Innovation and risk under the spotlight in Canada

The opening plenary discussion included Justin Ferrabee, COO at Payments Canada on the panel, who described how the organisation has been working to renew the country's infrastructure. He noted that they are moving from talking to doing, and have implemented a number of projects in the past couple of years. He outlined the full spectrum of collaboration, co-operation and competition, and that all three are necessary in a transformation project. Collaborating is hard, but essential, said Ferrabee.

This view was supported by fellow panelist Jeff Hindle, managing director, Finance & Commerce on the MaRS Discovery District. Hindle noted that innovation is mature in Canada, and it is time to start coming to market. This is the point where collaboration really matters.

Todd Roberts, partner, Strategy & Operations at Deloitte commented that this is an unprecedented time in the history of payments. He described Canada’s evolving payments infrastructure, combined with developments such as open banking, as the biggest change in payments infrastructure that the world has ever seen.

Throughout the day, audience polling in several sessions helped take the temperature of Canada’s financial services sector. One of the questions posed in the opening plenary was: 'Do you believe that innovation is already improving business and the customer experience in financial services?’ A large majority of delegates (75%) agreed that this is somewhat the case, that some progress has been made but there is still a long way to go to achieve transformation.

New technologies

Another polling question in the opening plenary asked: 'Which technology will have the largest impact in financial services over the next 3-5 years?’ APIs and data dominated the results, polling at 62%. This was far ahead of artificial intelligence (AI), which was in second place, with 23%.

Discussing new technologies on a later morning panel, Ben Cadieux, CIO at Katipult, commented on how blockchain has moved beyond proof-of-concept (PoC). Cadieux added that technology moves so quickly, from PoC, to being available on the market, to becoming the norm. In his view, the most value for blockchain can be seen in smart contracts - they can put applications on the blockchain and choose who they want to trust in the transaction landscape.

Turning to AI, Tim Hogarth, VP of Innovation Strategies and Framework at TD Bank Group said that AI is potentially more important than when the internet launched. It will create massive changes to everything 'under the hood' of the transaction banking landscape. He did caution that the noise around new technologies and innovation is getting louder, and that banks need to understand that this is not just about applying technology to their business, but that banks need to look at how they can take their business and apply it to the technology that is available.

Stephen Grainger, Sswift's head of North America, made the point that the emergence of new technologies is something that should make us think differently around the way we solve problems and manage risk. This was something that Derek Schneidt, CIO at BMO Financial Group agreed with, adding that design is critical in this regard. Bobby Singh, CIO & global head of infrastructure at TMX added that agility is important, but it is also like parenting at the breakfast table - you need to be able to adapt on the go.

The audience was asked how they would characterise their organisation's usage of AI and machine learning. A majority of delegates (55%) said that it is early days, but a significant number (43%) have select use cases/PoCs for the technology. Singh noted that the machine learning element is getting there and that there are some interesting use cases.

So, which new technologies have true staying power? In a multi-answer audience poll, the Toronto delegates put real-time payments at the top of the poll with 86%. Second place was a dead heat between AI/machine learning, cloud services, and APIs (all at 65%). Blockchain (35%) and Regtech (14%) did not fare quite as well.

Putting customer experience at the heart of business

During the Business Forum Canada, there was much talk of the value of the customer experience. Rania Llewellyn, EVP, Global Business Payments at Scotiabank, described how her institution has been on a transformation journey. She explained how they wanted to start with the customer, to make a seamless customer experience and ensure it is easier for customers to conduct business with the bank. They are also looking at how they can reimagine the end-to-end customer experience. Llewellyn noted that collaboration is critical to succeed in an endeavour like this - collaboration both with fintechs and also internally within the business.

Later in the day, Nicholas Bayley, MD, at Accenture Canada also commented that banks always need to be customer centric. Katipult's Cadieux added that people increasingly want to transact globally, and that regulations and rules will standardise as technology evolves. TD Bank Group's Hogarth noted that things come and go very quickly in the technology space. He is optimistic that the future will be informed by technology such as AI, and that banks will become much more nimble as they align with fintechs.

The importance of the customer’s needs was highlighted in an audience poll that asked whether regulation, cyber threats, technology, customer demands, or competition would be the key driver for change in the payments market. Customer demands decisively topped the poll, pulling in two-thirds (66%) of the audience vote.

The significance of data to the payments world was cited as one area where consumers currently enjoy a better experience from the big retailers than they do from their banks. Deloitte's Roberts made the point that the quality of information from Amazon is far better than the information from payments today. He suggested that customers will ‘vote with their feet’ and select the payments operator that can offer the best data.

Javier Pérez-Tasso, chief executive, Americas & UK Region at Sswift agreed with this point. He used Swift gpi as an example of co-operative's vision, and how the organisation is working to bring everyone in the community up to a new standard.

One note of caution regarding data was brought up by Roberts, who said that there is an issue about how data is used. It is not about who holds the data, but rather who can access it. He suggested that there needs to be a business model that protects the rights of the individual, and the right to be forgotten.

Cyber threats challenged head on

Cyber security was a recurring theme throughout the Business Forum Canada, right from the opening remarks delivered by Swift's Grainger. He commented that the goal is to make cyber threats a manageable nuisance and the inroads that Swift's Customer Security Programme (CSP) is making in this regard.

The evolving landscape of cyber threats was mentioned by Colin McKinty, cyber lead - Americas at BAE Systems, who said that there has been a clear shift from opportunistic attacks to more rigorous threats. It is critical not to let cyber threats understand your business via accessing your network, he noted, but at the same time still be prepared for simple threats, such as phishing, that continue to find success.

What is the biggest threat today in cyber security? Pat Antonacci, global head of Customer Security Programme at Sswift said that the people factor should not be overlooked, not only because human error can result in a cyber attack, but also because you need the right people with the right skills in your organisation.

Antonacci noted that Swift's CSP is built around the baseline cyber hygiene issue, and at that level it is free. The CSP programme has been mapped to ISO and PCI, among others, to complement rather than add to the existing ecosystem.

BAE System's McKinty observed that collaboration is critical in security and defence as well as innovation. He added that cross-sector collaboration is just as important as bank/fintech collaboration. Collaboration with law enforcement agencies and commercial entities is also important, particularly in an incident response to an attack. Building grassroots levels before you have an incident can help set you up to respond well.

Antonacci made the point that institutions still have to deal with fraud as well as cyber. He said that it is critical to have the capabilities to detect and respond to both. Insider fraud can be a tricky problem to solve, as you have to trust employees, but McKinty made the point that you must think specifically about the job role and limit individuals that have access. Those that are in an admin group, for example, can have additional checks in place.

While cyber security needs to be a key component to everything that banks do, the time and money invested in it should be viewed as an opportunity. Antonacci made a nice analogy, saying that you should not think about cyber security as brakes on your car that make you drive slowly, but rather as brakes on a Ferrari that allow you to drive fast.

In her closing remarks, Lisa Lansdowne-Higgins, ViP, Business Deposits and Treasury Solutions at RBC, said that the thought of cyber attacks keep her awake at night. She made the observation that you cannot have a conversation about seizing the opportunity if you don't have a conversation about risk at the same time.

For full coverage of the SWIFT Business Forum Canada 2018, visit the Finextra live blog.