Payments professionals from across Europe are gathering in Munich this week for EBAday 2018, hosted by the Euro Banking Association and Finextra. We're liveblogging events here.
17.00 Day one is rounded off by a number of short and snappy case studies and presentations. We’ll be back tomorrow at 8.30 sharp.
16.30 What about Swift gpi? Again two-thirds of delegates are sceptical. As DelGuerra points out there will still be payments that need to be checked, and need to be controlled. "Swift gpi will produce an incredible level of service and reduce the inefficiency," he says. "But there will still be some inefficiency." In short, we can expect this panel to convene again in five years time.
16.25 What about the prospects for the creation of a global real-time cross-border payments system in the next five years? Two-thirds of delegates believe this to be feasible, but Recker cautions that geo-political tensions will scupper any such utopian outlook. Delatinne makes a pitch for Ripple's open source Interledger protocol as an alternative global standard.
16.20 Lagarmitte says it's good to have competition and collaboration with big tech players, but regardless of what happens they will still need to use the global banking system for clearing. Roles may change, but the corbanking model will survive. DelGuerrra says that today there are no viable alternatives, although this may change in the future. Recker points out that fintechs don't have to tolerate the same regulatory pain as bank competitors.
16.15 Despite its cumbersome nature, two-thirds of the audience believe there is no viable alternative to today's correspondent banking model. Delatinne bristles at this, arguing that today a Google or other big tech giant could provide an equivalent global system, if they so wished.
16.05 Ripple's Delatinne says the system belongs to the 70s, from before the time of the Internet, and users of payment systems have less patience with it. "Is it working if you look at the needs of global e-commerce and business users today?" DelGuerra believes Swift's gpi initiative solves many of the pain points experiencced by corporate clients. Nonetheless, many banks are putting in place a community to use the technology deployed by firms like Ripple and develop a Swift-like network that will create trusted commercial transactions.
15.55 Barclay says correspondent banking has to evolve via iinnovations such as live payments tracking and instant payments processing. On the horizon there also exist opportunities to use blockchain technologies to improve straight-through processing. Asks the audience: Is global correspondent banking too slow for today's needs? Eighty-one percent agree. Deutsche bank's Recker says although he is not surprised to see that result he doesn't neccessarily agree with it. "The model has evolved over the past couple of years," he says. "It will evolve more but the speed is not as slow as the perception in the market."
15.45 In a world of instant information anywhere anytime, how can the correspondent banking model keep up? That’s the question being asked by James Barclay, executive director, treasury services at JPMorgan. Arguing the toss are Simone DelGuerra of Unicredit, Nadine Lagarmitte of HSBC, Deutsche Bank’s Marc Recker, and – to spice things up - Marjan Delatinne, global head of banking at Ripple.
15.30 The blcokchain chatter moves from the conference to the exhibition hall
15.05 De la Villa says concentrating purely on potential cost savings arising from blockchain implementation can be an impediment to innovation. It's incumbent on banks to become an expert in this market, future-proofing themselves and their clients for the transition to a new technology-led economy.
15.00 Bears says that the technology is maturing very fast and that blockchain infrastructure platforms being developed now- such as Hyperledger and R3's Corda - will be very different in a year's time.
14.55 Romani of SIA asks is the technology mature? "Probably not yet, but the opportunites are great." Points to a recent pilot by the Association of Italian Banks on the use of distributed ledgers to match nostro reconciliatons, with each bank operating their oown node on SIA's network. The first enterprise release is scheduled for 10 July. "The functionality works, but the queestion mark is about performance," he says.
14.50 IBM's Keith Bear says there are many points of friction in the transaction banking world and that is translated into higher costs. There also opportunities to generate more business and improve services to cliients, particularly in trade finance. De la Viilla agrees that many of ING's projects are geared towards solving customer painpoints, eg in KYC, digital identities etc.
14.45 De la Villa says ING is currently running more than 40 PoCs on blockchain technology. ABN Amro, meanwhile, has created its own 'blockchain tribe' operating across mulitple business lines.
14.40 Adams has spent the past two years acting as a facilitator on an EBA Working Group on distributed ledgers. "We're not talking about open transparent networks, but permissioned nodes across a distributed ledger. This is necessarily a collaborative effort. There are some interesting internal use casse but the real value comes about from the technology being adopted more widely across the transaction banking industry."
14.30 Tough call for the second session of the afternoon between a panel looking at the lessons incumbents can learn from challenger banks, and a stream 2 take on cryptotechnologies in transaction banking. I’m opting for the latter, moderated by Colin Adams of Lipis Consulting. Joining him on the podium are IBM’s Keith bear, ING’s blockchain lead Mariana Gomez de la Villa, Angeli Kokkes from ABN Amro, and SIA’s head of innovation Nicolo Romani.
14.20 Over 50% of delegates believe that PSD2 will most likely replace cards for consumer to business instant payments. Niederlander says that PSD2 may not cards extinct per se, but it does hold out the opportunity to expand the range of services available across the merchant ecosystem. McMahon says crosss-border instant payments hves to get better and grow before this can happen. In the long-term it may come about that national faster payment schemes will be fully-connected, but this is unlikely to take place in the near or medium-term future.
14.15 Pan-European Request to Pay is viewed by most in the audience as the next important industry-wide development for iinstant payments. Kulk says there have bee nextensive discussions with banks about this point The RT1 Working Group is exploring whether there is a role for an infrastructure provider to deliver an industry-wide system
14.10 On the question of fraud, EBA Clearing's Kulk says that as an infrastructure provider it would be useful to see how funds are moving across the system between banks. This would provide an opportunity for the use of pattern recognition technology to spot unusual or suspicious transactions.
14.05 Question from the audience on whether the limit of EUR15,000 for instant payments will be increased, Erste's Niedlerander agrees that the limit is a constraint, and should be reconsidered as banks gain more experiencce. Puete says there is a clear appetite from banks for raising the limit. "I'm not sure when it will happen, but there's no doubt that it will happen."
14.00 The most valuable benefit of instant payments? Beneficiary is able to use the funds immendiately is the clear winner with 66% of the vote. Maximum execution time below three seconds is more of a nice to have with just nine percent onboard.
13.55 Bystricker says there have been challenges, but also positives, with more corporates demanding instant payments. Niederlander says Erste Group is also on a learning curve, but as volumes remain high the bank is spotting new opportunities to service clients.
13.45 Moderator Sandra Puete says ABN Amro is still experiencing some teething problems with cross-border instant payments, but overall volumes are growing and most transactions are now completed within 2 seconds. NatWest's McMahon concurrs, Initial issues with Faster Payments in the UK were viewed as an opportunity to improve back office technology and roll out improved two-factor seccurity measures across the board. Volumes have since grown and fraud is massively reduced
13.30 Suitably refuelled and sitting in a panel session on lessons learned from the first six months of processing instant payments, guided by Sandra Peute, senior product manager in ABN Amro’s transaction banking unit. She’s joined by Gerhard Bystricky, head of product management payments Germany, Unicredit Bank AG, Erwin Kulk, head of service development and management, EBA Clearing, Rachel McMahon, European payments manager, NatWest and Petia Niederländer, head of group retail and corporate operations, Erste Group.
13.15 The view from my perch above the exhibition floor.
12.15 And on that note this person and this machine are both off for a recharge. We'll be back after the lunch break.
12.10 There's no escaping Donald Trump, even at EBAday.
12.00 "It's an FSI mid-life crisis," says Thomas. "What we have to change to get out of this mid-life crisis is a conversation about augmented intelligence." The chairman of Golman Sachs recently said that banks are now hiring more engineers than traditional bankers: "This is not a trend this is where we are right now," contends Thomas. The future bank will comprise people plus machines coming together to preserve and protect our data, he concludes.
11.50 As a banker we've always had the data, says Thomas, trotting out old Walter Wriston aphorism that iinformation about money is more important than money itself. Now that we have AI it's all about what we add to the data.. "I'm talking augmented intelligence. We have to pro-activelly integrate augmented intelligence into everything that we do." He refers to a recent chat with former boss DBS CEO Gupta, who remarked that people are now coming to the bank for information about their financial decisions, not just for the transactional relationship. Likewise, BBVA's Carlos Torres Villa, a former engineer from MIT, says that BBVA wants to evolve beyond banking to become a 'Databank'.
11.35 Next up in the traditionally scene-setting challenge speaker slot is Kyle Thomas of Saffron AI Group. A fomer banker, Thomas bailed when he realised how much AI was going to change the industry. The coming AI revolution will force all banks to re-examine "who we are and why we exist right now". He refers to a recent round of lay offs in wealth management as a result of robo-advisory incursions as the just the tip of the iceberg. Just today, US bank Citi warned that it could shed half of its 20,000 tech and ops staff in the next five years due to the rise of robotics and automation."These jobs are gone - for good," says Thomas. "They're not coming back."
11.30 HSBC's Katzeff brings the topic round to the application of security in the fledgling and "fragile" API ecosystem for bank data sharing under Open Banking. Businesses in this case are leading and security is running to catch up, he cautions. Hoffman says the bad guys - including nation states - will already be looking at how exploit this development. He warns of a coming constant war of attrition in this space.
11.15 The debate inevitably turns to the blockchain. Hoffman says there's a huge opportunity but like any of these ventures from ATMs forward there has to be discussion between security teams and business teams - the last mile is the biggest challenge. Leibbrandt says there's "no way" blockchain can scale to replicate capabilities already available in global payments, referring specifically to the recently published results of Swift's PoC involving nostro reconciliations. Banks that Swift speaks to are also expressing disillusionment wiith the concept, he addds.
11.00 Panellists agree that information sharing between banks is critical in the fight against cybercrime. Hoffman refers to FS-ISAC opening a dedicated environment for central banks and financial supervisors, noting that this is a global issue which requires astute guidance from regulatory authorities: "There's a huge responsibility on all of us to take this seriously and to do it well."
10.50 Leibbrandt says that the biggest corridor for payments over Swift gpi is between China and the US, as Chinese banks vie to keep pace with competitors from the e-commerce arena such as WeChat and Alipay. As transactions increasingly move to a real-time environment, Swift will soon introduce a new "stop and recall" feature via gpi for suspicious payment messages transversing the network in a matter of minutes.
10.45 Deutsche Bank's Hoffman says some of the biggest advances in security have come out of innovation - from fintechs to improvements in computing architecture. He says it's critical that security teams are involved right from the start in new innovations - "we wouldn't build a new bank branch without knowing where the vault is."
10.30 Kupfer runs a live audience poll on the biggest challenges for banks to be successful in the payments area - with cybersecurity coming out tops. Another poll finds investment in human capital scoring a measly 5% in bank plans for investment (score another win for Sophia on that count)
10.20 Ehrmann gives a special welcome to a surprise guest speaker - Sophia, the humanoid robot from Hanson Robotics.
10.00 The main event kicks off with the traditional welcome from EBA chairman Wolfgang Ehrmann. He’ll be followed onstage by keynote host Jan Kupfer, UniCredit's recently appointed head of corporate and investment banking.
We'll commence our live reporting at10.30 during a strategic roundtable on innovation and cybersecurity in transaction banking featuring a discussion between Deutsche Bank's head of Ciso Emea William Hoffman, Diego Katzeff, global digital and e-commerce director HSBC, and Swift chief Gottfried Leibbrandt. Moderator: Conor McGoveran, Director, Financial Services Advisory, EY.
The morning’s conference will be closed out by this year’s challenge speaker, Kyle Thomas of Saffron AI Group who will take a deep dive into a financial future governed by AI and robotics.
09.50 The EBAday 2018 conference programme is split into two streams, one of which will focus on first-hand practitioner insights into payment trends, with the other investigating new alternative payments and technology.
09.45 Exhbition floor chatter
09.25 'I say, that EBAday app is really rather good'
09.15 Queues are building for another record-breaking EBAday, which this year plays host to 1500 delegates and 74 exhibitors.
08.45 It’s a pleasure to be back in Germany, which was home to the inaugural EBAday in the lobby of a hotel in Frankfurt. We’ve come a long way in these past thirteen years, but as this is our first time in Munich here are some fast facts for all you newcomers out there.
First off, Munich has significance as a financial centre (second only to Frankfurt), being home of HypoVereinsbank and the Bayerische Landesbank. It outranks Frankfurt though as home of insurance companies such as Allianz and Munich Re.
Founded by Benedictine monks, the Bavarian capital is famed for its annual Oktoberfest celebration and its beer halls, including the renowned Hofbräuhaus, founded in 1589.
For those who fancy a tipple, Munich is awash with breweries and the Weissbier is a speciality from Bavaria. Helles, a pale lager with a translucent gold colour is the most popular Munich beer today. If you want a clear head in the morning it would be wise to steer clear of the darker, more foreboding Starkbier, a herculean brew with an alcohol content of between 6% and 9%. Don’t’ say I didn’t warn you.
On the culinary front, Münchner Weißwurst ('white sausage') is the local speciality. Traditionally eaten only before noon – a tradition dating to a time before refrigerators – these morsels are often served with sweet mustard and freshly baked pretzels.
08.35 First news out of the event comes courtesy of the European Banking Association itself, which has issued a call for industry collaboration on B2B data sharing, and set out its strategic goals ahead of a move to the ISO20022 messaging standard. Finextra has the full story.
08.25 EBAday is a paperless event, so don't forget to download the EBAday app.
08.15 Building on the success of last year’s congress in Dublin, EBAday 2018 will set out a vision for the future of the European payments industry as new technologies and trends reshape the business. Based around the theme 'New Payment Paradigms: Preparing for Global Impact', the conference programme comprises keynotes, panel discussions and debates featuring more than 80 speakers.