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It’s Asia story at Sibos 2015

Nearly 8000 banking technology and innovation officers converged at the Sands Expo and Convention Center in Singapore for the 4-day SWIFT Sibos 2015 deliberating topics ranging from the impact of the digital economy to influence of the mobile on cash to the prospect of ‘massive’ changes that blockchain will bring into the financial services industry.

Inaugurating the conference, Piyush Gupta, CEO, DBS Bank of Singapore, declared: “Not withstanding the recent headwinds, the Asia story is alive and well,” maintaining that the world is on the cusp of the Asian century and the growth is at least partly driven by technology. “A lot of the change in technology is happening more in Asia than anywhere else,” he said, noting that the region is populated by digital natives and has an average age of 28, compared to 36 in the US and 39 in Europe. The Asian growth will continue, he said although it will be a bumpy ride with occasional dips. But the region, which had 40% of the US GDP in 2000 reached 80% in 2010 and will soon climb to 120%, he visualized. He also said that demographics favor Asia, which with one third of the world’s land mass, has 50 to 60% of its population.

Gupta stressed that big banks remain in the industry’s driver seat even as traditional players use the new technology in a big way too – as online and mobile banking become ubiquitous.

Talking on the digitization and mobile banking, Gupta said the shift from online to mobile banking is very profound. Referring to mobile banking, he said when in past people need to go to bank for transactions, now banks are going with them. He said this is also changing the banking behaviour of the customers.

“In the past, people need to go somewhere to bank. It may be bank branch or desktop. But, today the bank goes with people in their pockets. On the convenience dimension, this makes difference on when you want to make banking, on what context you want to bank and how you will think about the banking picture. People who carry the ability to access banking seamlessly increase the interaction with the bank by 3 to 4 times as they are looking for the balance and incoming payment once a day or start looking ten times a day,” he said.

There was large Indian presence at the conference.

PMJDY

Speaking at a session on ‘The Challenge of Bringing Banking to All of India’, Ashwani Kumar, chairman, Indian Banks’ Association and CMD, Dena Bank, explained the Prime Minister’s Jan Dhan Yojana (PMJDY) and said it has a critical role in ushering in financial inclusion in the country. He also emphasized the need for fintech companies to be involved in the financial inclusion efforts.

He said PMJDY has been a successful initiative as a large number of people who hitherto did not have access to banking were able to open bank accounts. “Some 180 million new accounts have been added and a huge amount has been mobilized through these accounts – $3.8 million,” he said, adding today a majority of Indian households have at least one person having a bank account. “India has roughly 250 million households. As per our survey, 97-98% of these households have bank accounts,” he revealed.

He said under the scheme, even debit cards have been issued to the account holders and these account holders are also covered by insurance “As the operations in the accounts increase and are done in a proper way, the account holders will be entitled to an overdraft limit up to Rs5000. So in a way, it is a comprehensive financial inclusion initiative to start with,” said Ashwani Kumar.

He said that fintech companies, which create disruption in many other countries, are rather helping India to innovate in the banking sector. They have helped banks to reach out to the remotest locations, which hitherto was not possible for banks, he said.

Mohan V. Tanksale, CEO, IBA, and M.V. Nair, chairman, SWIFT India, too addressed the session.

IOT

One interesting discussion at the event was on the internet of things. Panelists felt banks have to accept changes to their core systems and cultures if they are to survive in the digital world. Cathy Bessant, chief operations and technology officer at Bank of America Merrill Lynch, initiating the discussion pointed out that there is no single definition of the ‘internet of things’, so it could mean something different to everyone. Patrick Maes, chief technology officer at ANZ, highlighted the connectivity aspect, and the importance of connecting with customers on a personal level. The panel also underlined the importance of customer experience when it comes to the commercial aspect of banking. The panelists agreed that in order to make change, collaboration with financial technology start-ups and hiring of talent from other industries are important.

INNOTRIBE

The session that attracted intense attention was Innotribe, where fintech was the core topic of discussion. There was a topic of discussion on ‘Leveraging modern payment platforms for accelerating social impact’, which saw panelists narrate their personal experiences. Speakers also touched upon data analytics and questioned how good the banking community is at understanding data. Several of them highlighted that the realchallenge is not the data, but how the data is used and felt that data analytics is fundamentally the biggest area that banks should be focusing on. Blockchain became a hot topic and panelists felt blockchain can enable secure information sharing and allows for faster transactions and reduced costs, which ultimately minimises risk, meaning that regulators are leaning towards the prospect, despite initial security concerns. One of the main benefits of blockchain is that is it actually more resilient to cyber attacks, and with business becoming increasingly international, technology is fuelling change in every aspect.

3 FORCES

Gottfried Leibbrandt, CEO of SWIFT, who addressed the delegates on the opening day, identified three forces that are shaping the financial services world globally – the move from the west to Asia, government politics and regulations, and financial technology and cyber. He spoke highly of Chinese currency renminbi, which is currently the fourth most-used currency, after the US dollar, euro and British pound. Generally, RMB and the Japanese yen jostle for fourth and fifth position, but Leibbrandt predicted that RMB would eventually win out. With regard to fintech and cyber, he visualized the digitisation of finance, including the emergence of blockchain and distribution ledger technology (DLT). He pointed out the benefits of DLT – it can be used to register ownership of practically any asset, and it is very secure. He also suggested that SWIFT could be well placed to take care of these ledgers.

SINGAPORE’S ROLE

Sibos 2015 ended with an address by Ravi Menon, MD, Monetary Authority of Singapore, who emphasized on common standards and seamless data sharing as the two characteristic of smart financial architecture.

He said lack of standardization leads to fragmentation, inefficiency and inconvenience. “Common standards allow systems and applications to operate applications efficiently and seamlessly when different financial service providers and solution providers come together”, he said.

He said MAS has been working closely with the industry as well as reaching out to the broader fintech community. “We have been talking with start-ups, software providers and experts and practitioners on various fields of financial technology including data analytics, cyber security, block chains and digital payments. We have learnt much from these interactions. The response from the industry has been encouraging,” he added.

He mentioned that Singapore is determined to build a Smart Financial Centre, focusing on creating common payment and data structures aimed at raising productivity in the industry. He also mentioned that MAS has committed to $$220 million over the next five years for the financial sector, technology and innovation schemes. The money will be used to help convince banks to set up their R&D and innovation labs on the island. How well these projects are executed will have a profound impact on Singapore’s long-term prospects, as the country continues its own transformation into a service and innovation-driven economy.

Menon said technological advances such as mobile payments, biometrics, the blockchain, cloud computing, big data and learning machines are revolutionising financial services and that a smart nation must embrace and harness this innovation. MAS is trying to support a fintech ecosystem, facilitating cooperation and also build technology skills among the country’s workforce.

He said insurers such as Aon and MetLife and banks like Citibank, Credit Suisse, DBS, HSBC and UBS have already setup innovation laboratories in Singapore. Aviva has already announced setting up a digital garage, and AXA a data innovation lab. MAS is working with several other banks and insurers on their plans to establish and expand the analytics and innovation teams in Singapore, he added..

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