I’m just back from Boston and the marathon known as Sibos 2014. In a post earlier this week, I shared a couple of observations from the show floor and the conference sessions. Now that the conference has closed, I’m thinking about the themes that spoke to me. And, this year, I didn’t get the sense that there were big new ideas being debated. Don’t get me wrong, there were great conversations and a few interesting products being showcased. But I just didn’t hear or feel a clear consensus on where we are.
With some reflection on the overall experience, however, I do think there are notable threads that create a narrative, albeit loosely woven, on where we are as an industry.
Four key, if loosely woven, threads stand out:
ISO 20022 – Certainly not a new topic but the interest in, and the demand for, standards in payments was, shall we say, a drumbeat that is getting louder. For example, the sessions I heard had high-level bank reps calling for greater format standardization. The Standards Forum, devoted attention to ISO 20022, its adoption by market infrastructures, and how ISO can facilitate payments.
There was a lot of conversation of country level market infrastructures moving to ISO and bank calls for the standard. Most of the banks did not recognize that we have elements of ISO in place that the market simply hasn’t taken advantage of, for example, the active but not widely adopted IPFA cross-border payments standards initiative and the underutilized FedWire and Chips mapping to ISO20022. Here at home, this conversation is also part of the Federal Reserve Consultation and we did not hear big objections about the idea.
“Faster Payments” – Variants of immediate payments are breaking out all over; we’re even discussing the possibility here in the US. There was a growing recognition at Sibos that this is where the payments market is going. Questions were about the more “productize-able” business cases, and when and how we are moving forward. This is a very different conversation from 12-18 months ago.
Crypto-currencies – Lots of attention at Sibos but the conversations about virtual currencies/block chain processing technologies still seem divorced from the bank payments world. Banks are embracing immediate payments but there is no obvious solution for banks to clear and settle using the new protocols. It’s unclear whether there is opportunity to bridge this divide, or whether the paths diverge forever.
Financial inclusion – There was an excellent session on Thursday showcasing how banks around the world have successfully offered basics savings accounts and payments to low income sectors. Most of the attention here was on Bill Gates who was the closing speaker. Gates had choice bits to say related to each of these threads – most notably, technology in general and Bitcoin in particular serving as a way to increase the speed of and dramatically lower the cost of providing payments. While his point was that these ideas can be used by the industry to affordably provide digital financial services to the poor, the lesson should not lost on more traditional payments.
So, yes, the Sibos threads do loosely weave together. There’s ample evidence that technology can enable financial service innovation and deliver it at a low price point. Is now the tipping point where banks embrace the opportunity?
This post was written by Glenbrook’s Elizabeth McQuerry.