Now in its sixth year, the Swift Business Forum London 2016 brought together 1000 delegates from across banking, securities, market infrastructures and corporates to tackle the theme, Build the future. A broad spectrum of speakers discussed their vision and aspirations for the industry, while tackling practical topics around disruption, technology and regulation - particularly as they impact the UK market.
17:31: So your live blogger is signing off now. Thanks for reading and see you soon.
17:30: de Teran is drawing the debate to a close, and McAndrew is sending everyone off to the bar. The Finextra assessment would be that Redwood won the debate... We'll take the measure of others' views over drinks.
17:28: Redwood is arguing we would be globalists. We could be a world leader. The world's centre of gravity is moving East and if we stay hitched to this backwards organisation we could find it is damaging to our real world business. And if we get rid of the British problem for the EU, they have more chance of solving their business problems. Otherwise they will stay dysfunctional.
17:27: Cable says he doesn't know. None of us know. It could all work out fine. It could well happen. But. There is massive uncertainty. We simply do not know. And if you tear up the common rulebook future rules on financial services will take place over which we have no input and we are taking an awful lot on faith. And given all the other uncertainty and disruption currently taking place, we need this like a hole in the head.
17:25: de Teran asking a final question. How much will really go? And how much is a strong native advantage in terms of the City? Redwood is recalling again what people said about the euro. The opposite happened. It'll be the same he says. We're not leaving Europe. We still have partnerships, joint deals, activities every day. And the restrictions on mobility would only apply to unskilled low paid jobs. Cable says you have to have the visa regime to enforce this.
17:24: The City knows the advantages of being able to move around freely in Europe to conduct business. We are being offered a tough visa regime which cannot really be of benefit, he says.
17:22: Cable - let's focus on immigration. It's the one issue that resonates. The idea that we might want to restrict migration within EU to relax it for people outside. Hard to reconcile with the promise to the public to reduce net migration. To do that you would have to restrict it from both inside and outside. And what does it mean? The vast majority of people who come here are skilled. We did a lot of research into the benefits and they are substantial. These are young skilled people that are contributing.
17:20: Redwood - disagrees. Thinks businesses would stay here because the knowledge is here. Brexiters are positivists. The last thing we will do is stop the freedom of movement of talented people. We will carry on. The advantage of running our own border system and migration controls would be that if we could control the numbers of people coming in from Europe to do low paid jobs we would be freer to have more people from the rest of the world who are at the moment restricted by our controls. Again echoing Lord Rose who wisely said that one of the consequences would be hgher wages at the lower end - which I think is rather good news.
17:19: Question from the floor... asking Redwood about two points. Don't send money to Europe and invest at home. The second is our voice. If we save 12%GDP... and the City generates 25% of GDP... how many would leave? What would be the employment challenges? The UK economy is based on the knowledge skills. What is the real argument for finance? It seems we would gain peanuts and lose a lot more.
17:18: The vote so far... 32% are saying out, which de Teran is saying is higher than expected for the City.
17:17: Redwood - if you are going to have a success with the euro there have to be massively bigger transfers around the zone and that has to be paid for by EU taxpayers and the danger is that we will have to pay a lot of that.
17:15: Question - is there a subsidy to stay? Cable says we're about 8-10 billion net. Which represents a process of very tough negotiating approaches with the EU. We've capped the budget and it seems to me a reasonable settlement. Redwood - says we all know it will rise. That's what he means by being a good European and leaving.
17:14: Cable - the IMF etc have warned of the consequences for currency and other markets. Also wants to pick up on the great windfall. He sounds like Jeremy Corbyn on steroids. We can abolish austerity, save the health service... the mind boggles. It is not true to say there is an immediate saving. It's part of a negotiation we would have to enter into over a two year period. There would be some very difficult negotiations. And the budget contribution would be part of that difficult process. The idea of a windfall of gold falling from heaven is fantasy...
17:13: Redwood - the EU is quite unlike any other institution and that is why the British people will reject it.
17:11: Redwood: it's not a big issue whether the markets go up and down on any given day in the week. When people look to review it sagely and wisely, they will see the points I have been making. Balance of payments etc. We will get quickly into discussions on reassuring people that cars and wine are being sold to us on very similar terms to before.
17:10: Another audience question. Will euro rates rise or fall?
17:09: Obama is the leader of the free world. The US has an interest in preventing the fragmentation of Europe. There is a fear that once you start opening up the Pandora's box of immigration, the unity the Americans have helped to create will start to go and that Britain leaving the Union will set in train something much more destructive. The US is a member of the WTO. It creates case law. It operates on the basis of legal rulings which override national justice. The Americans have been very upset in the past about some cases - eg underpants of Cost Rica. Any international body involves a pooling of sovereignty and all the compromises that entails.
17:07: Question from the floor... why is it only the UK that wants to come out? Especially when the US president and the Pope are saying, stay in? Redwood - it's convenient for them. The US thinks it's the UK's role to be the voice of the US in the EU. When we have US sharing common borders with Mexico and allowing Latin American countries what taxes to impose and does business with Cuba I might take their advice more seriously. The US took a leap in the dark when they threw us over and seemed to do pretty well out of it. You should ignore all advice from people who don't have a vote. It's unequivocally in our best interests to leave.
17:05: Cable says one of the problems with the great leap in the dark is precisely that we don't know what will happen... One of the consequences of Cameron's recent re-negotiations - on the particular issue of protecting the financial services sector - he was able to do that. Arguing from continued membership of the EU.
17:03: There are those that would argue most EU law is written with UK input. Do you buy that? The laws would be worse without us being involved? Redwood says we would write our own laws... and we'd be able to negotiate in terms of realpolitik. Take the passport... if you look at the most famous passport product, UCITS, practically all the successful products are in Lux and Dublin... we didn't get a look in.
17:01: De Teran is putting a couple of questions. Starting with Redwood. Asking about continued trade. Our City may be more supplier than consumer (unlike the car). Why would people continue to come to the City. Redwood said people told him that we'd lose the dominance if we didn't join the euro. It didn't happen. Other centres will try to wrestle the business off us whether we stay or not. We'll have our veto. We'll negotiate one to one with a veto. In recent years we've lost three times - we'd have more chance in a one to one with a veto.
17:00: Let Britain be a great global power... with our voice and our money restored. To spend on what we want to spend it on. Also a decent applause.
16:59: We would also get back control over making our own laws, he says. If we are in government and make a mess you can get rid of us and change things following a general election. But as we now see mainly in Greece but elsewhere the people can change the government but not change the policies.
16:58: We would have a huge amount of money to spend on our priorities and money to spend on our balance of payments.
16:57: When we get out money back all grants can be maintained when we get our money back. Even better - the 10 billion GBP we send to Brussels which we don't get back - I think we should spend that on ourselves at home. He has set out the first Brexit budget. The 10 billion goes a long way. We could get rid of the tampon tax, the vat on fuel, the taxes on green products... all of which we are not able to do at the moment. We could spend more on health, we could actually banish austerity...
16:56: The principle of negotiations with EU countries would be straightforward... we are more customer, they are more supplier. It's a bad idea to upset customers.
16:54: Outside the EU, we would get our voice back in the world. Instead of being one of 28 we'll have our own seat at the table... climate talks etc. World standards bodies. Leapfrogging the mezzanine level and being there at the top level. Of course they will trade with us. Referncing Lord Rose (chairman of stay)... he said the day after exit would look very similar to the day before... and I would suggest we don't change anything. It would be up to them what they changed.
16:52: The European Union is in crisis. Go and talk to the 25% of people out of work in Southern countries. It's a disaster. They want to get out of austerity. And they are prevented by the EU and the austerity policies of the euro. Don't believe me, he is saying. Read the EU web site. Last summer the 5 presidents of the EU kindly set out their manifesto - the five presidents' report - about what to expect in the next 10 years. A three step process to complete union. A European treasury. A European budget.... The euro is an orphan currency and all successful currencies have parents to love them. To provide democratic control. Central bank and government work together. They cannot do that in the EU because it's lopsided and asymmetrical.
16:50: Redwood - the case for out. It's as if we joined a football club. And then announced we don't want to watch or play football and we think the cost of subs is so high. It's very good we're out of the euro... parts of the criminal justice system... the common army... aspects of common foreign policy. So many things we here are that the great thing about our membership of Europe is that we are not really part of it at all. So he and his friends say let's be good Europeans - let's say, we want a relationship with all of you, our friends, trading, academic partners, based on trade and things we like doing - and we will leave you free to get on and finish your European Union.
16:49: Cable is quoting Cameron (not something he often does). Brexit involves a leap in the dark. In a world which is uncertain, where there is a massive amount of risk, why take the additional leap into the unknown? We don't need to do it, and we shouldn't. Gratifyingly big applause.
16:46: It will be argued there are reserves of energy that can be tapped into... The question is would we tap into that best by leaving the EU? It's true that some innovation is inhibited by regulation but often this is domestic regulation or matters eg minimum wage. Much of our future as a country doesn't lie just within the EU - and we have to have a close engagement with many emerging markets such as China. But is this best pursued within or outside the EU? One of the big successes of the Coalition he says was the focus energetically on Britain taking advantage of much closer relationships with the big emerging markets, but what became painfully apparent was how far we were behind competitors including Germany, France and Italy. They are operating within EU rules. It's not obvious to me how leaving the EU will help this. It's domestic issues.
16:44: He is now talking about George Osborne's numbers. Were Brexit to happen there would be considerable costs of two kinds. The short term costs of disruption and the long term and arguably irrecoverable costs as a result of loss of inward investment which comes as a result of our membership of the single market. He says when he was Secretary of State he spent a lot of time with inward investors who regarded the UK as a brilliant place to do business - within the framework of European frameworks and standards. JP Morgan has also said this.
16:40: Cable: the case to remain. He says this week has given us a lot of clarity on the Brexit debate. Gove's exposition yesterday - a clear explanation of the alternative model. We're no longer talking about hybrids like the Norwegian single market solution. That's gone as an option. What we're talking about is the Albanian model. A group of companies with some trading relationships with the EU but no common set of rules... That's a radical departure he says and that's the different model we're arguing the merits of. He says his concern is that represents a considerable disruption to the set of arrangements clearly understood in the City of London. He is referencing a meeting with a small company earlier today... experiences of exporting in the EU... found it easy... One single set of rules, 28 countries. In the City you're familiar with the rules he says. They're not all popular. But by and large MiFID has been shaped by Britain. Passporting has worked well for the City and the vast majority are comfy with the status quo he says.
16:36: Brexit time: We're now listening to moderator de Teran introduce at length the two speakers, Redwood and Cable... Debate to follow soon we assume...
16:24: Stevens is telling us what Working Well does - which is supporting people with moderate to serious mental health problems in returning to work. SWIFT is supporting the charity off the back of this event.
16:23: Oops, Baldwin back, explaining what Hadu does... now we really are moving on to CSR. Which will be John Stevens, in a change to the published programme...
16:22: McAndrew is back (again) - bigging up Baldwin's business knowledge. She spent 20 years in the City. Big applause for the Minister.
16:21: Baldwin is bigging up the good gender mix in the winning team... ie there are lots of girls.
16:19: Get ready... we're going to hear the winner shortly... The prize is a cheque for GBP15,000 as well as an all expenses paid trip to Sibos in Geneva (Baldwin is asking why it's in Geneva?!). The winner is Hadu from the Warwick Business School...
16:18: She's referencing the information hub for fintechs to find professional services providers and also supporting links with fintech centres around the world. She hopes the changes will put an extra spring in the step of the fintech industry.
16:16: She is going to give us a bit of info on how the Government is supporting fintech. She's name-checking the FCA Innovation Hub which she says is now being copied by other regulators around the world - the regulatory sandbox for real world innovation. This will help UK fintechs seeking to innovate and will be very valuable to consumers as well she says.
16:14: What's interesting about the challenge is it's about solving real world problems... how to help people make remittances to other countries. Remittance flows exceed 400 billion GBP she says - and just from the UK it's 15 billion annually. Somalia gets nearly half of its gross national income from remittances. And when this money flows in from abroad it's a great lifeline - 90% of the money from the UK goes on food, healthcare and education. So it's very important that fintech is being applied to this area.
16:12: Baldwin is making a not bad joke about the English weather... and thanking everyone for being part of the awards ceremony. She's now doing the Government Minister bit of her speech... delighted to see all the innovators in the room... and about the challenge ie finding fintech solutions to real world problems. The Government is backing the sector precisely because it is about delivering tangible benefits to real people - as well as helping our economy. She's giving an example around the economic impact of fintech - last year they generated 6.6 billion GBP in revenue. And that's just the beginning. So this is why it's so important to Treasury...
16:09: McAndrew is back, introducing Peter Ware, Director of the SWIFT Institute Challenge. He is telling the audience about the Institute. It's the research arm of SWIFT, working with universities and professors to do research which SWIFT shares the results of with the community. Some of the professors and their students are here at the event today. And what's been done this year is an industry challenge with UK univerisity students. They were challenged with the task of improving remittances. Seven uni teams have pitched today and the winner has been selected. And now Baldwin is going to tell us more about innovation... before announcing the winner and presenting the prize.
15:55: OK folks, we're in the home straight here at the SWIFT Business Forum London and (some of the) best may be yet to come. We're starting this next session with the announcement of the winner of the first SWIFT Institute Challenge and some words from Harriett Baldwin, Economic Secretary to the Treasury, City Minister. Then we have Helen Forster, CEO, Working Well Trust, the CSR beneficiary of this SWIFT event.
And then last but definitely not (we presume) least... the Great Brexit Debate, pitching Sir Vince Cable (on the remain side) against John Redwood (Conservative member for Wokingham, Chairman of the Conservative Parliamentary Economic Affairs Committee and former Cabinet minister (and of course famous challenger to John Major for PM)) - on the 'leave' side. Moderator is Natasha de Teran of SWIFT. If you're not lucky enough to be in the room for this one, do follow the discussion here...
15:34: Raymaekers is closing this one down. Coffee break. But join us a little later for the Brexit debate among other delights. Back soon.
15:33: Question about membership... Raymaekers says at the moment the membership is for SWIFT user financial institutions. The way it plans to stimulate collaborate innovation is by providing that better box so third parties including ecommerce companies can innovate with their customers... Open APIs come in here as well. To what extent can these banks be accessed by Open APIs.
15:32: Question about new technology... Van Rossum says this is up for decision still. The tracker will be built through SWIFT inhouse and they will look for new technologies for that. For every other service we will have to look at the right technology he says. Blockchain could be an option for some. But the idea of the GPII is to take the technologies that are appropriate and to apply them where it makes sense.
15:29: Audience question about whether compliance costs can be decreased? Westerhaus says compliance costs always go up. But when working on the initiative it should be considered not only what this means for payment service and the client, but also in terms of what messages are sent to whom, leading to a reduction and rationalisation of those relationships. Rahman is adding the point that customer advocacy is one of the key themes we see across all regulations and GPII is very customer focused.
15:27: Raymaekers is asking Westerhaus about the potential to build new services on GPII. He says when the service takes off if customers see tangible benefits then further services can be built out, he says. I don't know how the digital economy will look in five years, he says, but if we develop this step by step I see strong potential and benefits. If we were able to develop the service in that way, who would speak about the need for real-time payments market infrastructure connectivity. We can save certain development costs, he says.
15:24: There's an audience question about loss of marketshare and whether this initiative can help? Rahman says at the moment interbank there hasn't been a loss of marketshare to new entrants. The rails that the services these fintechs provide are the same that traditional correspondent banking offers. But it doesn't mean that will remain the case. Currently the barriers to a new entrant are how does it fit in regulation, how do regulators view the whole market, because correspondent is core to that, so that question needs to be answered for anyone to make a significant impact on the marketshare of correspondent banks. Clients still trust banks. Any new entrant has to build that trust. And that trust has to be earned, he says. Correspondent banks have a small window to act and must act quickly - and that's why we are doing what we are doing on GPII.
15:21: Van Rossum is talking about the impact on investigations. About 50% are related to beneficiary claims no receipt. Usually they did receive them but in a slightly different way so these are completely unnecessary investigations. If both receiver and sender can look directly at where the payment is we can eliminate the vast majority of these investigations. That's going to be a direct impact initially. We have also looked at account numbers he says. Often cause a problem. One of the ideas it to be able to go to the beneficiary bank and interrogate their ledger and be able to see whether the account is open, available and whether the number is correct. If you can do that in advance you eliminate any return and the charges and inconvenience of that, he adds. He is also mentioning the Vision group - lining up the painpoints experienced to see which have the biggest impact and which are the easiest to address as part of GPII and putting them on the roadmap for the next couple of years.
15:20: Raymaekers says we also have to make the plane fly more quickly and cleanly!
15:18: Rahman sees potential for GPII in the future to bring the provider and the buyer of the service seamlessly together, including by leveraging the robust compliance architecture of the service as well. Putting a Discovery engine in a plane that flies to NY - may make it fly faster, but does it reduce the overall time? Making the message fly faster isn't going to create the overall experience benefit for the client. We have to look at the end to end. The GPII by enhancing this ability in corporate banking fuels that end to end creativity and accumulation of value for the cients, he says.
15:15: Raymaekers is asking how customer experience will improve. Rahman says it has to solve a customer problem otherwise there is no point. GPII brings the transparency, the predictability of the payments. It also helps the banks own clients to improve the client experience for their own clients and also their supply chains, he says. By providing the efficiency, the visibility, the transparency of the cost, we help our clients bring those efficiencies inhouse and be more efficient and nifty in providing services to their clients. This has already started he says. Some banks are already providing real time status updates to clients. We can take it to the next level by having all the data in the cloud and enabling clients to develop their own views according to their own needs. The client experience has to be at the centre.
15:13: Westerhaus says GPII does not replace correspondent banking. It uses many ingredients which are sound in what happens today. Though there are improvements to be made we can build on an existing well-functioning core. When it comes to smaller or medium sized players not joining right now, we need to develop the rules and the way it is attractive for the end client, he says. Our focus is corporates doing a lot of import/exports. More traceability, reliability etc. If the corporates ultimately demand this the banks involved in servicing them, be they big, small, medium, if they understand it is best practice they will adopt it, driven by user demand. So we need to solve real market problems. It needs to be pervasive. And that is the measure of success.
15:12: For niche markets, small banks' revenue will continue to be protected and even enhanced by the features brought by bigger banks. For GPII, for blockchain, it's up to the banks how they transpose this to the benefit of their customers. Smaller banks need to think about how they can leverage relationships to create a product offering which is client focused and forward looking.
15:10: The panel is talking about who will join the initiative. Will it just be big banks? Rahman says he wants to see everyone involved, including corporates. To bring scale, reach. However, understanding that every institution has its own dynamics. So the banks in the initiative should be able to show the benefits of the GPII to their clients and other banks and help in being a conduit for the change impacting the market. So a two tier initiative going forward. It will take time for everybody to join but this is the future direction, he says.
15:09: Picking up the session on SWIFT's Global Payments Innovation Initiative. Standing room only again in this one.
We have:
Saad Rahman, Citibank
Maarten Van Rossum, Barclays
Christian Westerhaus, Deutsche Bank
Wim Raymaekers, SWIFT
15:05: Moving to the session on global payment innovation now... Small gap, back soon...
15:04: Midgely says we could spend a lot of time creating the perfect European standard for APIs. But he's not sure this is the best way to drive innovation. Standardisation is good but let's make progress in the meantime. If ultimately UK banks' APIs look a bit different from each other that's not a big problem for developers.
15:03: Audience is asking how to standardise data formats for APIs. Wandhofer is suggesting to reuse existing standards eg SWIFT... SEPA was a big standardisation issue. We have a lot of experience in the industry in creating standards and we can draw on this.
15:01: Wandhofer says as long as the customer is the owner of the data and can get the data back, it's fine. It gets murky if you have given the data access and then it is used in ways the customer didn't know would happen. For example TPPs who want to extend credit or credit scoring rather than just initiating payment. The API model where the bank has control to a certain extent and can push certain elements of data rather than having to open up the whole online banking identity - is good. So how do we get at a European level governance and streamlining. The UK will do one API and other markets may have a different approach. Thinking at a European governance level how to raise the API option to have a standard approach.
14:59: Taylor is talking about the frustration of a cut-off of online availability of transaction data. It's the equivalent of the bank knocking on your door and asking to have your paper bank statements returned three years on. Sometimes the online experience has taken us backwards and given us less access to data than we had in the paper world, he says.
14:56: Midgely is picking up on the comment about how difficult this is. API is not difficult. Open is, he says. He is distinguishing between transaction data which customers want to control... where this conversation goes is that it's the consumer who decides which applications to connect to this transaction data. There is a rich discussion around degrees of openness. Under PSD2 there are some instances where a bank can deny access to a TPP. There's more discussion that as a community we need to get into.
14:53: Now going to Latham. Currency Cloud saw an opportunity because banks didn't understand the concept of the API economy - and the huge challenge it is for them to build on APIs. Making a reference to first generation e-commerce web sites. And the pain companies made customers go through. Today - it's a click. That evolution hasn't happened yet on APIs. What people mean when they say they have an API is that they have just plumped an API on the top of their legacy infrastrucutre. In financial services, SOA is still coming of age he says... What Currency Cloud is doing is not that clever... it's applying tech thinking to financial services.
14:52: She has moved on to the 'right to be forgotten' - the issues that arise if data access is given and can't be got back.
14:51: Wandhofer says the technology makes these things much easier. Making a segue to PSD2. If there are fintechs that can tackle areas that are not banks' core businesses - eg an app to get your coffee more cheaply - not part of core banking but leverage banking data. By mobilising the data you can get a lot out of it but it has to be kept secure.
14:47: Taylor (a machine learning careerist and big data man) has formed a fintech in Shoreditch and says it's tremendous fun. Describing how it hit on the API space... talking to a bank, realising that it had no idea what an API was. Two major things came out of the project. Looked at the core infrastructure of banks and thought they could do better. And the API section is about how developers connect to banks and get transactions in a safe way. It needs to be quality controlled. Open leads to nervousness about security. So his company is thinking about how to provide a cloud based service while keeping everything secure. To apply for a mortgage you should be able to temporarily give access to your information to a provider - and then rescind the access afterwards.
14:44: The first question is around change... what the impact will be on customers. Moulson has put it to Midgley. He says a lot of Intuit is trying to do in the small business space is connect up the dots between all the data that sits around the SME business - and let them focus on their core. To be able to pull in everything around transaction data, the nuts and bolts of compliance, is very attractive. The easy access to transaction data by the customer is very appealing, he says.
14:41: Moulson is teeing up the conversation. Recalling King's comment earlier that we are moving to an API economy. With the emphasis on economy he says - there's a technical dimension to the conversation but there's also a commercial aspects to the converation. He says this is an interesting time of change in the industry, as regulators push for competition and innovation and there's a focus on value and choice for customers. The ecosystem in service providers has moved on from talking about digital to really focus on how commercially data can be used in propositions. How that will also need to become available to customers and other providers that service those customers. So the conversation will touch on a few key points: open APIs, unlocking the potential of open banking, the downstream impacts of the Treasury paper and how new services will become possible in the future that aren't today.
14:32: Gearing up for the session on Open APIs and open banking.
We have:
Adam Moulson, SWIFT
Todd Latham, Currency Cloud
John Midgely, Intuit
Paul Taylor, Thought Machine
Ruth Wandhofer, CB
14:25: Grainger is passing on an audience question about whether blockchain will obviate the need for CSDs... Cameron says blockchain is very interesting but there are a lot of features of the way things are done today that we do not want to lose. Gors says blockchain can provide alternative ways of doing things we do today - reduce risk, increase speed - but it can't just replace one system with another and it probably shouldn't, he says.
14:22: Zignani says LSEG will be working with its community around CSD-R and regulatory reporting... Dockx is emphasising that the CSDs also need to talk to each other, as do the participants.
14:20: Question from the audience on CSD-R... Dockx is picking it up. It imposes a lot of complications on CSDs specifically. As participants we need to keep an eye on these. CSDs are dependent on their participants - to do stress testing, support resilience etc he says. The Level 2 guidelines may not be final but there are a number of market groups being formed around implementation. In this context regulatory reporting is becoming extremely important. What we have to report in a year and a half from now is not what we have in our systems and he would expect CSDs to have conversations with us about how to manage this, he says.
14:18: Gors says issuer and investor CSDs should be one... so the whole chain is going through the same infrastructure. He is now recalling an old initiative around XBRL for corporate actions - which was stymied by a lack of business case for issuer investment. This is a perfect area to use new technology like... blockchain. There we go, mandatory mention...
14:16: Grainger is asking for audience questions... one is coming... asking whether there is a role for the issuer in this process. Grainger points out that there is not necessarily commonality in how CSDs face off to issuers. This seems to be a question about corporate actions and the relationship between issuer and investor. There is value says Grainger. But the challenge is that the CSD is often not at the forefront of that. Though we would probably all agree that the way to take the risk out of securities processing would be to keep that link intact.
14:14: Fors is picking up on the business case point. This will be the most important part. And it can't just be SWIFT and or the MIs working on this. We need full support from market participants and we need a business case to enable that. The competition for money and resources today is pretty tough he says. We need to spend a lot of our resources on regulation. We need to work togeher better in this industry.
14:13: Dockx is pointing out that before embarking on the standardisation journey, we must think about how to do it in the most cost efficient way...
14:09: Turning to Fors, Grainger is asking about the value of standards. If we come to an agreement that we will live with masses of CSDs, which is the case, we will have as providers of services the need to connect to different markets with different CSDs and different infrastructures and processes. There are and will be differences, he says. To make it easier for us, the harmonisation of this connectivity is enormously important. If we go back 15 years when ISO 15022 was implemented, SWIFT and the market participants fairly successfully came together to implement it. We need to become even more structured in the way we do that. The harmonisation charter SWIFT set up in Singapore at Sibos needs to be extended. We need to work out how to implement ISO 20022, Fors says. There is a challenge as to whether to push this more for settlement. It's mainly only being pushed for funds. As an industry we need to sit down and work on this he says because we are not going to have mass consolidation of CSDs and SWIFT is well positioned to do this.
14:07: Grainger, the moderator, is asking Cameron about the challenges of connecting to multiple CSDs, and the solutions to it. Cameron says everyone in his organisation has a view on CSDs. There are four buckets they look at. They are interested in how they connect with the ecosystem eg CCPs. The second bucket is features and functions eg auto-collateralisation. The third is the risk area. The risk in dealing with CSDs. They're not hugely capitalised, so how are they regulated and insured? The fourth is about how they behave. We really value our relationships with the CSDs. They're not all equal. We like them to involve the community in their decision making. To invest their money wisely. And this ties in with governance and ownership. When we talk about connecting, it's part of the features and functions - and (happily for Grainger) we like SWIFT, he concludes.
14:05: Zignani is observing that T2S is commoditising settlement... which means CSDs need to make decisions about their business models.
14:04: OK, picking up the CSD session conversation.
We have:
Alan Cameron, BNPP
Goran Fors, SEB
Alex Dockx, JP Morgan
Alessandro Zignani, LSEG
Stephen Grainger, SWIFT
14:02: We're moving to the future of CSDs session now... back shortly.
14:01: We shouldn't forget the risk involved... Everyone makes the comparison with telecoms, but a payment is not a phone call, Loos cautions. We have to make sure we have a safe and secure system. That's why we move a little slower than other industries.
13:58: Loos says for a long time global payments were only really done one way. But the industry has done a lot of building of new rails. For example real time payments systems. The challenge is they are mostly domestic. But it's all being driven by the massive growth in global trade. Traditionally there was only one place to go to get these - and that is developing. GPII is just the start of something he says. The payment has become a commodity - it's what comes around it that counts, the transparency and information around it. That can happen on the existing rails - that's what GPII is all about, he says.
13:57: Sarafidis is asking whether Martin disagreed with anything Sanchez and Rutgers said... No, Martin says. Can we coexist and cohabit? For the foreseeable future, absolutely. After that, who knows?
13:54: Martin says it's all about collaboration, competition and clients. Absolutely the banks are in competition with new players and he welcomes that - it's stretching the banks and driving innovation. Collaboration is really important he continues. He's referencing the Barclays accelerator programme as proof of this. And segueing into the potential of blockchain in trade finance. In terms of the customer, Barclays views the fintechs as potential clients - building on the rails already in place and the new rails being built (eg EBA pan European real time and US real time systems). The rails are improving but the open question is what next in terms of technology - and none of us have the answer, he says.
13:53: Sarafidis is asking whether for its business Transferwise needs banks to be successful... He says yes, at least for now... and maybe for a while into the future. And there is a lot of innovation that can be done using the existing rails. In the end though it's likely we will need something else...
13:51: Turning to Rutgers... He says Sanchez has hit the nail on the head. The need for fintechs has come from the fact that the big banks had failed to innovate around very simple problems customers had - for Transferwise this was international payments. Regulation enabled other companies to compete with banks and technology enabled companies like us to do it quickly and scale up cheaply to create alternatives to traditional banks. The person that gets the best out of this whole equation is the customer, he says.
13:50: Sarafidis is asking whether we need to build new rails. Sanchez says yes, we do. Which is probably not the answer many of us wanted to hear. Patching up is not sustainable he says. You get to the point where you need to refresh. Maybe in three years time blockchain will make payment systems redundant he says...
13:46: Now turning to the panel experts... Sarafidis is asking Sanchez why there's a need to change the industry. Technology isn't always the catalyst, he says. In payments there are two independent but converging trends. On the client side there was a frustration with payments, international payments, FX, and companies like Transferwise are thriving on that. From a user point of view payments will be faster and easier. Payments will disappear. You will not see them anymore. It'll be embedded in our everyday lives. At the same time banks are subject to extreme stress as we heard from Masters in the opening. All the KPIs look south. In this environment you try to cut the cost and the cost of reconciliation and of maintaining the rails are enormous. It's become apparent this is unsustainable and regulation is helping this to happen. The two trends are converging. For the user payments will disappear. They will be instant, immediate, embedded into something wider. They will not be visible. If you look at other technologies like AI he says - are we going to have jobs? Are we going to pay at all if we don't have money? This is still far away, he says - thankfully.
13:44: Sarafidis is asking Johnson what the future of payments will look like. He is saying the industry is great at scale. This is what the industry can bring to the table when we talk about collaboration. If you look at a start up though, it's all about speed and agility. If we can marry the resilience of the industry with the single minded start up approach we can do some great things.
13:42: Now asking where disruption will hit most? 71% payments. How seriously is your organisation taking new entrants in payments? Two-thirds are actively doing something or seriously investing... So as Sarafidis says, things are clearly changing.
13:37: Sarafidis is explaining that he has a plant in the audience, Kevin Johnson, Innotribe. He's the 'voice of the audience' apparently... He's asking everyone to do a test question for digivoting... apparently 1300 people pres-registered for the event. He's now asking the audience to define their roles. They're voting... slido.com may not be working... we're still waiting for the audience demographics... 52% are bankers... 7% startups. Age range wise - a good split... 28% Gen Y, 28% Gen X, 25% millennial... the rest boomers.
13:36: Loos... is talking how difficult it used to be to explain at a dinner party what his job was - and how easy it now is thanks to all the coverage of payments innovation. He's also bigging up SWIFT's GPII...
13:33: The panellists are introducing themselves and explaining why they are participating in a discussion about innovation in payments... They're all agreeing about how very exciting the payments business is right now.
13:32: Sarafidis is kicking the discussion off, asking whether start-ups should build new payments rails or reuse existing rails.
13:30: Getting ready to restart here. We'll be blogging in the 'future of payments' session, and moving half way through to the 'future of CSDs'.
Here in the payments session we have:
Matt Loos, JP Morgan
Richard Martin, Barclays
Wander Rutgers, Transferwise
Carlos Sanchez, Orwell Group
Christian Sarafidis, SWIFT
12:00: Gilderdale is bringing the session to a close now. Lunch. More blogging this afternoon, so check back in...
11:59: Taylor and Hampson are debating the potential of blockchain in emerging markets...
11:56: Buterin cites the use case of bitcoin. People have to understand for themselves the potential of blockchain, he says.
11:55: Hampson says today there aren't too many actual applications. He is referring to applications out there - all of which are POCs not real things. As of today there isn't a real-world example I can see, he says. But he says firms are actively engaging with the technology.
11:53: Gilderdale is passing on a question about the practical applications of blockchain so far. Taylor is referencing KYC, reconciliations. He says blockchain is a revolution in reconciliations, not in payments or settlement. There is an opportunity to digitise and standardise paper workflow internally and externally. The frequently cited bill of lading example as well. Broad categories with lots of interesting opportunities beneath. ISAs/ETFs could have applications he says.
11:50: Gilderdale is asking Buterin how the technology will develop. He says the key is to solve business problems. You might see smart contracts etc evolving on top of the platform. Systems to ensure privacy and security. The technology will evolve in parallel with the bottom layer. Over the next couple of years we will see a focus on scalability, on making it more useable for general use cases, he says.
11:49: Blockchain is just a label, Taylor says. It's concepts to solve business problems with. A box with bricks in it. How do you put them together to solve the channel.
11:47: Taylor says the banks that are working on this now have to show some tangible progress with it otherwise appetite will disappear. The appetite will drop out - it needs to show real turnaround. The name of the subject will evolve. Big data to AI. Information superhighway to internet. The language and terminology will change, and some of the technology will change, but the routes we are going down will lead us to some answers. We won't realise it came from bitcoin - it will just look like another amazing thing that came from the west coast.
11:46: What next? We are starting to use the tech internally and I encourage you all to do so - in real projects, not labs in dark corners. There are real business problems that need to be solved he says and have a look at DL as a potential solution to your real business problem. On the market infrastructure side, Nomura is monitoring it and so should you. Talk to people - a lot of people. We're getting stretched thinly but if you are not aware of what is happening it will be a problem. Stay aware. And lastly, he says, look for unicorns out there. One may come along and you don't want to miss it.
11:45: Matthew Hampson, Nomura Bank, says west coast tech companies aren't so interested because in a community it needs some kind of market infrastructure, the wholesale process owner to be involved. The west coast companies are much more interested in retail customers than wholesale customers. And they can't quite see how blockchain works in retail.
11:44: Stephen Gilderdale, SWIFT, the moderator, is commenting on the progress that has been made but the large number of unknowns that remain and the hypothesising about the future. What's the next 12 months going to bring - and even a bit further out?
11:43: Taylor: there is a community but it's not on the west coast. Why isn't Amazon really pushing this? Have they just not seen it yet?
11:42: Vitalik Buterin from Ethereum talking now... Commenting on how little some of the big tech firms have done with blockchain. The question is why haven't we seen this - is it because there isn't much for them, is it because they haven't found the right angle?
11:41: Taylor says when the tech sector gets hold of blockchain is when it will really get interesting.
11:37: OK... standing room only in the blockchain room.
We have:
Vitalik Buterin, Ethereum
Matthew Hampson, Nomura
Simon Taylor, Barclays
Stephen Gilderdale, SWIFT
Simon Taylor of Barclays is talking about use cases and how to work out where the blockchain tech is ready to use. The explosion has created a lot of confusion. It will take a few years to evolve. Really understanding how to use blockchain is important and the consortium work can speed this up. Standards will play an interesting role - as will standards bodies, he says. He recommends listening to your developers about which standards will prevail. Their enthusiasm and technical skills are there - you just need to find it within your organisation. There are a lot of people trying to fix bitcoin when what we need to do is fix our business problems, he says. A well organised standards body with good governance helps that as does open source.
11:35: We're heading into the blockchain session now... short break in service... back soon.
11:34: Now moving to Clements from Metro to ask about the costs of access. She says it's worth the cost to give customers the experience they need. It's all about customer service and choice.
11:33: Schickler says there is pressure on the banks to really understand what is going on with a payment. The opportunities to enable the settlement yet linkage between the movement of money and the information creates great opportunities. Keep them linked, but separate, for richer information - that would be a good result.
11:31: Gaetz is asking whether there is an opportunity to move more functionality into the central infrastructure. Schickler refers to the discussion of collaboration during the opening plenary. The last mile isn't something everyone should solve. Even a lot of operational and financial crime components can be shared. That's a tremendous opportunity he says. As Masters said - re ROE - there are challenges. If we can take costs out and still make the experience better for consumers and safer for stakeholders, we have to look at that.
11:30: Schickler says every year the planning for the technology budget needs to look at changes for all the payments systems around the world. The first hope he says is that there is a broader level of communication - and even convergence in terms of change - otherwise the cost of access becomes too great. In terms of how the banks think about access, he says, we have customers at the heart of what we do as well, so if there is a meaningful value of exchange in terms of the relationship we are going to provide access and innovation. In terms of the threats of other entrants, he says, we look carefully at client segmentation and the value proposition. The change of payments infrastructure isn't going to impact this strongly.
11:29: Gaetz says Canadian banks ask him what does he mean, he wants them to pay for a new infrastructure that is faster, offers richer data, and then allow the new banks to be free-riders.
11:28: Newman is talking about the value of technical aggregators, taking on the role of the technical stuff at the heart of the system, and allowing the new entrants to take on the business model. That model is emerging in the UK and Australia this is how it has been approached.
11:25: The discussion has moved on to direct access for new players. Metro Bank wants to be a direct member in order to provide what its customers need. So smaller banks shouldn't have to jump through such hoops to become direct members and the direct members should offer innovation down to the smaller PSPs.
11:22: He talked last week about real-time to 20 senior treasurers from multi-nationals. The treasurers talked about the opportunities real-time creates for them and what took him by surprise he says is other than their interest in the consumer experience, there was was a call to action for us to figure out the value chain we can create.
11:20: Schickler: the mix continues to change, which creates some challenges. But overall it's a positive story. As a general comment about the payments business, whether banks like to think it or not, we are in the transport business, moving money from point A to point B. We were able to do that when the infrastructure was so complex. It's complicated to move money. That's no longer the case. Certainly the greater interest from fintechs are looking to innovate. We can't remain in the transport business - it's the data pre and post payment where the value is. That is where we must focus.
11:18: He is now talking about SWIFT's experience with real-time in Australia. The evolution is compressed. The payment is just the basis. You build a structure that allows innovators to create new services on top. In Oz there was the concept of overlays - others (banks, neo banks, corporates) can come in and use the bank-built rails to build new services for the community. Some form of this approach will now become the norm he says. We can't conceive of what the innovative guys will do - but they will do it as long as the secure rails are in place.
11:16: Newman is reviewing the history of real-time payments. It all started in 2004 with a call for the industry to do something about too slow retail payments. It went live in 2008 and it's been a strong success in many areas, he says. Very strong in P2P, but in other areas it hasn't been used as much as was foreseen. How many people have seen the ability to do this on a website? So there has been strong volume growth in very specific pieces. And the system has evolved. PayM for example. There starts to be a variety of apps and innovation being built on the infrastructure.
11:13: We've restarted here and the real-time panel is under way. We have:
Harry Newman, SWIFT
Gerry Gaetz, Canadian Payments Association
Becky Clements, Metro Bank
Thomas Schickler, HSBC
10:44: Coffee break here now. Then breakout sessions. The live blog will be covering the real time and blockchain sessions. Keep checking in to follow the discussions....
10:39: Hauser: We never stop worrying about security and resilience. Many things failed during the financial crisis but predominantly payments systems didn't. We are focused on where we can innovate without hampering stability and we should aggressively move towards that. Trying to set the agenda for the future that helps consumers get a better deal without damaging resilience.
10:35: Asked whether one blockchain player will take all... She says no. The consortia work is interesting. Financial services is a big taker from open source initiatives. The reality is that a lot of foundation work on building fabric now goes on in the open source community, contributed to by banks, start-ups, academics, tech giants like Intel and IBM. The kind of work being done here on security and validation etc need to be developed in the public domain. If they're not secure, we're creating a raft of new systemic risks. The Linux Foundation work is something to watch - and a sign that the changes we need to see are actually beginning to happen. It won't be one winner takes all. It's analagous to the early days of the internet. Was it a foregone conclusion that bricks and mortar would automatically lose? The vast majority adopted and adapted and used the internet - and that's what the DL world will look like. Core infrastructure plus varied applications built by and contributed to by different players.
10:34: A lot of these technologies have implications for job losses, she says. Costs that will be cut are mainly headcount so we need to skill and upskill and create a strong pipeline of the stem subjects.
10:33: Masters wants to wade in on the question of what to invest in. If she had the opportunity she would like to see increased investment in education of our people in sciences, technology, engineering and maths. We are under-investing relative to certain economies in those areas and it's that pipeline of talent which will drive technology innovation that will accelerate everything we have talked about.
10:32: King says banks shouldn't leave innovation to start ups - they should partner. We need both. Banks can't innovate in the same way as start ups so we need partnership. In a start up environment you need distribution, scale - and we've all had experiences where scaling up innovation is difficult to do. You need a combination of both.
10:30: King is answering a question about what function she would create a utility for if given money... she is referencing Masters' point about shared infrastructure and Leibbrandt's that legacy doesn't go away... the reason cheques are here is because many SMEs depend on them. The same is true of cash. But there are customer needs. She would invest in shared infrastructure - not create more pipes - and focus on common standards. There are still a plethora of private standards in payments. The world of innovation and the partnership between banking and innovation will create the user interface that's needed.
10:28: Leibbrandt is responding to an online question about whether SWIFT views itself as a legacy or a disruptive force. Both, he says. SWIFT is quite a powerful legacy and infrastructure. But also a disruptor - another reference to the GPII to improve correspondent banking. SWIFT is doing the same in compliance - eg with the new KYC infrastructure it is building. So a bit of both - and the same is true of the banks, he says. Comparing the banks now to during the first internet boom it's been a real change - mobile banking, multi-channel. Banks have proved they can transform themselves given the right incentives.
10:25: Masters is now talking about the need to separate discussions about digital currency into separate categories. One is technology, one is policy. You can still limit access to central bank money while digitising cash for securities and payments. Going to the other end of the spectrum and allowing Blythe to have an account at the Bank of England fundamentally changes the fabric of the financial industry etc. These are important policy questions. At the end of the day the technologists need to stay focused on solving the business problem with which they are presented - and that needs to be well defined. Rather than advocating a technology based on a religious conviction that a technology can eliminate central banks altogether. This is where bitcoin started. But today the capacity of this technology is better understood and the reality is it can and will solve real commercial and policy questions.
10:22: McAndrew is asking whether banking leaders have caught up with fintech... Masters says there is probably a misperception - if you look at the core of what today's banking activity actually looks like there are some key ingredients. Capital, risk management capabilities, people/customers and then technology. Citing a stat that Facebook has about 10,000 engineers. Do you know how many engineers work at Goldman Sachs? Goldman Sachs is a financial technology company as are all the major financial services providers. To characterise the banking sector as non-tech-savvy is an over-simplification. Yes it's saddled with infrastructure that is going to need to be reviewed and revamped. Which is an opportunity given the enormous steps forward in technology. That's not the challenge. The challenge is finding the capacity to invest in a very challenged operating environment and the challenge of getting a number of divergent competing entities to collaborate in areas where a network effect is important. The incentives for that, the catalysts for that change exist now - and that's why we're seeing so much noisee around the space.
10:19: In terms of access, the central bank mustn't necessarily stand in the way of new entrants - we may be able to think of ways in which there is a packge for greater access, alternative regulatory access for new players, which impose sufficient requirements to ensure the system is stable. He is now talking about research into blockchain - what begins as a discussion about technology quickly comes back to a question about what this does to the distribution of risk. What will the future of financial intermediation look like?
10:18: McAndrew says there are questions coming in about whether fintech is a bubble. She is asking Hauser how to balance the urge to accelerate versus the desire to brake. He says we need to better understand what disruption means for the sector as a whole. It could be a complete disruption or we could see innovation quite quickly being internalised back into banks. Which model and how it impacts is really important for the regulator and banking. If fintech is just regulatory arbitrage there is no value in it.
10:16: Panel discussion now... King says the fintech market is exploding because of technology which makes our lives easier (like contactless). McAndrew is asking why the Brits are ahead... why have we been early adopters? King says it's driven by a vibrant economy, a strong financial sector, a strong understanding of requirements and the fact we are an automated country. The easy transition to transacting online has been straightforward because we were not a cash based country. Not just one reason but bring them all together and it starts to accelerate.
10:11: Most payments infrastructure is funded by banks - who have a lot to worry about - so it's important to reuse what we have. And really think in terms of segmentation. What are we building it for? What is the purpose of this infrastructure? It's different building something for high value than low value payments. You have to think about segmentation rather than throw something out there and see who comes. Target those processes where you can have the best payoff.
10:09: Leibbrandt now - talking about technology not being trivial, and if you get it wrong - it's expensive. And old infrastructures never go away. Referring to the difficulty of getting rid of cheques. Investments and pay-offs in infrastructure are very difficult to calculate he says. If you get it right - the payoff can outweigh all expectations... but it can go nowhere. The agony in the UK around Heathrow - new airport or existing? Very difficult to get it right. When is the time right for huge investment in something new? For that reason there is a premium on re-using things...
10:05: SWIFT is an example of exactly one of those times in the evolution of finance where standards were evolved to underpin a better way of doing business. The financial industry has never failed in the past to come together and collaborate and standardise and we are going to see that happen again - and some of the 'new fangled' technologies like blockchain will move to centre stage. Work on that is happening now.
10:04: In the context of that promise, the question is, why hasn't it happened already and why isn't it happening more quickly? It's difficult. Legacy systems are gigantic. They are proposed trillions of $ notional daily and if they fail it's catastrophic... changing the wheels on a bus on a fast moving highway. There are three obstacles. Legal/regulatory, the opportunity to create a network effect, and how do we agree on the necessary standards to facilitate all that.
10:02: It's the first time in history we can think about mutualising infrastructure while enhancing security. That's what blockchain is all about. What it means to mutualise and share financial infrastructure is the opportunity to eliminate very significant components of the cost base - which in an environment with depressed ROEs is a very interesting proposition. Not 5% - 30,40 or 50%, she says. In an environment where there are existential threats.
10:01: Throw in a few unknowns like cyber and you have a very challenged operating environment she says. And into this world comes a new generation of entrepreneurs and technology. There are risks of getting left behind and the creation of an un-level playing field while new entrants enjoy advantages such as regulatory positioning and a lack of legacy. But think about the positive opportunity innovation represents - which outweighs the risk, she says.
09:57: Now on to Blythe Masters. She has the unenviable role of representing the disruptor in the room - the one who is going to eat everyone's lunch, she says. But that's not the way she sees it, she says. Having spent the best part of 30 years in financial services, she carries some of the DNA with her, working in a more entrepreneurial capacity. It's easy to characterise the overall environment in one metric - ROE - or more specifically suppressed ROEs. Since the financial crisis this has been more or less consistently the case. All three inputs to this key performance metric are structurally heading in the wrong direction. Revenues are structurally depressed. Low rates, low spreads etc. And some of the things that used to make up for it such as the ability to extract economies and grow by acquisition have gone out of fashion... fun activities like prop trading out of fashion... At the same time costs are high and rising and have been doing that for eight years, driven by the need to comply with regulation. And capital requirements have gone up in a more than linear fashion with no abatement likely.
09:54: Hauser now talking about progress with the review of RTGS. Five things coming out. The first is resilience. Absolutely everyone has said, if there is one thing a central bank has to do, it's ensure stability. Provide new functions but ensure it remains stable and resilient. The second is convergence. Convergence between retail and wholesale, securities and cash, and between national systems across currencies/borders. It's quite hard to guess where it'll level out - so we need a system sufficiently flexible to deal with different future worlds. We need the technological capacity to run 24/7/365. We need better data and analytics and we need to think very hard - this is the most profound message - about who should have access to an account in our system. Is what we do now viable for the future? And cutting across all of that is the question of which forms of technology can we use to do our job better.
09:52: A lack of innovation can definitely harm stability, he says. Under-investment leading to single points of failure. And too little competition can lead to concentration which leads to single points of failure. Innovation properly channelled can improve stability rather than undermine it. Also, can central banks use innovation to do their own job better?
09:50: Turning to Andrew Hauser. Who makes a very cheeky joke about a rave... He is referencing the intense activity going on to build the future and asking what the role of the central bank is, making an elaborate comparison to a building site. Some people want us to be architects, master planners he says. We have to preserve the system as a whole and understand how to enable innovation to flourish safely. The second role is as plumbers... the drains, the water supply, the central infrastucture that is needed to enable the system to run safely. The third role is as health and safety. This is important but isn't everything we do, he says. Change is going to happen so we have to understand it and as central banks adapt as well. Central banks just like everyone else can't afford to be 'uber-ed'.
09:47: About 40% of investment in fintech is payments related, so the opportunity is growing she says. The backdrop is legacy and regulation. Bacs was launched 40 years ago! But legacy and the need for new technology and regulation are the facilitators of change, not challenges she says, as we move to open banking and embrace change. Moving money is what payments is all about, and doing it safely and securely and in real-time is now a commodity, it's a given. Like voice in the telco industry - given, and often given away. It's the applications that go with it that bring excitement. Corporate customers don't just want money moved. They want it integrated with other functions. Consumers want it on their app, they want data an analytics, and they want to be rewarded... and they want it one touch. That's the challenge. To respond to the changing and vibrant market while mainaining the safe secure infrastructure but making sure the economic model can work for all.
09:46: King from RBS is referencing the rise of contactless in the UK and the fact that London is the number one global per capita of e-commerce... this tells us a lot about how the people in the UK are embracing change and leading the way, she says.
09:41: Daisy is back... We've a panel discussion next.
Andrew Hauser, Bank of England
Marion King, RBS
Blythe Masters, Digital Asset Holdings
Gottfried Leibbrandt, SWIFT
09:40: It's amazing that we are here together. The day's agenda will start to challenge our preconceived notions. And the people in this room already want to be part of that, she says. As a Londoner she is proud that Sibos is coming she says. When it does we will be able to look back and think about how nascent it seemed then but how obvious the collaboration and the future is by that point... Big round of applause there.
09:37: Financial services and fintech are not mutually exclusive she says. It all works in concert. Think about the entire ecosystem as one great big thing as we build the future. In 10 years time we won't be talking about digital as a sector... nor will we be talking about fintech in 10 years. Everyone still in financial services won't be talking about tech as a separate thing. Any bank that is delivering services will be fintech by nature and any fintech that survives will be a financial institution.
09:35: What's new is not innovation - but the forces and influences from where the innovation is coming. Traditionally it has come from within the institutions, now it is coming from new entrants, new sectors like mobile, emerging markets etc and also from users directly. Technology is enabling new influencers to bring innovation to a market which is having to react to innovation rather than setting the stage for it. When asking how do we collaborate - what we are doing in London is a perfect metaphor for that.
09:33: Now referencing her day job as a VC which is now mainly focused on fintech though that wasn't the plan at the outset she says. It's a reflection of the strength of the entrepreneurs and the ideas in the fintech space. When people think about innovation she says the first thing to consider is in banking it's not a new thing. Banking has always been a leader in technology. It's always been at the forefront, an innovator even before digital came about. SWIFT is an example of that.
09:32: Burbidge is saying she has never been here before - but says her colleagues told her it was a great place for a rave! It's a great metaphor... everyone here today outside the Square Mile and Canary Wharf to build the future. She says someone tweated her to ask her to address collaboration... She says her presence, Baldwin's, regulators, etc are all about working together to move the industry forward.
09:27: He is finishing up now... closing reflection on the pace of change. Citing Moore's Law - change will never be as slow again. Let's get ready for transformation, he says. Introducing Burbidge.
09:26: Pérez-Tasso is dropping the blockchain bomb at last... This holds the promise of transforming securities and payments he says, to increase transparency and reduce risk. But we're still a way off a production environment - we'll be guided through the blockchain maze by Digital Asset's Blythe Masters later on. SWIFT is publishing a paper on blockchain today - the start of a journey and more to come, he says.
09:22: One further reflection... infrastructure. Underlying systems are supporting innovation. He is referencing Sibos in London in 2019 for many reasons - but one of them is Cross Rail. So there's a parallel with transport. Infrastructure change to support innovation. This is already happening in banking, with the focus on simplifying legacy to support front end integration. Also in domestic market infrastructures, he says. Referencing Andrew Hauser later to give us an update. The UK has led the way with Faster Payments and work is under way to evolve it further. SWIFT is very much involved in real time and there'll be a panel on that later. Also marking the 20th anniversary of Crest...
09:21: We see this in correspondent banking he says. New entrants are emerging but incumbent players must not throw out the baby with the bathwater. Rejuvenate current systems while improving speed and transparency... which SWIFT is helping with the GPII, he says.
09:20: Making a segue to the London Marathon coming up this weekend. One of the characteristics he says is it's hard to predict the winners with outsiders and new entrants coming in every year. In our industry, the winners of the competitive race may well be experienced incumbents or relatively unheard of start-ups, he says. Fintechs have clear advantages - no legacy, can build from scratch - but they don't always have the power of distribution, the strength of thousands or even millions of customers. So we can predict the winners will combine both - harnessing new technology while leveraging a sizeable customer base.
09:18: In the UK in particular, the PSR and the Open Banking Working Group report are two specific factors shaping the market and regulation... and fintech while a global phenomenon is particularly strong in the UK. Pérez-Tasso referencing the EY report's ranking of the UK as a fintech sector... The acceleration of fintech is creating a competitive race that is getting tougher and tougher he says.
09:16: Now elaborating on the theme... Build the future. Banks face two major challenges. Remaining compliant, resilient and cost-efficient - part of the licence to operate today, and harder and harder to achieve given cyber, growing regulation etc. The second is around innovation and technology, he says. We're getting to the fourth industrial revolution - cloud, robotics, big data etc. and this is going to continue to transform financial services.
09:14: He says there are more than 1300 delegates here... Impressive. Also flagging up interesting sessions including the Brexit debate later... which we're all looking forward to. Also Harriet Baldwin will be here to give the prize for the SWIFT Institute award.
09:12: McAndrew now reflecting on the depressing nature of the financial crisis, and welcoming the positive stories we are hearing now and will hear today. Also commending the usefulness of the sessions today. Handing over to Pérez-Tasso...
09:09: TV Journalist Daisy McAndrew kicking off... says the opening video had a James Bond feel. Asking for interaction from the audience and introducing the online question capability - using Twitter (#BFLondon) and sli.do... Encouraging delegates to participate in a phoney poll - what's the Queen's favourite supermarket? Fortnum & Mason is the top choice, of course.
09:08: Here we go... Opening video... Disruptive forces... Changes to technology and regulation... Now is the time to build the future and build real world change across financial services. Learn, network, collaborate... Welcome. Rousing words.
20 April 2016 - Tobacco Dock, London
08:53: Good morning folks. Finextra is here at the SWIFT Business Forum London 2016 live blogging all day. We have a packed agenda - starting with opening remarks from Javier Pérez-Tasso, Chief Executive, Americas & UK Region, SWIFT, and then moving to an opening keynote from Eileen Burbidge, FinTech Envoy, HM Treasury. Keep checking in to follow the discussion. The many delegates are filing in... more soon.