What we learned at SIBOS 2016
October 12, 2016
SIBOS 2016 in Geneva, just a few weeks ago, was a successful event and Infor enjoyed meeting so many wonderful financial services and banking professionals from across the globe at the expo and as part of our open session. Now that we’ve had a chance to soak it all in, here’s a few topics that caught our attention this year.
We learned that real-time banking payments are a key focus
One of the key takeaways from our time spent at SIBOS 2016 was hearing about the importance of real-time payments and lots of discussion around this topic. In one of the sessions, led by a speaker from the US Federal Reserve, a panel addressed this hot topic and discussed how different countries around the world are looking to implementing solutions with this principle in mind.
One of the key methodologies for implementing real-time payments within banks is the adoption of the new payments standard ISO 20022. This new standard provides an XML-based, open standard for the financial services industry to facilitate the transmission of payments and statement information. Infor was also at SIBOS in Osaka back in 2012 where this was first discussed. Now, the tone of the conversation has shifted to how and when global banks will implement systems that can communicate within this standard. We have seen an increasing global pressure from the global corporates who are insisting that their financial services providers can deliver their financial information with a 20022 transmission.
We were reminded that banks need to embrace innovation so they can better serve their global corporate customers
Another important theme from SIBOS 2016 involved conversation around better serving corporate customers. In several sessions that Infor listened to on Tuesday of the show, we noticed that message of innovation has changed. In years past, banks focused on how to innovate in new ways of delivering transactions. In 2016, the conversation has shifted to expand the focus for innovation. Innovation now must extend across all client touch-points: sales, client and product onboarding, delivery across omnichannel communications, and customer services.
As banks try to win the battle for increased presence with their corporate customers and compete against other financial institutions, it is important to have innovative solutions that increase the value of their bank offerings to their customers. These corporate clients continue to demand more of a consolidated services pricing and billing approach for their bank services. They expect a greater level of transparency and speed of response than ever before.
Banks are facing significant pressure to reduce costs at the same time they are growing revenue with their existing and new clients. Therefore, banks must constantly strive to push for greater innovation and find ways that they can add value from core strengths. It isn’t enough to deliver quality and timeliness in services and transactions. These corporations expect that their entire global relationship with the bank will be taken into account when their services are priced–across deposits, lending, risk, and more. Corporate customers also expect to receive consolidated billing. Any bank still presenting bills from their individual product factories, or separate bills by country or currency, are perceived as just not keeping up with the changing times.
When we look specifically at the bank’s ability to serve their corporate clients, a few key points stand out:
Commercial banking success must be driven through a modern enterprise billing and pricing system.
Many of the banks at SIBOS 2016 that we spoke to and recognized rely on either internally IT-built solutions, or simply allow each product silo to price and bill independently. Many critical aspects of a commercial banking relationship revolve around the ability to manage billing and pricing at the overall customer relationship level. The technologies that banks implement to manage relationships with commercial customers can help determine the success of those relationships. Proven solutions already exist that can turn a bank’s enterprise billing and pricing system into a powerful tool for increasing revenue, controlling risk, forecasting demand, and reducing costs. Every bank should examine how implementing these billing and pricing systems can help position them for future growth and stability.
Your bank needs to deliver the services that are prized by commercial customers to be on equal footing with the world’s largest banks
Do you currently have the power to unify and analyze information across multiple accounts, geographies, currencies, tax structures, and languages? Modern billing systems help you offer flexible and responsive relationship pricing, while meeting your revenue targets and keeping customers satisfied. Does your sales force have powerful tools for demonstrating value to prospective customers? Are you able to differentiate your bank with innovative relationship pricing strategies and track all the details about customer accounts while keeping sight of the big picture? As you explore areas for innovation, definitely explore tools that can help you create and execute successful long term strategies with capabilities that include:
- Billing—Impress corporate treasurers by presenting consolidated statements that span their full range of financial activity.
- Pricing—Tame the complexity of the most sophisticated billing scenario with advanced capabilities that can handle relationship modeling, operational price management, and pricing events.
- Deal management—Give your sales force a powerful competitive advantage with the ability to generate price catalogues and CRM integration.
- Analytics—Gain a more strategic view of your customer relationship with easy-to-use dashboards and reports.
We heard a lot about profitable banking regulations
Yet another takeaway from SIBOS 2016 was all about new intraday liquidity management rules. In a dedicated Q&A discussion, the head of product development and strategy for a US-based global financial institution heavily involved in international payments, told listeners that because the new monitoring framework for liquidity has been finalized at the international level, it is now up to the banks to implementation solutions for these regulations.
First there was Basel II. And, now as a part of Basel III, there are also new overall liquidity risk management requirements. The Basel Committee For Banking Supervision (BCBS) has issued BCBS248 which serves as their regulatory guidelines for managing intraday liquidity risk for financial institutions. With BCBS248 is set to change the landscape for cash management, implementing an intraday liquidity solution can certainly check the box for regulatory compliance. Some savvy institutions are taking this a bit further and considering that if they now have deep insight into their liquidity position at any minute during the banking day, then why not lower their Nostro account buffers and free up billions of capital to be invested elsewhere for an increased return?
True intraday control is when a firm can monitor its external account activity, compare to predicted activity, and manage any discrepancies and risks that arise–in real-time, every minute of every day. Such control brings enormous benefits where intraday liquidity usage is optimized, expensive intraday liquidity buffers can be reduced, operational and credit risk is identified and mitigated, end-of-day funding is more accurate, and regulatory compliance is strengthened.
If real-time intraday control is such a compelling vision, then why have so few firms managed to get there? Primarily because it’s difficult and traditional IT approaches have failed. The required data needs to be captured at an individual transaction level and the intraday platform needs to consume this data, aggregate and apply complex analytics, while simultaneously delivering the results instantly to a range of users in a variety of formats.
This is no small challenge. The largest global banks process millions of cash flows every hour. Firms with less data still need to address challenges around defining functionality, creating real-time architectures, and keeping pace with constantly evolving regulations.
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Byron Byrd, Senior Director, Infor Banking