Welcome to Finextra's live coverage of the Swift Business Forum in London. This year’s conference will focus on the key issues affecting the financial industry, particularly as they impact UK and global markets. In an ever-increasing ‘instant’ world, the agenda will look at how financial institutions can stay resilient and secure, while continuing to innovate and navigate change.
17.00: Esler wraps up the day by thanking the delegates and sharing his takeaways - we live in a disruptive period but that is the sea we are all in and we have to swim through it.
Thank you very much for joining this Finextra live blog today, see you at the next big event!
16.59: Poll time! Will the UK financial services industry thrive or survive outside of the EU? 60% say survive, although as Hague points out, it is possible to both survive and thrive. He is generally positive on this question, and doesn't see London losing its place as a major financial centre.
16.57: Regarding interest rates, Hague says that this is very concerning, as household debt is around 2007 levels. At some point there will be a set of economic events that make it essential to raise interest rates. The long we put off talking about, the worse the outcomes could be.
16.55: While nationalism is on the rise, many of the problems we face are international. The rise of competing nationalisms could be a real problem when it comes to tackling these international issues, such as cyber crime. The international institutions, such as UN or the World Bank, which could help mediate international problems are viewed less credibly by some nationalist strands.
16.53: One of the reasons why the UK wants to settle as much as possible in two years as the rules are more favourable, as individual EU states wouldn't get a veto on the deal. After that time elapses, there may not be a deal at all.
16.49: With a few minutes left, Esler joins Hague on stage for a quick Q&A. Brexit is the reason for the snap election, in Hague's mind, as Brexit is easier to handle with a win. But also the prospects of a big majority did not hurt either.
16.48: It would be a mistake to be defeatest about Brexit in the City of London. The key for the UK is remaining open to talent and business, while remaining competitive at the same time, according to Hague. If there is to be a free trade agreement between the UK and the EU, there is a good chance of a financial services agreement too. Hague thinks it is in the interests of the two parties to come to an agreement here.
16.44: The future of financial services in the UK will be impacted more by bigger global trends, such as migration, than Brexit. However, that doesn't mean that the Brexit negotiations won't be a rough ride, partly due to the short two-year window set aside for negotiations. Hague says he has a glimmer of hope about the negotiations, as it is not a divorce where we will never see each other again. It is more like a divorce where we will still be living in the same house. We are communicating, which is positive.
16.39: We should not feel negative about the world, but political and cultural unrest will more than likely continue. This means that more long-term thinking is called for.
16.34: If 47% of jobs can be replaced by automation, as certain studies suggest, that will have huge political implications. Society is changed profoundly by these trends. Should technology be taxed if robots are competing for jobs? The private sector will have to be involved in helping governments with some of these big questions, which will come up quite quickly, according to Hague.
16.31: Voters are looking for a way to control life where they feel they have lost control. Through politics, through technological advances as well. Hague mentions his unscientific poll pre-Brexit where every black cab driver he spoke to said they were voting Leave, whereas every Uber driver was voting Remain.
16.29: The Decade of Uncertainty - Surviving or Thriving? is the theme of the closing keynote. Hague points to the very recent first round result of the French election, the election of Donald Trump to the White House, and of course the Brexit vote in the UK last year - where on the night of the vote, the side that won thought they had lost and vice versa.
16.25: Esler returns to introduce William Hague to the stage, describing him as a decent, thoughtful and intelligent politician. Hague warmly thanks Esler for this introduction.
16.21: New technologies such as AI and machine learning are excellent new technologies that can enable the prevention of cyber fraud. With that, Pérez-Tasso mentions that Sibos will be in Toronto this year and will be right here in London in 2019.
16.18: Likening financial services to a football team, while you need innovation and creativity in midfield and attack, it is essential that you have a strong defence as well. The average cyber attack in the UK costs the organisation $3.2m, which shows what you could be facing if you don't have a strong defence. SWIFT is launching a number of security controls and increasing information sharing. Pérez-Tasso says that the community is on the right path, but there is still work to do.
16.13: Pérez-Tasso has three major takeaways for the day. Firstly, innovation is happening now, particularly in the UK market. Secondly, financial compliance and cyber concerns are keeping banks' feet on the ground. Finally, both of these areas are mutually reinforcing - a cyber and compliance mindset is needed during innovation, but equally innovation can benefit financial services organisations when it comes to compliance and cyber.
16.08: Gavin Esler welcomes us back to the main plenary room, and then introduces Pérez-Tasso to the stage.
16.05: We are heading towards the closing keynote from former British Foreign Secretary William Hague, but first the delegates have gathered in the main plenary room as we have been promised closing remarks from Javier Pérez-Tasso, chief executive for the Americas and UK region with SWIFT.
15.57: That is a wrap on the cyber panel.
15.56: What keeps the panel up at night? McElney wants to know that he has all the tools required to do his job, so that he has all bases covered for all eventualities. For Goode, the question "did we miss something that we should have caught" is a worry. He adds that he always questions did he put his point across to the business with the correct level of urgency. Curtin feels the responsibility of building systems and developing trust with the users of the bank services, and everything that his team does is towards providing the most secure services possible.
15.48: Part of the reason for being part of an event such as SWIFT's Business Forum London is to collaborate with the industry and keep the communication between peers developing and pushing forward critical thinking in this sector, suggests Goode.
15.41: What are banks doing to protect the end user? There are obviously many different types of customers to take into account in this scenario. Most want to transact securely in the manner they choose. The bank's job is to ensure it is done in a secure way, says McElney. Education of customers is also important in making sure they gain an understanding of what they can do to ensure their transactions remain secure.
15.38: Relationship building and having the business connecting with cyber is a key theme of this discussion. McElney says that getting this understanding across hits some cultural issues - rather than looking for boxes to tick as a compliance exercise, cyber requires a deep level of analysis. Building that broader appreciation of the landscape is key.
15.34: One thing that J.P. Morgan has been successful at is taking people from the business and putting them into cyber so they see how the operation works and maybe even transition to this role. Legault says that he has seen the 'lightbulb' moment when someone from the business comes in and looks at the issues from a cyber perspective.
15.28: We have to understand how the businesses function and what is important to them, as at the end of the day we are providing a service to them, notes Curtin.
15.27: The payments team needs to be aware of cyber, but how much? Goode says that it is important that the payments team understand what information is coming across, and it is important to have an ongoing dialogue with these teams in order to raise the base level of understanding. In the same way, it is key that the cyber team also have an understanding of how payments work. Criminals are not simply throwing a virtual brick through the window and stealing the jewels, they are sitting in the system and learning. For cyber teams to effectively diagnose the situation, an understanding of the payments world is required.
15.23: Who owns the cyber risk? Curtin is clear that everyone is responsible for this, from the CEO right down to the user, as vunerabilities can be found across the enterprise. This can be expensive to get right, but it would be much more expensive to not have these preventitive measures in place.
15.21: Have you spent time with your legal counsel when planning how your business responds to the worst case scenario? Goode says that there is an opportunity here to bring in other strands of business, and also the regulators, during reslience tests. Engagement across the sector can have real advantages.
Curtin agrees that the regulator is important to be in the loop, as they are the people that will hold you to account.
15.15: How do you empower businesses to understand their cyber risks? McElney says that cyber needs to engage in the discussion, make clear that cyber needs a seat at the table with the business. Security can support a competitive advantage to the business units, from payments to new products. You have to have the right people embedded in that conversation, to ensure that it is not too technical when talking to the business. People cannot engage with what they cannot understand.
15.09: Curtin's background is with the Federal Bureau of Investigation. Moving in to the financial services sector, he says that he really appreciates the ability to share best practices with peers and work in an open environment to try to stop the fraudsters targetting innocent parties.
15.07: Teams have evolved with resources and skills around identifying potential cyber threats. This is tied to the business processes, so understanding this is just as important as understanding the systems. Goode says it is important team to be sitting with the business, not isolated with the CIO.
15.05: An early poll question: how often do you speak to your cyber team? Promisingly, 36% say once a day, while 27% do this once a week. Perhaps worryingly, one in five (20%) never speak to their cyber team.
15.00: The third panel discussion of the day that we are covering is pointing a spotlight at security teams, specifically how banks can build a successful extended team. A great panel for this one, including Royce Curtin, global head of intelligence at Barclays; Brendan Goode, global head of information security operations and regional CISO for UK and Ireland at Deutsche Bank; and Scott McElney, head of threat intelligence & consultancy with Clydesdale Bank. Moderator for this session is a name you will be familiar with from earlier in the day: JF Legault from J.P. Morgan Chase.
14.32: A poll to send us on our way... will banks still dominate the cross-border space in five/ten years' time? A bullish 72% of the audience say yes! This concludes the cross-border payments session.
14.30: Understanding what customers want is vital. Banks and fintechs must provide this. They can do this better than is the case today, according to Tobar.
Zachariadis says competition will drive the change in the payments landscape. Financial institutions also need to look at increasing security and addressing cyber crime issues that new technologies and interfaces bring.
14.27: What will the future payments landscape look like and what can banks do to support their clients? Banks need to continue to talk to fintechs, in the opinion of Tobar. He thinks that payments will continue to get faster, as long as the path of standardisation is followed.
14.21: Looking at SEPA Inst and the role it plays in faster payments in Europe, Tobar says it plays an important role as it was something that SEPA did not immediately address. SEPA Inst is the next logical step that customers are looking for.
14.17: The important point is that the banks do not think they should be competing. Vincent says that fintechs have essentially taken over the R&D facilities of banks. The banks can learn much from studying what is happening in the fintech world, allowing them to look at many different fronts at the same time, before assessing which makes most sense for the bank and the needs of their customer.
14.15: Poll time! How should banks get the most out of the new landscape? Collaborating with fintechs dominates the vote here, before the results quickly disappear from the screen.
14.12: Vincent's take on UK fintechs is that some in the market are looking for a large dollar exit in the short to medium term. Although he notes that in China this is not the case. Fintechs in the UK may be building up market share, but they are really just aggregating on behalf of the banks.
Referring back to the poll, he comments that the desire for certainty and transparency show that SWIFT is on the right track in this market, with solutions such as SWIFT gpi. Tobar agrees that gpi can solve a large number of the issues that corporates face when making an international payment.
14.07: Banks work with fintechs on a daily basis. The main challenge going forward for Tobar is that, if PSD2 fragments the flow of payments too much, who will respond to the customer? Customers will buy a phone and expect Apple to make good on that phone, they make a payment with a big bank then they expect that bank to make good on that payment. If the ecosystem isn't able to interact with each other following certain rules then this may cause problems for the customer.
14.05: Zachariadis notes that standards are a key challenge for blockchain technology, when you have various parties working on blockchain that are not speaking to each other. He adds that governance is a key challenge to the rise of blockchain, adding this is something that SWIFT has had from day one.
13.59: Time for the 'B' word to make its presence felt, as the discussion turns to blockchain. Tobar says that whether blockchain ends up playing a very big role in the payments system is yet to be seen, but what it is doing is forcing the financial services to look at how they can up there game. He also says there are some things that blockchain cannot solve every problem in an end-to-end global payments world.
Vincent says that everybody is trying to stuff everything down blockchain to see what fits. Everyone has two ears and one mouth and they should be used in that order. He praises SWIFT's approach to blockchain in the way that it is listening to customers to shape its response. Newman adds that competition drives innovation.
13.56: Vincent agrees with the poll result, saying that certainty was key in his notes when preparing for the panel discussion. Customers want to know what they are getting, and that what they are getting is of value.
13.52: Time for a polling question, asking what matters most to banks and their clients. Certainty comes out on top with 49% of the audience vote, a clear leader ahead of transparency (19%). Timing only resonated with 7% of the audience, while cost (15%) and predictability (10%) round out the voting.
13.50: Standardisation of formats is making life simpler in cross-border payments. Tobar touches on XML and MTs as helping this journey. When you are driving a car, you do not want to be worrying about of the mechanics involved in the engine, you just want to get from A to B. Standards can help simplify the payments journey and drive complexity down.
13.45: Business models change due to technology. Zachariadis notes that banks need to be able to identify these changes in their customer groupings and adapt their products accordingly, while all the time keeping an eye on costs and compliance.
13.43: For Vincent, one of the biggest challenges is that it is increasingly expensive for the banks to make payments due to regulatory pressures, while the customer is looking for cheaper payments. Also, banks and customers are pulling in different directions - banks are generally shrinking their correspondence networks under regulatory influence, whereas companies are increasingly finding ever more exotic locations to make payments as they follow their customers - through mobile apps, for example.
13.38: What are the main difficulties facing banks and their clients in cross-border payments today? Tobar suggests that the information that travels with the payment has faced some issues. Corporates expect their own details and references to be carried with the payment for its entire journey. However, payment flows are complicated, with numerous channels needing to carry the information back and forth. This is an issue for corporates. Banks have to cope with this, but also have a focus on compliance and anti-money laundering requirements.
13.30: Cross-border payments take the limelight for the first session following lunch. Our contributors for this discussion are Alberto Gonzales Tobar, head, product management, global transaction banking with Santander UK; Gregory Vincent, head, FX payment EMEA, INTL FC Stone; and Markos Zachariadis, assistant professor, management and information systems at Warwick Business School. Our moderator for the next hour is Harry Newman, the head of banking at SWIFT.
This session promises to explore how global transaction banks are dealing with the challenge of improving speed, transparency and end-to-end tracking while safeguarding security and compliance.
12.02: That is all from our panel on open banking. Everyone heads out to check their phones and laptops in the sunshine. We will be back this afternoon with further coverage.
11.59: A final question from Buitenhek asks what one thing the panel would change about PSD2. Richardson says he would have the RTS become available and kicking in the same time as the legislation. For Martin, clarity is key. He wants it made a lot clearer as to what the final goals of the regulation is, to avoid unintended consequences. Laven agrees with Richardson, saying they should start tomorrow to avoid building up a culture of delays.
11.56: The big play for fintechs is for medium and small businesses and consumers with complex requests. Laven says that the largest companies will always receive a great service from their banks due to the constant profitable activities they have, but from the level below fintechs are very capable of coming in and servicing the market.
Collaboration is also important. Martin says that there are a lot of additional services that come out of more traditional banking. He cites the example of the role Barclays played in where to strategically site a new shopping centre, using the vast amount of data that they have in their system from customer interactions.
11.51: If you are a smaller bank or a new market entrant, one strategy would be to specialise in the areas where you can win - excellence of service and ease of use will be key differentiators. RIchardson says that there are ways to do this and then horizontally integrate for growth.
11.48: There is an expectation that banks such as Barclays can offer the full range of services. On the other hand, new entrants tend to be focussed on a particular segment niche. Martin says that a benefit of the new market entrants enable the banks to develop their own services.
11.42: What we are now calling collaboration we used to call sales, says Laven, addressing the fintech market today. The question used to be 'who owns the customer?' but this has now gone away, the customer owns themselves. The customer does not want ten different providers, so how does the distribution channel work? Currency Cloud deals with around 30 challenger banks, card companies that act like banks, etc. He does not see this level of players as sustainable for the customers that exist in the market.
11.39: Use of new technology also has the ability to catch the fraudster. Barclays used bio-catch to track a fraudster just the other day, purely from the keyboard pattern being used. Martin says they were able to notify the customer immediately thanks to this new technology.
11.35: The more places you have people involved in a transaction, the more chances there are that something goes wrong. Laven points out that identity protection is very important in the open banking environment, almost becoming a currency in itself. The way to protect this is through government regulation, in Laven's view.
One of the biggest concerns Martin has with PSD2 is, in the event of a bank breach, what that will do to customer attitudes? It may be obvious to push forward with anything that makes life easier, but it is vital that the fraud angle with open banking is addressed rigorously.
11.30: While the speed of travel in open banking is going quickly, Richardson says there needs to be a trigger point for it to take hold. He uses the Apple and Google app stores as an example. When they opened up, the apps available were relatively simplistic, whereas today the developers that are active in this space are incredibly sophisticated.
11.26: Faster Payments in the UK has been a huge success. Martin says that the accessibility and range of services that this underpins has been an important step forward.
If life can be made easier, through a mobile phone or a card, banks should be targetting this and asking how new technologies can be used to achieve this. Richardson says that retailers are pushing to improve the customer experience, with the payment very much happening in the background. Banks need to ask how they can take mandatory regulatory implementations and make customer beneficial services.
11.23: The simplification of customer processes and the ease to transact in the day to day running of the business by using new technology is where we are heading. These new applications will make a huge difference. Martin points out that in an area such as foreign exchange payments, new third-parties in the segment have been able to offer solutions that banks had not addressed.
11.20: It is not only APIs that banks are getting to grips with - blockchain, fintech, regtech - all contribute to what we are seeing in financial services. Richardson says that the customer has to be the starting point for any successful bank offering, and a combination of the inputs we are seeing can be harnessed to address this and evolve the offerings from financial services providers.
11.15: Do the executive level of banks really know what is going on? Martin says there is a lot of focus in Barclays on open banking, moving funds and value and where the organisation is heading. Primarily this is about the customer experience, which is evolving massively.
Laven makes the point that all bank CEOs have teenage children, so they do understand the changing user expectations.
11.10: Open banking is a level playing field between banks and new providers, so that when a consumer looks at the financial services they need, the providers will not just be five high street banks, but a whole range of providers that deliver these services to the customer, according to Laven.
This creates an opportunity for new entrants, while we will be looking at areas such as invisible or seamless services, rather than traditional 'banking services.' Martin quotes the old chestnut that nobody wakes up in the morning and says that they are going to make a payment today. Richardson suggests there will be a new economy that follows open banking, with new services being able to be developed and offered by new providers.
11.05: Appropriately enough, Buitenhek kicks things off by quoting Bob Dylan's The Times They Are a-Changin. He says that it looks like the industry is on the eve of an evolution, and we'll discuss what this means for banks and fintechs during the session.
11.00: Discussing the threats and opportunities of open banking are Mike Laven, CEO of Currency Cloud; Richard Martin, global head, product management at Barclays and Damian Richardson, head, innovation and strategic initiatives with RBS. Our moderator for this panel is Mark Buitenhek, global head, transaction service at ING Bank.
10.25: That is all for the opening plenary. Following the networking break and a large coffee, we will be picking up the Banking & Payments stream. The theme of that session is The Transformation of Banking - Threats and Opportunities of Open Banking.
10.24: Leibbrandt says that the pace of technological change over the next five to ten years will be extraordinary. He says that if you like a boring life, financial services is not the place to be. Legault adds that the issue with building a better mousetrap is that the fraudsters are always building a better mouse. The challenge is always ongoing.
10.22: Kingsmill says that cash is ludicrous, pointing out that their customers go everywhere with a card and a phone and that is all they need. Banks should think like they are a utility and act appropriately.
10.18: Looking to the future, Legault says that communication is key to banks engaging succesfully with clients. Risk awareness training, internally and externally, can work here. Fishing tests can be used to see how your organisation deals with the threat. Those that fail the test would then have mandatory training. Legault says that this would certainly stick in the mind of someone that failed, meaning that they are far less likely to fall for this in the future.
10.14: With PSD2 and the move to open up banking with access to APIs, Leibbrandt agrees that regulation is moving towards encouraging competition and innovation.
10.10: The topic moves on to regulation. Kingsmill says that a strong system of regulation is necessary, but a pratical onboarding approach to this would be beneficial for challenger banks. This would also make it less expensive for newcomers to enter the market, as initial regulatory costs can be prohibitive.
With regulation, you need to know what you want to achieve. Do you want to create more competition in the market? Kingsmill thinks this is the approach in the UK, but it could be better.
10.07: Exercises in cyber security is important, it is only then you find out how things work at the ecosystem level. Leibbrandt gives the Bank of England credit in this regard. He adds that a global cross-border perspective also needs to be added to the national context. SWIFT is building global information sharing in its part of the business across 200 countries.
10.05: How do you deal with 'unknown unknowns'? Legault says that you need to build out the intelligence system, and look at things from a risk-based standpoint, rather than a binary yes/no decision. Kingsmill adds that it is vital to be in touch with your own business, where the risks lie. She suggests that as so many bankers have only ever been bankers, it would be beneficial to look at other industries for advice on the human element of customer service.
10.00: No bank will want to go on record that they have been hacked. As a sector, to show the statistics and educate people is the way forward for the industry, suggest Leibbrandt, but adds that this should be as a sector as a whole, rather than individually. It can take a century to build a reputation but five minutes to destroy it.
9.56: Legault breaks down cyber crime in three key phases: a pre-compromise state, the post-compromise but pre-abuse, and the post-abuse stage. He says that SWIFT's gpi (Global Payments Initiative) is an important tool in understanding where threats may be coming from, not just on the banks own system but critically in the customer network. Understanding the ecosystem, communication, and doing exercises to simulate a fraud scenario can all aid the understanding of the threats the organisation faces. He suggests not just bringing in all relevant business units for this, but also to get together with peers to process this as well.
9.48: Leibbrandt says that with infrastructure, once it is there and it works, it tends to abide. He cites how London has made of existing systems work with the financial centre developing in the same geographical area, legacy upon legacy upon legacy. The same can be true in the payments world. The cyber challenges today exist because everything is connected to everything. The threats we see today look for weak points in the end to end chain. Therefore the solution must be ecosystem-wide, covering all the links in the chain.
9.39: The business of running a retail bank becomes less and less sexy the bigger you get, suggests Kingsmill. She says it is vital to maintain the energy and focus you have as a start up as you grow to a bigger size.
9.32: Regulation around a start up is very paper-based, says Kingsmill. It is 'one size fits all' - while the objective has been to open up the regulation, a two track process would benefit smaller banks. Monzo has raised a million pounds in 96 seconds through crowdfunding as one of its revenue sources. Kingsmill says this was an indicator of customer trust because of what the bank represented - simple and straighforward banking.
9.29: Kingsmill said that she became chair of a bank as she wanted to create a bank that people did not hate. The process has taken her two years so far, and her team are focussed on enhancing customer capabilities rather than being focused on extracting profit.
9.27: Cyber teams have a far better understanding of payments today, says Legault.
9.25: The opening plenary panel is called Building Tomorrow, Today. Our panelists are JF Legault, global head of cyber security operations at J.P. Morgan; Baroness Kingsmill CBE, chair of the board at Monzo, and Gottfried Leibbrandt, SWIFT's CEO. Legault opens the conversation saying that what keeps him up at night is what issues are keeping the business up at night. This is not just the technology side of things, it also covers the people and the process. The breadth of knowledge of cyber security controls across the business represents an opportunity for the business to enhance its overall risk competence across all business segments.
9.18: Here's Gavin Esler, our host for the day. You may well know Esler from his work as a broadcaster across the BBC. To check that the polling technology is working, he asks what the audience think of the UK's snap election. The top answer finds that 39% think that it is risky and creates more uncertainty for UK financial services.
9.14: Banks will also be asked about their cyber governance and internal controls by the regulators, warns Shah. Customers and counterparts will also require guidance from their banks. The institutions that start now in organising this may be able to gain competitive advantage and deeper client relationships. With that note of caution, Shah concludes his opening remarks.
9.08: Following a introductory video, highlighting cyber threat and regulatory challenges for financial services, proceedings get under way with the opening remarks from SWIFT's Chairman, Yawar Shah.
While fraud and cyber crime have always existed, today cyber protections are more necessary than ever. SWIFT's latest Customer Security Program is mentioned by Shah as an industry development to face the new paradigm. Those who organise themselves to tackle this threat will gain a competitve advantage, says Shah, particularly if banks are also evaluating their clients and counterparty standards as well as there own. This is where items such as SWIFT's KYC Registry can help.
8.55: Delegates are filing in to the main plenary room and we are ready for the day to begin.
8.33: Good morning everyone, welcome to the Finextra live blog for the SWIFT Business Forum London. Sunshine and blue skies have greeted us at London's Tobacco Dock, with plenty of delegates already here and enjoying the coffee and breakfast put on by our hosts. The event is due to begin in little under half an hour, with a packed agenda of plenary sessions and breakout workshops.