave Murphy, the head of financial services for Publicis Sapient, said incumbent banks can learn from SCB’s story. For instance, SCB’s decision to create a food-delivery app represents its choice to rethink how they engage with their customers.

“It is very much looking to build an ecosystem of services around their customers through which they will most likely surface banking products as and when customers need them to live their lives.”
Dave Murphy, Financial Services Lead, Publicis Sapient
Takeaway 3

Our futures are bound together in a digital money world

Jane Fraser, the chief executive officer of Citi, called for the global financial community to confront the complexities the new world of digital money in two crucial ways: move with speed and act in partnership.

During her “View from the Top” session on Tuesday, day two of Sibos, she said it’s imperative that the financial sector doesn’t lose the ability to innovate with urgency as we emerge from the pandemic. She argued this is one reason the industry must transition to the ISO 20022 standards for payments data globally.

“I know that for some of us this transition isn’t going to be easy. It represents a huge investment of time and resources,” she said. “But in this digital world, SWIFT has to start delivering it at an even faster pace, or we’re going to risk becoming obsolete.”

Fraser said the financial community needs to keep the gates open to fintechs and big tech, in part because financial institutions need to engage with customers where they conduct business in an age of digital platforms.

“We are all in this together. Now there are many areas where we go head-to-head. This isn’t one of them,” she said. “Our collaboration and cooperation is precious, and we’re all equal partners here regardless of the size of our institution or the countries in which we operate.”

According to Fraser, the probable emergence of central bank digital currencies and cryptocurrencies as a regular method of payment highlight the importance for acting in partnership.

Rather than having individual banks develop their own cryptocurrencies, she suggested that the regulated sector work with central banks to develop innovative models for digital currencies. That would mean central banks, commercial banks, fintechs, big techs and crypto companies that embrace regulation working together.

“In this pivotal moment in the history of money, we need to lift our eyes up from the level of our individual firms to see that our future is bound with our community and in building the next generation of digital payment systems, there’s ample room for everyone’s contributions.”
Jane Fraser, CEO, Citi
Takeaway 4

Incumbents can be leaders in DLT

Distributed ledger technology (DLT) and potential disintermediation were recurring topics at Sibos 2021. During a “View from the Top” session on Wednesday, day three of Sibos, an interviewer posed the somewhat provocative question of whether this technology might one day render central securities depositories obsolete.

He asked Lieve Mostrey, chief executive officer of Euroclear, whether she sees DLT as a threat to her business and how she is embracing it.

An engineer by training, Mostrey expressed deep interest in the topic and hope that DLT could connect everyone to the same ledger – without limitations or the need for reconciliation. This might usher in a new era of transparency and efficiency. While appreciating this future potential, she sees the transition as a major challenge.

“Is it attractive for an insurer to go on a digital ledger if there are very few investors connected to it? And what will drive an investor to connect to a new environment if there are very few insurers on it?” she asked.

Mostrey said incumbents like Euroclear see this as an opportunity to be amongst early adopters who can facilitate this transition, which will require interoperability between the old and new worlds.

“We believe that it is for incumbents like ourselves who embrace the new environment and the new possibilities, that we can really be the facilitator and allow different market actors to evolve and to migrate and invest in their own base and then take the benefits gradually as a total ecosystem.”
Lieve Mostrey, CEO, Euroclear
Takeaway 5

Digital is driving financial inclusion

The Indian government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) program, launched in 2014, made affordable bank accounts available to almost every citizen.

Union Bank of India CEO Rajkiran Rai explored what made it possible for the country to expand financial services to millions of unbanked people, during a “View from the Top” session on Thursday, the fourth and final day of Sibos.

“But for technology, we would not have done it,” Rai said. “Today when we talk of PMJDY, it is one of the biggest financial innovations and changes which helped the digitization and the data creation in the system.”

Rai explained that the 43 crore PMJDY accounts in the system were initially considered a burden on the banks, but that their balance is actually 1.45 lakh crore and the average balance per account is normal, upwards of 3,000 rupees. He said digital technology helped banks expand financial inclusion to the rural areas of the country.

“So, it helped to mobilize a lot of low-cost resources for the banks. It is no more a burden,” Rai said.

The government’s JAM trinity, which linked each PMJDY customer’s account, mobile number and unique identification number, helped immensely when the COVID-19 pandemic hit, according to Rai. He said when the government decided to credit lower-income people the transfer happened almost immediately – within minutes.

“It happened in minutes actually, because we had already built a system,” he said. “Transferring money to the ultimate beneficiary was a big, big issue earlier because there are a lot of losses in between. Now it is the press of a button, so we can reach out to the last person in a village within two minutes.”

There were many more thoughtful moments at Sibos 2021. Speakers from across the financial ecosystem delivered sharp insights on digital acceleration, managing risk, transformative technology and banking on change. The common thread throughout it all was how the financial services community can recharge global finance – a tall order, but vitally important.

SWIFT, the conference’s organizers, initially planned to host Sibos 2021 in Singapore but opted to go virtual to protect public health. But they are optimistic that next year’s conference will return to in-person in Amsterdam.

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