By Jose Mendez
As Sibos draws to its conclusion, here are some final takeaways on an interesting year which saw fintech and technology make a star turn:
- Many consider the rise of fintech to be a reaction of the 2008 global economic crisis. This set the stage for fintech providers to come into the market and provide consumers with products and services that challenged convention. Since then, global dominance of the fintech space is an ongoing battle between China and the West. The winner will likely be the side that captures the hearts and minds of the middle class. China has a lot playing in its favour though, including the meteoric rise of the middle class which has helped the investment, development and subsequent adoption of fintech.
- The idea of technology replacing people in banks isn’t accurate in the world we live in today. Financial institutions and banks need to let staff know that technology is about empowering them – not putting them out of a job. This is especially important when it comes to areas like solving financial crimes, where banks require having people with the right skills who can use new technologies to analyse information adequately.
- Is a cyber 9/11 inevitable? The worst likely case for companies could involve becoming victims of several types of attack simultaneously, such as DDos and social media manipulation. This could lead to many customers at once withdrawing their money, creating a range of problems with cash flow and liquidity for banks and financial institutions. The reality is that cybercriminals have many incentives today to share information and communicate about how certain regulations, technology and tools could help them in launching an attack. The lack of communication and well-linked collaboration channels and networks also make it hard for criminals to get caught, as banks, law enforcement agencies and other institutions need to be joined up to protect themselves and often they are not.
- Global payments are going digital. There are two main drivers of this: firstly, we should highlight the customer experience, which demands a digital experience and the technologies to make this happen. As the theme of Sibos highlights this year, customers today live in a hyper-connected world and they want experiences that align to this. Secondly, we should highlight technology, which delivers the ability to meet customer expectations. Application Program Interfaces, or APIs, have been absolutely key in this regard, given that they provide a way to assemble processes into an ecosystem and pass that onto customer over a real-time, convenient and simple interface. The future is all about making extremely complex things easy and cost-effective.
- The concept of identification has always been a key element of financial services. For banks to manage customers’ money safely, they need to know who they are dealing with. This may sound simple but in reality it’s a complicated and costly affair. A recent study by Thomson Reuters shows that some financial institutions are still spending up to $500 million annually on ensuring Know-Your-Customer (KYC) compliance. This has driven many banks to de-risk, putting an end to their relationships with particular institutions, countries and regions. The emergence of new technologies such as blockchain have provided new opportunities for banks to re-engage with customers and correspondents who had previously been excluded as a result of de-risking.