Innovation and cyber: An interconnected relationship
SWIFT Business Forum London 2017900 delegates from across the financial ecosystem gathered in London to participate in a packed programme, under the theme of ‘Building the Future’.
He underlined that this new paradigm will have a major impact on the P&Ls of banks’ payments and security settlement businesses in the coming years. Those who organise themselves to deal with this challenge, not only by improving their own defences, but also by working with their clients to understand and improve theirs, will gain a competitive advantage.
He also explained how SWIFT is supporting the industry through its Customer Security Programme (CSP). SWIFT has published a core set of mandatory security controls and an associated assurance framework for users, and users need to get ready to self-attest by the end of the year at the latest.
The plenary panel explored the dual challenges of cyber and innovation:
JF Legault, Global Head, Cybersecurity Operations, JP Morgan Chase & Co, pointed to the importance of cyber controls and payment controls coming together, and noted the encouraging signs of cyber teams having an increased understanding of the payments space and vice-versa.
Baroness Kingsmill CBE, Chair of the Board, Monzo, outlined the experiences of a ‘mature start-up’, noting that innovation takes place outside of accelerators and labs – it’s about listening to customers and what they want, and then adapting to their needs.
She also raised the ‘nirvana’ of a future single, unifying platform for all of a customer’s financial needs - a thread that was picked up on throughout the day.
Gottfried Leibbrandt, CEO, SWIFT, advocated a pragmatic approach to improving and reinforcing infrastructure to address both innovation and cyber. An example he referred to is SWIFT gpi, which applies a system of rules to speed up and improve the transparency of cross border payments in collaboration with banks, whilst leveraging existing infrastructure.
A deeper dive
Following the plenary, delegates had the option of five streams, taking an in-depth look into Banking & Payments, Cyber & Technology, Securities, Compliance, and SWIFTLab.
The lively panel debates, which featured experts from the UK and beyond, picked up on some common themes.
- A new economy will emerge from Open Banking. There is huge opportunity in the payments space as the industry moves to an era of open APIs and open banking. Sessions highlighted that opportunities go beyond domestic borders and it is very much a global trend. Delegates talked about ‘an explosion of diversity’ regarding future products and services.
- Regulatory shifts. Regulation is moving from a focus on the banks (e.g. Basel II and Basel III) to a focus on the customer, and enhancing competition (PSD2).
- Unlocking value from technology. Much has been said and written, about the potential of developments such as blockchain and AI. The challenge is to now transform this promise into practical value.
- Balancing the relationship between humans and machines. Machine learning can’t be ignored – in compliance, for example, it can reduce false positives and increase efficiency. But the human element is still a vital control. The advice is to start small and not rush things through a desperation to reduce cost.
Javier Pérez-Tasso, Chief Executive, Americas and UK Region, SWIFT summarised the day through three key takeaways.
- Innovation is happening now. It’s the new normal, opening up business opportunities and challenges in equal measure.
- Financial crime compliance and cyber-crime are keeping feet firmly on the ground. They are pressing areas to address.
- Innovation and cyber are mutually reinforcing. Organisations need to foster a compliance and cyber mindset when they come up with new products, whilst at the same time compliance and cyber challenges can be better addressed through innovation.
Innovation is happening now. It’s the new normal.
Javier Pérez-Tasso, Chief Executive, Americas and UK Region, SWIFT
Invest in resilience
He advised that financial services should invest more in resilience than in prediction, and highlighted the importance of consulting a diversity of advice to help cope with the unexpected.
For the UK, in a post-Brexit world the key is to remain open and collaborative with both global talent and global markets.
It was a perfect note to end the event on. The discussion will continue at Sibos 2017, when the industry gathers in Toronto later this year.