One recurring theme at the last few Sibos conferences has been the nature of the relationship between banks and FinTechs in advancing new technology initiatives. A notable shift in Sydney this year was the apparent downplaying of the perceived dichotomy between banks and FinTechs and a greater emphasis on collaboration between the two sets of players.
Prominent on the agenda, given the location of the event, was the project that the Australian Stock Exchange (ASX) is running with Digital Asset Holdings to replace its clearing and settlement infrastructure by 2021.
While the need to replace CHESS, the current post-trade infrastructure of the exchange, made the option of a DLT solution easier to pursue, not all financial institutions are at the same stage in the investment lifecycle.
According to Annerie Vreugdenhil, head of innovation for wholesale banking at ING, this is not necessarily an obstacle in committing to new IT investment. Rather, it is external factors that are bringing the urgency to innovation. Disruption is more of a driving force, she suggests. “it could be by the regulator, for example, heavy capital increases on certain products or by FinTechs; that’s where the sense of urgency comes from,” she says. “There is a sense of urgency to innovate regardless of existing product lifecycle.”
How is the growing entente cordiale between Fintechs and financial institutions reflected in the innovation projects themselves? “It’s a bit of a mix,” says Vreugdenhil. “We have developed our own innovation methodology. We start with the discovery phase and then go into problem fit, because we believe that first you have to establish a problem that’s big enough to solve. If you don’t have a problem that’s worth solving, probably your product won’t go anywhere.”
“After problem fit, we go into solution fit,” she continues. “The first thing we do is to see if there is anyone out there that has already built a solution to the problem identified or is quite far advanced. In that phase we will often see a fintech already building something and that is where we look at working together. We have a lot of partnerships with FinTechs. Sometimes we invest in them, sometimes we have commercial partnerships. Sometimes we come to the conclusion that what’s out there is not what our clients need and then we build ourselves. But we try to partner as much as possible as we think it will speed us up.”
ING itself took advantage of Sibos to announce the release of its open-source zero-knowledge set membership (ZKSM) solution, focusing on data privacy in the blockchain. The technology allows information to be shared without revealing contextual details.