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IBS Journal October 2016


09


Sibos 2016: Regulation key to future of finance


he future of the finance industry was under scrutiny at Sibos 2016 in Geneva, Switzerland during September, as a panel – lead by MoneyWeek’s Merryn Somerset Webb – discussed the ins and outs of obtaining a secure future.


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“It’s quite clear that the crisis eight years ago has eroded a lot of trust in global finance,” opined David Wright, Partner at Flint Global and Chairman of EUROFI. “We shouldn’t forget the loss of GDP in the world and the massive amounts of public aid poured into banks and that a lot of people who should have gone to jail didn’t go to jail.”


It’s only right that regulators have ramped up their restrictions, but there should be more to come (worryingly for the banks). Restoring customer trust is about taking the consumer “off the hook” when it comes to looking after banks’ interests.


Sergey Shvetsov, First Deputy Governor of the Bank of Russia, who seemed to relish playing the Devil’s advocate, declared that predictions about the future are “always overestimated”. “I don’t think that FinTech creates a huge pressure on the banking business.”


Regulation, added Wright, is a difficult thing to predict. Acting under imperfect information with the technology “always moving around you”, he said that regulation is usually based on judgment at the end of the day. There should be a level set of standards that are as simple as possible to give everyone a fair competitive chance.


Shvetsov countered that you can only supervise the growth of FinTechs up to the point they begin to start disrupting regulated businesses. As an industry we’re not ready to say whether platforms like cloud are ready to be on the same levels as those with standard regulation, he argued.


When asked how much of an impact AI and automation might have on the industry, Shvetsov said that in time he believed we will see machine vs. machine as opposed to man vs. machine. Returning to a familiar theme, he added that it will be up to regulators to make sure customers aren’t taken advantage of.


“Lots of people didn’t believe that we would be buying things from the internet,” stated Wright. “The world has changed dramatically and will continue to change dramatically.” Years ago, we didn’t know a thing about blockchain and now it’s all everyone can talk about. There is huge potential, he concluded, in emerging technology and what it can do for people.


Trevor Spanner, COO and Group Risk Officer for the Hong Kong Exchange and Clearing Limited, piped up to take on Wright’s point. “Machines can beat people at Go but do I want to play Go against a machine?” he asked. “No, I want a service with multiple stages.” Consumer trust [in new technology] is earned through verification and verification means giving up data and that bring up a lot about personal privacy.


Alex Hamilton


www.ibsintelligence.com


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