Recently I attended SIBOS, a premier corporate banking event, at the ICC Center at Darling Harbour in Sydney, Australia. The theme for 2018 was Enabling the Digital Economy. As I reflect on the four days filled with engaging sessions, networking opportunities, and meaningful conversations, I want to share my top four takeaways from the event.
AI, ML, and robotics were major discussion areas. Most of the financial institutions (FIs) have deployed Robotic Process Automation (RPA) in some fashion, and their approaches are maturing. Savings can be achieved, but typically not in the range of the hype curve, and there is growing opinion that RPA should be looked upon as a short-term automation strategy based on the technical debt that it introduces.
There were several sessions focused on how FIs and various service providers are succeeding with AI and ML. Success stories highlighted the use of AI and ML in efficiency projects such as customer onboarding, loan processing, and intelligent customer servicing and in risk management areas, including fraud detection and AML false positive resolution. In addition, examples on the revenue enhancement front, including micro-segmentation, microloan approval, next best offer, and enhanced product recommendation were also discussed.
Open banking is in vogue. Drivers include regulatory change like PSD2 or initiatives adopted by firms like the Monetary Authority of Singapore (MAS), as customers demand for more capability, transparency, and lastly innovation, which is fueled by competition from FinTechs and TechFins. A few companies made important open banking announcements as well. For instance, Virtusa and BIAN jointly announced an API exchange platform to support open banking with open-source APIs and microservices.
As companies embrace open banking, countries worldwide are taking a variety of approaches to balance innovation with consumer protection. Adoption worldwide seems to be mixed. While some countries and regions like Europe, Singapore, Hong Kong, and Australia are passing regulations to drive open banking, others like the US and Canada have taken a more market competition approach. Delegates also stressed on balancing data privacy in an open banking world and discussed the impact of GDPR compliance.
Payments transformation and real-time payments were the key highlights. Australia is moving to the New Payments Platform (NPP), Hong Kong to FPS, Europe to SEPA, and the Nordics to P27. Canada has embarked on Payments Canada; the US has a real-time payments initiative while a number of other countries have similar initiatives in various stages. One of the key points highlighted was that as we employ real-time and instant payments in markets, banks need to focus on the end-to-end customer journey to ensure a seamless experience. This will be particularly important as banks look at how to drive revenue improvements from instant payments. While much of the focus in this space has been on retail banking customer products like P2P, there are opportunities to differentiate in corporate payments in particular in the development of overlay services
AML, payment fraud, and cybersecurity continue to be a focus. As the industry moves toward real-time payments and instant payments, there are concerns about a potential rise in fraud. As traditional reactive approaches will not be enough, AML approaches around new payment methods needs to keep up and be able to detect fraud before it happens.
The application of emerging technologies can provide new techniques and capabilities to improve how we look at analytics, patterns, and customer behavior, thereby allowing us to process the data faster upfront and make decisions without slowing down payment processing. Machine Learning (ML) or decision science can offer analytics for more predictive capabilities, as it is emerging as a crucial tool to combat real-time fraud.
Cybersecurity was a focus with breaches seeming to happen with more frequency. Cyberattacks directed at people have also increased. For instance, cyberthieves are trying to steal credentials through deception. In an era of open banking, this can lead to increased risk for FIs as they create an extended network of partners with whom they share transactions and data. Hence, it is important for banks to ensure that their partners maintain the same vigilance and security standards as they use.