The Swift Nordics Regional Conference 2016 in Oslo is focusing on how to effectively harness disruptive trends and deliver practical, real world change to the financial industry. Over the course of two days, the programme will examine challenges and opportunities in the Nordics and beyond, and assess how new technologies, changing business models and collaborative ways of working pave the way for the future.
17:00: As Raymaekers says, a good high to end on. The deep dives are wrapped up. The delegates have a pre-dinner break. We will be back live-blogging bright and early tomorrow for the keynote address from futurist Stefan Hyttfors. Thanks and more tomorrow.
16:58: The last digivotes of the session show that by a nose delegates favour partnering with other providers to achieve transformation - but that they are overwhelmingly confident (71%) that banks will remain at the heart of the customer experience, and in the future this conference will NOT be being run by guys in hoodies...
16:54: Gervasini says the banks can’t afford to be closed… the future is not just about banking services... it’s about financial services, he reminds delegates. Banks might need to be able to offer adjacent services and there will be an interesting discussion about how far to go in such collaboration and what is the liability - and will the client find it relevant to go to just one place? If banks allow other providers on to their platforms and they turn out to have better cash management solutions for example, will the bank switch its solution off? How far are banks willing to go? What does openness actually mean? This will test silo-based thinking in banks very seriously, he says.
16:51: The really big technology development will be... machine learning. There are some test cases (like wealth management). If you have a cognitive computer answering the phone, analysing the customers' behaviour, analysing the market - they can give better advice than a human.
16:49: Syvanne also highlights new technologies outside payments. The customer is now at the centre and they are always connected. Wearables are key. Apparently we will all need an Apple Watch. Also API utilisation. The bank can't be everywhere and knowing how to connect to the customer at all times is why you need the APIs. Also references analytics - information about the customer and how you can relay it to your customers.
16:46: Back in the digitalisation session... Syvanne is talking about blockchain! That is differentiated from other developments on the market he says. Everybody understands it's the way of the future but there is still some way to go.
16:41: Skinner is wrapping up this session... So we will pick up the digitalisation session again.
16:40: Gilderdale references the IoT again. We will see the blurring of the physical and the digital world. You will interact with the physical world and underneath things like payments will just be happening. Interacting will make things happen.
16:39: Soramaki says in the future banking will be distributed - people will get things from different places, like we used to get meat from the butcher and bread from the baker.
16:36: Skinner says SWIFT's future will be providing information - Gilderdale agrees that as a co-operative and a utility SWIFT can provide risk management capabilities and analytics in a utility model.
16:33: Skinner is referring to credit algorithms, alternative risk management like Klarna, but says he takes the view that banks can rebundle fintech for a better customer experience. But, how do you make money on things you make money on now? The way you make money is on information about money. The analytics and how they are leveraged is where banks will make money in 10 years.
16:32: Soramaki says the biggest threat for the banks comes from fintechs taking bits of their business away. The banks are squeezed and they could lose out from this gnawing at the borders. This is based heavily on analytics - being able to make better customer propositions.
16:31: Skinner: Remember what you measure is what you get - if you have the visualisation tools at least you can see the swan flying towards you before it hits the windscreen (this refers to the black swan which next time might be purple...)
16:29: Skinner agrees wealth managers are using analytics heavily to give specific individualised portfolio advice that looks like it's been developed just for them. Also says banks are working out what to do with their legacy. Always the problem - as we have heard throughout the day. They are using cloud and analytics as a way to get there, to rationalise data architectures. A number of banks are saying we have to rationalise data architecture first before we get to digital platforms.
16:27: Ahman asks whether banks have data analytics in their digital roadmaps. Soramaki says in wealth management the need for this is very clear. They want to secure the new generation of customers, the Uber generation, who want analytics and don't want to talk to anyone.
16:26: Skinner agrees location-based services could be a driver...
16:25: Gilderdale says if you look at pure digital offerings from challenger banks with predictive services telling consumers they won't be able to pay their mortgage so here's a temporary overdraft... this is all based on analytics. So there may be more push for real-time from a customer analytics side. It's got to be triggering an action.
16:23: Skinner referring to talk among central banks about real-time regulatory reporting which was offset by the costs. Soramaki says the regulators have large amounts of information daily. Agrees it's about the decision making. You don't need frequent data if your decision making takes a couple of weeks. From a systemic risk perspective there are no real-time dashboards yet. We see it going in that direction but it's not there yet.
16:21: Gilderdale says the move to real-time payments will demand real-time analytics. Also Basel reporting etc. Some financial institutions may have had monthly reports in the past but today you have to be able to monitor intraday how your liquidity is changing. There is no point in having real-time data analytics without a real-time decision needed behind it. These are concrete examples of where there would be such a need... real-time payments/liquidity management regulation.
16:20: Says he hasn't done anything with real-time data. Skinner saying that real-time isn't that great according to some - T+3 gives time to clear up the mess... Are we moving to real-time?
16:18: Soramaki says his firm is looking at regulatory data. Asset managers/hedge funds are usually based on price data/market data which often isn't high quality. You can't spot this in statistical models very easily. If the data quality is not good... you get garbage in, garbage out. We often combine market data with the customers' internal data - to see if there are factors that are driving/affecting their businesses eg your volumes are going down because a certain market is not doing very well. We can also do stress testing like this - what will happen to your business if there is a crash in China.
16:16: SWIFT's Gilderdale says there's a shift. Responsible for many more risk metrics than they would have been before 2009. The drive for enterprise data models - a vision of 10-15 years ago - has disappeared somewhat. People are trying now to say, they have various sources of information acquired under different routes and it is difficult to bring that together easily. There are technical restraints... the challenge is how to take various sources of information, bring them together, and drive insights. That's not easy in a financial services company. It's easier in other businesses where the very strict control on data usage is less prevalent.
16:14: Now picking up the deep dive on 'risk management in the age of disruption'. Oddly, moderator Skinner's first comment (with us in the room) is about chief digital officers... but also chief data officers. Are more people doing data analytics projects?
16:13: Time to move on to the other deep dive... Bear with us.
16:12: Pehrson - a few years from now everything will be real-time. If it provides a value to a corporate, then that service will be developed... Over time, that will happen.
16:10: Bjornhaug says digitalisation is about more than banks. It's happening everywhere. Citing a Chinese construction firm that used a digital printer to build cheap houses quickly: no industry is safe. It's important for banks to talk to their customers about what is their digital strategy. I visited two customers in the past month - both in the process of hiring a chief digital officer.
16:08: Gervasini points out corporates are very busy already. A lot of corporates are just trying to survive and then they hear fintech buzzwords around them and are coming to the banks to understand the implications. We must not try to jump on every wave that is coming. We must start by solving the day to day needs of our clients - then we can start to think about giving these new technologies to our clients. Deliver to our clients what they expect so they can deliver to their clients - and then look at how to optimise the set up without making their day even more complex.
16:05: Raymaekers turns to Bjornhaug to ask about the corporate portal question... He says consumers and SMEs can go in the same basket. Small, easy, customer interface based. Simple needs, want things to be easy. Going up the ladder we see large B2C customers curious on the consumer side. How they get payments in is interesting to them. There's no clear definition of what a corporate wants - it depends how they're integrated with their banks. If they have ERPs, they may go to the ERP company for more services, and view the bank as just an infrastructure provider.
He sees more potential for collaboration with fintechs. The fintechs targeting corporate segments realise it's a complex area and they need to collaborate with the banks. They need to think holistically, think about integration, do things on a win win basis. If you look at the payment market, more people in the world are connecting to the payments infrastructure. I don't see the great risk that fintechs will come and steal all our payments, because things are growing. There might be something in it for everyone, he says.
16:04: Raymaekers asks whether POCs are a good approach? Yes, says Syvanne. We all know blockchain is the technology at the future but we have to find the use case so what you should do is test it actively - and the POC is the easiest way. Put it in production somewhere, gain your experience, don't give a headstart to your competitors.
15:58: Raymaekers is asking Syvanne whether we can get ahead of our customers' needs? Syvanne says this is a typical consultant question - and gives a typical three point consultant answer. 1) Be active participants... Participate in startup competitions. Involve your customers in product development and what your bank is doing, like Fidor in Germany, which is even asking customers what their mortgage rates should be. 2) Do your homework. Go to market, do your research, ask other consultancy agencies, participate in dialogues.
An interesting point is predictable disruption - disrupt yourself - how can you predict what will disrupt? You can do this by following the market. We've been discussing platforms a lot today... Airbnb, Uber. We did see that coming. Perhaps we didn't react quickly enough. But that is definitely something that will continue. Everybody is building a crowd funding platform at the moment, for example. We see corporate platforms coming. A lot of the disruption is about the consumer market but there is a lot of money in the corporate market, so what is going to become the corporate portal? Another market that will definitely be disrupted in the future is wealth management, rob advisers etc.
To conclude... 3) You just need to go and to it... Ask how you can fail fast to see you are choosing the correct approach. Build prototypes, be agile, have multiple layers in your own banking software so you can tailor services for customers...
Whatever your approach - the time to act is now, Syvanne says.
15:57: Pehrson agrees technology is a key enabler of digitalisation but says we have been working on it for some time. It's about standards, business rules as well as technology. A combination of how we agree to collaborate as an industry and the new technologies that enable us to collaborate in an efficient way.
15:54: Raymaekers is asking Gervasini to define digitalisation, which he says is hard... it's about improving client experience using technology... What it comes down to in essence he says is that there are various technologies out there and there are infrastructure improvements... the entire point and what is difficult is where to place our bets? What types of technology will we focus on to enable the customer experience we want? We don't fully understand what are the ramifications and the possibilities within these different technologies to give us a clear view which means we are putting eggs in many baskets so we don't lose out on any possibilities. But our budgets are quite limited. So we need to be making bets based on a lot of uncertainty. The big question for the industry is what bets are we making? Each individual bank needs to figure out what direction it wants to go in. There are consortia today, trying to gather groups, but there are different choices. Are you a follower? A leader? What does your client expect you to do? Where are you going to put your money?
15:52: Last idea... collaborative disruption. Raymaekers is name checking SWIFT's global payments innovation initiative... which is a good example of where banks come together and collaboratively decide to disrupt the correspondent banking model before others do...
15:51: Last slide... it's not all about fin-tech - it's also about business, he says. The back office needs to be real-time as well for beneficiaries to benefit. We must look at fintech but also business rules that govern - that are above the technology - that need to be addressed as well in order to achieve seamless customer experience.
15:50: Raymaekers is showing a slide outlining the opportunities for blockchain... and the challenges... including governance, business model, identifying parties, data privacy and scale... Quite some challenges before blockchain becomes bank-grade, he says, but sooner or later it will find its sweet spot he predicts.
15:49: Disruptions from the consumer space are creeping up the value chain to SME and even corporates... Over time the new entrants could disrupt B2B which is where on the cross-border side the banks make most of their money.
15:47: Moving to the front office - there are new companies offering storefronts... and the ultimate disintermediator is bitcoin. Promising a P2P way of sharing value without using any intermediary. Though as Raymaekers points out there ARE intermediaries in the bitcoin chain today...
15:44: Raymaekers is highlighting this morning's discussions around front office and back office - and the need for an excellent back office to compete. The traditional model is being disintermediated as operators such as ACHs/RTGSs start to interconnect, cutting out correspondent banking, though they have their challenges. New companies are offering direct to ACH - taking files and putting it directly into the ACH. That could bypass the bank on the receiving end. Also see the potential for blockchain to disintermediate correspondent banks - new technology offering new possibilities.
15:43: Raymaekers is drilling down again, to the customer experience. The new solutions outperform correspondent banking on all dimensions - except security and inclusivity - he says. Many new solutions are closed loop - whereas correspondent banking is very inclusive, but the experience is not rapid or seamless.
15:42: The barbarians are not just at the gate - they're in the castle! You can see these as partners, enemies or 'frenemies', Raymaekers says. All in all, the traditional correspondent banking experience/model is under pressure.
15:40: Years ago a long list of correspondents was a status symbol - now banks are consolidating their correspondent relationships, driven by compliance, the cost of AML, keeping the relationships versus the volumes they represent. This could be increasing the number of hops to get to real-time cross-border payments.
15:39: Raymaekers zeros in on cross-border correspondent banking business. It's under pressure. The real-time trend is growing and consumers expect real-time... and don't care where. So real-time is impacting cross-border as well.
15:36: Raymaekers is showing a slide with a picture showing fintech pacmen eating banks... and themselves being eaten by GAFA and co. Echoes the point made earlier that fintechs only have to be good at one thing - and can then unbundle banks by excelling in their individual area eg P2P lending or cross border payments. References the giant e-commerce platforms as a 'very interesting development' - and how it's interesting to see FaceBook re-positioning changing payments services. They too are changing their models. Under the pacmen is the heat being created by new technologies such as blockchain... there'll be a question on technology in the panel he promises.
15:33: Raymaekers setting up the discussion. It will follow on from this morning's debates, drill down, look at underlying trends, customer expectations, ask can banks compete? Introducing his distinguished panel... and explaining how the session will work. Intro from him, then panel debate in two parts. Four questions. Interactive. Panellists paid in bitcoins based on how much interaction they achieve... (joke)
15:30: Filling up here... A lot of interest in digitalisation (surprise, surprise...)
15:26: We have an extra speaker in this one, Ulf Bjornhaug, Nordea. Pleasant surprise.
15:25: Starting off in the 'digitalisation and changing customer expectations' deep dive. Looking forward to kick-off...
15:00: More coffee. Stand by for deep dives in 30 mins.
14:45: For the rest of the afternoon, the programme here splits into two 'deep dive' sessions. One will focus on 'digitalisation and changing customer expectations', and will feature Petri Syvanne, Accenture, Robert Pehrson, SEB and Mark Gervasini Nielsen, Danske Bank, and be moderated by Wim Raymaekers, Global Head, Banking Market, SWIFT.
The other, happening in parallel, focuses on 'risk management in the age of disruption' and will be moderated by Chris Skinner, Chair of the Financial Services Club, with speakers Dr Kimmo Soramaki, FNA, and Stephen Gilderdale, Head of UK Key Clients, Ireland and Nordics.
The live blog will attempt to cover the most salient points from both deep dives but make sure you don't miss anything by following the discussion on Twitter at #NORC2016...
14:00: The delegates are participating in 'chat room' sessions now for an hour - short presentations on different hot topics. The full programme restarts 90 mins from now and normal live blogging services will resume at that point.
Lunch next. Back soon.
12:57: Taylor asks for one word about what lies ahead. Fors - 'concerned'. Jones 'better'. Koch 'proactive'. Taylor 'lunch'.
12:55: Jones says it's a real challenge. Bigger banks are nervous about Iran etc because of the risk - but the business opportunities are there. The appetite for business there is enormous but how we do that in a risk managed way is a challenge. Some areas are more dangerous than others. We have to extend that thinking. It is not thought through yet but it is possible. The first Iranian oil shipment hit Spain yesterday. There's opportunity there but there's also risk.
12:54: Taylor puts his final question to the panellists. How can we cope with the level of change impacting FCCM? Koch says his institution takes a reactive approach. It's how we build the systems and manage the list which will enable us to react. It's easy to add names without understanding - you need to have a good reason for why they are put on, so they can be removed more easily. Think through the entire operating model of the bank.
12:53: Jones says the fragmentation of the financial services landscape explodes this even further - and references again the value of the FCA Innovation Hub in the UK to tackle this.
12:52: Taylor asks Jones if he has seen clients who have 'completely nailed this'. Jones says you see pockets of good and bad activity - and good technology used badly/vice versa. In all honesty though he says he doesn't think he has seen anyone nail it. The business needs to tell the technology function what to look for - you can't expect a technology function to go off and to this by itself. A lot of the issue is scale Jones adds. It is hard to get it right when the volume of screening activity is so high.
12:50: The DFS says, this should be related to your risks. Too often we buy a system from a vendor with a lot of rules in it... there is a chunk which is right, but you need to be able to say I bought this system to control MY risks. The principles they're starting to get the conversation going about are valid.
12:47: Jones says clients do have 'orange jumpsuit' concerns. It's not law but it's interesting in terms of direction of travel. He is referencing SoX and its similarities. Could there be something similar for AML and sanctions screening? But if you unpick it a bit, there is some common sense in there (paper from the DFS). What they are actually suggesting needs to be done is going right to the heart of the effectiveness debate. What the regulator wants to know is, does it work?
12:46: Taylor is moving the discussion on to attestation... If you take the 40,000 names on lists, there are 4 billion matching possibilities, he says. Attestation means there needs to be one man/lady in the organisation that promises they are in full control of sanctions/FCCM. Otherwise they risk personal liability and potentially prison... Taylor asks Jones to comment.
12:45: Fors says it's very difficult to identify the real beneficial owner. There are different structures for ownership of securities.
12:44: Koch: for securities there is little information to screen, and that is the issue. He references the development of the 202 COV to address this problem in payments... could it be a solution for the securities industry?
12:43: It's good that for securities we are getting to a place where we are starting to think about the risk and work it from first principles, says Jones.
12:42: There is a huge role for technology around this. What SWIFT is doing around transaction monitoring is part of the answer, and there are opportunities with blockchain as well, Jones says. Blockchain allows for proof of identity and that has a role to play.
12:41: Jones says these challenges are analagous to the challenges in correspondent banking. It's all about getting comfort that your bank is not being used for purposes you are unaware of. There is a huge challenge there. The correspondent banking route is the one you're describing.
12:40: Taylor says ISSA has issued principles. It's interesting that the industry has come together at an early stage of the challenge. The idea of the principles is to let the industry get ahead of the challenge.
12:39: There will be situations where providers will have to decline clients because they can't be sure they have enough information and trust the way they are setting out their compliance work.
12:38: In Norway there is a system where all ownership of securities is segregated at the CSD. In most markets there is no segregation at all at the CSD level. So as custodian banks we will have to ask our clients to tell us how they do their compliance work, how they monitor their clients, we will become a sort of supervisor of how they do this. It's a very sensitive subject.
12:37: There are two objectives. The first is to live up to the standards of compliance and sanctions screening. The other is to maintain an efficiency in an industry built on a more omnibus and aggregated structure. It is difficult to do.
12:34: A few years ago no-one would have predicted the discussions happening about compliance in securities. No one had really seen the need to screen - also the securities business is very non-transparent. It's built on an omnibus structure/consolidation instructions/aggregated communication of everything between counterparties. What triggered this work that has now been done by ISSA is that around two years ago Clearstream was fined because they didn't know their client had a client on an OFAC list. It created a lot of concern in the securities industry.
12:31: Taylor brings in Fors to cover the securities angle on this. Fors observes that there has been extreme growth in the area of compliance, remembering a legal officer's 'black book' in the past. During the past few years there has been an extreme focus on this, its used on a geo-political level, it's becoming extremely complicated, and of course the penalties for the banking industry are significant.
12:30: Taylor asks how banks can use data to spot 'unknown unknowns'. Koch says most banks are siloed so not all data is available for all compliance activities. Integrating that data and being able to cross-reference it across borders within institutions is key for the future.
12:29: So far sanctions screening has had a cross-border focus but I know the regulators will ask for more controls on internal transactions as well.
12:28: For commercial transactions, these are well covered in sanctions schemes. There are new interesting payments methods coming - how do we handle these? Do recurring payments need to be screened every time?
12:27: Taylor asks Koch to update us on cash/payments/transactions compliance trends. Koch says there is a need to focus on wherever there is a transfer of funds or assets and focus on those transactions. He groups them into commercial transactions - which we are all looking at and avoiding sanctions breeches. Then looking at financial transactions between institutions, and trade finance, where we see a transfer of assets, and ending up with securities.
12:26: Koch says in Norway sanctions are relevant, thinking about the proximity of certain countries. Geo-political tools take on new relevance.
12:25: There is still a disconnect between the technology functions that manage the risk and the business and ownership of the customers.
12:23: Jones says the challenge he sees is reminding ourselves that this is not so much about compliance with regulation as management of risk. There is often a focus on the letter of the regulation - rather than the spirit, and understanding where the risks actually lie. He references the previous panel - we are entering an interesting new world as we fragment the financial services landscape. We will have to think about risk in a different way and that will throw up additional challenges. Understand where the risks like, he says. Technology is just a piece of it. It's a control mechanism that is only there to manage risks. We can lose sight of those, who our customers are, and what they are doing. If you own the customer relationship you have a bigger responsibility to manage risk.
12:20: By way of scene setting, Taylor is sharing some of the issues SWIFT's clients talk about - including ever-present supervisory pressure, a growing need to provide testing and assurance, effectiveness being pushed by regulators eg FATF has a specific focus on this, cost pressure, with hundreds of thousands of people being dedicated to the topic, growing complexity around financial crime compliance and an expectation from regulators around easing not removal of sanctions, and from a utility perspective... a new openness from regulators around the concept.
12:19: Taylor is kicking off the session, outlining the topic for the discussion, and framing the scope, which is sanctions. He is now introducing his panel...
Up next, a session on financial crime compliance, moderated by Paul Taylor, Director, Compliance Services, SWIFT, and featuring Goran Fors, SEB, Henrik Koch, Nordea and Michael Jones, PwC.
12:16: Bentestuen says the biggest game-changer for traditional banks will be that the back office structures will fundamentally change. They will be automated to an extent we haven't even been able to grasp yet.
12:15: Toivonen highlights IoT... The invisible, ubiquitous nature of services will happen in payments. With Uber, you don't think about executing the payment. And this will happen for all financial services. You don't go to a bank to purchase financial services - the services come to you, wherever you are, whatever you are doing.
12:14: In his wrap-up question, Perez-Tasso is asking the panellists to identify their one big transformation... Kreutzer says the biggest change with the biggest impact will be to go from very strict strategic planning to pragmatic, dynamic strategic approach where we admit we can't say anything meaningful about what the landscape will look like in five years. The fundamental change will be increased pragmatism and the symbiotic nature of different players.
12:11: Perez-Tasso asks Bentestuen to comment. He says that it's been a journey in terms of opening up. The bank has opened up and partnered up with big players to change capacity and bring new ideas. For DNB it isn't a question of whether we want to embrace fintech start ups - we have to - but not on every access. We need to be prudent on what we can innovate ourselves and where we receive new models, technology and competence that enables us to win in the competition. We are recruiting people from a much broader base. We have opened up to be an attractive place to work. We have to open up. We hire people from Google these days he says - which two years ago we wouldn't even have thought about.
12:09: Toivonen is name-checking the UK FCA's efforts here around the fintech licence - for companies that don't fit into existing regulation - allowing them to experiment. He says banks can follow that model. If you want to work with fintech can you build structures where the fintechs can experiment, get their services off the ground, in a real life environment that is still a sandbox so you can see what they are doing and then expand access if needed.
12:08: At the outset Holvi got regulated which allowed it to play on the same field as its payments partners, getting access etc. What was challenging early on though was to approach the banking partners we wanted to work with was there weren't any dedicated teams to approach as a fintech start-up. Advises banks that if you want to work with fintech startups it's important to have dedicated teams who know the challenges, can guide new entrants on what it means to be in the financial services industry... Now that fintech is very trendy many companies coming to the market have no clue. If you want to service them you have to walk them through what they have to do.
12:07: Perez-Tasso moves on to partnerships, asking Toivonen for recommendations and lessons learned.
12:05: There is a history of collaboration in Norway when it comes to developing underlying infrastructure. In the past 10-15 years we have harvested more than we have invested up until two years ago when we made key strategic decisions, as a result of which we will have a shared payments infrastructure in Norway that will be cost effective, safe and open.
12:02: Kreutzer says PSD2 as a regulatory response to a lack of success in the industry in developing effective cross-border payments in Europe. There is a link between a too-slow response and regulatory change. From a Norwegian point of view we have always tried to be internationally oriented. We are dependent on importing and exporting. We are a small open economy and international payment structures are key to a well functioning economy for us. We are 5.3m people and we have more than 120 banks - so the average bank in Norway is relatively small. It's important that we have easy access to effective infrastructure. 90% of all businesses in Norway have less than 11 employees. We have a business landscape characterised by SMEs. So the financial services landscape reflects that.
12:01: Perez-Tasso is shifting the focus to renewal of wholesale payments market infrastructure, both domestic and cross-border... Asks Kreutzer to update on back-end initiatives in Norway.
12:00: But banks need to make sure they are both solving customer problems and making back office systems more efficient.
11:58: There are many technologies today with the potential to be game changers for the banking industry, Bentestuen says. New technology combined with the investment capital going into fintech will challenge and change several of our value chains, he says. He refers to P2P lending and says what impresses him most is the back office set-up. It's scalable from here to eternity. And the risk assessment is done totally differently. They don't look backwards to make credit assessments. There are some new technologies that will fundamentally challenge the banking industry both in the back office and the consumer interface.
11:58: Perez-Tasso picks up the digital ID theme and puts it to Bentestuen...
11:56: Kreutzer weighs in on the subject of how to treat information. References Google's requests to access his information... In the disruptive landscape we have seen too much uncritical use of and collection of and management of information. Entering the financial services landscape we cannot have that kind of uncritical use of and storage of information, he says. With PSD2 one of the critical issues that has raised a lot of discussion is how to treat information about the digital identity which is key to secure payment system. It's a good thing that this is on the agenda, and that will continue in the name of consumer protection.
11:54: The learnings should be taken from internet startups he says - they do not try to build everything inhouse. They build APIs to let others leverage their data and extend their services. It's not an island where you control all the data and provide all the services. How to get from large legacy systems to a more modern software stack... there are approaches around re-doing core banking and an iterative approach works well too. First start to open up internally interfaces/APIs for internal startups before you open up for external developers which PSD2 will force everyone to do. Can you apply the same methods for internal projects first?
11:53: He confirms that regulation has been the enabling not the limiting factor. Holvi doesn't see the Uber approach - building new services by breaking existing laws a bit - as the way to go in financial services. He welcomes sensible regulation (PSD) which has fulfilled the objectives of consumer protection and competition. Looking at PSD2 he says it will bring more changes, especially as account servicing providers will need to open up access to their systems. This is where legacy systems will create very big challenges, he says.
11:52: Perez-Tasso is asking Toivonen about how regulation has helped Holvi, and how banks will cope with new innovations and update legacy systems.
11:51: Returning to his theme Bentestuen says, we have to stay customer focused...
11:50: There are also challenges around organisational structures and processes. Not all processes have to take 12 months! Some can take 3 hours... We need to pick up speed and that will challenge the way we are organised. Bentestuen says he is not that worried about the bank's ability to develop new products and services. But we have to deal with the historical legacy we carry with us. In terms of regulation he is fundamentally positive - though there is a challenge to harmonise regulation within Europe.
11:49: All traditional banks have to deal with legacy and pick up speed in developing new products and services. There are fundamental system challenges. We need to get rid of the 1970s systems we have and reduce the number of systems we have. We need to put them up in the cloud and take them off the shelf. There are huge systems challenges for most banks.
11:48: Perez-Tasso asks Bentestuen about legacy systems and the challenges these create. How can these challenges be overcome?
11:45: Kreutzer asks the delegates to keep in mind that technology disruption driving change in financial services is not new. It's been a driver for at least 25 years. Financial services has always been using technology to drive efficiency. Even though we are facing fundamental changes now it's important to meet them with a certain degree of confidence. We know a bit about this. We should be proactive. That said, Kreutzer adds, normally we see regulation as a constrainer and new technologies as an enabler. But it is important to bear in mind what are the key drivers behind the regulatory changes we are facing... for the regulators there are three: competition, financial stability, consumer protection. Increased dynamics and increased agility are part of the underlying factors driving regulatory change. We should see regulation driving the landscape change, creating new opportunities. It will be a key driver of productivity, customer experience, competition and profitability.
11:43: Perez-Tasso is now introducing his panellists... and asking Kreutzer first about fintech disruption and regulation...
11:41: Moving on to collaboration. Fintech is booming - and after the UK, the Nordics is attracting the highest investment in Europe. The Nordics are important as a fintech hub. The question he will be asking the panel is when to partner, when to invest, and how to ensure scale and agility to make sure the investments become mainstream.
11:39: Perez-Tasso is dissecting the technology driver, highlighting the IoT, the third wave of the internet - an interplay of technology, cloud, social, mobile, sensors, robotics and big data. At Davos this was a big theme - the fourth industrial revolution - as the IoT and the interconnectedness of technology drive change. By 2020 there will be 50bn interconnected devices. The other technology angle he highlights is.... blockchain! The debate has moved from bitcoin to the underlying technology and this DL technology is particularly relevant, holding the promise to transform the financial services industry. We will hear more about DL, Perez-Tasso promises...
11:37: Nobody would dispute that disruption is a very real phenomenon. Airbnb, Uber, Amazon... And in the Nordics there are good examples as well - Spotify is one. He is linking back to Amazon, pointing out that Amazon deliveries still get to you faster than the payments behind them - which is why Silicon Valley has its sights on financial services.
11:36: Perez-Tasso is kicking off the next part of the agenda. The first panel will tackle the conference theme he says, and will look at the different dynamics of transformation here in the Nordics and further afield. It will be based around three themes - disruption, technology and collaboration.
Next up, Trond Bentestuen, DNB, Idar Kreutzer, Finance Norway and Tuomos Toivonen for a panel session, moderated by SWIFT's Chief Executive, Americas and UK Region, Javier Perez-Tasso.
Coffee break now - back in 30 minutes for a panel with these speakers on turning disruption into real-world change.
11:05: Signing off with a quote from the Economist about how Holvi has made payments something that takes care of itself in the background. If that is true, he says, then Holvi has succeeded.
11:04: Holvi was enabled by PSD and says PSD2 will be an even bigger change. Bigger than a lot of people think. Holvi will also have to open up its services to other players and has built APIs already.
11:03: Working with incumbents is vital. He challenges everyone to look at where they are changing their customers' lives - and where they can work with upstarts to offer services where they can't get as close to customers.
11:02: Responsibility is critical - we are looking after our customers' money.
11:00: The team is very important. Holvi's is more from the technology sector. Also ex-Nokia, gaming. The key thing - most have been entrepreneurs, freelancers, have run their own small businesses. So they know the segment and are passionate about helping them. It's a service they can relate to. It's a financial service with a meaning.
10:59: Toivonen says it has also been key for Holvi to own the customer relationship end-to-end. It works in the background with banking partners. What it excels at is taking the core components and package them into new targeted retail customer propositions. We see more and more that this is what fintechs and challengers do. They take something that customers are not even prepared to pay for - for example current accounts, typically free - and provide crucial value add so they are more than willing to pay for the services.
10:57: Holvi is an independently regulated payment institution. This authorisation has been very important. The European regulatory area is extremely good. Europe is the best place to build financial technology companies. You do need to spend a lot of time in the regulatory area but the rules are accessible enough for a 20 person start up can play.
10:55: Another key element is to leverage changes in technology. Holvi is cloud and open source all the way. It owns the whole core banking stack. The company is half technology, half customer engagement and marketing. Technology is a big part, and this will be the case going forward. Customer acquisition is primarily digital. Holvi is present in all the social channels. But also needs face to face - goes where the entrepreneurs are eg start up workshops. It's very important even if you are only digital for people to be able to put a human face on the service.
10:53: He is now presenting a 'playbook for a challenger'. It's vital to find an underserved, niche segment. You should know about this segment and be passionate about it. The founders of Holvi had all been small business owners, looking for ways to avoid having to do the manual accounting work that goes with running a business. In the context of PSD and SEPA, Holvi founders asked whether they could provide a better service. They started with the hypothesis, could they build a better bank for this segment, without being a bank?
10:52: Holvi is a 'little bit of a different challenger since yesterday', Toivonen says, emphasising the company will continues to operate independently... with the support of the larger group in making new services better and faster. One of the questions for a challenger is how to work with incumbent players, he adds.
10:50: Toivonen says he will talk about how he has built a challenger. He is describing Holvi's business - an online only current account for business owners plus a suite of business management tools. It's a one-stop shop for small business owners. The focus has been, how can we make life easier for entreprenuers?
10:49: Ahman is introducing the next speaker - Tuomas Toivonen, Co-Founder, Holvi Payment Services. A topical speaker given yesterday's news about the BBVA acquisition of Holvi.
10:48: The inevitable mention of blockchain - Bentestuen says this is definitely applicable in the home-buying process. DNB is exploring it - with one key question in mind. Are we solving any problems for our customers?
10:47: Bentestuen has a slide full of buzzwords. The important thing is the customer however. He is referencing the talks by the CEOs of Uber and Airbnb at Davos about what their future plans might be. They emphasised that they would focus on improving the service for the customer - not on selling T-shirts via Airbnb. This is important to remember.
10:46: Banks are running too many systems today, making them vulnerable in terms of stability and in terms of new products being developed.
10:45: Bentestuen says banks are moving from customer service to advice. He is showing a picture of an advisor in a DNB branch - who is working only on consumer platforms, not the back office.
10:43: DNB is also going to make it as 'comfortable as possible to crash your car'. It will use the mobile technology and make what is a difficult process today easy going forward.
10:42: It's not only about payments and daily banking. 'We need to make life's big decisions even easier for our customers.' Bentestuen is referencing initiatives around home buying - not just at the front end but in the back office. It's going to be a 'moon landing' he says. We know a lot of banks have automated processes around non-secured lending. This is about secured, and will be done in a very short period of time. This is a game changer in the way we are running the bank, he says.
10:41: 'For me, Uber is just another taxi company. It's our job to make sure Oslo taxis can compete, through the introduction of Vipps.'
10:40: This has set a new standard for DNB - which is now looking to surprise its competitors even more going forward! Always keeping in mind that we want to solve problems for our customers. Are mobile payments making it easier than using a card? Are there any solutions that compete with the speed of using a card? Mobile payment in physical stores will prevail over time but today it's fairly immature. But for in-apps e-commerce mobile is definitely solving a problem.
10:38: You need to be flexible, adapt to customer behaviour, and listen to customers in order to develop the service going forward.
10:37: Why did this work? It's a good service. It was well marketed. And it established a word in the Norwegian vocabulary!
10:34: Bentestuen is referencing the recent launch of Vipps in Norway. It's a P2P payments mechanism. It was launched fast - and continues to introduce new services. This is a proof of what the bank can do he says - that it has what it takes to develop new popular services going forward. It was a different approach - no workshops, no steering committees. The way DNB has worked with Vipps required the setting up of a new organisational infrastructure. The result is - it worked. This has the same brand awareness as Apple in Norway! There have been 1.5m downloads of the service. More than 60% of users under the age of 30 in Norway use it and more than half of the customer base is non-DNB customers.
10:32: Why do customers use banks? Why do they choose our bank? What are the benefits of being a universal bank customer in a world of start-ups? Just a few of the fundamental questions banks need to address more radically than in the past. DNB still believes in the need for face-to-face meetings (references Amazon store on 5th Ave). Customers still want to buy homes, insure valuables, save for the future, make good investments. 'Brand building will have its renaissance going forward,' he says and therefore maintaining a high street presence will be important - but the concept is different. Encourages delegates to visit the branch while here.
10:30 Bentestuen says banks need to lower legacy costs enough to compete with new entrants - and work on the user experience and internally to stay competitive as banking is changing. We need to be prepared for the future, able to develop products and services much faster than we used to... Consumers don't think of banking and at the same time think of speed. Banks cannot afford to be trendy for the sake of it. They need to solve problems for customers.
10:29: What do fintechs have that banks don't? They don't need to follow a lot of regulations. They don't have the same legacy costs. They don't face lots of competition - they are trying to do only one thing. Also - they don't have any bad habits!
10:28: Bentestuen is referencing how start-ups are attacking the banks' value chains. They only have to be best at one thing. He is showing a picture demonstrating the move from total banking to fragmented banking - where consumers buy different services from different providers. This is challenging banks heavily not only on the 'front and side' in terms of consumer experience but also quite radically in terms of back office functionality.
10:26: Changing technology leads to changing behaviour. People are used to doing their own research and they may trust it more than traditional ways of getting advice. Today's entertainment world is teaching consumers they can have access anywhere on a personalised basis. They can use existing accounts to log on to other places online and they can buy things just by clicking once... Do you think consumers will expect less from their bank, he asks? He thinks not. They will want the same kinds of simplified ways of buying and enjoying services from their banks. Are banks ready?
10:24: Bentestuen is showing a slide about customer traffic in 2015. Today mobile banking is almost twice the size of the e-commerce platform - and no one knew that one year ago. Today only 1% of personal banking traffic is in the branch network.
10:22: In DNB they say, banking will change, with, or without, the banks. Bentestuen is showing a picture of the three most popular phones in Norway in 2009 (when he joined DNB), and asking if anyone remembers 'WAP' banking. These are all signs of exponential growth and change in technology and the way we run our bank - and that is what banks need to adapt to. Since 2009 it's been all about the mobile phone. Today, he says, 'we hardly do any innovation in DNB outside the mobile platform'.
10:20: Keynote speaker Trond Bentestuen, DNB, is taking to the stage... Makes immediate reference to the oil price, which is moving up... Explaining how he left consumer electronics for a 'relaxing' career in banking: how wrong he was! Change has been the key denominator in our industry since the financial crisis.
10:17: Ahman is testing the digivoting with a question - which word is NOT in the OED... The answer is 'Fitbit' - chosen by 33%. Now the real question... which area will impact your institution the most in the next couple of years... the top answer is 'regulation and market change' - 33%... with 'technology revolution' coming in second at 28%.
10:12: Ahman has moved on to the sharing economy, and says there are lessons from the financial industry from the likes of Uber. Makes a parallel with another industry - how digitalisation is rewriting the map for cities... Technology being used to establish patterns in previously 'unknown' information... eg experiment in Helsinki where bus routes are being adapted to where people happen to be. Opens up new perspectives, Ahman says. Shows a picture of Volvo self-driving car in Sweden. In 2017 there is a project in Gothenberg where 100 self driving cars will be put in the hands of consumers. It's a collaborative project designed to achieve a 'crash free' future... The cars will have video cameras so we can see how people behave - and whether they trust the cars. The automotive industry - like finance - has a lot of hype around new technology and is facing new entrants (Google etc) - the key learning points are around how they have collaborated, between industry, authorities, academia, to create a real world project.
10:07 Ahman: Outlines differences between the Nordics countries in terms of economic performance currently. Makes segue from GDP discussion to wealth of information available from SWIFT's Business Intelligence data... Points out that Nordic countries continue to pay and trade mainly with each other... Also notes that Nordic is categorised as running ahead in terms of digital progress as defined by the EU, while other Nordic countries' leads are slightly diminishing. Nordic countries should not take this leadership for granted.
10:04 Ahman: Reminds delegates of discussions in Copenhagen last year. Says this year's theme is 'from disruption to real world change' and promises the two days will be very concrete and will focus on how the financial industry in the Nordics can find ways to embrace change and find ways to collaborate and excel together.
There are 14 countries represented, 4 exhibitors, 37 speakers.
10:00 Welcome address: Flatraaker from DNB kicking proceedings off, welcoming delegates to Oslo. Reminds us that everyone is talking about disruption, innovation and change - which are impacting banking profoundly. Emphasises that the Nordic countries are in the forefront of this evolution, and says this conference will be a good opportunity to find out about this change. It's more difficult than ever to determine what the future will look like, he says, and introduces Ahman from SWIFT...
Here in Oslo getting ready to live blog during the first day of the SWIFT Nordics Regional Conference 2016.
Looking forward to hearing the opening remarks from Erica Ahman, Head of Nordics, SWIFT, and Dag-Inge Flatraaker, Norwegian National Member Group Chairperson, DNB Bank.