IBS Journal June 2018


Keeping ahead of the innovation curve

To innovate, or not to innovate? That is the question with only one answer. Yet are banks agile enough to keep up with their younger, jeans-wearing fintech counterparts? Alex Hamilton visited Swift’s Business Forum to find out

Senior Fintech Reporter Alex Hamilton


wift welcomed delegates to London’s Tobacco Dock earlier this year to help them understand the “fourth industrial revolution” occurring in the industry. The fact that everything under the sun has been named the new revolution didn’t deter the talking heads at the show, who launched into talks on how innovation is set to be at the heart of everything the industry does from here.

Javier Pérez-Tasso, chief executive, Americas and UK at Swift, opined that this fourth industrial revolution has given customers the “best experience ever” and that experience is the sole focus from a consumer perspective. Things took a turn as Pérez-Tasso used Taylor Swift as an example. The pop star has 107 million followers on Instagram – if the platform disappointed her she could leave and take her following with her. In the same way, banks need to stay relevant to their users.

Pérez-Tasso added that an underlying robust reliable infrastructure is “critical” to the proper running of front-end change. He cited Swift’s gpi solution as an example, as it provides. Now it is up and running, he says that around half of all gpi transactions take 30 minutes, some in just seconds. The system has been taken on board by major banks such as ICICI Bank in India and HSBC in the UK. Pérez-Tasso also took the opportunity to highlight change in the domestic payments arena, talking up the Bank of England’s RTGS project and the New Payments Operator’s payments infrastructure roadmap. The UK, he added, is a leader when it comes to the adoption of faster payments for consumers.

At a morning panel session, Andrew Pearce, global head of payments at HSBC, continued the collaboration narrative. You can only tackle the complexity of the market today through collaboration, and leveraging the ecosystem, he said. Failing to do so could lead to major firms “missing the bus”. Andrew Hauser, executive director for banking, payments and financial resilience at the Bank of England, pointed at the earlier-mentioned strength of payments in the UK, but added that the service can be patchy in places, joking that it stands in parallel with the UK’s rail infrastructure. Hauser advocated stability in a time of change – something he feels should be the main concern of all going forward.

Hauser talked about the now-regular narrative that banks are at risk of newer fintech companies coming in, stealing all the “cool” parts of banking and leaving the banks behind to become background companies. On top of that, the Googles, Amazons and Facebooks of the world are poised to break into the industry at their whim, with a far superior understanding of what customers actually want. Gottfried Leibbrandt, Swift CEO and moderator of the panel, asked how you combine legacy systems with new technologies. Pearce answered that a hybrid approach is needed: banks must be flexible enough to enable new technologies for corporate customers while still taking the usual measures to prevent risk.

Despite all the problems that banks might face in the industry, said Hauser, it remains true that it’s incredibly hard for major companies to fail, while smaller ones can drop off the map. He added that the Bank of England has conducted many tests and startup innovation labs in the past few years, but has always run into problems when it comes to scalability. Still, he said, it’s not up to central banks to actively try to protect market structures. The Bank of England has the ability and the responsibility to move to the outside of the innovation curve to watch, regulate and let things evolve. It’s all very well for the regulators, but major banks don’t have that luxury.

Clare Griffiths/Flickr

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