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.
16.00 As the moderators gather to reflect on the last two days, we say goodbye to a hugely successful EBAday 2018. Well be back again next year, in Stockholm, for EBAday2019.
15.40 Baker McKenzie has been retained by R3 to advise on legal and compliance issues surrounding the implementation of its Corda platform. Despite the general lack of enthusiasm across the conferene for distributed ledger technology, Mitchell is most excited about its potential for resolving problems in AML/KYC, tax planning and Basle compliance.
15.25 Singleton says payments has been a catalyst for new entrants to come in, using data in a different way to solve customer problems, for instance via personal financial management tools and savings apps. Data is key says Promontory's Burger, even more so under GDPR. Mitchell asks if banks are monetising customer data with other parties. If so it has to be properly noted within GDPR and include proper consent notices. "There's definitely a lot of issues there if banks choose to go that route."
15.15 Ulster Bank sponsors a startup community in Dubllin to better understand how startups work and then transfers the learnings inhouse via an intrepreneurial effort that encourage employees to think differently about generating and developing new ideas for customer services. When entering into a partnership, Singleton says banks should also look at the intangible values of workng with fintechs. Burger says banks often undertake PoCs and implement piecemeal in a way that frustrates startup partners. "Both parties have to understand that this a long journey."
15.10 Kicking off with an audience poll. Have you started to co-operate with fintech/regtech either in a B2B or B2C perspective? 63% say yes, but a third have no plans. Singleton says co-operation with vendors is not a new phenomenon. What's different is banks are now working with fintechs to solve customer problems, not bank ones.
15.00 Rounding off with a focus on fintech and regtech and bank co-operation models. Jose Vicente from Banco Comercial Portugues helms the debate, with support from Andreas Burger of Promontory, Holland Fintech founder Dan Ginsel, Peter Mitchell of legal firm Baker and McKenzie, and Celine Singleton, head of payments at Ulster Bank.
14.45 Finextra TV technician tapes the action for the closing highlights video reel.
14. 20 Horlock says the NPSO is working with stakeholders and regulators to bring strong resilience and innovation. The aim is to lay a stable and unified foundation from which banks can innovate and compete. "Our aspiration is to get ahead of regulation so that we get the value coming through without having to comply every time."
14.15 PSD2 is trying to push the innovation agenda. "But innovation through regulation is always tricky," Broxis says "There's still basic stuff that we have to get right, which will probably take about a year. So the regulators need to back off while we try to understand how this will play out."
14.05 "Strategy is easy - you can do it on a power point. The hard part is to implement it," says Nielsen. Banks need to figure out what their new products will be, who their partners are and how to make money in the new data sharing era. The banking industry is entering an unknown ecosystem where it will no longer be able to hide behind regulatory frameworks. "Banks need to wake up. They can no longer play within the existing structure," he says.
14.00 Nordea's Richter says the bank is preparing for Open Banking 2.0, likening it to letting outside firms use its platform a la Netflix. Open banking 3.0 is more like YouTube where multiple providers begin to leverage each other's data. The fourth phase is more akin to Amazon's business model in the creation of an ecosystem value chain that moves beyond pure banking.
13.55 Broxis says banks could do better with using the data they've got. Horlock highlights the UK's forthcoming move to ISO20022, which should create new value opportunities for UK Plc . Nordea says banks have to first find out what data they have and structure it. He refers to a big struggle ahead to get to grips with it. Nielsen says the banks have big data lakes, but also asks do the bank's have the right to monetise client data? An audience poll finds that 64% of the sizeable crowd of assembled banks currently use only as much as 25% of the data available to them.
13.50 Balanced panel with two bank reps and two infrastructure providers. All the same, Deutsche's Nielsen confesses he knows little about banking having been hired from Silicon Valley to help shape tthe bank's digital strategy.
13.45 Into the final stretch with a session on Open Banking moderated by SEB’s Krister Billing. The power panel participants include John Broxis of Preta, Paul Horlock, CEO of the UK’s New Payments Systems Operator, Thomas Nielsen, chief digital officer in transaction banking, Deutsche Bank, and Nordea Bank SVP Claus Richter.
13.15 If you can spare the time, do drop by and meet our friendly representatives on the Finextra stand. Ask nicely and they might even give you a special sneak peek at our up-and-coming design makeover. It’s a doozy.
13.00 Back on the floor, the exhibition is rocking
12.15 New poll: How ready is your firm to embrace new technologies and transform transaction banking? Forty per cent are fully-embraced and delivering new services already, while 45% are 'getting started'. Rhino says: "Time is a devil, speed is a God. We must be fast as banks. We can no longer afford to take three years to roll out new projects. There are big technology companies out there that will take us over if we do not change our thinking."
12.10 Rhino says AI will replace half of the bank's back office staff currently handling manual processes over the next three years, due to a radical combination of machine learning and robotic process automation.
12.00 Rhino says AI is changing the game competely. The big German bank has in the past two years significantly grown its Big Data, analytics and AI teams, from 20 people to 200. The bank now has five distinct AI products acting on the data behind transactions to present new services to corporate clients. Augemented intelligence is already here in our daily lives through services like Alexa, says Eacott. AI is moving from the domain of data sciences to the forefront of the modern banking experience, he adds, Wassmer bills AI as the most disruptive technology facing the banking industry today. Banks need to start thinking like technology companies and develop their own AI products if they want to continue to own the customer proposition.
11.55 Wassmer refers to bringing an end to "old-school deliverables" and instead developing working prototypes for presentation to customers for feedback and fine-tuning. Also, come first with the solution and then worry about the regulatory aspects. Rhino says regulators are on the same learning path, hence the arrival of sandbox environments for testing new products and services.
11.50 Putting staff into agile development teams and exposing them to customer-design thinking helps engender the cultural change required for innovation across the bank, says Wasssmer. Natwest's Eacott says it's important to break down hierarchies and organise teams around customer journeys. Commerzbank's Rhino says the aim of the bank is to bring processing staff, payments experts and IT teams together in teams of about 100-150 people to operate more like a technology company and spread innovation across the group.
11.45 Fintech collaboration scored only 15% of the poll. Wassmer says fintechs bring customer-centricity combined with a dedicated focus on one special thing that they're doing to create an awesome customer experience - which most banks with a wider portfolio of services to provide cannot hope to match. "They also think outside of the bank, bringing in innovations from other markets." Eacott says the days of the fintech replacing the bank are long gone. "We now very much see fintech's as part of our overall thinking, but they're never going to eat our lunch."
11.35 On instant payments, as reported on Finextra yesterday, NatWest's Eacott points to a new pilot from the bank on account-to-account payments as an alternative to card payments for merchant clients, as a clear example of the potential transformative impact of the move to real-time..
11.30 EBAday app working overtime again, asking what will have the biggest imact on tranformation in transaction banking. Shift to customer-centric design thinking flashes up on screen as the clear winner with 45% of the vote. Blockchain gets a pauttry seven percent.
11.15 Back to the plenary room for today’s strategic roundtable debate, featuring NatWest head of innovation Simon Eacott, Christian Rhino from Commerzbank, and Robert Wassmer of Landesbank Hessen-Thuringen in a discussion on ways to keep up with ever-accelerating transformation in transaction banking. Your moderator is Patricia Hines from Celent.
10.40 Onto Open Banking. NatWest's Connors and Towers are as one in pointing to harmonisation with PSD2 as contributing to a slow burn roll out within UK, as banks wait for the rest of Europe to catch up and begin work on standard setting wiithin APIs and data sharing, The EBA's own OBWG earlier this week issued a report advocating the creation of an industry-led coalition to drive digital consent management and data exchange standards in the B2B space
10.30 Legacy systems and the fragmentation of innovation responsibility at individual banks is viewed as the biggest inhibitor to true innovation in financial services, with only 16% of banking delegates present citing the regulatory burden as a major drawback. Andy Roe of FIS says the problem is that most banks have so much going on at the back-end to support their technical architecture that they struggle to innovate at the front end.
10.20 35% of the audience believe AI will bring efficiency, fraud or security benefits to their banks within the next 12 months. NatWest's AI agent Cora has significantly reduced traffic to the bank's call entres and over Web chat, says Connors. AI can be both personal and impersonal, which can be an advantge for instance in debt collection, she says, pointing to a bank in Poland which has deployed it to collect outstanding debts with impressive results. At HSBC, AI is being viewed from a client service perspective, as a support to human staff. "We're still a long way from AI displacing huge volumes of staff," says Towers.
10.10 Brennan was chair of the Euro Banking Association's Open Banking Working Group, a critical pivot point for innovation in payments. Connors says AI is overtaking blockchain as the key focus for innovation at NatWest. For UniCredi's Derras, real-time payments is where the big innovation improvements for clients is taking place. Joanne Towers sees the movement to APIs and Open Banking as the biggest opportunity to innovate in the near future.
09.50 Sessions coming thick and fast this morning. Next up, a panel focusing on bank responses to trends in global payments innovation. Vincent Brennan of Bank of Ireland is in the chair, with panel participants Teresa Connors, head of market management payments at Natwest, UniCredit’s global head of cash management Cedric Derras, HSBC’s European payments product head Joanne Towers, and Andy Roe from FIS.
09.40 Availability at the point of sale will provide the biggest boost to SCT Inst, with both delegates and panel in accordance. But first banks have to stop competing at the customer-to-bank interface, points out Beltran. Hayes says there's a huge commercial incentive to make the interface interopeable, if only to bypass the card schemes and save on fees.
09.35 Beyritz asks the central bank if its wants to steer all users and stakeholders towards a real-time economy. Borestam says the real-time economy is already here. "This is something which is positive, and it should be supported." she says.
09.20 Over 50% of the audience think SCT Inst volumes will overtake regular STC within four years. Only a small minority believe it will never happen. SCT Inst is not only for replacing traditional credit transfers, points out Borestam, it has multiple potential applications in e-commerce and mobile payments. Stet's Beltran thinks the cards model will be affected by the roll out of SCT Inst, with the card payment running across the new real-time payment and settlement rails.
09.15 SCT Inst is expected to be fully operational across all European banks by 2019/20, although many in the audience take a sceptical view, pointing to a longer time horizon. Borestam believes that once available it will be widely used. Pricing will be a big factor, but a competitive space will drive down prices.
09.00 Your dedicated correspondent is sitting in on a Stream two opener that will assess the outlook for European instant payments. Moderated by Ingo Beyritz of the German Association of Private Banks, we have representatives from two payments processors in Stet’s Jose Beltran and SIA’s Jean-Philippe Joliveau, tech supplier Tom Hay from Icon Solutions, and the European Central Bank represented by Ann Borestam.
08.40 And now for a spot of shameless self-promotion...
08.35 One notable PR gaffe aside – by a person who shall not be named – EBAday has fully embraced the spirit of diversity sweeping the industry. Just about every session this year has one or more female representatives acting as either panellists or moderators. We even have our own Women in Payments special interest group meeting taking place this morning.
08.30 Welcome back to day two of EBAday.