The world should have prepared for the covid pandemic, but unfortunately, it was not, said Jamie Dimon, CEO of JPMorgan, while giving a keynote address at the fully digital and online Sibos 2020. He said: “I’m not blaming any administration, but the world was unprepared.” And added: “We prepare for things like pandemics, closedowns, and disasters, but not a global pandemic shutdown. On a more positive note, Dimon stated that it was even more shocking how the world reacted, with entire businesses being able to send all their staff home and work remotely. April through to August were some of the most active months ever experienced across almost all of JPMorgan’s areas of business, according to Dimon. The fully digital and online Sibos helped the organizers this year to cater to a broader audience, showcasing an exciting digital program, not just for Sibos week but stretching into 2021 with a new monthly series.
The annual event of bankers, financial services professionals, and observers took place from 5 to 8 October. The conference had the overriding theme, ‘Driving the evolution of smart finance’. The sub-themes on which lively discussions took place were:
- Delivering digital value
- Responsible innovation
- Banking for humanity
- The future of finance
One of the key sessions on day 3 discussed the topic, ‘The Future of Finance’ from multiple angles. The conversations were, however, anchored in the very real challenges that have arisen in the past year and how they have been met and overcome. One lively session was ‘ ‘A View from the Top’ with Matt Comyn, CEO, Commonwealth Bank of Australia, confirming the health of the Australian banking industry. While the pandemic has clearly had a significant impact globally, he said the Australian banking system has never been in a stronger position with multi-year capital built to comply with the regulator’s strong capital requirements. All the major Australian banks are now holding capital above that threshold. At the outset of the pandemic, banks acted with a sense of urgency. The same response, Comyn suggested, is now needed in the face of digital and technological disruption as the pace of change continues to accelerate.
AI UNIT AT SBERBANK
It was revealed during a session on AI and banking that Sberbank of Russia, the largest banking institution in the country, employees 2500 people in its AI unit. Participating in a discussion with Jeremy White, executive editor, Wired Magazine, Alexander Vedyakhin, First Deputy Chairman of the Board, Head of Business, Sberbank, suggested that AI was essential today to ensure the requisite speed of interaction with clients. “Our clients want their products immediately, personalized, and almost free. This can only be delivered by AI,” he said.
INNOVATIVE CYBERCRIMINALS
Two sessions that attracted attention were on cybercriminals and how they innovate just as banks do. A topic that was keenly followed was the impact of the covid work environment on cyber-crime. Participants in the discussion were panelists from Intercontinental Exchange, the European Central Bank (ECB), the Bank of England, IBM, Firebrand Research, and Barclays. The highlights of the discussions were:
Cyber comprises 3 key features: speed, scale, and intent. Between March and April, IBM witnessed a 6000% increase of spam attacks on their data using covid as a phishing lure. Hackers’ targets shifted as employees moved to work from home. The themes of phishing have also changed with the pandemic as has malware which now seeks those working from home and identifies them as potential targets. Ransomware has also undergone a change and now uses naming and shaming combined with extortion – ransomware as a service if you will. However, while the scale of attacks has increased, the mechanisms of attack have not, and businesses are doing a great job in defending against these attacks, though as the financial industry innovates so do the hackers and cybercriminals.
FUTURE OF MONEY
As is customary, Innotribe, SWIFT’s network of fintech experts, which seeks to reinforce the importance of collaboration when it comes to innovation, organized a session on ‘The Future of Money’. Participants sought to portray the money as centralized and common, at least within borders but highlighted that its history has been more plural and diverse – and so might its future be, with new forms of money potentially servicing niche purposes. Central Bank Digital Currencies (CBDCs) could represent the most significant change in the understanding of money over the next 5-10 years, the participants felt, with most central banks exploring their potential. Panelists disagreed about whether CBDCs would truly revolutionize the use of money but acknowledged the domino effect of such innovations is hard to predict.
RISK MANAGEMENT
A session was also devoted to the broader challenges of risk management on the topic ‘A World of Worries’. The thrust of the arguments made by participants in the discussion was that risk management now is about operational resilience and setting up the right framework to ensure business continuity. An enterprise risk management framework must include an established line of defense model linked to the company’s values, they felt.
The participants also felt it is important that the community as a whole makes the much-discussed switch to digital payments easy and secure. Nevertheless, every risk presents an opportunity for further digitization.
TECHNOLOGICAL REVOLUTION
Technological Revolution in Financial Services was the topic for discussion at the session conducted by the Sibos Academy. Panelists discussed the influence of disruption, regulation, and diversity on an industry undergoing profound technology-driven structural change. As cloud and other digital technologies have lowered barriers to entry, fintech and incumbent banks have as often collaborated as disrupted each other in scaling up new models that address longstanding customer frustrations, they felt and suggested that the real future source of disruption could be the influence of bigtechs, already embedded at the platform, product and infrastructure layers on the industry. The program on the final day discussed a highly relevant topic – Banking for humanity, including how the industry can help to address some of the world’s most urgent societal problems. The finals of the Discover Perfect Pitch competition and Sibos Hackathon were also part of the programs held on the final day.
