Welcome to Finextra's live coverage of the Swift Business Forum in Toronto. This year’s conference, on the theme 'building the future', will investigate how the financial industry is adapting in a fast-changing, digital world where new fintech entrants pose an opportunity and a threat, and cyber-crime is a growing problem.
16:39: Finally, we have a little pitch from Swift's head of Sibos, Sven Bossu. Toronto will host the event in October and Bossu says we should all be there! Finextra will be, bringing you all the news and views, but that's it for today's event.
16:28: So what does the future hold? Can Payments Canada do as well as Stanley Kubrick in predicting the future?
It's all about being frictionless, says Pilbauer, citing Uber Eats as an example and stating that Payments Canada's modernisation projects are all designed to remove friction.
16:21: Today's proceedings are drawing to a close but we've still time to hear from Payments Canada's Jan Pilbauer about the country's efforts to modernise its systems.
Acutely aware that he's all that stands between his audience and the bar, Pilbauer is promising not to be too dry, instead offering a "journey through space and time". So, we begin with 2001: A Space Odyssey and a run through all of the technological ideas that where science fiction in the 1960s but are now reality (video calling, tablet computers but not quite, yet, HAL 9000).
So, the connection to payments...In 1969, the year after the film came out, the world got its first ATM. Payments Canada was established in 1980, phone banking arrived in 1992 and online banking in 1996. PayPal arrived on the scene in 1998 while the e-transfer followed soon after. The last few years has seen an acceleration of innovation with bitcoin, mobile banking, contactless payments and more.
15:30: Swift's Pat Antonacci says we're not going to have all four to five thousand correspondent banks live with gpi by the end of the year or by the end of next year but eventually we want it to become the new norm.
15:15: We're now hearing about last week's news that Swift has struck a gpi agreement with the Federal Reserve Banks and The Clearing House to support end-to-end payments tracking across their respective wire services.
15:08: Moran is now giving an update on, and demonstration of, gpi (global payment initiative) which comprises a range of service level agreements intended to improve the customer experience in correspondent banking by increasing the speed, transparency and predictability of cross-border payments.
Launched last month, so far 12 major transaction banks are already live on the service, with 100 banks - including all of the major Canadian players - committed to come onboard in the next few months.
15:02: We're now going to hear a bit about SwiftLab and some of the innovative programmes the cooperative is working on from Dan Moran. SwiftLabs are now located in London, New York, Hong Kong and other places to help the organisation 'think outside of the box'. KYC Registry, gpi and DLT work are all part of the project.
14:32: Swift is now pushing ahead with standards and adoption of ISO 20022 in the DLT space, promising to engage with "selected" partners while working on its own proof-of-concepts, including a bond lifecycle management service. Meanwhile, a DLT sandbox hosted in a third party cloud has been set up.
14:25: Another poll: Do you have an AI initiative underway?
And again, 'don't know' comes out on top...
14:12: We're back from lunch and ready to hear from Swift's Kris Ketels and Charles Boniver about DLT and APIs. Ketels makes point that there is huge overlap in use of ISO 20022 and DLT and APIs.
Interesting audience poll: Do you have a DLT initiative underway at your firm?
A third say yes, 10% no and more than half don't know.
12:45: As we near the lunch break, Roberts makes a key point: banks may feel need to keep up with the digital rush but 95% of the fintech firms out there and 95% of their ideas will fail so need to use judgement about what you focus on and offer up to customers.
He also has positive words for Swift... Despite the rise of blockchain, Ripple etc, the network has massive benefits for member banks.
12:38: Panel agree that as important as the front end is on the fancy new digital services, you win the war in the middle and back office which make everything work.
Audience Q: which fintech innovations are you looking to adopt in near future?
Salvi says that BMO sees AI as the buzzy new tech that has the most potential in the near-term, capable of impact on lots of biz segments. Roberts says Cibc is also focusing on AI and talks about the banks partnership with the Mars Fintech Lab as a way of tapping the startup community.
Llewellyn talks up Scotiabank's new digital factory and the 'agile' working method that the bank has moved towards to bring about changes fast.
Finextra spoke to Scotiabank' co-CIO Kyle McNamara about this.
12:17: King now brings up a panel to discuss 'banks and their vision of the future'. We have Alec Morley from Ugo Mobile Solutions, Rania Llewellyn from Scotiabank, Todd Roberts from Cibc and Andre Salvi from BMO Partners.
On mobile payments, Morley we still seem to have a solution looking for a problem. Even Apple is having trouble getting momentum. Man on the street doesn't care about payments. Have to refocus ourselves on what the consumer wants or we (banks) will lose.
Llewellyn says Scotiabank is convinced on value of the new technologies, runs through list of projects: digital factory, blockchain work, partnerships with startups and universities.
In a nod to Silicon Valley, Scotaibank also has a bowling alley...
12:01: King takes on the media claim that fintechs are a threat to 60% of bank profits. Says this misrepresents a report and that in reality they have only taken on per cent. He says that startups are really struggling because customer acquisition is expensive and funding is tough (see the P2P lenders).
So, he argues, the disruption argument is not really backed by the facts. Rather, fintech is an enabler, as seen by the raft of partnerships that have been forged in the last couple of years.
11:45: Audience poll on which fintech areas will most affect their biz - blockchain comes out on top by a long way, followed by P2P payments.
Next poll: Is fintech an enabler or disrupter? 83% vote for enabler, reflecting the changed mood among banks in the last couple of years.
11:40: OK, after a brief coffee break we're back to news they're turning the heating up in this room, which gets the biggest reaction of the day so far.
And now we're going to hear what Michael King, co-director of the Scotiabank Digital Banking Lab thinks about the often posed question: Is fintech a disruptor or an enabler?
King defines fintech as the digital delivery of financial services and products. In the US alone, there are more than 1000 companies with $105 billion in funding - far more than the money they've made. Vast majority of these firms will not really 'disrupt' anything.
10:53: What should you do if you are hacked?
Get a good lawyer. Follow the threads to the end to make sure you know where the threads go. Know what you're doing because you've done the planning.
Big Q for banks is what you do inhouse and what you outsource?
Tim says you need a hybrid model. Things such as monitoring the dark web you want to bring in outside help. Liveselsy says that smaller banks might need to outsource more. Beauchemin says you need to focus on what you're expert in.
10:42: We're into audience Qs. Lots of best practice talk about avoiding phishing scams but consensus is that the crooks have a big advantage as long as we still rely on humans not making mistakes.
10:21: Having scared everyone in the room to death, Lewis now reassures us that the risks can be managed. He invites panel members to join him onstage to discuss how:
We have: Gwen Beauchemin from Payments Canada, Steve Hawkins from Scotiabank, Richard Livesley from FS-ISAC, and Matthew Tim from RBC.
Livesley says that Canada is doing very well on tackling the cyber threat, usually ranks as number two. Beauchemin says its vital to be adaptive because we don't know where the threat is going to go. Hawkins says "technology cannot solve this problem, it's a human issue".
10:02: And we're onto a keynote on cybersecurity with James Lewis from the Canadian Security Intelligence Service (CSIS).
Four big trends:
- Automation of attacks
- Targeting the 'seams'
- Exploiting human vulnerabilities - about 10% will click on malicious link. CSIS set up fake phishing email to own staffers inviting people to meet cast of Downton Abbey, signed Miss Moneypenny. Some clicked
- Nation state actors
"Do not underestimate people you're up against. They are very motivated."
09:48: What's on the payments innovation agenda here in Canada? Lansdowne-Higgins runs through the roadmap. Real-time rails - early stage talks on what that will look like with Payments Canada. About modernising and innovating. (
Yesterday Payments Canada revealed it's called in Accenture to help with this.)
Pérez-Tasso says Swift is keen to support Canada in its modernisation, has been working with Payments Canada on ISO 20022. Importance of the standard is huge, data-rich.
09:40: Lansdowne-Higgins says the appetite for innovation is increasing because of demands from customers for instant services - gives credit to Apple for changing the way we live through the iPhone. Talks about the rise of fintech hubs in Toronto and the way banks are embracing them.
Innovation is a way of moving forward because if we stand still we are at threat - from cyber hits and disruption. Innovation seen in blockchain but also cloud, APIs etc.
Pérez-Tasso says innovation needs to go hand-in-hand with cybersecurity because new digital services offer new paths for crooks.
09:25: Lansdowne-Higgins is now onstage talking about cybersecurity, noting that crooks are getting better at communicating and collaborating and the industry has to do the same, noting that it has not always been good at talking.
Grainger notes to Pérez-Tasso that "Swift hasn't been immune to these issues". What's the response?
Pérez-Tasso says Swift has changed its approach to security since the famous Bangladesh Bank hack by doing more to support its users - the banks - in their cybersecurity efforts. We'll get into the details of the
Swift Customer Cybersecurity Programme later in the day.
Lansdowne-Higgins says Swift participants need to talk about allocation of resources, how do the bigger players in their markets help the smaller ones. The Swift programme is about setting global baseline.
09:14: Talking about how the world has changed over the last year, Grainger takes a small dig at blockchain, suggesting that the hype has died down a little in recent months, while also namechecking the geopolitical shocks: Brexit and Trump.
For Swift, he talks up the organisation's relevance by citing its response to the cyber threat and its innovative nature, seen through
gpi.
09:07: After a brief welcome from Swift's Stephen Grainger, we'll kick off with a conversation between Grainger, his colleague Javier Pérez-Tasso and RBC's Lisa Lansdowne-Higgins.
09:00: Toronto will, of course, be the centre of the Swift universe later this year, when it hosts the annual Sibos jamboree - hopefully Spring will have arrived here by then, just the -7 c this morning...
Today's event is a little more low key than Sibos but we still have a packed house to hear a lineup of senior bank speakers give their vision for the future of financial services.