Sibos Diary – Day Two – FinTech and Capital Markets, Global Hubs and Bank Collaboration
September 28th, 2016 / Innovate Finance / Featured Insights
The impact of FinTech on capital markets was the first speaking engagement for Innovate Finance at Sibos — and the subject pulled in the crowds. The talk was framed around the report ‘Capital Markets; innovation and the FinTech landscape’ which was produced with strategic partner EY. Unveiled at the session, the research highlights how investment banks continue to battle declining return on equity but how FinTech collaboration can improve their approach to the market and enhance performance. The report included input from many of our members including institutions such as UBS,Standard Chartered, Goldmans Sachs and startups Essentia Analytics, Crypta Labs, Percentile, Trunomi, TallySticks, City Falcon, Sybenetix and more. Lawrence and EY partner David Williams explained how the biggest challenges to the sector were structural costs, regulatory reform, conduct issues and capital requirements. Collaboration with FinTechs was key to overcoming these hurdles and transforming the investment landscape with innovations such as Robotic Process Automation (RPA), advanced analytics, digital transformation cited as game changers. Artificial Intelligence (AI), smart contracts and blockchain were also mentioned as good long-term investments for the sector. “Innovation is no longer optional but imperative” for investment banks, said Williams but FinTech firms also have to get better at attracting the attention of businesses by perfecting their pitch and being well versed in the procurement process. Innovate Finance also participated in the EMEA FinTech hubs session at Innotribe. Representing London, Lawrence was joined by representatives from Luxembourg for Finance, EggSploreBelgium, I NG FinTech village, FinTech Holland, and the FCA. The talk gave each hub the opportunity to share their activities and ambitions for their region and to highlight what sets them apart from other FinTech hotspots. As the session Lawrence unveiled the ‘Connecting Global FinTech: Hub Review 2016’ report, which was produced by Deloitte in collaboration with All Street Research. The research ranks the world’s big FinTech hubs on the basis of its ease of doing business and helping to grow FinTech startups. The research revealed that London and Singapore were the top FinTech spots in the world, thanks to a strong ecosystem, top talent and a supportive regulatory regime. Lawrence praised the FCA for supporting innovation through Project Innovate and their industry sandbox. When asked about Brexit, the response was simple “Keep calm and carry on” — and lobby for access to the single market. In the meantime, collaboration is key to ensuring London remains on top of the FinTech world. In the session Evolution of correspondent banking: Can compliance help defend the model, collaboration was also a key theme. Participants argued that it was necessary among members of the correspondent banking community to work together. Sberbank’s group head of compliance, Larisa Zalomikhina, said banks had to do more to “build up the knowledge and trust for each other and build a compliance piece into the platform”. Collaboration among banks and joining forces to innovate would also help to keep up with the changing real-time demands of customers. But technology is not enough, and the FSB Correspondent Banking Coordination Group explained how it was focusing on different work streams, including data-related initiatives such as sharing, technology and monitoring and regulatory clarification “Correspondent banking is here to stay, but it needs to evolve,” said Olivier Denecker, director of knowledge at McKinsey — and preferably together as a united force for change.