Club @ Sibos
PAYMENTS
Strategies for the digital
payments world
During Sibos, delegates were told that the banks that would ‘win’ in payments would be those
that own the front-end customer interface. To take ownership of this interface banks must utilise
technologies such as the cloud, mobile, social media, big data, machine learning and the internet
of things. The problem is, the fintechs and bigtechs also have access to such technologies
T
here has never been a time when
so much is changing, Ulku Rowe,
technical director, financial services
at Google, told Sibos delegates. Technologies
such as the cloud, mobile, social media, big
data, internet of things and machine learning
were transforming the landscape, particularly
in payments. These technologies are also lev-
elling the playing field for everyone, lowering
the barriers to entry for access to customers
and devices.
“All of these technologies create a lot of data
that can be turned into knowledge and used
to interact with clients in ways that were not
previously possible,” Rowe said. Large en-
terprises such as banks have the same access
to these technologies as a fintech start-up.
Moreover, they can also take advantage of
their brand, data, and people to “disrupt
themselves” before they are disrupted by
others.
In adopting new technology financial
institutions needn’t give up their legacy
systems. Rowe said as new technologies are
introduced, the old ones don’t go away. In
fact, there are still 1.2 million dial-up modem
users in the US. “The challenge for everyone
is how to build technology for the diversifi-
cation of payments and systems and handle
legacy along with new products.” The way to
do this, she added, is to use containerisation
and APIs to provide a ‘wrapper’ around old
technology. This allows financial institutions
and other organisations to provide a diverse
set of services through a single window. It is
also not a case of “one or the other” when it
comes to technology. Organisations will have
to support a diversity of systems – legacy and
new, she said.
Speaking during the same session about
disruption in payments, Esther George,
president and chief executive of the Federal
Reserve Bank of Kansas City, questioned
whether legacy systems were indeed out-
dated. “The reality is that legacy systems are
updated by virtue of new technologies. For
example, the cheque is now in an electronic
form. Legacy systems reflect the current
environment.”
In a debate on reengineering international
payments, Philippe Henry, global head of cor-
porate, financials and multinationals banking,
“The mobile channel is having a big impact right now and the user
base is growing. We are bringing the environment of alerts and
notifications via mobile channels into the payment experience for
corporate treasurers.”
TOM DURKIN, BAML
14 | CLUB@SIBOS | Bringing the world to Sibos and Sibos to the world
HSBC, said legacy systems represent “proven
technology”. However, the new technologies,
languages and capabilities that can be devel-
oped around legacy systems, via application
programming interfaces (APIs) are adding
value. “There is a lot of information in our
legacy systems that was never given back to
clients, who therefore couldn’t use this infor-
mation to develop new business models, for
example,” he said. Historically, clients were
not particularly demanding and have started
to be so only now that the “fourth industrial
revolution of digitisation” has begun and is
making them revisit their business models.
“Now there are solutions that enable us to
utilise the information in banking systems, to
share it with the ecosystem around us.”
A similar point was made by Saskia
Devolder, head of Western and Central
Europe at Swift. Speaking to Club@Sibos, she
said while many people think having a legacy
is negative, for her, it means “you have made
it in life. Banks can embrace that legacy, work
with fintechs and create new partnerships,
bringing new business models and the legacy
will adapt.” Not all Sibos delegates have such
a positive view of legacy systems, however.
In a poll during the debate on reengineering
international payments, delegates identified
their biggest challenge as the inability of lega-
cy systems to tap into new revenue streams.
During that session Henry made the point
that the new financial technologies are not
only being deployed to deliver value-added
services; private equity investment in fintechs
is increasingly being made in regtech and
cybertech – technologies that help banks to
improve the way they control and organise
their transaction operations.
Financial institutions have had to move
from “payments as a product to payments as a
service”, he said. “We have to look at the cli-
ent and understand what is going on in their
world, whether they are a retailer, luxury
goods supplier, industrial or pharmaceutical
company, etc. They are all facing the same