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Sibos 2022: Coffee winners and takeaway themes

Sibos is the networking event of the year for the who’s who in financial services, relevant industry players, trade innovators and, of course, the SWIFT partners (SWIFT hosts the event). This year’s show was held in Amsterdam with more than 8,000 attendees – and I was one of them.

However, after attending my first SIBOS this year I’d describe the event somewhat differently.  For me, it’s effectively a pop-up shop for all major financial institutions across the world. FinTech’s and banks flank one side of the hall and technology providers line the other side. Perhaps this is a true reflection of the ongoing tug of war between these three different players.

Walking through the ‘streets’ of banking, Fintech and Technology gave me a thirst for good coffee. I didn’t have far to go if I needed the ‘good stuff’. Every second bank had a barista providing a taste of what they have to offer, but the clear winner was the HSBC stand with long queues from the morning till the afternoon.

SIBOS themes

A key phrase that stood out at this year’s Sibos was ‘real-time’. This is because everywhere you went people talked about real-time payments, real-time Treasury and the role technology plays in this real-time world.

But this wasn’t all they talked about. Other topics included ISO 20022 and the looming deadline (which has been delayed from the time of writing this blog), instant cross-border payments interoperability, Open Banking, the increasing focus on ESG, (Environmental, Social and Governance), and of course Central Bank Digital Currencies (CBDC).

Here we unpack these major themes in more detail:

ISO 20022

ISO 20022 is currently seen as a ‘grudge move’ for many banks, needing to move from MT to MX messages. The key message at Sibos was that ISO 20022’s better data in payments will offer banks greater efficiencies and better risk management.

In our opinion, banks should not view ISO 20022 as a forced change, but as a future opportunity to reduce costs by detecting fraud quicker and making speedier decisions than their peers.

Instant payments

A common theme is that real-time cross-border payments is the future, and that CBDC will play a significant role in this. However, the introduction of CBDCs is at least three years off. The future will hold a need for interoperability across the traditional and digital financial landscape, with CBDC, blockchains, other distributed ledger technologies and traditional payment rails all playing a role in this real-time landscape.

Customers and businesses expect fast, low-cost, secure payments through enhanced data, and the most successful providers will be those who get to market first with overlay services on top of their payments enabling interoperability.

ESG execution phase

Like at all of these conferences, ESG is a hot topic (excuse the pun). There’s talk of the data required, the taxonomies, the implementation thereof and the role of technology to effectively solve the problem.

Sustainability is moving up the priority ladder in banks’ strategic objectives, and it’s moving from planning to execution phase. But sustainability is not just a technology or a platform change, it is a culture change and as we all know, that doesn’t happen overnight.

There will come a time when banks and corporates will need to publish sustainability metrics alongside financial reports. The question is, are these companies ready for it? Will their sustainability metrics paint a good picture?

Going digital

I lost count of how many times CBDC came up in the talks I attended. Many agree that CBDC will play a big role in the payments and banking world, but not everyone is sure about how that role will and should evolve.

In our view, CBDC has the ability to democratise access to financial services. It has the potential to enhance financial stability, create financial inclusion for all, uplift emerging economies, enhance cross-border payment operations, and empower financial authorities.

Digital, cross border payments are our future. But there are a lot of hurdles to overcome before it becomes a mainstream form of payment.

There are questions about whether CBDC’s are a threat to digital currencies. Recently, Binance’s CEO Changpen Zhao (CZ) was quoted as saying that he believes CBDC’s are not a threat to cryptocurrencies like bitcoin and ether.

I guess only time will tell if CBDC’s take over from the crypto world. There may, perhaps, be more trust in CBDC’s given that they’re backed by Central Banks. Perhaps at the next SIBOS, which will be held in Toronto in September 2023, this is exactly the topic we’ll all be talking about.