‘Digital first’: Top takeaways from Sibos

I’ve been fortunate enough to attend Sibos in various locations over the years, from Toronto to Geneva and Singapore. However, it’s been special to have Sydney play host this year, and a real coup for the local economy and Australia’s financial services industry.

The overall theme this year has undoubtedly been technology and digital transformation, reinforcing the commentary that Sibos has become less about banking as we knew it as the digital age brings about real and exponential change to an industry that is still inherently traditional.

And five common topics at this year’s Sibos stood out.

1.    Digital first

The financial services industry is facing a watershed moment, as technology giants and fintechs make inroads on their traditional territory. Banks are faced with a mammoth task – to scale innovation and create new customer experiences that set them apart from their newly emerging competitors.

This tension has been apparent for some time, and big four leaders such as ANZ’s Shayne Elliott were this week open about the challenge the industry faces, and the need to shift quickly.

Indeed, that’s the key challenge for the big four – scaling, at speed.

The banks have a head start on the fintechs, in terms of budget and resource base, but can they turn the ship fast enough? Can they be sufficiently agile and creative to drive the innovation, battling legacy systems, outdated processes and ageing infrastructure? Yet a lot of the conversation was also around how the banks need to form strategic partnerships with fintechs to collaborate, harness their innovation, benefit from disruption and learn from it.

In my mind, it’s also about the accountability – innovation is not just the job for the CIO, the CTO and the CRO. A challenge of this scale needs wider accountability as it impacts and fundamentally transforms the traditional business model from the core.

2.    Data sharing and open banking

Open banking and its benefits and challenges have been widely debated this week at Sibos. There’s still an element of uncertainty around what it will look like once implemented from July 2019, and what the consumer uptake and reaction will be.

Not to mention the major work required by the big four to comply, and to create compelling customer value propositions to retain and grow their customer base, with fintechs hot on their tails hungry for market share.

There are various underlying and opposing pressures at play. For example, the regulatory push for competition; the corporate desire for stability; and the consumer need for data privacy.

The need to create a balance between these factions is paramount – driving tangible value for consumers with the advent of new personalised services and value propositions, backed by a secure and controlled framework.

Retail customers are only half of the challenge too – open banking will also impact corporate clients.

There was significant debate around what this offering will look like, suggesting the end state is still far from known.

3.    Distributed Ledger Technology (DLT)/Blockchain

Ever the buzzword, there has been hot debate this week around the use of distributed ledger technology (DLT) both in the form of digital currencies, and as an enabler of more efficient, faster and traceable payments, settlements, shares and contracts.

Coincidentally, Accenture this week launched two new blockchain solutions that will enable greater integration between blockchain platforms, solving a critical challenge for broad adoption of the technology. This is a positive move that will help accelerate adoption and gain traction.

The Bank of Canada, Payments Canada, TMX Group, Accenture and R3 also announced an update on Project Jasper, publishing a new report on the feasibility of the clearing and settlement of securities using DLT.

RBA assistant governor Michelle Bullock told the Sibos audience that hopes of an Australian digital dollar are fading, but didn’t rule out the potential of blockchain in the wider banking ecosystem.

It appears rapid innovations in the digital payments space may negate the case for the creation of a digital dollar issued by the central bank, with the banks investing in new payment infrastructure globally and with a regulatory push, such as Australia’s NPP (New Payments Platform).

4.    The Future of Work

A big topic this week as artificial technology (AI), robotics and automation increasingly impact the financial services workforce.  Many financial organisations are openly apprehensive about harnessing the power of AI in the workplace, fearing that this will mean job losses and loss of morale.

My colleague Andrew Woolf, who runs our global talent and organisation practice within financial services, took part in several events including a panel debate and a podcast on the emerging seismic shifts in how people live and work – and his perspective is actually that when AI is used for augmentation (rather than automation) it is likely to create jobs, not destroy them.  

The catch, though, is that many of those jobs will be radically different from today, so investment in workforce transformation is both vital and urgent.

5.    The Weakest Link in Cyber Security

Cyber security was also a prominent topic, both in our booth and in the various keynotes and roundtables, including debate around a major, often overlooked cyber security vulnerability – staff and culture.

Other senior banking executives agreed, stating that people are the strongest, and often weakest link.

It was also suggested that whilst deep technical skills are key in the fight against cyber crime, people with understanding of human behaviour and motivations help close the gap.

Kieran White, Accenture Senior Manager, Financial Services, contributed to this article.

The views expressed are those of the author and do not necessarily reflect those of the Westpac Group.