Welcome to Finextra's live coverage of the Swift Business Forum Canada 2018 in Toronto. This event will focus on important issues affecting the financial industry, exploring how far, and how fast, the transformation of financial services will take place in Canada and beyond.
16.50: That concludes the Swift Business Forum Canada 2018. Thank you very much for joining us here at Finextra to follow the proceedings.
16.47: APIs have been an accelerator, says Lansdowne-Higgins.They change how you can accelerate and do things differently. She adds that coming to a forum such as this, getting out of the office and joining peers in a conversation, can be really help you think differently.
16.45: Cyber attacks keep Landsdowne-Higgins awake at night. You can't have a conversation about seizing the opportunity if you don't have a conversation about risk at the same time.
16.40: Landsdowne-Higgins moves on to the closing remarks. We need to look at how we are moving togther as a community. She refers to the earlier poll that asked about whether innovation is already improving businesses and customer experiences, and the fact that 77% responded 'somewhat'. This shows how we are all on the journey, we are not at the end point yet.
16.37: Organisations that learn that they need to evolve will be successful, says Maoloni. Redefining partnerships and what the community looks like will be a true gamechanger by 2020, adds Landsdowne-Higgins.
16.34: The value added principle is something that shapes our future, notes Landsdowne-Higgins, who then introduces another audience poll - which new technologies have true staying power? This vote allows the audience to vote for as many options as they want, and real-time payments lands at the top of the pile with 86%. Second place is a dead heat between AI/machine learning, cloud services, and APIs (all on 65%). Blockchain (35%), and regtech (14%) bring up the rear.
16.29: If you were going to build something from scratch, what would it look like and what would be the biggest obstacle in coming to market? Newman says its hard to think about building something from scratch as the ecosystem is so evolved, but first he would remove the whole concept of time. He says that this is something we have imposed on ourselves, so strip that out. Landsdowne-Higgins agrees with this idea, as well as leveraging the strengths we have around us already, such as the broad Swift community.
16.24: The ability to capture the additional pieces of data that go along with the journey are vital, notes Landsdowne-Higgins.
16.23: Newman doesn't see much of a role for chat bots in the payments space, which is moving towards the information about the payment being prevelant throughout the chain end-to-end.
16.21: Chat bots come up in discussion. Maoloni sees these fulfilling a conceirge function in an outward looking sense, while inside the business they could be useful for onboarding.
16.19: Maoloni says that there could be a data panic in terms of privacy and how data is used. This is a challenge that the industry needs to tackle head on.
16.14: Thinking about what is changing, customers are expecting global ubiquity, notes Landsdowne-Higgins. Newman adds that the pace of change is only going to get faster, so the logical conclusion is that no institution can do this alone. He is convinced that the technologies that are here to stay are cloud-based services, data rich services, and APIs. When you put these things together, you can start to keep up to speed with the technological revolution.
16.11: Newman refers to the old adage that nobody jumps out of bed in the morning excited about making a payment, that payment is more a side effect of customer demands. There is also a strong element of competition that is driving payments, he notes, which drives innovation to create faster quicker and more transparent payments.
16.09: Our consumer experience is changing our experience in the business space, says Lansdowne-Higgins. Maoloni comments that the real barrier to getting the customer what they really want is the period of the journey that a transaction takes before it lands in the end account. He says that regulation and the globalisation of the economy can help this.
16.05: Following some introductions from the panellists, a second poll question asks whether regulation, cyber threats, technology, customer demands, or competition is the key driver for changes in the payments market. Customer demands wins the day, pulling in two-thirds (66%) of the audience vote.
15.55: Lansdowne-Higgins kicks things off with a poll question - where do you see the payments industry in 10 years? A sizeable majority (77%) say completely modernised, while 13% say its hard to say. Trailing at the back are 'much of the same' (6%) and 'outdated' (5%).
15.50: After a short word from Swift's CSR partners at today's event, Swim Drink Fish, we move to the closing panel discussion of the day. Our moderator for this discussion is Lisa Lansdowne-Higgins, Vice President, Business Deposits and Treasury Solutions at RBC, and she is joined by Harry Newman, Head of Banking at SWIFT, and Peter Maoloni, Assistant Vice President, Product Platforms for Interac.
15.10: Having addressed the individual questions from the audience on specific Swift and gpi issues, the session concludes. After a short coffee break, we will be back with the closing keynote panel, which will address new technologies and the future of payments.
14.59: Elizabeth Vanderput, Swift's gpi Onboarding Manager, joins Forman and Lear on stage to get into a technical Q&A to troubleshoot specific questions from the audience.
14.55: Forman talks to the audience about why now is a good time to go on a gpi journey. This includes the Business Intelligence for gpi analyses, Observer Insights, and Observer Analytics that are coming to the Business Intelligence dashboard later this year
14.53: Looking out to 2020, all payments confirmed is coming to gpi, pending community feedback and board approval.
14.49: Other new elements are the Swift gpi for corporates multi-bank pilot that is currently underway, an ISO 20022 migration study of the community, and the International Payments Assistant.
14.45: Lear adds that the plans for gpi expand beyond the three services just mentioned. One of these is the Swift DLT proof of concept. This saw 34 institutions come together as their own individual node in the DLT sandbox.
14.39: Three new gpi services will be released in 2018: extended tracking, cover payments, and stop and recall. With extended tracking, all users benefit from unique reference in key payment messages and gpi banks benefit from extended tracking. With cover payments, a timely transfer and tracking of payment will be possible, also if there is no direct relationship between the sender and receiver. For stop and recall, you will be able to immediately stop a payment (whether needed due to fraud or error), no matter where it is in the gpi transaction.
14.35: Forman says that a number of Canadian institutions are getting involved with gpi, either live or on the onboarding process. Standards Release 2018 is coming up, notes Lear, with changes that are designed to bring end-to-end visibility on gpi.
14.32: The gpi has been live since January 2017. There are over 155 banks that are committed to implement it, representing over 78% of Swift's cross-border payments. Over 14 million gpi messages have been sent since it went live. Since it went live, nearly 50% of those payments are credited to the beneficiary in under 30 minutes, with many settled within seconds.
14.27: Correspondent banking is at the heart of the gpi project, says Forman. She explains how this is not about reinventing the wheel, it still runs on the Fin rails, but rather the use of service level agreements to make payments more efficient, transparent, and fast.
14.23: To discuss Swift gpi, two gpi product specialists at Swift, Will Lear and Joanna Forman take to the stage.
14.18: As an industry, is there a more systemic fashion that information can be shared? McKinty says the important question is what are we sharing, and how rich is the information? It can help the community become stronger, without giving away any competitive advantage. That concludes the discussion on cyber security. Coming up in a few minutes, the Swift gpi will take centre stage.
14.15: Cyber security needs to be a key component to everything you do, says Antonacci. He says that you shoudn't think about security as brakes on your car to keep you going slowly, but rather as brakes on a Ferrari that allow you to go fast.
14.13: With the growth of the Internet of Things, there are more and more end points that are potential vulnerabilities. Whether we like it or not, the IoT is not going away and in fact will grow, says McKinty, so you need to get your arms around the risk. You can plug things in, but that doesn't mean you can't ringfence core systems. It is about understanding what the device is, what data it gathers and how it interacts with your systems.
14.10: There's fraud versus cyber, says Antonacci. You have to differentiate between the two, which can come down to how you define it. But you have to have the capabilities to detect and respond to both. Insider fraud is tough as you have to trust employees, says McKinty, but you need to think about the job role and what individuals require access to. Those that are in an admin group can then have additional checks placed on them.
14.06: McKinty says that every member of the business has a role to play in cyber security, and the culture needs to be around encouraging this, rather than piling additional tasks on employees. Antonacci says the challenge today is understanding who is responsible for acting on the data once it is available to the business.
14.03: Shifting focus, Suprenant turns to governance and risk management, looking at where this sits in the organisation. Beginning with a poll that asks how engaged are your C-suite/board and business lines engaged in dealing with cyber security? Yes, fully engaged scored 54%, followed by technology only (27%), C-suite/board only (15%), while thankfully 'not engaged' only polled 3%.
13.57: If you leave someone inside your business for a few months or longer, they become just like an insider. They understand how your business works and get the right accreditation to stealthily access your core systems, says McKinty. They can then time their attack - for example at midnight before a public holiday - and make efforts to clean up after themselves to try not to tip off the victim as to how the attack happened.
13.55: The Swift CSP sets out the basics that you should be concerned about, says Antonacci, but there is a bigger picture. If you are just using multi-factor authentication on your Swift connectivity but not elsewhere across the business then you are not as secure as you could be end-to-end. McKinty adds that cyber fraudsters aren't just knocking on the front door to try to break in, they are looking at connections with fourth or fifth level suppliers as a way in.
13.50: Collaboration is key with defence as well as innovation, says McKinty. Cross-sector collaboration is just as important as bank/fintech collaboration. Collaboration with law enforcement agencies and commercial entities is also important, particularly in an incident response to an attack. Building grassroots levels before you have an incident can help set you up to respond well, he notes.
13.48: Swift's CSP is built around the baseline cyber hygeine issue, says Antonacci, and at that level it is free. The CSP programme was mapped to ISO and PCI, among others, to complement rather than add to the existing ecosystem.
13.43: McKinty says that each organisation is unique in terms of what its assets are and what its risk appetite is. Understanding this helps to inform how you can go about addressing your cyber security profile. However much money you spend on preventitive measures, you also must spend on detection components for when someone does breach your barricades. Technology is important, but people and processes also play a role, McKinty notes.
13.39: What is the biggest threat today in cyber security? Antonacci says that the people factor should not be overlooked, not only because human error can result in a cyber attack, but the fact that you need the right people with the right skills in your organisation.
13.37: The evolving landscape of cyber threats is touched on by McKinty, saying there has been a clear shift from opportunistic attacks to more rigorous threats. Not letting cyber threats understand your business by accessing your network is crucial, and yet simple threats such as phishing still exist and have success.
13.32: Kicking off the post-lunch precedings, Anne Suprenant, Country Head, Canada and Global Account Director at Swift welcomes everyone back to the plenary room for a session looking at securing the financial ecosystem. Joining Suprenant onstage for this discussion are Pat Antonacci, Global Head of Customer Security Programme at Swift, and Colin McKinty, Cyber Lead - Americas with BAE Systems.
12.15: That concludes the risk panel discussion. After lunch, we'll be looking at securing the financial ecosystem.
12.12: How would you characterise your organisation's usage of AI and machine learning? For most of the delegates it is early days (55%), while a significant number have select use cases/PoCs (43%). Singh says that the machine learning element is getting there and there are some interesting use cases.
12.09: An innovation challenge that Singh brings up is that any innovation doesn't challenge reputation, and there has to be a failsafe in place to protect the trust that people have for the organisation as a whole. Schneidt adds that while innovation is expensive, the other option is to stand still and disappear. Having a long view about how to last is important. Innovation should be about how you help your customer, are you designing solutions that are wanted and that are durable. The key with the acceleration to change is whether you are building the right cultures, Schneidt notes.
12.06: Time for another audience poll. Are your teams adequately prepared to react to market changes quickly or effectively, yes or no? No dominates with 71%. Grainger says organisations need to find ways to be on the front foot when dealing with crises. Mehta notes that Swift have Innotribe as an innovative initiative to find new solutions and responses to possible future challenges.
12.02: Innovation isn't purely about technology, says Grainger. Companies need to allow their employees to develop different muscles if their organisation is going to flourish. Schneidt agrees, and adds that it is vital to actually have a goal defined when embarking on innovation, don't just do it for innovation's sake.
12.01: There has been a lot of hiring in the regulation and compliance space in banks since the financial crisis. Is there an active move to leverage technology alongside this, poses Mehta. Schneidt says that realistically there has been a separation between an academic view and a practitioner view. He see value in moving pure compliance staff into an operational role and vice versa, so that everyone can have a thoughtful view across the whole organisations, knowing both the regulations and the business.
11.57: The emergence of new technologies should make us think differently around the way we solve problems and manage risk, says Grainger. Schneidt agrees, saying that design is critical in this regard. Singh says that agility is important, but it is also like parenting - you also need to be able to adapt on the go.
11.52: Grainger notes that regulation in Canada in the past 10 years has generated cost. He adds that as people were going through the CSP process, it became much easier when the business became involved as they have the liability. It is important to see how technology can then facilitate this.
11.48: Schneidt says that governance is key. If you can get that right, it is a thoughtful exercise. Mehta then asks about the evolution of risk and compliance functions and how banks are adopting their processes. Schneidt says that banks shouldn't be compliance-driven, but rather than compliance activities need to be integrated successfully across an enterprise-wide function. Siloes that previously were rewarded for being separate now need to be rewarded for integrating.
11.42: Singh refers back to the poll, and says he would have chosen the 'other' option. With legacy systems in place and the complexities they create, taking a jump to take on a fintech is a big possible risk. He is a little more optimistic on the cloud - with the data they are collecting, the cloud allows them to process data faster.
11.39: Which potential risk factor is the biggest threat? An audience poll finds that cyber threats are the main concerns of the delegates. New technologies were another option, which Schneidt says are another side of cyber. He adds that the cloud is a great marketing tool, but is different in different industries. In banking, you need the same level of transparency and key control in the cloud environment - until that happens, you have an issue with systemic risk.
11.35: Time for our next session - 'Adapting risk strategies in today’s digital world'. The moderator for this discussion is Bijon Mehta, Managing Director, Financial Services at BOX. Mehta is joined by Bobby Singh, Chief Information Security Officer & Global Head of Infrastructure with TMX, Derek Schneidt, Chief Information Security Officer at BMO Financial Group, and Swift's Grainger.
11.30: Does regulation impede or improve innovation? Hogarth says that his institution is very conservative when applying regulation, and the hard part is when something needs a little more experimentation. Bayley says that the industry needs to involve policy makers much earlier on, showing them how things will work and why they are being implemented.
11.26: Looking ahead to the next three to five years, Bayley says that banks always need to be led by being customer centric. Secondly, they need to be focussed on their employees too, as this is a key change area. Cadieux adds that people want to transact globally more, and that regulations and rules will standardise as technology evolves. Hogarth adds that things come and go very quickly in the technology space. He is optimistic that the future will be informed by technology such as AI, and that banks will become much more nimble as they align with fintechs.
11.22: What are the pitfalls for banks in this environment? Cadieux says that banks need to transform a little bit, not just adapt to technology. Where can banks provide the most value? He says this might not necessarily be where they are looking right now. Business knowledge is important too - what is the data that you are analysing actually telling you, and do you know that this is true, cautions Bayley.
11.18: Masters asks whether banks need to be ecosystem enablers? Bayley says this is important, to open themselves up to new customers and new ways of interacting with existing customers. This is creating a platform that is trusted and held in high regard by customers. Hogarth says that banks have always played the ecosystem card, facilitating both the customer and the merchant. Banks want to be the open piece that facilitate trade, he comments. Keeping trust, data and finances secure, is vital in backing this up.
11.13: Anything contract-based can be put on the blockchain. Cadieux adds that the ideas are from the mid-1990s, but the key is that it is actionable today. Hogarth comments that his institution is still in the PoC stage with blockchain.
11.10: Masters moves the discussion to blockchain, and asks Cadieux where he sees the most value for this technology. He says that smart contracts are key - they can put applications on the blockchain and choose who they want to trust in the transaction landscape.
11.08: Hogarth says it is important that innovation is a key discussion points in banks today. He says that the noise around it is getting louder - it is not just applying technology to the business, but banks needs to look at how they can take their business and apply it to the technology available.
11.05: The next poll asks how many in the audience feel like their companies are doing a great job with innovation? Almost half (46%) think that they are on the right track, while 38% say that they are still figuring it out.
11.04: Corporate culture and digital transformation comes under discussion next. Bayley says that the technology evolution is affecting the workforce. He notes that he sees discussions around AI, as machines take up an increasing workload, how do banks also transform how their workforce are operating. He adds that the customer has to be at the centre of bank transformation.
10.59: The first poll of this session asks, as we move toward a more open banking environment, how many people believe that banks will be at the centre of everything financial that customers want to do? Some 19% of the audience agree with this, but over half (57%) say that banks will have a somewhat important role. For 18% of the audience, it is too early to say, while just 5% believe that fintechs are going to take over.
10.55: Blockchain has moved beyond proof-of-concept [PoC], says Cadieux. He adds that technology moves so quickly, from PoC to available on the market and the norm. Hogarth says that AI is fundamentally what we do in banking, potentially more important that when the internet launched. It will create massive changes to everything 'under the hood' of the transaction banking landscape.
10.52: Masters begins by asking that, with such a lot of noise in the market, what is really happening behind the scenes and which new technologies we should really be excited about. Bayley comments how Capital One has introduced an SMS chatbot that has greatly improved efficiencies.
10.48: Time now for the next plenary panel discussion - 'Shaping the Future: Innovation in Action'. Our moderator for this session is Ryan Masters, Executive Director, Strategic Relationship Manager at Swift. Masters is joined on stage by Tim Hogarth, Vice President of Innovation Strategies and Framework at TD Bank Group, Nicholas Bayley, Managing Director, Accenture Strategy with Accenture Canada, and Ben Cadieux, Chief Information Officer at Katipult.
10.15: That concludes the opening panel discussion. Following a short break, attention will turn to innovation in action.
10.14: Another poll question asks what the best way is for banks to engage with fintechs in order to transform the financial serviecs landscape. A mixture of collaboration, acquisition and competition wins the day on 62%, ahead of pure collaboration on 28%. Hindle say that Canadian FIs need to be wary of fully acquiring fintechs, as this may truncate the art of the possible for that fintech. He supports collaboration for Canadian self-interest, to allow fintechs to blossom and attract finance from abroad back in to Canada.
10.11: There is a great collaboration factor between banks and fintechs where fintechs can benefit from the long-established trust that clients have with the banks, says Llewellyn.
10.08: Capital is a challenge in Canada, but so is human capital, says Llewellyn. Banks are competing with the Amazons and Googles of this world for the talent pool in the country.
10.04: The real-time rail is coming on, says Ferrabee, so they hope to engage fintechs in a much more agressive way now this is possible. He adds that everything is changing and the window for change is open, but the risk is that a number of issues to be addressed, such as privacy, are very complicated and potentially time consuming. He hopes that these challenges don't mean that the window of opportunity is missed.
10.00: AI, even from an internal basis, can be used to create efficiencies today, notes Llewellyn. Hindle adds that Canadian ventures are being successful. He says some people believe it is difficult to get through the procurement process with Canadian banks. The banks are looking to get better at it, but it is a work in progress to achieve efficiency in this respect. It is not uncommon for conversations to last months up to a year, compared to weeks that he has experienced in the US.
9.56: Time for some audience polling now. The first question asks 'Do you believe that innovation is already improving business and the customer experience in financial services?' Three-quarters of the delegates (75%) agree that this is somewhat the case, there has been some progress but we have a long way to go to achieve transformation. When asked which technology will have the largest impact in financial services in the next 3-5 years, APIs and data dominate, polling 62%. This was far ahead of AI, with 23% in second place.
9.53: There is an issue about how data is used, says Roberts. It isn't about who holds the data, it is about who can access it. There needs to be a business model that protects the rights of the individual, and the right to be forgotten.
9.49: How is Payments Canada tracking to where it originally thought it would be? Ferrabee says it is quite close, there is a level of flexibility built in. They are using the ISO 20022 standard, everything they do is ISO enabled, which he says recognises the importance of data value.
9.47: 'Smarter, better, faster' is the mantra that the financial services sector needs to embrace, says Hindle. He adds that the industry sometimes needs to get out of its own way in this regard. The payment is incidental to the transaction, which is why data becomes so important. Understanding how the data value chain plugs into the payments value chain is critical.
9.44: Nobody would debate that ease of access to transaction status is necessary, says Roberts. Pérez-Tasso agrees, saying that Swift has a vision and is working to bring everyone in the community up to the new standard with the gpi.
9.40: Llewellyn describes the Scotiabank business banking mobile app that launched last year. This includes a digital token, so once that has been input initially it never needs to happen again, with log-in being managed by biometrics. The bank will also be launching Swift gpi in Q4. She says that business clients want the same ease of use that consumers enjoy when making purchases. They want to reimagine the customer experience.
9.35: The quality of information from Amazon is far better than the information from payments today, notes Roberts. Can we design great interfaces, and have data flowing along with the payment? Users will vote with their feet and select the payments operator that can offer the best data, Roberts says.
9.33: This is an unprecedented time in the history of payments, says Roberts. This is the biggest change in payments infrastructure that the world has ever seen, happening in Canada, with the work on the payments infrastructure combined with developments such as open banking.
9.29: Hindle agrees that we are in an exciting time, with items such as real-time payments rails and ISO 20022 changing the payments landscape. You have to be a believer in the potential of new technology to be able to see it, he notes. Innovation is mature in Canada, and it is time to start coming to market. This is the point where collaboration really matters, says Hindle.
9.25: The ecosystem is very dynamic, which sits on infrastructure that needs to be renewed. Ferrabee describes how Payments Canada has been working to renew the infrastructure in the country. They are moving from talking to doing, and have implemented a number of projects in the past couple of years. He describes the spectrum of collaborating, cooperating and competing, and how all three are necessary in a transformation project. Collaborating is hard, but essential.
9.21: This is the most exciting time to be in the payments space in particular, says Llewellyn. She notes that Scotiabank has been on a transformation journey. They want to start with the customer, making a seamless customer experience and making it easier for them to do business with the bank. They are also looking at how they can reimagine the customer experience end-to-end. Llewellyn notes that collaboration is critical - both with fintechs and also internally in the business.
9.17: The underlying fundamentals of the transaction banking platform are critical for innovation, says Pérez-Tasso. This is true on both a domestic and cross-border sense. Additionally, the cyber threat is both global and not going away.
9.12: The opening plen ary panel has the theme of transformation through collaboration. Our moderator,Javier Pérez-Tasso
Chief Executive, Americas & UK Region at SWIFT, notes that Toronto is a fast-growing fintech hub. The speakers on the panel are Justin Ferrabee, Chief Operating Officer, Payments Canada, Jeff Hindle, Managing Director, Finance & Commerce, MaRS Discovery Project, Rania Llewellyn, Executive Vice President, Global Business Payments, Scotiabank, and Todd Roberts, Partner, Strategy & Operations at Deloitte.
9.08: Stephen Grainger, Swift's head of North America, officially welcomes the audience to the Business Forum. He notes that Toronto was home to a successful Sibos in 2017, and there are 350 delegates in attendance today. Addressing cyber security, Grainger says that the goal is to make cyber a manageable nuisance. He notes the efforts that Swift's Customer Security Programme (CSP) is making in this regard, which we will hear more about later.
8.44: Good morning from a sunny Toronto and welcome to our live blog from the Swift Business Forum Canada. Delegates are currently taking advantage of the breakfast buffet, and we'll be getting underway in around 15 minutes.