Another year, another Sibos. While the industry collectively recovers from the sheer intensity of the four-day marathon event, let-alone the jetlag upon returning from Sydney, some interesting themes did emerge out of the conference. Sitting through industry gatherings has been a fairly depressing exercise for securities services professionals recently, not least because they have been constantly pumped with apocalyptic missives from FinTech enthusiasts warning them that their days are numbered. Sibos Sydney, however, marked a dramatic change in tone, much to the relief of securities services.
Collaboration is in
Rather than attempting to aggressively disrupt intermediary providers, the best FinTechs are now working with them. “There is a real opportunity for banks like ours to collaborate with FinTechs, as they are agile, innovative and unconstrained by complex processes,” said Margaret Harwood-Jones, global head of securities services and transaction banking at Standard Chartered. “However, FinTechs cannot disrupt the industry in isolation, as they do not always have the clients, relationships with regulators or capital, which banks do have. This has created synergies for banks to work with FinTechs.”
Other factors are also accelerating these partnerships, chiefly the general reluctance among many clients to outsource core operational activities to start-ups. “Clients’ primary concern is safety and they want to work with trusted counterparties which have long, proven track records, robust asset safety provisions and the correct infrastructure from a risk management perspective,” said John van Verre, global head of custody at HSBC Securities Services. “As a result, a partnership approach is becoming more common between banks and those FinTechs offering innovative solutions.”
Are we at peak blockchain?
Roll back five years, blockchain was going to transform everything, be it clearing and settlement, corporate actions, reporting and payments. While blockchain is certainly not a dud, the technology has not quite met expectations. Even its purported ability to facilitate instantaneous cross-border payments has been met with short thrift from correspondent banking clients, who say they are more than happy for transactions to complete in several hours or on the same day. Van Verre acknowledged many banks were using the technology mostly to resolve internal issues involving duplication, adding that APIs now seem to be more of a business priority for them.
Quantum computing in the limelight
Just as the securities services industry had finally adjusted to the tsunami of blockchain verbiage like mining, nodes, hard forks, and soft forks, a new, even more mind-bending technology made headlines at Sibos. Quantum computing – depending on who you speak to – may or may not be genuine, but as a conjectural premise it could enable the industry to digest and disentangle the most byzantine problems and calculations well beyond the comfort zones of any existing technology. While some believe quantum computers could unravel blockchain encryptions, most experts are not flustered about it yet. As one seasoned securities industry veteran put it, “quantum computing is a long way off.”