Money 20/20 2023 takeaways

As one of the largest financial services events, it was great being able to attend Money 20/20 in Amsterdam this year. My first time at an event that started in 2012, that hosts over 20,000 people across 3 locations with sessions ranging from fintechs, traditional banks, IT companies and regulators, my expectations were to really get a feel for the pulse of what’s top-of-mind and driving discussion points with our customers.

With lots of topics being discussed, there were three that I repeatedly heard mentioned - ESG (Environment, Social and Governance), Regulatory Compliance and specifically DORA (Digital Operational Resilience Act) and GenAI (Generative AI).

What I found interesting is that all 3 are not specifically financial services in themselves but will each have an impact on how any FSI or their partners works moving forward. On top of that, there is one common thread that underpins all three of these talk tracks - the use of data!

The importance of E in ESG 

ESG is quite a broad topic but the area that was consistently referred to was the E - Environment - whether that was Zilch’s CEO Philip Belamant talking about how they offer the chance for their customers to receive information on their purchase decisions based on ‘Green’ criteria to how Mambu and the EQT group have both signed up to Science Based Targets (SBT) to reduce their own carbon footprint.

With pressure from shareholders, board members and customers alike, companies are having to understand more about how they impact the environment and then how they can make a difference; how can they help reduce their impact. Data plays a couple of different roles within this.

First, if you don’t know enough about your own environment, how can you work out what impact you are making and how to reduce it?  Being able to deploy tools that give you those insights is key.

Second, the data itself; almost 70% of all data is NEVER accessed once created, creating a gigantic landfill of data. The carbon footprint of the infrastructure needed to store all this data alone is greater than the entire airline industry every year! Knowing what data you have is a good first step to being able to understand what savings you can make.

Why DORA is a positive

In an industry that is known for its regulation, it shouldn’t have been a surprise that this was such a strong talking point. The main talking point around regulatory compliance was DORA - the EUs Digital Operational Resilience Act.

Being able to hear directly from Marilyn Pikaro of the EBA (European Banking Authority) on the importance of DORA, how it is being looked at and when it will come into force was really interesting. With financial services organisations and their critical ICT suppliers having until 2025 to be in a position to comply before penalties are introduced, organisations are starting to really sit up, listen and start looking at the impact. However, I see that there are a lot more that haven’t even started and could easily be taken by surprise.

DORA is a positive step forward for the industry as it shows that the regulators recognises that the cloud is an acceptable part of an organisations strategy but wants to ensure that relevant controls are put in place to protect consumers, organisations and country economies. At a high level covering two main areas of cyber resilience and cloud concentration risk, DORA - as with ESG - will rely heavily on data. Again, data will play a couple of different key roles.

First, from a cyber resilience perspective, organisations will need to be able to collate, share and report information on any attacks that are made against them as well as their ability to recover not just to the regulators but also their peers. Being able to share this information will help reduce future threats to the industry at large. The use of data and then reporting it out will be fundamental in the fight against cyber-attacks.

The second is around cloud concentration and the ability to ensure that should something happen that risks a financial service, there are relevant procedures put in place to recover them ASAP and minimise any outage. Here, data plays a significant part as with any service, there is generally a considerable data footprint that accompanies this. It is great for organisations to be able to spin up services and applications at a moment’s notice in different clouds or even in their own data centres but if the data that underpins them isn’t there, the service is still ‘down’. Having a robust, simple and cost-efficient data resilience plan is absolutely key.

AI and data goes hand in hand

AI is definitely not a new topic to financial services organisations and a topic that I discussed recently with NVIDIA around how there has been three waves within financial services. The latest wave, GenAI, is more of a tsunami.

Following the massive hype around ChatGPT, organisations are trying to get their head around how they can deploy their own versions. Bloomberg is an example of a company really forging ahead in the GenAI space where they are releasing BloombergGPT. Based on 40 years’ worth of data, it can analyse the sentiment of financial data, gauging whether that is positive or negative and help traders and analysts make more informed investment decisions. Over the next couple of years, we will see more companies - both existing, long standing financial services organisations as well as newer, innovative and niche players use GenAI more and more to provide a whole host of services both internally and externally.

One of the most important components needed to make GenAI a success is data. ChatGPT itself used multiple sources from the internet to get enough data such as the whole of Wikipedia and Bloomberg themselves are using their 40 years of data and 50 billion parameters. Without these vast quantities of data, GenAI cannot function.

Organisations will need to be able to understand the data they have, have they ensure that they are using it responsibly and then how to securely store it now during its use but also for longer term retention in case it is ever needed as part of a regulatory investigation. 

New and emerging technologies can enhance the sector

Money 20/20 was an interesting event for me. Hearing directly from different parts of the financial services industry is extremely useful for me to understand what is happening and where things are heading.

Hearing so much about three areas - ESG, Regulatory Compliance and GenAI - from so many different people shows that these are not topics that are being taken lightly. Whilst the challenges that these topics can bring won’t be resolved overnight, the advances in technology over the past few years have really opened up the ability for organisations to approach them in new and different ways than ever imagined before.

Data itself plays such an important part in all 3 areas and as we are creating more and more of it, the opportunities grow - but ensuring that the correct visibility, resilience and accountability is going to be key.