13 October 2015
Reporter: Stephanie Palmer

Sibos 2015: migration, regulation and digitisation

Movement towards Asia, regulation and financial technology are the main drivers for change in financial services, according to Gottfried Leibbrandt, CEO of SWIFT

Leibbrandt addressed Sibos 2015 delegates in the opening plenary, identifying three forces that are shaping the financial services world globally: the move from the west to Asia, government politics and regulations, and financial technology and cyber.

Addressing the move towards the east, he argued that the pendulum is still swinging in that direction. According to the SWIFT renminbi (RMB) tracker, RMB is currently the fourth most-used currency, after the US dollar, euro and British pound. Generally, Leibbrandt said, RMB and the Japanese yen jostle for fourth and fifth position, but he predicted that RMB would eventually win out.

While he noted the impressive rise of the currency—RMB was in seventeenth place just two years ago—he does not expect it to become a major, or even reserve, currency just yet. He said: “It will be a while before it gets there, but it will be very interesting to watch it rise.”

With regards to regulations and politics, Liebbrandt argued that global banks have been hit particularly hard, affected by the first wave of regulation aimed at financial stability post-crisis, and then by the second wave, which tackled sanctions and financial crime prevention.

There is now a third wave as regulators demand more access to data. “The pessimists would hold the view that this is the end of global banks,” said Leibbrandt, but he argued that they have invested in common infrastructures and these challenges are not necessarily new.

The final trend address was the digitisation of finance, including the emergence of blockchain and distribution ledger technology (DLT). Liebbrandt pointed out the benefits of DLT—it can be used to register ownership of practically any asset, and it is very secure. He also suggested that SWIFT could be well placed to take care of these ledgers.

He also pointed out that ledgers do not record transaction information well, and that the premise of delivery-versus-payment would only work if there were significant assets and ledgers with liquidity. Distribution ledgers have the potential to be to transaction banking what trains were to transport, but they could still transpire to be the hovercraft or the jetpack.

Liebbrandt concluded by saying that banks will have to transform themselves and “absorb technology”, saying that while change may feel risky, institutions have to accept it, while also providing good service.

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