New disruptive market entrants don’t have to service older legacy infrastructures either, necessarily conform to the same regulations, or provide many of the infrastructure ‘rails’ that they use for their services But it is undeniable that these newcomers are more nimble than the banking behemoths and offer an interesting alternative. The opposing views of start-up innovators V operations-focused technologists in the respective forums will be an interesting scenario to witness.
“Digital banking and the digital agenda is very important,” explained Dan Roberts, head of trade and working capital for Barclays, at the bank’s recent London press conference. “Tech companies have been able to bring out services quicker than banks recently, but this is changing. It is acting as another ‘call to action’ for banks in terms of responding to innovation [and not from a regulatory driver either].”
“Personally, I am renewing my mortgage at the moment and I’m tracking it all on my mobile; something I couldn’t have conceived of doing a few years ago,” added Roberts, as he envisaged future trade and working capital mobile launches such as a letter of credit (L/C) that you could track in a similar way in real-time.
The progress or otherwise of the Bank Payment Obligation (BPO) electronic trade finance effort between SWIFT and the International Chamber of Commerce (ICC), which have jointly developed the Uniform Rules (URBPO) for the trade finance electronic instrument that relies on the use of XML, will also be debated at Sibos, with Roberts admitting “the industry now needs to agree and get critical mass”. It could effectively give him his trackable L/C, but as he said at Barclays’ press conference corporates have got to want to do it too.
“Big data could also help give corporate customers better invoice and payment data in the future,” he speculated.
No Avoiding the Digital Agenda
As Carole Berndt, RBS’ global head of transaction services, said at her bank’s own pre-conference season get-together in London on 2 September, “change is happening and the digital agenda is prevalent because we’ve got people now who didn’t grow up with microfilm and faxes, but rather with mobiles and the web. Banks have to update systems to serve their needs.”
“Where appropriate, Sibos discussions can be expected around the benefit of shared services to deliver economies-of-scale savings in non-competitive areas like KYC compliance,” she added, leaving banks to focus on competitive areas. The single euro payments area (SEPA), Basel III and KYC screening obligations are all expected to be hot Sibos talking points as these new rules either come into place or move towards the implementation phrase – not to mention the changing collateral requirements. Expect some heated debates about who pays for what.
SEPA 2.0 will also hopefully outline how the European payments harmonisation project is going to remove the 19 different cross-border variations in its adoption of the XML ISO 20022 messaging format that users have been left with. The promised standardised payments environment still needs to be delivered and SEPA 2.0, due in 2016, is expected to deliver it.
The SEPA payments harmonisation initiative has been around for so long now, since its initiation in 2002, that it has in some ways been superseded by the dash for mobile, electronic e-invoicing and other newer payment innovations. Delegates might be tired of hearing about SEPA, but SEPA 2.0 is necessary if the envisaged cross-border European payments harmonisation is ever finally to be achieved on the 1 February 2016 revised date when the niche exemptions granted so far must end.
Non-euro countries such as the UK and Denmark officially join SEPA in 2016 too, although they’re actually moved ahead of time anyway to avoid any disruption to cross-border payments in Europe. Let’s just hope that SEPA 2.0 delivers the promised efficiency benefits for corporate end users.
Many banks around the world, large and small, continue to experience major security failures. Biometric systems such as pay-by-selfie, iris scanners and vein pattern authentication can help.
Despite all the automation and improvements that digital banking has the potential to achieve, customers and their needs still form the very core of the banking sector.
Banks might feel justified in victim blaming when fraud occurs, but it does little for customer confidence.
Politicians have united in urging the Reserve Bank of Australia to lend its backing to the digital currency by officially recognising it.