IBS Journal April 2017


43


via ‘meshing’ them together. For example, can a [manually-supported –Ed.] lending process be eliminated using Robotic Process Automation (RPA) and AI in conjunction to automate the decision- making? How can inter-organisational delays in settlement and reconciliation be eliminated using blockchain and smart contracts? These are the important questions.”


According to Rajasingham CBA has “a fairly large portfolio of experiments and projects” in the emerging technology space, including:


• Visualisation projects, such as augmented reality.


• Internet of Things (IoT) projects, involving drones, and AI projects that use deep learning techniques to get better results from predictive behaviour models.


• Cyber security is important too, including creating a rapid innovation capability to bring in the best the FinTech world has to offer, in an agile way.


• Blockchain. This technology is being explored to automate processes, such as procurement; and explore new secondary market opportunities, such as data sharing with counterparties to eliminate reconciliation. Monetisation and commercialisation opportunities are also actively under investigation.


• Longer-term, next generation quantum computing is being explored. As is how to train professionals to think in new ways in order to best utilise the technology and cryptography in a post-quantum computing world.


“Our aim is to mesh all these technologies together to create new value,” concludes Rajasingham.


Threats and opportunities


Technology is a double-edged sword in that it presents a displacement or disintermediation threat, as well as a cost-cutting or new market opportunity. How FIs choose to identify the technologies that are important to them and to deploy cloud computing, open source software or to partner with FinTechs in the short-term will decide if they’re successful or not in fighting off newcomers, or indeed more tech savvy rival banks. The


same applies in the longer-term when utilising AI, DLT and so on.


It’s important how FIs align new technologies with their people and processes. Banks can no longer support the expense of aging, siloed IT systems that are expensive to run, especially with internal staff, so they are increasingly looking to more modern digital platforms and cloud-based solutions and partners. The initial driver was the post-crash environment at the turn of the decade where return on equity fell, compliance costs rose and operational savings had to be made. Know Your Customer (KYC) and other financial utility platforms also had to be introduced to get economies- of-scale savings on shared solutions.


But a later driver has been the need to transform banks’ internal IT to meet the displacement threat from FinTech-enabled digital-only neo-banks, such as Starling or Fidor in the West, and numerous other such challengers in Asia and the Middle East. A more flexible digital platform is required to compete with these newcomers. Meeting enhanced customer expectations of a digital ‘always on’ 24x7 service at a reasonable operational price is often not possible with the legacy systems and silos at Western banks. If others can do it, at a cheaper price, then eventually Millennial and other customers will move, necessitating the need for a new core.


FinTechs


“The banking landscape is changing very rapidly. FinTechs are disrupting the market by delivering services much faster and with less friction than traditional banks,” says Sonny Singh, Senior Vice President at Oracle FS. “It is more important than ever for banks to expand their digital capabilities by modernising their business architecture and technology infrastructure.”


For instance, a new tech-based FS player such as Ripple with its DLT-based Interledger protocol could potentially displace an incumbent infrastructure such as the SWIFTNet cross-border payments network. This is why SWIFT has this year launched its own third stage


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