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Show Preview: Sibos 2017 – Real-time gets real

12 October 2017

Canada is celebrating the 150th anniversary of its establishment as a Federation this year and welcoming the banking and payments world to its financial capital this month when the downtown Metro Toronto Convention Centre (MTCC) will play host to 8,000+ attendees at SWIFT’s Sibos 2017 trade show.

Payments Canada will be showing off the country’s new payment system overhaul, while the show will also feature conference sessions and updates about the Australian New Payments Platform (NPP), the US real-time payment scheme, and Europe’s SEPA Instant Credit Transfer (SCT Inst) project. All these schemes will no doubt attract a lot of attention at Sibos 2017 from payment professionals not interested in the securities, capital markets or other conference streams at the wide-ranging financial services show.

This payments-focused preview will highlight some of the relevant Sibos sessions to look out for, as well as examine the likely trends, hot technology, fun things, standards debates, interesting asides and other issues likely to be of interest to real-time payment (RTP) professionals attending the show. Be sure to watch out for InstaPay’s own on-site live show reports and videos throughout the week too on the website and via twitter.

Canadian payment system
Sibos 2017 will play host on Tuesday 17 October to a session in the FinTech Theatre, 4.15pm, entitled ‘How to Design a Better Payments System’, referencing Canada’s payment system modernisation, with the help of Neville Arjani, Principal in charge of Research at Payments Canada. The organisation has been deeply involved in Canada’s payment system overhaul and in the design of Lynx, its new core clearing and settlement system.

Payments Canada will be talking with ‘InstaPay’ in-situ at Sibos – look out for the online video interview. Other live videos and post-show interviews will also start appearing shortly on the insights section. Contact the editor or in-situ reporter if you want to talk to ‘InstaPay’ at Sibos 2017.

Carolyn Wilkins, Senior Deputy Governor at the Bank of Canada (BoC) will be present in Toronto as part of a session looking at the future prospects for ‘Blockchain & Payments’ on Tuesday 17 Oct 3.30-4.30pm in Conference Room 2. The central bank’s rejection of distributed ledger technology (DLT) as the underlying infrastructure for the country’s interbank payment system, after a year-long investigation, will be discussed alongside the wider longer-term prospects for DLT.

Blockchain technology
The plug was pulled on the exploratory BoC-sponsored ‘Project Jasper’ Canadian DLT initiative this summer. It involved the country’s largest banks, Payments Canada and the R3 consortium using a digital fiat currency called Cad-Coin, as covered by CNBC.com at the time. Despite the BoC rejection, the participants did stress that valuable lessons were learned. Perhaps the concerns about privacy, ‘single point of failure’ resiliency, and scalability that were identified as DLT problems can be addressed in future.

The potential future role of blockchain technology in the Canadian domestic or, more likely, cross-border payments scene is likely to be a hot topic of debate at the MTCC in Toronto, but the technology is still in its early days.

Instant payment infrastructures are live here and now in many countries around the world, with more joining all the time, so unlike the more experimental DLT there will be real-world large scale case studies to see about this topic at Sibos 2017. RTP infrastructures already offer speed, traceability and other benefits. The best way to connect, as a bank or FinTech player, to the EU, US, Australian and other new schemes around the world will be on the minds of many operationally-focused bank employees at the show, alongside migration challenges, the use of standards, interoperability and so on.

However, DLT cannot be ignored even if discussions about it come with numerous caveats about the relatively experimental technology. R3 and Hyperledger representatives will be at Sibos 2017 in the form of IBM and other consortium participants. SWIFT itself is also a user of the shared Hyperledger protocol for their global payments innovation (gpi) third stage DLT Proof of Concept (PoC). This is exploring the potential future use of the technology on its own cross-border correspondent banking network.

Real-time gets real
Within the MTCC venue itself, however, and in the ‘here and now’ of RTP platforms that are already live, or going live like the EU SCT Inst scheme, the focus will be on getting immediate benefits. How can banks easily connect to new platforms in the US and other domestic and regional cross-border instant payment systems around the world? What are the best ownership and accessibility models for RTP backbones? Is the ISO20022 standard now mandatory to aid interoperability? These and other debates will no doubt be heard in the Sibos conference rooms and on the exhibition floor. Indeed, there is even a session in the Standards Forum on Monday, 3.30pm, entitled ‘Innovation Enabler: What ISO 20022 can do for Market Infrastructures’ for those that want to get down to a granular level.

The thirteenth edition of the long-running World Payments Report from the Capgemini consultancy will also be debated at Sibos, with an accompanying session at 9.30am on Tuesday in Conference Room 5 highlighting some of its key research and survey findings. McKinsey’s not quite as old seventh edition of the Global Payments Report will be debated the day before at 3.30pm in Conference Room 4. Both are usually interesting for professionals wanting a comprehensive overview of the wide-ranging payment scene and usually contain RTP sections, consumer, corporate treasury, tech, regulatory and other sub-section overviews. The Boston Consultancy Group’s (BCG) own long-running Global Payments research will also get an airing in Conference Room 3, 12.30-1.30pm on Monday, where future transaction banking profits will be under the microscope.

Australian NPP payment system & UK FPS overhaul
The Australian New Payments Platform (NPP), which SWIFT has had a hand in developing, will be discussed on Wednesday morning 9.30-10.30am 18 October in Conference Room 5 by Greg Johnston, Managing Director at the Reserve Bank of Australia. The session entitled ‘Australia’s Payments Ready for the Future’ will also hear from:

  • Rachel Slade, General Manager, Deposits & Transaction Services at National Australia Bank;
  • Nigel Dobson, General Manger, Wholesale Digital Transformation at ANZ;
  • & Katrina Stuart, Relationship Manager of the NPPA.

ANZ’s Dobson will also be part of the NPP-themed ‘Instant payments over SWIFT’ session at the organiser’s stand on Tuesday 17 October, 4.30-5.15pm, where its role in the Australian project will be reviewed and its connectivity solutions for other instant payment backbones around the world debated. Mehdi Manaa, a Departmental Manager at the European Central Bank (ECB) and Hays Littlejohn, CEO of EBA Clearing are due to join.

SWIFTNet Instant, a new access solution for EBA Clearing’s RT1  system in Europe, which conforms to the SCT Inst scheme, offering instant messaging, file transfer capabilities and so forth, will no doubt be heavily advertised by the organisers of the show in Toronto.

Some banks already signed up to use EBA Clearing’s RT1 pan-European platform will share their migration experiences so far and future expectations about volume, use cases and so on in Conference Room 4, 3.30pm, on Wednesday 18 Oct in a session entitled ‘RT1, real and timely’. In attendance will be:

  • Tanja Peic, Departmental Manager, Erste Group Bank AG
  • Sergio Dalla Riva, Departmental Manager, Intesa Sanpaolo SpA
  • Cedric Derras, Global Head of Cash Management, UniCredit
  • Sandra Peute, Analyst/Consultant, ABN Amro Bank NV.

The NPP project and EU scheme have sought to learn lessons from previous real-time rollouts in Denmark, the UK, India, Singapore and elsewhere in the world where instant payment platforms are already a reality – see the InstaPay Tracker for more details about global RTP initiatives. Indeed, some of the early RTP movers, such as the UK Faster Payment Service (FPS), are now looking to re-build their platforms to ensure they use ISO20022 as their key standard, instead of old card and ATM-based standards.

In the UK’s case the Faster Payment Scheme Ltd also want to move away from the thrice daily ‘near real-time’ settlement they introduced last decade – as pioneers of a new methodology – towards a truly instant immediate payment platform. Lessons could be learnt from some of the latest movers. Faster Payments’ re-build invitation for firms to register an expression of interest in carrying out their desired technology overhaul will no doubt be attracting attention.

EU SCT Inst payment system
The readiness or otherwise of the European market for instant payments, just prior to the launch of the SCT Inst scheme in November 2017, will be the topic on the final day of Sibos at an Open Theatre1 event, 10.45-11.15am, on Thursday 19 Oct. Francisco Tur Hartmann, Section Head/Supervisor at the European Central Bank (ECB) will be joined by three clearing representatives:

  • José Beltran, Business Development Director, STET
  • Michael Steinbach, CEO, equensWorldline
  • Hays Littlejohn, CEO, EBA Clearing.

The EU SCT Inst scheme and its pan-European or more localised platform providers, bank and other end users, possible volume figures and capabilities will all be debated. As will the question of whether it has met its remit and successfully laid the groundwork for the use of harmonised instant payments throughout Europe? The Eurosystem has also announced a new service: TARGET instant payment settlement (TIPS), to be launched in 2018, to process payments in central bank money within seconds across Europe – this too is likely to get an airing in the session. What new services will result and challenges lie ahead?

Immediately following in the nearby Open Theatre2 will be Claus Richter, Head of CM Customer Solutions at Nordea and Keith Ajmani, Functional Head at TD Bank Group, who will be joining FIS representatives to discuss their annual ‘Flavours of Fast’ survey on global real-time payments. Related issues such as how Open Banking and instant operations can be combined for benefit, how the EU’s Payment Services Directive (PSD) 2 will open access and so on are all likely to feature. Crucially, the bankers will share their experiences of moving to RTP and their plans for the future.

Preceding this on Tuesday 17 Oct, 12.30pm, is a session in Conference Room4 entitled ‘The Evolving Payments Ecosystem – A SWOT Analysis from a European Perspective’, which as the title indicates will be pretty wide-ranging but could be interesting. The business implications of PSD2 and giving access to application programming interfaces (APIs) for FinTechs to use data, in order to encourage more open banking competition, will be debated. The EU’s General Data Protection Regulation (GDPR) will also form part of the conversation. This tries to regulate data as the new ‘business oil’ of modern finance and payments. Data is almost a currency too to FinTech players in this era of so-called ‘big data’, so consumer’s personal details and so on need protecting. FIs that don’t protect their data could face a GDPR fine of 4% of their revenue. The transformative nature of FinTech / bank cooperation and of large investments allied to the EU SCT Inst payment system will also be discussed by a panel consisting of:

  • Thomas Egner, Secretary General of the Euro Banking Association (EBA) Group
  • Wolfgang Ehrmann, Chair of Landesbank Hessen-Thüringen & a board member, EBA Group
  • Vincent Brennan, Head of Group Payments at Bank of Ireland & Deputy Chair, EBA Group
  • Claus Richter, Head of CM Customer Solutions, Nordea.

Soon after the above session finishes another one starts up next door in Conference Room3 at 2pm entitled ‘The Role of Payments Market Infrastructures (PMIs) & Correspondent Banks in Instant International Payments’. It will look at if they are complementary or not, with the help of RBC, BNY Mellon, equensWorldline and others. Banks often see real-time services from PMIs as an opportunity to develop new products or cross borders more easily, but integrating foreign exchange (FX) components or complying with Know Your Client (KYC), anti-money laundering (AML) and sanctions screening obligations is not easy. Nor is offering settlement finality outside a normal currency zone or respecting local market practices.

US payment system
In the US new fast payment services are being encouraged under the auspices of the US Federal Reserve (Fed), with Zelle (formerly known as ClearXchange) being one such example from Early Warning. Multiple banks are offering the P2P real-time funds transfer service to their customers. The Clearing House (TCH) Real Time Payments (RTP) platform is a national instant payment system that enables the immediate clearing and settlement of credit transfers between customers of different US FIs. The platform will also provide immediate delivery of ancillary financial messages to support value-added services for liquidity, tracking and so forth.

These US initiatives will likely be discussed by the southern neighbours attending this Canadian Sibos show. A number of US speakers are in the conference programme, some from the securities side. For instance, on Wednesday 18 Oct, 2-3pm in Conference Room5 there is a ‘Deep Dive into the ISO20022 Implementation Strategy for US High-Value Payment Systems’.  The Fedwire Funds Service and Clearing House Interbank Payments System (CHIPS) will respectively provide a walkthrough of their ISO 20022 implementation strategies that emerged recently, lessons learnt and so on. The TCH platform also favours the ISO20022 messaging standard, which is going global in order to aid interoperability, provide more character space for value-add services and so on.

 

Other topics that are likely to dominate Sibos 2017 include regulation and cyber-security in the wake of recent attacks versus Equifax and indeed last year’s raid on Bangladesh Bank, which prompted SWIFT to launch its Customer Security Programme (CSP). How well banks are doing in meeting the minimum security requirements needed to connect to SWIFT and in meeting the new security attestation procedures is bound to be debated. For payment professionals and RTP backbone infrastructures cyber-security matters too so this issue will likely be part of the instant payment sessions highlighted above. We hope you like this RTP overview of the Sibos 2017 programme and look forward to reporting on the show in-situ shortly.

Author: Neil Ainger