Payments take centre stage at SIBOS 2018

We started SIBOS 2018 in Sydney with a visit to the innovation lab of the Commonwealth Bank of Australia (CBA), hosted to a breakfast by its innovation team. Mike Baldwin, briefed the attendees on some of its latest initiatives and developments, including the launch of the New Payments Platform (NPP), its latest data analytics and cybersecurity initiatives.

Sophie Gilder who drives the bank’s experimentation agenda for blockchain shared learnings from the launch of the $78.14 million (A$110 million) ‘Bond-i’ bond for the World Bank. This is perhaps the world’s first bond to be created, allocated, transferred and managed through its life cycle using distributed ledger technology (DLT). She also shared insights from the test of blockchain based ‘smart money’ or Programmable money, which utilises blockchain technology to help citizens manage payments made to the National Disability Insurance Scheme (NDIS).

At the opening plenary Shayne Elliott, CEO at ANZ enthused about the exciting times that the Australian banking system is going through with the introduction of the new payments system. With the pace of disruption from Open banking regulation, industry players have to adopt an open-end growth mindset. This is especially pertinent, given the current scrutiny that the industry is coming under from the Royal Commission enquiry into banking practices. 

SWIFT Chairman, Yawar Shah remarked despite the pace of change, the only constant is that SWIFT remains as a bank owned fintech. Calling for greater support from members for key initiative such as gpi (global payments innovation) and CSP (customer security programme), he commented “what you get out of SWIFT is what you put into it”.

Wrapping up the session, SWIFT CEO, Gottfried Leibbrandt touched upon three areas that keeps him awake at night; cybersecurity, geopolitical uncertainty and technological change. In particular, he talked about the enhancement of the SWIFT market infrastructure through the adoption of APIs (application programming interface).

In our conversation with practitioners, payment innovation was a recurring theme. Claus Richter, Nordea and Paula da Silva, SEB discussed about how banks in the Nordic region are building a harmonised cross-border system of  real-time payment and adopting open banking standards in line with SEPA (Single Euro Payments Area) regulation. They highlighted the private initiative, Project 27 by leading Nordic banks that aims to unify the payments system across the region.

This project will offer useful lessons for similar initiatives in other regions such as ASEAN, where member countries are also looking to integrate their payments systems, as part of AEC (ASEAN Economic Community).

Alan Huse from ANZ spoke about the opportunities for banks to develop value-added services on top of the infrastructure provided through NPP. Hong Kong also recently launched its domestic payments platform, FPS (Faster Payment System). Kee Joo Wong, HSBC observed that in Hong Kong, retail payments had started to account for a larger share of overall transactional volumes. With the introduction of FPS in September 2018, he believes that retail payments will become even more significant. Looking around the region, he expects the trend to continue as countries pursue similar infrastructures. Diane Reyes, HSBC added that with its strong retail presence in Hong Kong, HSBC is in a unique position to service retail and wholesale clients in an integrated manner.

Encapsulating the potential of growth for payments in Asia Pacific, Philip E. Bruno and Reet Chaudhuri, McKinsey shared that global payments generated $1.9 trillion in revenues in 2017, of which $900 billion came from the region.

This year’s SIBOS with focus on enabling digital economy is expected to draw about 7000 transaction banking executives over the world.