Sibos Issues I Sibos 2018 Sydney I 22-25 October
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WRAP-UP EDITION Sibos Issues I Sibos 2018 Sydney I 22-25 October Expect the Catching up with A problem Meshing new Asia’s great unexpected the customer shared … with old leap forward page 6 page 12 page 18 page 24 page 30
Sibos 2018 Sydney P U B L I S H E R ’ S L E T T E R
in numbers Contents page
TOTAL PARTICIPANTS
7526
MALE
5494
73% FEMALE
2032
27%
From Sydney
to London
1931
UK/NORDICS 26%
1248
16%
Dear Sibos delegates
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2 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 3
PUBLISHER’S LETTER OPENING PLENARY CROSS-BORDER PAYMENTS
From Sydney Expect the Catching up with
to London unexpected the customer
page 3 page 6 page 12
CYBERSECURITY DOMESTIC PAYMENTS INNOVATION IN ASIA
A problem Meshing new Asia’s great leap
shared … with old forward
SIBOS • 1/2 Page Largeur FU • 180 x 118 mm • Parution 24/oct./2018 daté November • Remise 12/sept./2018 • Empl. Warp up edition pgi • BAT
page 18 page 24 page 30
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Differentiation AI stakes claim Three keys to
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O P E N I N G P L E N A R Y
Table of contents
Cross-border
payments: Catching
up with the customer
Expect the
unexpected
Banks must In a world of growing uncertainty, the
ability to adapt at speed and scale will be
of SWIFT’s traffic, as proof of the increasing
agility of the wholesale payments sector.
work together paramount, delegates were told in Sibos
2018’s Opening Plenary. All three speakers In both retail and wholesale banking, the
to keep ahead emphasised the need for banks to have the
tools, technologies and – above all – mindset
key to growth and adaptability is the use
of open platforms to support further
of the pace of to respond to new sources of competition,
evolving trends in customer demand and
innovation, he suggested. In October
2018, SWIFT and a group of banks in
change. changes in the regulatory landscape. the Asia-Pacific region successfully
completed trials for a real-time cross-
“It is not just the speed of change but also border payments service over SWIFT gpi
the diversity of change – from technology through correspondent banks into domestic
to product relevance to risk management payment systems.
SWIFT is moving fast,
to the geo-political environment – that we
must manage well,” said SWIFT chairman “As banks embed gpi into their digital
Yawar Shah, in his opening address. offerings, you can start thinking of the
role gpi can play in e-commerce and in
engaging, and increasingly Fast-paced, far-reaching
Taking up the theme of fast-paced and
the fast-growing digital payments space,”
Leibbrandt observed.
working with the coalition
far-reaching change, SWIFT CEO Gottfried Enabling instant payments
Leibbrandt pointed to the speed of new
developments in the payments sector. In domestic payments, the use of open
“Innovation is everywhere. Especially in platforms to support innovative solutions
of the willing. payments – especially in Asia,” he said. “We
have never seen such levels of investment
in new financial technology, especially in
is already firmly established. Australia’s
New Payments Platform (NPP) went live
in February 2018, enabling consumers to
Yawar Shah, SWIFT payments, nor such speed in development make real-time payments using just an
and change as we have over the last couple email address or mobile phone number.
of years.”
NPP is a key component of SWIFT’s global
Noting the rapid growth to market instant payments strategy – a strategy that
dominance of Tencent’s WeChat and also includes the provision of an instant
#Plenary Alibaba’s AliPay in the Chinese retail payments messaging service for the euro
#Payments payments market, Leibbrandt cited area. Launching in late November 2018,
Sibos 2018: #Fintech SWIFT gpi’s three-year journey from to coincide with the launch of TARGET
Opening Plenary #Digitisation concept to today, where it is carrying a third Instant Payment Settlement (TIPS) service,
6 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 7
We are investing heavily
to allow access to all our
services through APIs.
Gottfried Leibbrandt, SWIFT
SWIFT’s new messaging service will enable Leibbrandt. “We are using our expertise to their banking partnerships with smaller
instant payments across Europe. standardise API calls between banks, and institutions, SWIFT customers are due to
we are running proofs of concept to carry submit their re-attestations by the end
Even as instant payment systems are interbank API calls over our infrastructure.” of the year. Failure to self-attest their
being implemented around the world the compliance with CSP’s mandatory security
underlying technologies are being refined Duty of care controls will result in customers being
and augmented to deliver new features and reported to their regulators.
functionality, with minimal disruption to Shah also emphasised the potential of
service providers and their end-clients. “All APIs to enable innovation, customisation “Many global transaction banks are
these initiatives use new SWIFT technology. and collaboration, and to facilitate data already looking at your self-attestations,”
NPP is built on a peer-to-peer architecture exchange and system interoperability. Shah warned. “But early next year they
with all the intelligence at the edge. Our But he also reminded delegates of their will begin incorporating them into their
European solution goes a step further and collective responsibilities in relation to the risk management processes and start to
delivers an intelligent edge using container careful management and protection of data decide whether and how they will continue
technology from Docker. That means we – often derived and collected from clients to do business with you in the context of
and our customers can easily add new – even as they look to enable greater data cyber-risk.”
functionality to the edge, instead of waiting access, integration and analysis.
for the next upgrade or software release. Raising the bar
It is like downloading an app on a smart “SWIFT has tremendous data and
phone,” Leibbrandt explained. information. Leveraging it for your Shah outlined how new SWIFT services are
business purposes in a collective way with helping banks to keep ahead of cybersecurity
To respond quickly and positively to confidentiality and integrity is an important threats, through new transaction monitoring
changing customer demand, service job – and one that SWIFT takes seriously,” services such as Daily Validation Reports
providers, including SWIFT, are rapidly he said. and Payment Controls, emphasising the
exploring and expanding the capabilities need for banks to continually upgrade their
of digital technologies. But they need to Cybersecurity is of course a critical capabilities. “The bar on the CSP mandatory
do so in a way that does not add excessive element of effective and responsible controls will continue to rise as this threat
cost and complexity for end-users data management for financial service evolves,” he observed.
whilst also allowing for interoperability providers. Shah pointed out that strength
and competition. SWIFT gpi is a great of information security arrangements But cybersecurity is far from the only
example of how to build on secure, is an increasingly important factor in area in which banks must remain alert to
tested infrastructure, argued Leibbrandt, determining commercial success. “Those change. In concert with his fellow speakers,
while incorporating and leveraging new firms that are able to work with their Shah underlined the need for banks – and
technologies such as APIs to improve the customers to protect, detect and recover SWIFT itself – to evolve their strategies and
customer experience. Banks can easily will be competitively advantaged in the capabilities on an ongoing basis. “SWIFT
move to gpi, embed it in their customer future,” he said. is moving fast, engaging, and increasingly
applications, and consult the tracking working with the coalition of the willing:
database through an API, he explained. While banks are beginning to factor banks that want to innovate and partner
cybersecurity attestations under the with SWIFT as their fintech,” he said. “In
“We are investing heavily to allow access Customer Security Programme (CSP) this dynamic environment, seizing the
to all our services through APIs,” said into their due diligence when reviewing opportunity with speed is important.” n
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Exposing
ourselves to
different ways
of thinking
and different
skills makes us
stronger.
Shayne Elliott,
ANZ Bank
In conversation with Sibos TV’s Juliette “Customers want a better user experience both for us and fintech providers. It’s an made that model less efficient for many
The future of Foster, ANZ Bank CEO Shayne Elliott
sketched out a future of banking in which
human qualities could become more,
and increasingly engage with us using
technology. But all the research shows
that customers still want to talk to
exciting first step,” he said.
“Australia is among the early adopters,
banks. As we move to the open banking
era, the cost of digital opportunity has
reduced dramatically; it has begun to
Banks must be agile,
move at pace, and
banking will rather than less, important. Further, he
suggested that more banks could
switch focus to fewer areas of excellence
someone when they’re doing something
of real importance to them, like buying a
home, saving for retirement or starting
joining a club of around 40 countries. Part
of the next stage is how we join these
systems together and make it a global
throw the universal model into doubt. At
ANZ, we think that the only way to win in
the future is to do fewer things, and do respond to changing
have a human and expertise, shifting away from
the once-dominant universal banking
model.
a business. That’s a fundamental human
need and I don’t think it’ll ever disappear,”
he asserted.
capability. In Australia, we’ve also got a lot
to learn from observing how this has been
adopted elsewhere and the innovation it
them really well.”
In future, more banks will choose either
customer needs.
face Whilst acknowledging the growing
importance of technology in delivering
Nevertheless, understanding and deploying
technology effectively is also important.
has seeded in other economies.”
Elliott characterised NPP as one of two key
vertically or horizontally integrated models,
suggested Elliott, increasingly partnering
in areas where they feel it is inefficient to
Shayne Elliott, ANZ Bank
services to clients, Elliott said cultural “Even if you have the most brilliant ideas ingredients shaping the future of payments develop internal expertise. “Banks will look mindset, and an honest assessment of
attributes would become an increasingly in the world, you still need to be able in Australia, alongside open banking, which less alike than we’ve been used to over the strengths and weaknesses.
critical factor in the future success of the to implement them. Do you have the is already exposing banking services to past 20-30 years.”
industry and individual institutions. “The technology to move at pace and respond to greater competition from non-traditional Ultimately, banks will require a “blend” of
only way to be better is to have a culture the changing environment? That requires sources, and offering users access and Mindset shift human skills and technology capabilities
that enables us to constantly adapt to a different architecture both in a technical ownership of their data. “When these two to succeed at a time of uncertainty and
customer needs.” sense and in how you run the company,” come together, we’ll see an explosion of Banks have already proven themselves opportunity, Elliott suggested. “The people
said Elliott. new business models, revenue streams and able to partner in the back office, said who survive in a disrupted world are those
Human needs, technological means customer experiences.” Elliott, but now need to collaborate to that can adapt at scale and speed,” he said.
Elliott referenced the SWIFT-designed deliver a superior customer experience, “Large organisations are difficult to change,
According to Elliott, the ideal bank and built New Payments Platform (NPP) Further, Elliott suggested that NPP and bundling services together that might not in terms of culture, strategy and direction. To
culture of the future would incorporate – Australia’s recently-launched instant open banking could provide the catalyst necessarily all be manufactured in-house. survive, banks must be agile, move at pace,
a growth mindset, a willingness to payments infrastructure – as an example for a new type of banking model. “In the “We’ve chosen that path at ANZ and are and respond to changing customer needs.
learn and experiment, an ability to of how new technology can encourage past, the universal banking model was looking to partner with people who are
listen to customers, and an approach to further collaboration and innovation. “More very attractive, with banks essentially really good at what they do. Exposing “We’re not in a position to say what the
partnership that can adapt experiences important than the real-time payments looking to broaden customer relationships ourselves to different ways of thinking future looks like; we’ve just got to be ready.
from other industries to banking. “All of are the data capabilities that come with it. by adding more services,” he explained. and different skills makes us stronger,” he The only way to be ready is to have people
these things are human, they’re not done As banks, we haven’t fully explored all the “Over time, we’ve found that the cost and said, acknowledging that this approach who are capable of learning, adapting
by robots,” he observed. doors that this technology will open up, complexity of doing lots of things well has required banks to undertake a shift of quickly, and are open to new ideas.” n
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C R O S S - B O R D E R P A Y M E N T S
Opening plenary:
Expect the
unexpected
Cybersecurity:
Banks can offer new
A problem shared …
services by being better
Catching up with information providers.
Philippe Henry, HSBC
the customer
Despite recent Few sectors of the finance industry are
undergoing more profound or rapid
The new business models of the digital
age are also driving change at the retail
innovations, a change than international payments.
Demand for cross-border retail payments
level, observed Jennifer Boussuge,
treasury fulfillment, service and operations
more transparent, is soaring, driven by demographic shifts,
facilitated by super-apps and wallets. The
executive at Bank of America Merrill Lynch.
“The gig economy, the sharing economy
inclusive and reliable wholesale payments sector is reinventing
itself in response to heightened customer
is generating huge volumes of small-value
payments, which require the development
ecosystem is still a expectations, risks and costs, warding off
the threat of disintermediation. Technology-
of cost-effective cross-border, cross-
currency options,” she said, citing forecasts
work in progress. based innovation is critical to survival as
distinctions between low- and high-value
by Accenture that the value of cross-border
payment volumes will rise by 5.6% per
channels fade. But other skills and assets annum up to 2022.
will also be needed to keep up with demand
and ahead of the competition. Sibos 2018’s To provide these options, neither banks nor
payments sessions indicate the pace of their fintech competitors are attempting to
change will not relax for some time. fly solo, instead partnering to meet specific
customer needs with a tailored mix of
In Monday’s big issue debate, ‘Re- capabilities.
engineering international payments for
a fast, digital age’, panellists highlighted China’s Ant Financial, for example,
the importance of customer focus, partners with local banks in nine
collaboration in service development countries to provide digital wallet and
and delivery, and the potential for data other smartphone-based services that
analytics to enhance customer experience. bring payments and micro-credit to the
previously unbanked. “We work with local
Philippe Henry, global head of partners to deliver wallets, but we work
corporate, financial and multinationals with banks on many other fronts. It’s a
banking at HSBC, said banks must collaborative relationship,” explained Clara
reimagine payments as a service, not Shi, head of financial institution strategic
a product. “Clients are facing up to the partnerships in Ant Financial’s international
consequences of the fourth industrial business group. The firm develops
revolution. They are revisiting how they partnerships with merchants across Asia
Sibos 2018: work with customers and suppliers. If we in order to supply payment services to
Re-engineering #BigIssueDebate understand these changes, we can offer Chinese consumers abroad, she added.
international #Payments more tailor-made services. Payments is a
payments for a fast, #CorporateTreasuryAndTrade part of that challenge, if not necessarily In response to the burgeoning market for
digital age #GPI at the centre,” he said. low-value cross-border payments, Western
12 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 13
Intelligent Many
automation treasurers
will empower struggle to
clients. achieve daily
visibility.
Jennifer Boussuge,
Bank of America Merrill Lynch
George Zinn, Microsoft
Union has invested heavily in digital access to payment-related information, Virtual reality? status. This approach solves some Swedish subsidiary to an Australian parent George Zinn, corporate vice president
transformation over the past decade. Henry also noted the security implications operational efficiency problems, but we could take up to seven days. Dan Birdseye, and treasurer at Microsoft, said this kind
According to Molly Shea, global manager of open banking. “When banks offer open The twin need to reduce costs and can also overlay third-party solutions group treasury manager at Cochlear, of service could help address a common
for global money transfer, Asia Pacific at access to our systems, via mobile apps increase service levels to corporate to address other pain points around said the firm had started to take a highly fraud tactic whereby a supplier is sent an
Western Union, the firm is reaping the etc, we have to have appropriate security and institutional customers is leading sanction screening and account validation conservative approach to month-end email claiming to confirm new payment
rewards with 40% annual growth in digital features too, including biometrics,” he correspondent banks to rethink the in a more comprehensive way than at reconciliation. “Visibility and speed is what instructions. “Many treasurers struggle
revenues, as mobile and wallet payment observed. mechanisms underpinning cross-border present,” explained Ashish Sharma, chief we’re after. I will only rely on what I can to achieve daily visibility. If you reconcile
volumes multiply. payments. The linear nature of the operating officer for global payment see in my account, rather than including at month-end, it can be hard to identify a
BAML’s Boussuge said corporate customers correspondent banking transaction chain services in the financial institutions group expected in-bound payments,” said fraudulent payment that took place earlier
“Customer expectations are very advanced. were already beginning to benefit from new has led to increased duplication and at Wells Fargo. Birdseye. “We don’t need payments sent in in the month,” he noted. n
As service providers, we have to keep initiatives in cross-border payments – such inefficiency in recent years, with KYC and a matter of seconds: same-day value would
catching up,” admitted Shea. “The future as the greater speed and transparency other compliance checks being applied Niall Cameron, global head of corporate be good.”
will be about collaboration and partnership. being delivered via SWIFT gpi – but insisted multiple times. Although SWIFT gpi now and institutional digital, HSBC, added that
Fintechs are good at the customer more innovation was needed, citing the use sheds greater light on a payment’s status, a virtual ledger could help correspondent In this context, panellists welcomed the
experience, but more established providers of real-time data sets to develop self-service helping to identify bottlenecks and thus banks to meet their compliance obligations greater transparency on cross-border
really understand customer needs when models. An increasing number of banks increase speeds, could a more radical shift in the era of instant payments. “When payments offered by SWIFT gpi, noting that
moving cross-border payments securely are already using AI to support customer also eliminate duplicated effort and cost? payments become instant, our approach to gpi tracking for multi-banked corporates
and efficiently.” service teams, for example, to reply to screening and compliance has to change, went live in October. In a subsequent
simple client queries or refer complex ones Some have proposed solutions that in concert with regulators,” he said. “With session, centred on the potential benefits
In the corporate market, emerging on to staff. Boussage suggested technology leverage distributed ledger technology. But this model, all messages could go up to the of open banking to corporates, Mark
business models not only require upgraded would help to offer greater flexibility to in ‘Cross-border payments over a virtual cloud layer where the sanction screening McNulty, global head of clearing and FI
cross-border payment services but new clients and efficiency to providers. centralised ledger – future or utopia?’, process is executed at a higher standard, payments at Citi, said the combination
information services. “Clients are more panellists considered the merits of a cloud- with more information.” of open banking and instant payments
demanding today due to the pressure they “Intelligent automation will empower based service layer across correspondent could yield new collection opportunities
face to revisit their business models. We clients to access services where, when and banking networks. In this model, banks “Visibility and speed” for firms switching to direct-to-consumer
now have solutions that utilise and share how they want,” she said. and other service providers would use sales models in the digital age, especially
information across the ecosystem – partly APIs to provide and/or access services via Two further sessions – both focused on in Asian markets where card penetration
driven by (EU Directive) PSD2 and the Ant Financial’s Chi agreed that new use a central cloud utility, not only tracking the needs of corporates – suggested is less comprehensive. “You can request
new service providers it brings in. Banks cases and customer experiences would transaction status, but applying KYC transparency is one of several cross- a payment through open banking, then
can offer new services by being better continue to emerge. “The journey is just at checks or other services. border payments needs not being met get the payment by immediate return in
information providers,” said HSBC’s Henry. the beginning,” she said. “We’ve completed satisfactorily. a country that has implemented instant
100 metres of a 10,000-metre run. We need “Instead of messages flowing back and payments,” he said, adding that Citi is
Acknowledging the role of APIs in contributions from all parties to build a forth between institutions for cross- In ‘Service matters – how can banks better working with various bodies to define a
facilitating the development of new more transparent, inclusive and reliable border payments, banks could call into the serve corporates on the seller side?’, new API standard that enables payment
value-added payment services and greater financial ecosystem.” cloud via API to determine transaction delegates heard how a payment from a requests and micro-credit.
14 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 15
Can
technology
release trade
from legacy
technology
and
governance?
Cross-border payment volumes might be system that is keeping us anchored in On the same morning, an optimistic view of ecosystem for the benefit of all, added
surging, but the outlook for trade finance yesterday’s capabilities?” he added. the global trading environment was offered Khanna, citing China’s One Belt, One Road
transactions – and the commercial flows by Parag Khanna, a renowned author and initiative, which is creating much-needed
they support – is clouded by geo-political The multilateral institutions of trade’s advisor on international relations. In his physical trading infrastructure across Asia
tensions. Introducing ‘Trade wars and established governance framework had breakfast keynote, Khanna argued that and into Europe. From energy to finance
technology – A new era for trade finance’, failed to resolve bilateral disagreements, accelerating investment in cross-border to the internet, the connectivity between
Coriolis Technologies CEO Rebecca Harding panellists agreed. Further, the US dollar’s infrastructure and connectivity – digital domestic capabilities through globalisation
said US-China disagreements were just the role as dominant settlement currency and physical – would ensure governmental bolstered overall system resilience, he said.
most prominent example of trade becoming brought global trade within oversight of a disagreements did not lead to open conflict
“weaponised”. jurisdiction with increasingly unpredictable or outright isolation. “The more the world “Being big doesn’t make you important,
trade policies. becomes an integrated marketplace, the being connected makes you important,”
Panellists noted the challenges of financing more we compete over supply chains,” he he concluded. “All countries are realising
global supply chains in an uncertain Could the World Trade Organisation and the observed. that connectivity is how you enhance your
political climate. Rajkiran Rai, CEO, Union US$ be replaced by a new trade paradigm, influence.” n
Bank of India, said the 180-day trade cycle based on the blockchain and a country- Rather than a war, Khanna characterised
left banks highly susceptible to interest neutral crypto-currency? Daniel Schmand, current struggles as a tug-of-war in which
rate and currency movements. “Banks global head of trade finance at Deutsche nations compete for influence over the
are exposed to huge risks, due to a lack of Bank and chairman of the International binds that connect their economies.
confidence in the system,” he said. Chamber of Commerce’s (ICC) banking Further, he explained that the rise of China
commission, said it was possible to make had been achieved by a well-established
But they welcomed the potential for trade governance more independent from template that was increasingly being
smarter use of data to increase credit geo-politics. The ICC is already exploring pursued by other countries in Asia and
risk appetite, by enhancing visibility the potential of technology to reform world beyond. This approach relies on the
across counterparties and intermediaries. trade, but Schmand acknowledged the development of an increasing number and
In particular, this could accelerate need for support from other bodies to raise The more the world complexity of interactions with trading
If we can change the international expansion by SMEs. the subject at a G-20 summit. counterparties to bring an economy and its
becomes an integrated workers up the value chain.
way we share data, we “If we can change the way we share data, “First, we need to create an ecosystem
and permission others to see that data, we in which technology is able to come to marketplace, the more “The import-displacement industrial policy
can begin to change can begin to change where the risk sits,” its full fruition, perhaps starting with a is how America became a super-power in
said Jason Kelley, general manager at IBM closed loop, and then branch out. It may be we compete over supply the 19th century. China is no different and
where the risk sits. Blockchain Services. Not only can innovation possible also to agree on a new currency now India is doing it too,” he observed.
improve credit access, it has significant and settlement system outside of the chain.
Jason Kelley, governance implications. “The system is traditional currencies. But we need to start Whilst these policies are pursued for self-
IBM Blockchain Services the challenge. How do we get beyond the with baby steps,” he said. Parag Khanna interest, they also strengthen the broader Sibos 2018: Breakfast Keynote - 23 Oct 2018
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C Y B E R S E C U R I T Y
Cross-border
payments: Catching
up with the customer
Domestic payments:
The worst case scenario
Meshing new with old
is when cybercriminals
attempt several attacks
simultaneously.
Dmitry Samartsev, BI.ZONE
A problem
From large-scale Financial institutions and market
infrastructures are more vulnerable to a
their money, they can cause just as much
duress to the system as a major network
threats to the entire 9/11-style, black swan cybersecurity event
than other critical infrastructures on which
outage for example,” she said.
industry to the society relies, such as telcos or even power
grids. Sibos 2018’s big issue debate on
The biggest threat of a black swan
cybersecurity event in the financial service
shared …
response tactics of cybersecurity grappled with how global
market operators and participants should
industry comes not from state-sponsored
cyberwarfare, terrorists or hackers, but
smaller firms, greater collaborate, innovate and work to improve
resilience against cybersecurity threats.
rather from organised criminals, via the
dark web, said Dmitry Samartsev, chief
coordination can Jacqueline McNamara, head of cybersecurity
executive officer of BI.ZONE, a Russian
cybersecurity firm. Organised cybercrime
reduce cybersecurity at Australian telecommunications giant
Telstra, explained how her firm runs scenario
is increasing every year, he asserted, and
is absorbing more resources to develop
risks. testing in order to plan and test responses
to attacks on network resilience or network
tools that leverage artificial intelligence
for use in more sophisticated attacks.
outages. She said the company’s Network Samartsev also noted that cybercriminals
2020 plan focuses on resilience, pointing out will collaborate in ways that institutions
that the imminent arrival of fifth generation and governments do not.
mobile phone networks would reduce
vulnerability of systems hitherto dependent “The worst case scenario is when
on a single cable or physical installation. cybercriminals attempt several attacks
Noting the efforts made by Australia to simultaneously,” he said. “For example
implement collaborative frameworks they’re making DDOS attacks and then
between business and government to at the same time they’re making huge
protect critical infrastructure against informational attacks on social networks
security threats, McNamara said that a – spreading fake news claiming that the
cyber-attack impacting financial service biggest banks are going down. Can you
infrastructures could be as big a challenge imagine the domino effect it will have? This
to a country as an attack on its will lead to troubles with liquidity, troubles
#BigIssueDebate telecommunications network. with central banks or troubles with the
Sibos 2018: #Cyber government. Cybercrime has no borders
Is a ‘cyber 9/11’ event #MarketInfrastructures “When you have significant impact to and there must be cooperation between
inevitable? #Culture financial systems, or people can’t get to countries and companies.”
18 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 19Significant barriers are
associated with sharing
material, from the point
of view of customer
relationship management.
David Pegley,
Australian Financial Crimes Exchange
Business risk its efforts to collaborate. However, speakers to attacks that can spread throughout the campaigns. Not only are you securing
acknowledged that there are real barriers supply chain. your organisation, but you’re also
By treating cybersecurity threats to sharing information across institutions, securing your home life.”
as a business risk, rather than an IT such as privacy regulations and the Kathryn Taylor, a researcher with the Cyber
consideration, organisations are better protection of customer data. Policy Initiative at the Carnegie Endowment Incident response training is also a key part
able to manage the potential repercussions for International Peace, presented research of any organisation’s cybersecurity strategy,
throughout the organisation, Sibos
delegates were told in the SWIFT
Institute session titled ‘Cyber – How
“Significant barriers are associated with
sharing material, from the point of view
of customer relationship management
commissioned by the SWIFT Institute in a
session entitled ‘Protecting the ‘long-tail’ of
smaller organisations from cyber attacks’,
due to the importance of managing the
aftermath of an attack to its impact and
recovery, said Chris Hockings, CTO for IBM
Compliance
is necessary,
you can mitigate the business risk?’ Dr and ensuring there is appropriate focus in which she noted that governments Security in Australia and New Zealand, in
Maria Milosavljevic, government chief on privacy,” said David Pegley, managing are attempting to build resources and the same panel discussion. To help clients
information security officer for the director, Australian Financial Crimes processes for smaller firms. In one improve incident response, IBM has built
Australian state of New South Wales, Exchange, a non-profit, cross-industry example, Taylor cited the UK’s National a truck, the interior of which serves as a
suggested that while the understandable
initial organisational response to cyber
risk is to focus on putting controls on
organisation. “The challenges within each
institution lie in their legal and compliance
requirements – the interpretation of
Cyber Security Centre, which has issued
a guide for smaller businesses outlining
governance and operational approaches to
simulation room in which executive teams
and CISOs test their response plans to a
cyberattack, Hockings explained.
practice is
essential.
technology access, a more holistic view the law between different jurisdictions managing cyber risks.
would seek to put in place mitigation is important in considering sharing of “When we started, we thought people
strategies as well. material. We do our best to deal with this Incident response would be doing exercises on computers,
within constituencies, primarily through but in reality they needed to realise how
Chris Hockings,
“What else increases your likelihood of standardising exactly what we share, Managing how staff responds to risks, in would they coordinate during an incident,”
IBM Security
something going wrong?” she asked. “Poor how we share and, more importantly, the addition to managing technology controls, Hockings said. “Panic can set in. You
contact management arrangements, not behaviours recipients of that information is an area that organisations, large or [must] work out who your leaders are
being able to hold people to account when will adopt.” small, can address, said Andrew Pade, chief when you immerse them into an unfamiliar
things go wrong, buying from the wrong information security officer (CISO) at the circumstance: ‘Your response plan is not
suppliers, not knowing where your critical Experts emphasised the need for greater Reserve Bank of Australia, noting that the there. Your systems are offline. What are
assets are.” collaboration on a number of fronts: at a majority of cybersecurity breaches occur you going to do?’ You don’t know until you
pre-competitive level between financial due to staff action, such as clicking on a test it. Compliance is necessary, practice is
A persistent message across all the institutions themselves; between institutions link in a phishing attack. essential.”
cybersecurity sessions at Sibos 2018 was and government and regulators; and across
that organised cybercrime is already supply chains. This can take up significant “The technologists love to buy This level of immersive training may not
collaborating and sharing information, resource for global organisations, but there technology, because it solves problems,” be available to smaller organisations,
and thus has a potential significant are also complex issues facing smaller and Pade said. “[But] if you’re in a small acknowledged Hockings, but the principle
knowledge advantage over financial medium sized institutions, which can be organisation, you can educate your staff of running simulations and testing plans is
Sibos 2018 highlights: Cybersecurity institutions if the sector does not step up less prepared and thus more vulnerable on how to identify the typical phishing still possible.
n
20 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 21In the time of Sigmund Freud, solving an In terms of the legal and regulatory said. “We’ve seen a lot of startups trying “The JCSC initiative is looking at this
Solving the identity crisis necessitated a therapist and
a couch. But in the 21st century, an identity
crisis has different implications – and
framework, Bayle noted the efforts of EU
member state governments to coordinate
on the introduction of electronic identities,
to solve the identity issue with blockchain.
But it’s going to be very difficult for one
organisation to own the solution. It needs
from an economy-wide perspective. I think
it’s really important that governments
facilitate that kind of conversation. The
identity crisis demands a different response – compared
with an existential loss of self. Identity
theft is a growing aim of cybersecurity
adding that legislation such as Europe’s
recent Payment Services Directive (PSD2)
is already playing a role in protecting
to be a consortium. The government
obviously has a significant role to play, and
the banks.”
concept of safe harbour is very important
here too,” she added. n
attacks, requiring banks to invest and plan customers and payment service providers.
accordingly. As with broader cybersecurity threats,
“PSD2 helps to increase interaction panellists suggested that coordination
In a session entitled ‘How do we solve between actors in a digital payments between organisations can increase the
the identity crisis in a digital world?’, world,” Bayle de Jessé said. “This also ability of institutions and individuals to
representatives from banking, payments, creates the necessity to strengthen respond in the event of identity theft. A
market supervision and the legal world standards to make sure people are well recent Australian industry-wide review,
considered the risks and possible solutions identified when they initiate payments or cited by Victoria Richardson, chief strategy
to identity theft. circulate information about their accounts. officer at the Australian Payments
There are already a range of authentication Network, highlighted the need for real-
The stakes are high and the probability is techniques available; fintech can bring time sharing of actionable information,
rising. Michael Bui, head of identity and more and we are open to that. As a central consistent incident response management
The good guys have access management at Commonwealth Bank bank, we support innovation and believe and awareness generation.
of Australia, noted that a person has a one that is good for the development of our
to exert caution in 15 chance of having their identity stolen or economy.” “The good guys have to exert caution
being a victim of a data breach each year. around who they share information with,
around who they share In terms of innovative solutions, Nick I think we’ll become and the bad guys don’t,” Richardson said.
“We are in a world where the opportunity Abrahams, global head of technology and “They share the information with everyone.”
information with, and of identity theft is quite high,” admitted innovation at Norton Rose Fulbright, called much more comfortable To address this issue, the Australian federal
Marc Bayle de Jessé, director general for facial recognition technology a “game government is leading an initiative to
the bad guys don’t. market infrastructure and payments at the changer” to protect identity. with biometrics. support cross-industry collaboration and
European Central Bank, noting also the secure information sharing through the
Victoria Richardson, cross-sectoral nature of the threat as more “I think we’ll become much more Nick Abrahams, establishment of a network of Joint Cyber
Australian Payments Network of our daily lives become digitised. comfortable with biometrics,” Abrahams Norton Rose Fulbright Security Centres (JCSC).
22 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 23D O M E S T I C P A Y M E N T S
Cybersecurity:
A problem shared …
Innovation in Asia:
Asia’s great leap
forward
Meshing new
with old
As new technologies offer greater choice and
convenience, the payment mechanisms of the
past must also be accommodated.
To many, making a payment by cheque “As new technologies are introduced, the
might seem as old-fashioned as travelling old ones don’t go away. The challenge
on a steam engine or listening to a vinyl for everybody is: how do you build
record. But one of the surprises of Sibos technology for diversification of payments
2018’s big issue debate on disruption in or systems; and how can you handle
the domestic payments landscape was the legacy along with new products? We have
revelation that personal cheques are still to start from what the customers want,
widely used. In fact, 25% of respondents because they are demanding payment
to an audience poll had written a cheque systems that are efficient, seamless
within the past six months. and instant,” said Ulku Rowe, technical
director of financial services at Google
While the domestic payments industry Cloud.
is gradually being reshaped by
new technologies, from application In a debate that challenged payments
programming interfaces (APIs) to professionals to think and work more
distributed ledger technology, the poll disruptively, while respecting and
#BigIssueDebate reminded panellists and delegates of the maintaining the payment mechanisms
Sibos 2018: #Payments need to accommodate legacy payment on which customers still rely, panellists
Disruption in the #MarketInfrastructures mechanisms when implementing fresh acknowledged that the pace of change has
payments landscape #Cryptocurrencies innovations. not always been rapid.
24 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 25Customers There is
are demanding tremendous
payment opportunity for
systems that both incumbent
are efficient, banks and non-
seamless and traditional
instant. players.
Ulku Rowe, Leila Fourie,
Google Cloud Australian Payments Network
As the digital revolution took shape, – so the pricing and value that is attributed technology giants such as Apple and explained, speaking during a SWIFT
quickly spreading from IT and consumer to payments might be fundamentally Amazon, which have thrived by developing Institute panel discussion.
electronics to many other retail-facing different to the traditional banking model.” platforms that give third-party providers
sectors, most banks were dealing with the access to a global customer base, while Optimising data
aftermath of the financial crisis, which put Asked in a second audience poll to rate the also giving customers easy, standardised
them on the back foot in embracing new most important feature of any changes to a and cost-effective access to a wide range For banks seeking to remain relevant in
technologies. payment system, 46% of respondents cited of services. this fast-changing payments environment,
ease of use, while security and regulation one of the core challenges is to extract
“It took banks slightly longer to put a came in second with 30%, followed by The NPP was built on a similar premise with value from data in a similar way to their
strategic focus on innovation, but we are stability and speed. a basic infrastructure, a fast settlement more nimble non-bank competitors. Just
catching up and technology offers huge service provided by the Reserve Bank of as banks may have been slow off the mark
opportunities,” said Michael Spiegel, global Australia has become something of a Australia that allows every payment to be in embracing technological innovation in
head of cash management at Deutsche poster child for payments innovation, settled in real time, and an overlay that payments, they are also playing catch-up
Bank. “We don’t know where payments will following the launch of the New Payments enables products and services to leverage with fintechs in leveraging and optimising
land because the space is so innovative Platform (NPP) in February 2018. Informed the NPP to provide tailored payment customer data to refine and tailor their
and disruptive. Settlement of payments by a core mission to provide domestic experiences. services.
probably won’t change much, but the consumers, businesses and government
communication and the way you get there departments with a means of making With eight banks connected directly “Banks have such a big amount of data but
will change a lot.” payments faster and more efficiently, the and another 70 indirectly, the NPP has we have never exploited it, so it’s an asset
NPP has become a reference point in the embraced the concept of open access, for the future, with respect to data privacy
Ripe for change industry, demonstrating the transformative working with SWIFT to develop an legislation as a trusted third party,” said
power of bringing new technologies to infrastructure that ensures availability to Fabrice Denele, senior vice president for
Other payments specialists agreed that conventional processes. non-bank organisations. But keeping the partnerships and interbank relationships
the proliferation of new technologies and barriers to entry as low as possible is not and head of customer solutions at
innovative challenger organisations have “The most important thing in meshing always easy, said Adrian Lovney, chief Natixis Payments. “Banks have millions
combined to create a payments landscape different technologies is making sure you executive of the NPP. of customers and this creates some
that is now ripe for change. take a regulatory enabling environment, constraints; we cannot act as a fintech
robust and scalable technology and focus “One of the challenges for us is to think and test and run a new product for a small
“There is tremendous opportunity for on the customer,” said Fourie. “With about how we extend the ecosystem customer base. When we decide to launch
both incumbent banks and non-traditional NPP, there was an enormous amount of in a way that allows as many different a product or service, it has to be reliable,
players to take a role in the distribution collaboration between regulators and people to connect to that infrastructure dedicated to everyone, and it has to work
and manufacturing of products,” said Leila participants, and between the fintech and as possible. Market participants were every single day.”
Fourie, chief executive of the Australian banking industries.” looking for consistency, standardisation
Payments Network. “The objective of non- and interoperability in terms of the access But other speakers took issue with the
traditional players is to keep people on Acknowledging their impact on client methods. In response, we developed concept that banks cannot compete with
their platform. Moving money is not always expectations, payments professionals have an API framework that provides this the same agility as fintechs, suggesting
Sibos 2018 highlights: Banking central – payments happen in the periphery sought to learn lessons from consumer consistency and harmonisation,” Lovney that a large incumbent customer base
26 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 27We see the potential
opportunity to address
challenges in the
We don’t know traditional settlement
where payments networks.
will land because Lewis Sun,
HSBC
the space is so
innovative and
disruptive. How would a CBDC
Michael Spiegel,
Deutsche Bank
make things more
efficient and
competitive?
Michele Bullock,
should not be a barrier to innovation.
Reserve Bank of Australia
Thomas Nielsen, chief digital officer
for Deutsche Bank’s global transaction
business, argued that the industry is
moving away from a model of ‘walled
gardens’ – where banks owned and
operated the entire stack of payments
technology and services – towards an open
Industry urged to lead the way
access model.
Nielsen illustrated his point with reference
on digital currencies
to the way that Nokia’s dominant position
in the mobile phone sector was quickly The evolution of central bank digital demonstrate to us why what we have got still some way to go before they become
overturned by the new partner-based currencies (CBDCs) is a positive example available in terms of payment systems widely accepted. Despite conceptual and
business model introduced by Apple’s of the public sector embracing new and what is still coming onboard can’t practical challenges, discussions at Sibos
iPhone and App Store, warning of similar technologies and disruption in the actually deliver that already. How would reflected a high level of interest in potential
consequences for banks. But he insisted payments landscape, but industry a CBDC make things more efficient and benefits.
that banks have the assets and capabilities participants also have a role to play in competitive?”
to respond positively to the challenges demonstrating use cases and tackling “From a commercial banking point of
ahead. associated challenges. Financial inclusion and the extension of view, we see the potential opportunity to
banking to the world’s poor is one area address a few challenges we have seen in
“What banks and financial institutions During a panel discussion on the prospects where session participants felt digital the traditional settlement networks. The
can bring to the table is the knowledge for this emerging asset class, Reserve currencies might ultimately play a valuable ability to address availability, ubiquitous
of a global network, customer experience Bank of Australia assistant governor role, by offering a more accessible and access to markets, no time-zone, and the
and understanding how to do business Michele Bullock explained that while digital secure form of tender. A digital currency settlement mechanism can all be achieved.
in multiple regions in a trustworthy and currencies are not expected to replace could have a more challenging impact in a However, to succeed technology must also
compliant way,” said Nielsen. n standard bank notes in Australia, they future systemic crisis scenario, however, as be accompanied by other changes, such
might still have a significant role in the large numbers of people might look to hold as a consistent approach by regulators,”
payment systems of the future. value in CBDCs rather than withdrawing said Lewis Sun, regional head of product
cash, which could put new strains on the management for global liquidity and cash
Data is an asset for the future.
“We have more of an open mind on financial system. management in Asia-Pacific at HSBC. n
whether or not a CBDC could play a
role in assisting with supply chains and While some countries such as Sweden and
Fabrice Denele, cross-border payments, for example,” said Singapore are already in the advanced
Natixis Bullock. “It remains for the industry to stages of exploring CBDCs, there is clearly
28 Sibos Issues 2018 Wrap-up edition Sibos Issues 2018 Wrap-up edition 29You can also read
