Payments professionals from across Europe are gathering in MIlan this week for EBAday 2016, hosted by the Euro Banking Association and Finextra. We're liveblogging events here.
16.00: As the moderators gather to reflect on the last two days, we say goodbye to EBAday 2016, and look ahead to EBAday 2017 in Dublin.
15.50: Financial market infrastructures are a critical and indispensible element of the networked economy. As a best practice measure, banks in the future may have to assess the security of their counterparts as they transact over shared networks, suggests Volcker, creating a big opportunity for third party service providers, auditors and consultants.
15.40: With an indirect reference to Swift, EBA Clearing's Vink says that failure to share information was a critical risk factor in the latest spate of breaches,
It's Important to realise that "Swift has not been compromised", says Volcker, It's the banks that connect to Swift that have been breached. However, it does lead to a discussion about how much trust do we have in our financial market infrastructures. "The crime side is quite organised. We might need to do some catching up here," he says.
15.20: Volcker says large cyberattacks make it into the breaking news most days. Swift is on everybody's mind, he says, remarking that a panel on this subject cannot stay silent.
15.15 Time for a timely workshop on ‘cybersecurity – the never-ending challenge’. Will we hear more on Swift’s current woes? No Swift rep on the panel (natch). We’ve got Deutsche Bank CISO Hinrich Völcker acting as facilitator, with participation from David Neumarker of SIA, Monica Pellegrino from ABI Lab, and EBA Clearing chief risk officer André Vink.
14.50: The market will develop gradually, agrees the panel, seeing strong growth in certain niche markets. CA's Mitra says there may be hundreds of me-too apps, but there will likely only be a small number of killer applications. Koninckx says the development of a rich ecosystem, with control and trust embedded in will be key to uptake and success.
14.45: APIs are not just a B2C proposition. Banks could also gain a competitive advantage by accessing other bank APIs to provide added value services, says Richardson, citing account aggregation as a potential application.
14.35: What's in it for consumers and businesses, asks Brennan. The opportunity to build contextual applications, says Koninckx, citing Starbucks order and pay in advance app as a prime example of a bundled approach to product delivery.
14.25 Brennan asks how banks can entice developers to use their APIs as the basis for future development. RBS is using a purpose-built Website, bankofapis.com, to encourage developer participation. It provides a space where third party developers can explore the potential of the bank's first test API, dubbed Blue Bank, in a sandbox environment and apply for participation in up-and-coming hackathons. Richardson says the early feedback from users has been very encouraging.
14.20: Damian Richardson from RBS uses his own experiences of using APIs from Uber and City Mapper to give him addded value information about problems on the London Undergound and other options for his daily commute. Banks, likewise, will be able to provide a range of new services to consumers. Kersten says a traditional bank today has its own products, its own channels and its own clients. In the future this will be completely different; some traditional revenue lines will be impacted but other opportunities will open up.
14.10: ABN Amro's Kersten defines an API as an interface that is open, secure and operates in a self-service environment. Koninckx from FIS believes that APIS have the potential to provide a pick and mix package of banking services for customers. From the customer perspective, the API will provide more relevant services, agrees Kersten, but it will also enable banks to share experiences and data with other banks.
14.05: Brennan references the EBA work group on open innovation, drawing from the experiences of 40 member banks. The paper finds APIs could pave the way for open banking with fintech and PSD2 pushing the envelope. While still at the infancy stage, the paper signals growing interest among banks in the value of co-creationin an open environment and sourcing of APIs to advances their product propositions.
14.00 Lunch over, I’m waiting to hear about the innovation potential of open API’s in transaction banking, with Bank of Ireland’s Vincent Brennan chairing the discussion. Panel participants include Marijke Koninckx of FIS, Karin Kersten - ABN Amro, Ronnie Mitra from CA Tech’s API Academy and Damian Richardson, head of payment innovation at RBS.
13.20: Token's Kirsch achieves EBAday celebrity status. Doesn't appear too thrilled...
12.40: This year's first selfie
12.30: It's been a busy morning. Time for some lunch
12.10: UniCredit's Marksteiner says that banks have to be prepared to accept failure as part of their DNA if they are to match up to the startup culture, which relies on agile design methodologies and rapid prototyping to get products to market, Oracle's Grey says there is an operating model conflict between startups who focus on customer centric design, and banks who tend to major on the product attributes. He points to firms like Capital One and BBVA, which have bought UX and CX design firms to focus specifically on the customer interface. Marksteiner points out that the bank's legacy architecture is a real burden, and often the only way to circumvent this is to partner with startups who are able focus purely on pushing out new innovative services to customers
12.05:Box says there is an opportunity for banks to sell services to fintech startups, As an expample, he says Raphaels is currently working with a startup in Germany, providing e-money and card services on their behalf. Banks have to forge close relationships with startups before they can feel comfortable in offering such sercvices.
11.55: HSBC's Chazot says new technologies are fundamentally transforming the busness of banking and banks themselves. HSBC's strategy is fulfilled through accelerators and part funding. The bank invests in about five companies every year, taking minority stakes in new startups that can help it deliver better services. Unicredit too screens fintech startups for investment purposes typically focusing on Series C-level funding. The bank has created a new team of relationship managers to work closely with such startups as well as to provide them with access to clearing and settlement systems. Oracle's Gray says the vendor management team can act as a firm's immune system, seeking out potential threats and assimilating new ideas, right up to acquisition.
11.50:Gabriele Marksteiner of UniCredit sees the fintech phenomenon as both a challenge and opportunity. New customer centric startups are beginning to insert themselves into the value chain, providing services which big banks cannot match. She says banks have to find the right model of collaboration with newcomers in order to find better ways to service clients.
11.40: John Box off Raphaels Bank brings the perspective of a long-standing traditional B2B bank "Fintech is central to our business" he says. The bank only performs banking services and has no legacy infrastructure to support. It relies on companies like Oracle to deliver its backbone IT and is increasingly working with startups to deliver new innovative services to customers.
11.35: As with any buzzword, fintech as a phrase has come to mean many things, says Ginsel. For the purpose of this panel it will be applied to how changes in technology are ushering in innvoation across banking. This applies to companies large or small, not just startups,
11.30: Fintech – friend or foe? That’s the question being asked in this session by Don Ginsel of Holland FinTech, with contributions from John Box of Raphaels Bank, Christophe Chazot from HSBC, UniCredit’s Gabriele Marksteiner, and Gordon Gray of Oracle.
11.15: Back on the exhibition floor, business is brisk.
10.50: EBAday challenge speaker Kirsch from Token pops up to ask a question of the panel, once again banging the drum for a standard open API to which all industry participants, including the new breed of PISPs, connect. Von Poser believes liability issues will get in the way, with the risk falling on the banks in the event of failed transactions and breaches. HSBC's Duchel agrees, stating that this has been red flagged as an issue at HSBC. Whittle, however, concurs with Kirsch, saying that the utopian ideal of the single API has to be the way forward. The secret is how to open it up while maintaining a degree of trust that underwrites the liability.
10.45: Egner asks if banks' IT is fit for purpose. "The devil is in the detail," says von Poser. There will be big calls on currency conversion systems and bank data processing centres. Whittle says that banks will feel a sense of urgency in the dash to the finish line. There is a risk that the industry will default to a similar operating model to that which exists today, resurrecting old bugbears, particularly around reference data issues.
10.40: HSBC's Duchel states that there is a lot of co-ordination going on at the banks' outposts across Europe, but welcomes more co-operation from an industry-wide perspective.
10.35: James Whittle from Payments UK adopts the mantle of the spectre at the feast, noting that in 18 months, five thousand payment institutions will open up their accounts to PSD2. "That's a massive undertaking. We have to make sure that we work together to avoid the risk of fragmentation and extract the opportunities." There are a lot of "known unkowns" he says citing trust, identity, customer authentication, authorisation of TTPs and the liabilities that the new ecosystem has to deal with.
10.30: PSD1 was more of a compliance issue, suggests Egner, while PSD2 appears to be an opportunity for banks to focus on the strategic business opportunities. Von Poser of PPI agrees, indicating that more budget is being made available for banks to handle the competitive issues arising from PSD2 provisions. Accenture's McFarlane believes the legislation will usher in new unconventional partnerships between banks and new entrants to address the issues at hand.
10.25: Egner opens with the key dates in the calendar governing the introduction of the new legislation and the implementation path facing banks.
10.20: Off to a slow start as the room fills up. People still filing in
10.15: Decisions, decisions. Kudos to the EBA for putting together such a compelling programme, but it’s not making your correspondent’s job any easier. So…eschewing the stream one debate on instant payments, I’ve pitched up for a session on PSD2, asking ‘where lies the opportunity?’. Moderated by EBA secretary general Thomas Egner, the panel features Catherine Duchel, PSD2 business lead, HSBC, Accenture’s Andrew McFarlane, Hubertus von Poser from PPI, and James Whittle, Payments UK’s director of industry policy.
10.00: The key take away from this opening panel appears to be that banks are open to innovation, are investing in new opportunities and, crucially, are not phased by the emergence of fintech startups.
09.55: No talk on disruption would be complete wiithout the mention of blockchain technologies. Each of the panellists are watching the technology closely. UniCredit's Cederle says the bank is investing 'heavily', with opportunities at the last mile of the payments chain and in the trade finance arena.
09.45 Moving to the theme of disruption. Hines asks if banking is entering a revolutionary or evolutionary phase. For UniCredit's Cederle, it's a bit of both. Revolutionary advances in mobile and AI are pushing payments along an evolutionary path. Petit say the fintech startups entering the market don't have the direct customer interaction and track record that banks have in safety and security. He adds that RBS has a 'Bank of APIs' Web address runs hackathons and is open to working with startups as it cleans up its historical product legacy and simplifies its customer proposition,
09.35: Instant payments brings security challenges, says Chazot. Changing the system to aid convenience and speed cannot come at the cost of lax security. Petit says saftey and security is absolutely paramount. "Do you buy the discounted parachutes when you're about to do a skydive?"
09.30 Inevitably talk turns to PSD2 and the prospect of disintermedation. Chazot says the regulation is helping to steer the banks to new initiatives and innovation in services, "If banks look to the future with confidence, rather than with angst, this is a great opportunity for us to better service our customer." Petit agrees that the opportunities are vast to further push banks up the value chain. The payment will become almost incidental in the future he says.
09.25: On to faster payments. RBS' Petit says the introduction in the UK eight years ago has revolutionised payments, completely changing customer behaviour and paving the way for new mobile-based services such as Paym. Real-time is the new norm and with that comes expectation and demand from customers. "I think that's healthy, It keeps us on our toes."
09.20: Hines cites research that suggests 70% of bank IT budgets are spent on maintenance. HSBC's Chazot is not surprised by the figure. "The bigger the structure the harder it is to turn around," he says. The challenge for banks is to keep the machine running while investing in the future.
09.15 First question from Hines is about challenges customers are facing. UniCredit's Cederle refers to the disconnect between legacy infrastructure and new tecchnologies. Customers want an easy experience and fast payments at minimal cost he says. Petit from RBS believes there is too much complexity in cross-border payments and not enough transparency around costs. Again easing the experience for customers is key.
09.00 Day two begins with a strategic roundtable: ‘Brave new world - future challenges and opportunities for bank’. Up on stage are Paolo Cederle, CEO, UniCredit business integrated solutions, Christophe Chazot group head of innovation, HSBC, and Damian Pettit, RBS head of payment operations. Moderating courtesy of Celent’s Patricia Hines.
08.40: Exhibition floor already looking lively
08.35: The EBAday bag ladies are primed for action
08.30: Welome back to day two of EBAday.