[ T E C H N O L O G Y ]
“It is important to remember that clients
still incur liability whenever they outsource,
so their providers need to be strong. As a
result, a partnership approach is becoming
more common between banks and those
FinTechs offering innovative solutions.”
JOHN VAN VERRE, HSBC
A
nother year, another Sibos.
With the industry having
recovered from the sheer
intensity of the four-day
marathon event, let-alone the
jetlag upon returning from Sydney, some
interesting themes did emerge out of the
conference. Sitting through industry gath-
erings has been a fairly depressing exer-
cise for securities services professionals
recently, not least because they have been
constantly pumped with apocalyptic mis-
sives from FinTech enthusiasts warning
them that their days are numbered. Sibos
Sydney, however, marked a dramatic
change in tone, much to the relief of secu-
rities services.
Collaboration is in
Rather than aggressively attempting to
disrupt intermediary providers, the best
FinTechs are now working with them.
“There is a real opportunity for banks like
ours to collaborate with FinTechs, as they
are agile, innovative and unconstrained by
complex processes,” said Margaret Har-
wood-Jones, global head of securities ser-
vices and transaction banking at Standard
Chartered, speaking at Sibos. “However,
FinTechs cannot disrupt the industry in
isolation as they do not always have the
clients, relationships with regulators or
capital, which banks do have. This has
created synergies for banks to work with
FinTechs.”
FinTech risk
Other factors are also accelerating these
partnerships, chiefly the general reluc-
tance among many clients to outsource
core operational activities to start-ups.
“Clients’ primary concern is safety and
they want to work with trusted counter-
parties which have long, proven track
records, robust asset safety provisions
and the correct infrastructure from a risk
management perspective,” said John van
Verre, global head of custody at HSBC
Securities Services. “It is important to
remember that clients still incur liabil-
ity whenever they outsource, so their
providers need to be strong. As a result, a
partnership approach is becoming more
common between banks and those Fin-
Techs offering innovative solutions.”
Are we at peak blockchain?
Roll back five years, blockchain was going
to transform everything, be it clearing and
settlement, corporate actions, report-
ing and payments. While blockchain is
certainly not a dud, the technology has
not quite met expectations to date. Even
its purported ability to facilitate instan-
taneous cross-border payments has been
met with short thrift from correspondent
banking clients, who say they are more
than happy for transactions to complete
in several hours or on the same day. Van
Verre acknowledged many banks were
using the technology mostly to resolve
internal issues involving duplication,
adding that APIs now seem to be more of
a business priority for them.
Quantum computing in the limelight
Just as the securities services industry
had finally adjusted to the tsunami of
blockchain verbiage like mining, nodes,
hard forks, and soft forks, a new, even
more mind-bending technology made
headlines at Sibos. Quantum computing –
depending on who you speak to – may or
may not be genuine, but as a conjectural
premise it could enable the industry to
digest and disentangle the most byzantine
problems and calculations well beyond
the comfort zones of any existing technol-
ogy. While some believe quantum com-
puters could unravel blockchain encryp-
tions, most experts are not flustered about
it yet. As one seasoned securities industry
veteran put it, “quantum computing is a
long way off.”
January 2019
Securities@Sibos
9