Returning for its third year, the Swift Business Forum London brings together over 700 financial services professionals to explore the key challenges and opportunities facing our industry today. Finextra is liveblogging events here.
16:52 And that's it for today but Swift will be back in London soon for an Innotribe event:
16:47: Garnier hands over to Alain Raes, chief executive Emea and Asia Pacific, Swift for the closing remarks.
Raes highlights the large numbers of students attending today, stressing the importance of making sure that banking, despite the reputational hit it has taken recently, is still attractive to the best young graduates.
16:41: On competition, Garnier says that as well as account portability, customer financial literacy education is important and also a bigger range of types of banks - more diversity, esp local players.
And we're back to account portability again with a v good q from the floor: would it make it too easy for a run on a bank if capital can be withdrawn immediately?
Garnier agrees its a good question, especially in the age of instant communication (Twitter etc) but doesn't offer an answer...
16:33: Q from floor: we're back to account portability - can we be trusted to get IT infrastructure in place, who will build and run it?
Vocalink will have to build it, says Garnier and private sector (ultimately the public) will bear the cost. Says that the seven day switching system (which isn't even live yet) should be given time to bed in first, though.
16:22: Garnier wants more done to make it easier for new bank to enter the market. Welcomes regulatory moves but wants more.
He also makes clear that new
bank account switching system being built by industry should only be the first step. He wants the full account portability system that banks managed to cry off because of the high IT costs.
16:15: Garnier says that FS industry going through a major change. The government response in UK and around the world has been uniform and the central point is that banks should never be too big to fail.
Splitting banks (Glass-Steagall mark II) isn't realistic in the modern world. Electrified ring fencing is way forward. Treasury Select Committee set to publish final report soon and while Garnier refuses to give details hints that BofE's Haldayne has been major influence on thinking, esp re over regulating.
16:00: We have a closing plenary coming up from Tory MP and Treasury Select Committee member Mark Garnier, who,
Wikipedia tells me, used to be a fund manager.
15:24: So, finally, who wins all this new money? Aston says not the life cos, they're big, un-wieldy, technologically a mess. Aston and Cocks agree that Nest will hoover up business. Fawcett thinks some of the new corporate platforms can win business but says giant companies like Google and Tesco have bigger fish to fry. Norman has no idea who will come out of this best, hopes incumbents get shaken up.
15:12: Our moderator, Malcolm Small, suggests that auto-enrolment offers a 'once and done' moment - the winning providers will sign up lots of business in 2018 and then they'll keep it. Rest of panel think he's wrong and increased customer awareness (consumers more than employers) means business will continue to be up for grabs.
15:02: Q from the floor: 90% of people go in a default fund so how do you get all of these auto-enrolled people engaged?
Aston very uncomfortable with getting everyone to take active role in how they save when they don't know what they're doing. When numeracy and literacy levels in this country are so poor it's no bad thing to have default funds. Focus should be on making these better and simpler.
14:53: Aston notes that 90% of the new people being brought in to pensions through automatic enrolment are not interested in getting involved in how money is managed.
Ben Cocks backs this up: new auto-enrolment will end up coming from small employers so has to be highly automated rather than bespoke services. So only Nest and one or two others can win this business.
Fawcett says that firms that win the biggest share of the new pot will be those that take a more consumer-based approach, focusing on things like user experience, personalisation, relevant content. Mentions lots of smallish and newish providers that could become serious players but don't have brand recognition yet.
Norman reminds us that when working out how 'we' divvy up all this money it's worth remembering that it's the investor's money.
14:35: A quick run up the stairs to catch the pensions session. Nigel Aston from State Street Global Advisors, Ben Cocks fro Altus, Jeremy Fawcett from Platforum and David Norman from TCF Investment.
Malcolm Small, Director of Policy, at Pima moderates and begins by reminding us that we are currently seeing biggest change in pensions world in 100 years with automatic enrolment. Who's going to win here and get the lion's share of 10s of billions in new money?
14:22: We wrap up T+2 with the panel bullish but, of course, automation and systems are key.
14:12: T+2 as stepping stone to T+1 or even T+0? Symons pretty clear: lets just get the first one right:
Godau points out v different in States where there's no cross-border issues. Fletcher confident that US will move to shorter settlement cycle now that rival Europe has.
14:05: Audience point: unless clients are made to settle T+2, which isn't in regulations, small providers are in big trouble. Fletcher says it will hit big boys too.
Re automation, Parker says money is always an issue for back office, particularly on buy-side - there's still a lot of faxes used for confirmation.
13:45: JPMorgan's Dockx kicks off by warning that T+2 is not an easy thing. Not because of systems but because settlement in the last link in the end of a long chain.
Euroclear's Symons says his organisation asked member states who is managing the move - UK has no idea and many places plan to leave it very late. UBS's Parker suspects T+2 could drop out of CSDR. Symons disagrees.
Godau and Fletcher agree that T+2 will happen but there is q about when:
13:33: The agenda tells me that we're now moving onto T+2 & CSD Regulation: The road to cost-effective cross-asset class post-trade processing.
Alex Dockx from JPMorgan, Angus Fletcher from Deutsche Bank, Kristina Godau from AFME, Ben Parker from UBS and Paul Symons from Euroclear are all here. SEB's Goran Fors moderates, promising that t here will be some debate/disagreement.
12:25: Summing up, Anthemis Group's Rolph says that banks will become enablers, with new, smaller, agile firms providing some of the services companies need. Curran characterises relationship between banks and new entrants as competitive collaboration.
Lunch time. Back later for T+2 and CSD regulation.
12:31: Lloyds' Curran: regulation is rapidly changing landscape. So much going on: PSD 3, Dodd-Frank, Fatca, new UK payments regulator, international sanctions regs. Of course this all affects new players - they can't just ignore them because they're not banks. You can't outsource your sanctions obligations.
12:24: Meanwhile, in the CCP session:
And in the diversity session:
12:14: We're now onto the 'bottom of the stack':
The bankers on panel insist they'd love new entrants to be more involved in the big infrastructure stuff but why would thy be interested when cheaper to piggyback?
12:10: Laven: big corporates always get great service from banks but the hundreds of thousands of smaller firms don't get looked after and that's what small new entrants can do. Competition will drive down margins and improve customer service.
Cleaves: Banks suffer from legacy both internally and externally, eg. how many clearing systems do we need. Why have half a dozen for different sized payments clearing at different speeds?
12:00: Barclays' Cleaves says that benefits of using a bank over new outfits like Currency Cloud for FX is that they can bundle lots of things together in one place.
Curran goes all 1984 on us, when do these disputers effectively become banks - especially telcos offering mobile wallet services? When do they become deposit-taking institutions?
11:47: Caffeinated, delegates have made their way to various streams. I've opted for transaction banking and the changing future of payments with Barclays' Maurice Cleaves, Lloyds' Mark Curran, The Currency Cloud's Mike Laven, Anthemis Group's Michael Rolph and moderator Harry Newman from Swift.
Newman kicks off by asking: is the rise of new entrants an existential threat or an opportunity? PayPal put a thin veneer on the existing infrastructure but the next generation could be far more disruptive.
Lloyds' Curran: can't see banks disappearing from the payments landscape. There's a view among new entrants that payments is 'bits and bytes' - I don't buy that.
Currency Cloud's Laven compares payments to music industry when it went digital. New entrants force incumbents to rethink how they do things but we still need the banks. His firm's customers all need a bank account.
11:03: Audience q/point: Who is being protected by ringfencing? Retail or 'casino'? Public talk is about the nasty casino types but much of the problems in industry comes from high street (Northern Rock).
Curry asks: will young bankers in room get to stage in careers when they can say they work in City and not feel "residual shame"?
Trundle says yes but maybe not in his lifetime...
And that's it for the opening plenary. Time for a coffee break but we'll be back shortly to look at transaction banking and corporates.
10:55: Audience Q on new entrants into UK banking markets. Is regulation the reason for lack of new players?
Sharma says incoming rules will make it easier for new entrants but makes no apology for having stringent requirements.
On payments rules, Leibbrandt says just as tough for new entrants as established players, citing PayPal's decision to cut off UK coffee firm for
selling Cuban beans.
10:50: On tensions between global transactions and local regulations, Swift's Leibbrandt says you need to be very careful about which businesses you're in.
10:40: RBS's Owen says regulation has been positive in some respects by forcing banks to deal with inefficiencies. Many of systems that underpin payments are decades old.
Euroclear's Trundle makes rather obvious point that we need smart (not stupid) regulation.
10:30: PRA's Sharma: We have not yet fully dealt with too big to fail. How do we do ringfencing? Won't be drawn on whether ringfencing is enough and banks should be broken up. Says only "there needs to be a debate".
10:20: Gieve departs and Curry welcomes panel for opening plenary on: Can global operating models withstand the challenge of regulatory fragmentation?
Participants:
Gottfried Leibbrandt, CEO, Swift
John Owen, CEO, International Banking, RBS
Paul Sharma, director, policy for the Prudential Regulatory Authority, BofE
John Trundle, CEO, Euroclear UK and Ireland
10:16: Q from audience: how can banks do what politicians want and both lend more and build up capital?
Gieve: They can't. Should have built up capital before crisis but they didn't so we are where we are. Well intentioned efforts like Merlin haven't worked (al least yet). Also, consumers don't want to borrow at the moment - ie. there's a demand as well as supply issue.
Curry asks: was it lake of rules that caused financial crisis or was it that the regulators were incompetent?
Gieve: some of the rules where the wrong rules. There was incompetence from regulators but also from everyone else. There is a risk that "close supervision" can lead to shared myopia and you miss the risks.
Is Archbishop of Cantabory right on stupidity of bankers? Gieve says no, the senior bankers he's met are intelligent. It's more complicated than mere stupidity.
10:06: Joined now by journalist Declan Curry, Gieve warns that Britain faces being left on sidelines in Europe. "It would be madness to pull out of Europe". When you have a huge finance industry you need to be at regulatory table. He won't be voting for Ukip.
09:58: Gieve moves onto the economy - globally the recovery has been perfectly normal but all the growth is coming from emerging markets while Europe and Japan stagnate and the US bumbles along.
At best, we face a "slow recovery" which might be sensible in the long term but is very difficult politically so politicians turn ire on banks. This could result in dramatic action such as banks being broken up.
09:50: Gieve raises the worry that the raft of new regulation is overcomplicating things. What
Gieve (who is now VocaLink chairman) mentions the
sharpening of government attitude to payments with the planned full utility-style, regulator. This is a huge shift and could be a model for other parts of the banking industry.
Gieve says that, when you talk to Westminster-types, the thing you notice is the level anger that still exists with banks. Still a feeling that bankers just don't get it.
09:38: Sir John Gieve is now up to talk about politics, regulation and banking in London, promising to provoke some discussion. He begins by disagreeing with Aggarwal on the industry fog clearing: "still seems pretty foggy to me".
09:20: Aggarwal tells us that there are over 1000 registrations for today and that the London event is now Swift's second biggest, after Sibos.
It's Swift's 40th birthday this week. It was set up in '73 by the industry to replace the good old telex with something a little more robust but there are now new challenges, says Aggawal, and today's theme is 'thinking beyond compliance'. Banks have been forced to adjust to the new regulatory landscape but now the fog is clearing and we can now move on in a more structured way.
09:10: You can also follow events on Twitter via the
#BFLondon hashtag:
09:03: Arun Aggarwal, MD, UK, Ireland & Nordics, Swift is kicking things off today before handing over to Sir John Gieve, VocaLink chairman and former BofE deputy governor, who will talk about London's role in the international financial markets.
08:53: We're at the Brewery in London to bring you all the news from Swift's Business Forum, where transaction banking and corporates, T+2 and pensions will be among the topics up for discussion.