Sibos in Singapore drove home the message of industry disruption. Surprisingly, bankers are facing the challenge cheerfully.
Either join the revolution or sink without a trace, is the overriding message from Sibos in Singapore this year.
Banks are facing disruption to their traditional modes of business in much the same way that business models in industries such as retail and transportation have been disrupted and reinvented.
Today, Chinese e-commerce company Alibaba has one of the world’s largest market caps and the potential to become a financial services player in consumer spaces once thought to be exclusively the province of banks.
Alibaba and Tencent, which provides media, entertainment, internet and mobile phone services in China, have already turned into fierce competitors to the nation’s state-owned banking giants in internet and mobile banking.
It is not inconceivable that within the next five years an Alibaba will use its firepower to buy a fintech company and go head-to-head with the likes of Citibank globally.
Another trend working on banks from outside the traditional channels is the ‘trickle-up’ phenomenon.
This phrase is used by John Laurens, head of global transaction services at Singapore’s DBS Bank, to describe how innovation is coming to banks from unlikely sources.
Following the global financial crisis, governments in Europe and Australia, with the goal of consumer protection and support, have pushed into place real-time payment systems, which are now just being unveiled for low-value transactions.
As these systems come into operation, they will provide easier access to financial services for consumers and enriched data about them as well.
Laurens points out that the same principles could well migrate upward to the higher value transaction world of corporates and their interaction with banks, opening the door to better and more customized services.
Banks may be facing an existential threat from the ‘disruptors’, but the smartest of them are attempting to introduce and embrace disruption in their own organizations.
Many banks, including DBS and Bank of America Merrill Lynch, take innovation seriously enough to give their chief innovation officers broad powers to introduce change into wholesale banking.
Perhaps that’s why an air of optimism has pervaded the conference, despite the mounting challenges that banks face from new and formidable sources.
Christian Behaghel, director, global transaction banking at France’s Societe Generale, told Global Finance that, “For the first time in several years, the emphasis has not been on regulation, but on growth.”
He added that corporate treasury clients, while focused as always on risk management, are also seeking to optimize their banking relationships for growth, and demanding more innovation.
Innovation—a buzzword in the often mundane world of financial services – suddenly has real weight.
For now, wholesale bankers will have to juggle new risks and run a little faster to keep up. But they’re enjoying it.