Having just returned from the whirlwind that is Sibos, I (along with many other industry observers) feel compelled to contribute my two cents on the top takeaways from the event, along with one observation on the mood. Nothing about Sibos can be exhaustive, but three key areas stood out: cyber, PSD2 and open banking/APIs.
Cyber was the first topic mentioned in the opening plenary address. Its seriousness brought into stark relief by the $81m Bangladeshi incident (something my cab driver in Boston asked about on the way to the airport!), cyber was a focus throughout the conference. While it has long been an important issue, it has catapulted to the top of the agenda of every member of Swift’s ecosystem given the recognition that the system is only as secure as its weakest node.
PSD2 is often thought of in a retail banking context, but its implications will carry over to the corporate side as well. There are two critical points:
- Banks must make their customers’ data accessible to any qualified third party.
- Third parties can initiate payments.
These changes will have profound second-, third- and even fourth-order effects that can scarcely be imagined today. Banks are thinking through what they need to do to comply, as well as what their strategies should be once they’ve implemented the necessary (and not inconsequential) technology changes. For a primer on the current state of PSD2, see Gareth Lodge’s recent report on the subject.
Open banking is enabled by APIs. While PSD2 is certainly accelerating the concept, it would have been gaining momentum even without the external pressure. There are simply too many activities that can be done better by third parties than by banks, and the banks have realised that they need frictionless ways to tap into these providers. APIs are critical mechanisms to enable this interaction. Technology, of course, is a necessary but not sufficient condition for success; banks must be culturally able to integrate with new partners quickly and flexibly.
On a final note, the mood was pragmatic. The atmosphere wasn’t one of consternation, panic or confusion. Instead, the buzz was focused, purposeful and businesslike. Bankers and their service providers are ready to roll up their sleeves and get the job done instead of wringing their hands about all of the possible ill-fated futures that could arise. Here at Celent, we’re looking forward to the progress to come in 2017. What are your thoughts?
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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Photo: Sibos