Event
Moving forward, experts across Sibos discussed the need to consider facilitating greater interoperability between instant payment systems and continued technological innovation, as well as cutting costs for end-users, and regulatory standardisation. Above all, panellists agreed that working together would be the best step towards progress.
An excellent example of this principle in practice centres around reducing transaction friction. The majority of cross-border payments reach their destination quickly and efficiently. But when exceptions do occur, fixing them can be time consuming and costly. To make matters worse, problems can often arise from reasonably small errors – for instance putting data in the wrong field, using the wrong currency or even just misspelling a recipient’s name. Nor is awareness of these problems limited to experts inside banking. The G20, after all, has outlined a number of goals to enhance the speed, cost, transparency, choice and access of cross-border payments by 2027.
Given these problems, many speakers at Sibos were looking forward to how ISO 20022’s richer and more structured data could be used to improve frictionless transactions, alongside solutions that can check payments for errors before they’re sent. In a similar vein, attendees were also excited about how ISO 2022 could promote interoperability across borders, and ultimately expressed a desire to make ISO 20022 a standard right across the sector. At the same time, Sibos discussed the need to think collaboratively when dealing with the cost of payments exceptions. As speakers explained, cross-border payments typically touch at least three banks, and potentially even more, meaning the costs involved are shared by several institutions. Partnering with outside experts can also help. As Sibos attendees explored, Swift’s end-to-end orchestration of a payment’s journey, notably via the so-called ‘Transaction Manager’, can make investigations more efficient, and get cash to its intended recipient much faster.
Collaboration and tokenisation If payments were the first pillar at this year’s Sibos event, fraud was the second. Once again, this makes sense: financial crime is a
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major and continuing challenge facing the sector, and one that costs banks and their customers billions of dollars each year. Like with payments, moreover, many of the discussions at Sibos assessed the potential of a collaborative approach to keeping fraudsters at bay.
One approach here involves pre-validating payments before they’re sent – ensuring that details such as the name or account number given match the beneficiary’s information. And while many banks around the world are already implementing domestic pre-validation schemes to use historical transaction data to confirm a payment’s details, attendees agreed that harmonisation between domestic systems is needed if the industry wants to truly combat fraud on a cross-border level. It’s a similar story when it comes to tokenisation: whereby digital data is replaced by unique tokens, speeding up settlements and bolstering security. In a broader sense, meanwhile, tokenisation has the potential to bring about new asset classes, and assist in the development of new forms of money, including digital currencies. To ensure this happens, at any rate, both standardisation and interoperability are key, once again obliging stakeholders across banking to work together towards common goals.
What exactly those goals involve was another area of discussion – and certainly Sibos offered plenty of reason for optimism. Interlinking instant payment systems for cross-border payments can, for instance, bring big benefits. Panellists at Sibos discussed real-world case studies – notably the runaway success of PromptPay, Thailand’s system – which has become part of the national lexicon thanks to a range of simple, overlaying services. That includes a QR code for simple, quick payments on transport, or around paying medical fees. Many conversations at Sibos equally centred around the good ISO 20022 can bring to payments, even as panellists recognised the need to move payment engines to be ISO-compliant. Fail there, insiders agreed, and institutions risk getting left behind, preventing them from taking advantage of the latest product propositions. Developments such as Swift’s
Transaction Manager platform are a case in point – and offer dramatic evidence that
the sector is shifting fast from point-to- point messaging to end-to-end transaction management.
Threats and opportunities Other advances are just as exciting. Central bank digital currencies (CBDCs), for their part, continued to garner a lot of attention at Sibos. As various domestic and global platforms develop for CBDCs, experts agreed that interoperability is vital to success, yet further evidence of the need for collaboration across the sector. Panellists similarly emphasised how excited they were about the technology that underpins digital currencies – including tokenisation, programmable money, and smart contracts – as they enable the industry to move value and payment simultaneously and settle at the same time. Obviously, the exact role of digital currencies remains unclear. But as speakers pointed out, Swift is preparing for tomorrow today, with cooperation and interoperability as core to future success as ever.
Not, of course, that collaborative financial institutions can expect everything to go their way. With financial criminals also committed to evolving their tactics – artificial intelligence is one obvious danger here – it is important that the industry adapts in turn.
Sibos, for its part, highlighted the need to work together to build processes, share data, and collectively fight against the rising cyber threat.
Panellists also explored how, with the growth of the digital economy and digital finance, the industry must examine data in a more joined-up way – and conduct collaborative analysis to understand an ever-changing range of threats. In a sense, that last point echoes the message of Sibos as a whole. With collaboration crucial to growth – and, of course, to keeping institutions secure – delegates surely left the convention closer than when they arrived. Swift, for its part, will clearly continue to usher in improvements too, a valuable reminder that cooperation hardly ends at the gates of banks themselves. ●
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