Sibos Recap #1

Sep 26th, 2013 | Posted by
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So that was the week that was Sibos. Dan has already shared some of our thoughts from Sibos, but I wanted to add some additional insights and flavour. I’m going to split the posts in two. The second is a more informal view of the week. This post is more around content, and is based on what struck me as interesting, rather than what was necessarily spoken about most or was most profound. Those of you who know Sibos well will know the challenges of getting good dialogue in the sessions, and so it’s as often as what is not said that is interesting.

Innovation

4 years ago every conversation was around innovation. This year, the “I” word didn’t come up once in any conversation I had. That’s not to say banks no longer want to innovate, but that they have a very clear view of what they need to achieve, and don’t feel they need to “dress” it up. Setting up an innovation team (again) costs money and will be slow to happen, but reducing “cost to serve” by 10% or improving STP by 5% makes a material difference to the bank, and will get funded. As a result, whilst there is innovation taking place, it’s very much rooted in the process and ways of working, rather than being called out separately.  Many of the activities we’re seeing continue to focus on the customer client interface – and rightly so.

It may of course be that all the conversations around innovation took place in the Innotribe discussions – but that in some ways, that would be worse, as it would mean it was confined to its own little cocoon. I think the answer lies in what counts as innovation and to whom. There is a ripple backwards from those at the leading edge of things. For example, the closing plenary this year talked about the impact of mobile, but in effect replicated the Innotribe discussions of 2009 (as several in the audience were quick to point out in tweets). Yet the Innotribe discussion of 2013 replicated conversations we have been having around BitCoin and virtual currencies for over 18 months now. I guess my take away is that innovation is something rarely that you find at conferences, but the conference agendas act as a useful barometer to see how far that bow wave of innovation has travelled into the mainstream.

Big data, little progress

Big data is another recurring theme over the last few years, but that many believe that little is actually happening. Indeed, the title above is a soundbite from one of the sessions. I think it’s a classic hype cycle, with many firmly in the trough of disillusionment. But we are, I believe, seeing a number of smaller, successful projects that are having significant impacts. Many discussions around big data focus on combining the vast variety of data. Whilst not an area I follow closely, the examples I’m hearing are focusing on one of the other attributes – velocity. Being able to process data in real-time to influence outcomes is where progress in particular is being seen. It may not be sexy, but big data projects to provide teller prompts to guide the conversation is having a big impact in some banks. Whilst there was much talk about real-time at the conference, it was focused on real-time payments. In reality, real-time is a much broader topic, and will have far more profound impacts than many are planning for.

Regulation

It was the 5th anniversary of Lehman’s whilst we were at Sibos. Those of us who were at Sibos in Vienna will remember the events unfolding in front of us, and the palpable tension in the air, with many of us thinking Is This It? Roll 5 years forward, and the number of conversations about it were…well, zilch. A few mentions here and there, but pretty much it.

What was talked about was the impact of the regulation that has happened as a result of it. We would expect much discussion about how to respond to the avalanche of new requirements, but two themes really stood out. Firstly, there is no co-ordination. Banks are feeling stretched by the regulation, and there seems to be a clear feeling that neither the banks nor the regulators have a clear view of the big picture. Regulators I can see, but the comments from banks, about banks surprised me. I don’t disagree, but then why aren’t they doing something about it?

Secondly, that the regulation (or perhaps more accurately, regulators) is facing the wrong direction. Much of the regulation is about fixing the problems we have so we don’t have a recurrence of what just happened. But most agree that something else will happen, and just as we failed to foresee the circumstances that caused the last crisis, that there is little in place to identify what else could be the trigger for the next one.

Real-time

As alluded to in the big data section, real-time payments were all over the agenda. Australia is currently going through a large programme to implement such a system, and in the week before Sibos, the US Federal Reserve issued a consultation about the future of payments in the US. The preferred outcome of the paper was obvious – the creation of a real-time payments system.

I’ve just finished a research project on real-time payments, and what is very clear is…well, it’s not very clear. Some of the systems held up as real-time, simply aren’t real-time, and even which bits need to be real-time need to be real-time for whom is not clear. As such, whilst the sessions were good, it’s clear that few are starting from the same position of understanding, resulting in some very different views of who needs to do what. Needless to say, I intend to write on this topic in the near future.