So, it’s a 20 some hour flight, you’re not 100% sure who’s going to be there and you’ve decided to be a good corporate citizen and fly to Sydney via Melbourne as it’s a bit cheaper and who doesn’t like a 3 hour lay-over and a final 90 minute flight at the end of a 23 hour journey?! Why am I doing this again? One thing to note about Sydney in October is that if you don’t like the weather just wait half an hour and it will have completely changed. On the day I arrived the weather alternated between sunshine and mid-20’s temperatures to absolutely torrential rain and buffeting wind. Hang on a sec, didn’t someone say we’d hired a boat to take clients out in Sydney Harbour this week?!
Sibos is one of the biggest banking industry events and is run in a different location every year allowing the great and the good of the financial services world to get away from the office for a week and spend some time seeing what else is going on in the market.
The event itself covered a huge number of topics this year, from real-time payments to the application of quantum computing in solving the world’s energy problems. This was definitely not your typical ‘one topic’ conference and even when looking at ‘core’ banking subjects such as real-time payments, the conference managed to pull together thinking on some more left field areas.
Australia has recently implemented its own real-time payments system, NPP, and like the UK and Europe is now embarking on the implementation of Open Banking standards on top of this network. Interestingly, though it is also using Open Banking as the first use case for the application of its new “Customer Data Right” (CDR) legislation. CDR formally gives customers ownership of their data and makes switching easier between financial institutions and various product categories/types. It is aimed to improve consumer choice and convenience by allowing data to be safely shared with accredited, trusted recipients, such as comparison websites. An improved ability to compare will allow the consumer to either negotiate better deals with the current providers or switch products. Consumers will obtain better value for money and competition and innovation in participating sectors will increase.
‘Information asymmetries’ are a pervasive feature of banking and financial markets. Standard economic theory and years of corroborating empirical evidence suggests that markets work most efficiently when:
- customers are informed
- there is transparency in pricing and in the quality of available products and services
- there is a level playing field between competitors
- and where the costs of switching between providers and barriers to entry for new providers are low.
Allowing customers to own their data will help address these asymmetries and thus improve customer choice and is a trend that we are seeing emerge globally via other legislations such as GDPR in Europe. Elsewhere, CGI had its own share of publicity at the event (and not just because we had our logo in 10’ high letters on the boat we’d hired!) as part of the launch of the Trade Information Network.
The Trade Information Network sees seven top-tier banks (ANZ, Banco Santander, BNP Paribas, Citi, Deutsche Bank, HSBC and Standard Chartered) joining forces to create a single platform for trade and supply chain finance, helping corporates to communicate seamlessly across multiple banking partners. CGI has been selected to build the Network, which will have an open architecture and standardised connectivity based on a governance model similar to Swift in order to maximise adoption across the supply chain ecosystem.
One of the great things about Sibos as a conference is that they have a lot of non-financial services speakers, often bringing in leading academics to talk about their specialist areas. This year was no exception and one of the more interesting diversions was into the world of Quantum computing.
Quantum computing is one of those areas that many people in the banking world talk about, but I’m not sure that many really grasp the potential impact of the technology, or understand how it actually works. To quote Richard Feynman when asked whether he understood quantum mechanics (the theory behind quantum computing), “I think I can safely say that nobody understands quantum mechanics”, and this from one of the leading theorists on the subject! So we’re not alone in not understanding the details, but that doesn’t stop us from looking at how it can be applied.
Quantum computing is often seen as one of those “silver bullet” solutions, but actually there are currently a limited number of areas where a quantum computer helps. Unfortunately for those of us worried about security, encryption is one of those areas. It turns out that quantum computers are potentially really good at factoring really large numbers, the basis for a lot of current encryption technologies.
So should we all panic and move our money from the banks into gold bars under the bed? Well, definitely not yet, currently quantum computers are around 5 to 10 years away from being able to consistently break current encryption standards. Having said that, knowing what bank investment cycles are like, maybe we should be worried!
On the slightly more positive side in the future quantum computers may be able to model chemical systems that are unsolvable for conventional computers. Wow, that sounds dry, but when you think that something like 5% of the world’s energy output is used to produce ammonia fertilizer from atmospheric nitrogen (the Haber-Bosch process) at high temperatures and pressures and that this generates a huge amount of greenhouse gases, then making better, more efficient catalysts for producing fertilizer could have a significant impact on the worlds energy production and our generation of harmful greenhouse gases.
Who says banking conferences aren’t eco-friendly! In any case next year’s conference will be in my home town of London, so I for one will have a much lower carbon footprint for this trip. Please get in touch if you’re thinking of attending too or would like to discuss any of these topics in person.