The main theme for the Swift Regional Conference in Copenhagen this year is disruption. The programme will explore the different challenges arising from newcomers, technology and regulation. It will look at how the financial industry can cope and turn these challenges into opportunities.
Wednesday 4 March 2015
Editor's note: All times reflect local time in Copenhagen, Denmark
17.30: Securities Panel and final session ends. The first day of the Swift Nordics 2015 conference is over.
17.29: Swift's Oliver is summarising the securities panel now: "There is still lots of uncertainty," she says. "Roles are changing and markets. More CSDs are being launched and time will tell who survives."
17.22: In response to questioning if there will be a later consolidation in the next decade, Euroclear’s Hjorth, doesn’t think so, saying that: “Most CSDs will remain in place over the next 10 years.”
17.19: Swift's moderator Oliver takes over the questioning, prompting a response from Soren Rask Nymark of VP Securities. He comments that “we’ll see an increase in CSDs for sure” [under the weight of all these changes].
A. SEB’s Strandberg perhaps gives the answer, when she says: “Sweden will join. We’re just hedging our bets.”
First question is: Q. "Norway and Sweden aren’t joining T2S," says a SWIFT Nordics 2015 attendee. "How does that leave them?"
17.12: We’re going into the Q&A element in this final securities-focused panel of the day.
17.05: Euroclear’s Hjorth is commenting on how there is more segregation Europe-wide and separate accounts - versus the Nordics - where the direct holding model has been holding strong for more than 10 years.
17.01: Soren Rask Nymark of VP Securities has just mentioned a large CSD that got fined EUR150m (a German institution) for not dealing properly with Iraq. Naming no names of course.
1652: Great quote by SEB’s Strandberg: “It’s not a good time to be a product manager at a bank. I sometimes feel that my title should actually be market infrastructure manager!”
16.44: “There is a large discussion at the moment around pre- and post-trade transparency in the wake of all these regulations,” says Kerstin Hermansson, CEO, Swedish Securities Dealers Association.
1640: The custodian perspective is given next by panel member Christine Strandberg, a product manager, Transaction Banking, SEB. She rightly says that the CSD Regulation (CSDR) is the key worry for her. “For me, it’s the CSDR that’s on the immediate horizon, not T2S, although that will of course be important later on.”
16.39: “In Denmark, it’s similar, we’ll be ready,” says Soren Rask Nymark, Strategy Director at VP Securities.
16.37: Next we hear form a CSD member of the panel. Marcus Hjorth, Head of Legal & Public Affairs at Euroclear in the Nordics, representing Finland and Sweden. He says that the former will be ready for 2017 and Sweden will be made T2S-ready as well, in case it decides to join later. [Norway isn't joining either yet -Ed.]
16.32: “It all adds up to an earthquake for the securities sector,” says Oliver.
“Two new CSDs being created – one in Luxembourg, and one in Belgium by BNY Mellon.”
16.28: "it's a huge project," adds Oliver, explaining that about 50,000 man hours have already been expended on the T2S project in Italy alone.
What’s the status of T2S? “Well, 23rd June is the key date,” says Olivier “as wave 1 migrates to T2S then. There are 4 migration waves in total. Denmark will be in wave 3 in 2016, with Finland in the final wave 4 in 2017.”
16.20: Isabelle Olivier, Head of Clearing & Settlement, EMEA, Swift, as the securities panel moderator, is giving an overview of the huge T2S single securities settlement engine project in Europe. How it covers:
- 24 CSDs
- 21 central banks
- 35 directly connected participants (FIs).
16.10: For the securities panel, Hermansson takes the stage and provides a brief outline on the regulations impacting the securities industry - Emir, CSDR and MiFIDII/MiFIR all require a mention. 'Emir is a challenge and we're still not there,' closes Hermansson.
16.00: The securities panel conference stream, which ran concurrently with the payments session in a different room, is entitled: 'The evolution of the European and Nordic Securities'. It features the following speakers:
- Kerstin Hermansson, CEO, Swedish Securities Dealers Association,
- Marcus Hjorth, head of legal and public affairs, Euroclear,
- Soren Rask Nymark, strategy director, VP Securities
- Christine Strandberg, Product Manager, Transaction Banking, SEB
- The moderator is Isabelle Olivier, Head of Clearing & Settlement, EMEA, Swift.
17.28: Payments panel ends (concurrent Securities Panel report above) PSD2 has good intentions in regard to consumer protection, concludes Nilsson, referring back to her earlier point in the payments stream that she is glad TPPs will now be regulated as banks are. I’m sure there are a lot in the room at the Swift Nordics conference 2015 who’d agree with her on that point as the regulatory-focused payments debate comes to an end. Tomorrow’s payment theme will be on corporates and real-time payments on day two of the conference.
17.17: What Nilsson is getting at is that we are all consumers now, and do not care how a payment is made. “When I do a payment it's not because I'm happy or sad, I do it because I need to buy something. The payment is just a means to satisfaction. I want a payment to be secure as well,” she adds.
17.13: Swedbank’s Nilsson’s returns to the discussion, commenting that: “Payments instruments are dead”.
According to Thaarup, National ID is the future because it frees up a lot of payment possibilities and e-commerce potential if you have secure national identity programmes, as many Nordic countries do. “Denmark has doubts, however,” he adds, as he emphasises that it won’t be a smooth path.
17.01: Carsten Thaarup, a Senior Industry Expert with Nordea, the consumer perspective is the key thing. “For the consumer: a payment needs to be fast and simple. That’s it.”
16.48: Jorge B. Jensen, Head of Section Finance, Department of Consumer Advocacy, Norwegian Consumer Council (Forbrukerradet), takes up the reigns in regard to PSD2. “
“PSD2 is about TPPs,” he says. “One needs a clear view on what it is, and how to respond. It is a challenge; indeed many say it's the latest attempt from the EC to open up the payments markets. Other efforts didn't work, so we're now in uncertain terrain.”
16.34: The bad part of the PSD2 regulation is that it also further opens up the payments market to new entrants and banks could face a disintermediation threat. New players such as iZettle, Square, tech companies such as Google and Apple and many many others might reduce transaction banks’ steady income from this area. Its point much discussed throughout this session.
“The fact is TPPs have been here for some time, they’re not new,” says Nilsson. “What is good is that under PSD2 they are going to be regulated just as we are as banks. That is the good part of the regulation.”
16.23: Kristine Nilsson, SEPA & EU Payment Regulation Coordinator, Swedbank, provides attendees with the promised overview of the PSD2 EU payments regulation. She focuses particularly on third-party payment services providers (PSPs), what she calls TPPs.
16.15: “Kristine will look at PSD2; Jorge will look at the customer perspective; and Carsten will look at infrastructures. We’ve also got a Dane, Finn and Swede, so are doing pretty well on giving a Nordic perspective,” jokes Poutiainen.
16:07: Erkki Poutiainen, Senior Vice President, Public Affairs, Nordea is moderating the payments panel and setting out the agenda, explaining that today will focus mainly on regulatory and mandatory changes, such as the Payment Services Directive (PSD)2, while tomorrow’s payments stream at the Swift Nordics 2015 conference will focus on communication between corporates and banks, and on real-time payments.
16.00: The Payments Panel is introduced by Swift’s senior account director, Robert Widmark, and consists of the following speakers:
- Jorge B. Jensen, Head of Section Finance, Department of Consumer Advocacy, Norwegian Consumer Council (Forbrukerradet)
- Kristine Nilsson, SEPA & EU Payment Regulation Coordinator, Swedbank
- Carsten Thaarup, Senior Industry Expert, Nordea
- Erkki Poutiainen, Senior Vice President, Public Affairs, Nordea (moderator)
16.00-1730: The conference now divides into sessions on Payments and Securities streams.
15.30: Coffee Break
15.30: Disco! There's the vendor speed dating music again to signal the end of the exhibitor chat room sessions. A lively interlude.
15.28: Wiss is rapidly speeding through its presentation as the chat room sessions are coming to a close. The Wiss presenter is talking about website monitoring and protecting your banking brand. As cyber-risks proliferate it's appropriate.
15.26: intix has a big crowd. Let's drop in on them ... The intix presenter is talking about analytics, which plays into the big data discussion from this morning. Another disruptive force is the power of big data analytics. Real-time payments is being talked about as well; another hot button topic here at the Swift Nordics 2015 conference.
15.21: Tieto is talking about back office and cost, especially in a time of falling prices and falling revenue. The dreaded regulatory challenge and expense is also being discussed by the Finnish firm.
15.16: Evry is running a quiz this time, with the prize of a bottle of champagne for the winner: Nice. Easy questions too -i.e. what does Swift stand for? Anyone? anyone? Bueller? Bueller?
15.14: Last changeover underway. There's the disco music again: shazaam. Intercope have a few attendees this time. "started in this industry back in 1985," says the presenter at the German software firm's chat area.
15.12: Under discussion at the FircoSoft chat area is CFAC, compliance, watch list screening and how to deal with some of the regulatory challenges discussed this morning.
15.09: We know better than others the technology, says the clearstream presenter, while stressing SLAs and the service they offer.
15.00: The next changeover is underway. The disco music is playing and I swear I saw some people dancing this time as they swapped seats to listen to the next presentation! Will it be clearstream on collateral; Tieto on payments? Who knows ... Wiss has done well for numbers this time.
14.54: The other presenting companies are Wiss, Tieto, intix, Intercope and clearstream.
14.50: The first swap around is underway. Muscial chairs here with Fircosoft and Evry doing well for footfall on this round.
14.30: Chatrooms begin. Each exhibitor is presenting to small groups of the audience at Swift Nordics 2015 before moving on to the next chat area. It's speed dating for the vendors.
The biggest challenges and opportunities for Swift?
"How can we keep delivering core services, keeping the same level of quality - while still being agile?" says Raes
The three opportunities for Perez-Tasso are cyber security, regulation and the move towards real-time.
13.19: "The different flavours of Sepa and T2S make the systems less coherent. What we are trying to do is show the costs of all these flavours and how we can mitigate this - it's an endless mission." says Raes.
13.02: Perez-Tasso discusses the trend of platform-based businesses e.g. Amazon and eBay and more recently Uber and AirBnB. They have achieved success by reaching critical mass while simultaneously getting access to data and making it meaningful for a customer. He claims that Silicon Valley is now looking at FS as the next industry to disrupt.
"We are going to innovate, we are going to make some bold moves - in market infrastructure, in real-time projects and adoption of ISO 20022 in the securities space," claims Perez-Tasso.
12.56: 'The best way to defend your turf is to help the industry develop services' - Raes talks about the threat of new challengers to Swift. Raes is pushing for collaborative answers from the industry - citing the ongoing real-time payments project in Australia.
12.55: Perez-Tasso talks about the total cost of ownership in running Swift. He explains how keeping this cost down is key - including linking back and front offices as well as the all important customer pricing issue.
12.50: Swift's marketing manager Javier Perez-Tasso explains the importance of growing volumes and being able to provide economies of scale - "We aim to complete 6 billion financial messages by the end of 2015" claims Perez-Tasso.
12.30-13.15: An update from Swift on business plans going forward:
Swift's Raes talks about the challenge of a rapidly-shifting banking environment and encouraging new platforms to be widely adopted: collaboration is a key focus for Swift.
12.40: Benham fields questions from the audience - a final note stating that banks are taking better precautions with their backup strategy and their security than they were a few years ago.
12.30: Benham's first personal prediction is that within five years a bank will collapse following a cyber attack - he cites the example of Northern Rock to exemplify how social media chatter could damage reputation and incite a bank run.
His second prediction is the rise of economic cyber terrorism - organisations having their social media presence breached causing significant financial damage.
12.26: Benham presents some of his 'obvious' questions he hopes to tackle, including: 'Is a cyber attack on a bank limited to that bank?', 'Is the last banking crisis a dry run for a cyber generated collapse?', 'What is plan B? - is it government-backed banking?' and 'Is there a future for privately owned banks?'
12.22: Benham extends an invitation to delegates to come forward and present their own theories to be used within the financial services module of the cybersecurity MBA.
12.19: Benham explains the trademarked 'Cyber Ripple' theory - which essentially states that a cyber attack on an organisation has a destructive and cascading effect on the connected technology and linked human aspects. The extent of said destruction is dependent on awareness and protection levels build around the points of attack.
12.15: "You open the MBA textbook and there's nothing inside it - there are no theories yet established" says Benham - reinforcing how new this field of study is and the element of improvisation required to study cybersecurity.
12.00-1230 Cyber-security in the financial industry
The UK's first professor of cyber security management, Richard Benham, founder of the MBA in cyber security at the University of Coventry, takes the stage for a keynote presentation. His wealth of experience spans decades in the financial services, policing and security industries.
11.30: Coffee break. Everyone breaks for a much needed coffee …and another Danish … well, when in ‘Rome’ aka Copenhagen it’d be rude not to. It’s been a good morning’s discussion.
Idar Kreutzer, Managing Director, Finance Norway makes a great point. “”We process 200 times more information every second than Gutenberg released in printed material.” That’s the big data challenge right there.
11.25: Swift's Raes concludes that it is always a case of "keeping ahead of the bad guys". True. Cyber-security is always an arms race.
Digital identities in Norway help. Regionally, the Nordics are doing well here in fighting cyber-crime.
“At Danske we’ve concluded you cannot be in the middle of the pack,” says Söderholm. “You need to be in the forefront (so you don’t get attacked). I can’t see that investment cost being reduced.”
11.22: Summing up this panel now with a discussion about cyber-crime and how it impacts banks, what is best practice for dealing with it, etc.
Technology and disruptive newcomers are now coming into the discussion. The #NORCS2015 conference hashtag is taking off as well. Be sure to look there and at #fintech. Bitcoin already surfacing there, as the below tweet shows:
“Apple is normally not just noise though,” says Söderholm in response to questioning by the panel moderator, Chris Skinner. “I think Apple Pay is a game-changer.”
Glenn Söderholm, Member of the Executive Board and Head of Corporates & Institutions, Danske Bank, quite rightly says, “it is hard to predict how the competitive landscape will look in 5 years.”
"All these regulations and disruptive forces are leading to a major call for collaboration," says Raes.
Alain Raes, Chief Executive, EMEA and Asia Pacific, Swift turns the conversation towards opportunities, rather than threats from regulation and disruption, highlighting how collaboration can reduce cost and risk.
11.12: Kreutzer has two key concerns:
- Balkanisation of the regulatory framework within the Nordics and Europe
- Fragmentation of global regulatory processes [e.g. Dodd Frank / EMIR, etc –Ed.]
Finance Norway’s Kreutzer lists some of the regulatory and governmental challenges from the capital markets union in Europe, to the payments directive, to Basel III, etc.
10.58: It all goes back to the post-crash Pittsburgh G20 meeting back in 2009 explains Kreutzer who reminds the audience at Swift Nordics 2015 that President Obama said “never again”. That is the key point says Kreutzer and everything flows from that.
Idar Kreutzer, Managing Director, Finance Norway, starts by saying: “FS industry is facing the most severe regulatory change we’ve ever faced.”
“The elephant in the room is T2S. It’s an enormous undertaking for us.”
10.50: Michael Carty, CIO, Euroclear Nordics opens by saying, “there is a tsunami of change”.
Chris Skinner is introducing the next panel.
10:45 - 11:30 PANEL: Disruptive forces - harnessing the power of change
- Michael Carty, CIO, Euroclear Nordics
- Idar Kreutzer, Managing Director, Finance Norway
- Glenn Söderholm, Member of the Executive Board and Head of Corporates & Institutions, Danske Bank
- Alain Raes, Chief Executive, EMEA and Asia Pacific, Swift
- Chris Skinner, Chair, The Financial Services Club (moderator)
10.42: First mention of collaboration. Likely a key theme today as banks look to shelter around SWIFT versus newcomers.
“Clients want a seamless and reliable bank. If that doesn’t work then we might as well close the shop. This is where Swift can help [i.e. collaboratively]. … That is how we will be able to resist disruption from Google and the like.”
10.39: Danske Bank’s Söderholm is now using his keynote speech at the Swift Nordics 2015 conference to explain his bank has managed to change, to refocus on transaction banking, customer service and the fundamentals of banking.
“New regulation makes on-boarding and advising clients more expensive. Our cost base is going up dramatically,” says Danske Bank’s Söderholm. An honest assessment there of how changing collateral and capital controls are impacting FIs.
“RoE gone from 30% on average to maybe 10% now – that gives us a severe challenge.” Those are some great figures there!
10.24: Söderholm is now giving the Swift Nordics audience here in Copenhagen an economic overview of the region and of FS post-crash, particularly with regard to the impact of regulation.
“We’re now a strong regional Nordic bank,” he says. “Transaction banking is now one of our most important streams.” That is something Danske shares with others.
Danske Bank’s Söderholm explains how his bank has 60% of its business here in the Nordics and gives an overview of his firm and how they are embracing change post-crash, admitting that some of their previous Irish investments “weren’t perhaps our best investments.”
10:15 - 10:45 Keynote speech: Glenn Söderholm, Member of the Executive Board and Head of Corporates & Institutions, Danske Bank takes to the stage...
The FS landscape is changing under the weight of all these disruptions and this conference is intended to help attendees navigate the waters.
“There are also new entrants to the market too: You are all aware of Apple and Google,” she says, perhaps referring to the announcement of Android Pay this week, joining Apple Pay and other such innovations.
In terms of the disruptive forces that will be debated in Copenhagen, Bitcoin (BTC) – and the block chain – will inevitably be discussed, alongside cyber-threats, technology and, yes, regulation.
10.09: Åhman explains there are 207 participants here in Copenhagen from 12 countries, with 32 speakers and 8 exhibitors – more than the previous Nordics conference in Stockholm.
“Welcome to Copenhagen to this Swift Nordics 2015 conference,” she says where the theme this time is disruptive forces: Harnessing the power of change."
Erica Åhman, Head of Swift Nordics, welcomes everyone and reflects on the previous Nordics conference in Stockholm when the issue of regulation was discussed, alongside the growing collaborative space, T2S and much else besides.
10:00 - 10:15 Welcome from Erica Åhman, Head of Swift Nordics
- Erica Åhman, Head of Swift Nordics
- K.B. Larsen, Chief Expert, Clearing, FX/MM & Derivative Operations, Nordea
The theme today is disruptive forces: Harnessing the power of change
Everyone has had their danish here in Denmark and is gathering for the SWIFT Nordics conference, despite some flight delays. We are awaiting the opening address now from Erica ...