Sibos is a banking and financial conference held annually in September and organised by SWIFT, the global financial messaging network. It brings together participants in the financial markets from around the world, as exhibitors and attendees discuss topical issues.
This year, the event was held in London and the opportunity to spend a day with more than 11,500 delegates and 300-plus exhibitors was too good to miss.
I attended one of the four days and I wanted to share some observations and insights from that day.
SWIFT gpi enables banks to provide end-to-end payments tracking to their customers. The SWIFT Tracker gives end-to-end visibility on the status of a payment transaction from the moment it is sent right up to when it is confirmed.
In effect, the first phase seeks to provide faster payments by making transferred funds available, providing they are transferred before SWIFT’s cutoff point. The cloud correspondent tool also seeks to address the pain point around payment visibility from corporate treasurers. SWIFT gpi uses real-time tracking, end-to-end view of payments, thanks to the unique tracking codes that will enable a notification life cycle of the settlement, ie you will know when the payment has reached its destination. The ability to settle transactions in the same day optimises liquidity with improved cash forecasts.
I’m aware of the concept of gpi and know that it will make a real difference to treasurers who currently either log into their banking portal or ring their bank to see if key incoming funds have been received.
However, what I had not appreciated was the possibility of using gpi to extend beyond just tracking a payment. Two corporates showed how gpi could be used between them for more than just monitoring payment activities. Having agreed an authenticated protocol between the buyer and the seller (via the Relationship Management Application), the seller was able to issue an invoice (which was now also authenticated) directly to the seller. The buyer then added it to their own workflow and could provide visibility to the seller of the status of the invoice and ultimately the payment itself.
It is interesting that innovators are looking at the overall entire end-to-end process rather than just the payments.
There were plenty of sessions on artificial intelligence (AI) and machine learning to choose from at Sibos. Although I feel I’m still looking for the promised application, I did learn more about the challenges and the terminology.
One presentation illustrated how machine learning was being used in the credit application process. The company showed how the current process is typically time-consuming with the collection of imperfect, unclear and unstructured data requiring significant manual intervention. Its solution was to use a mixture of natural language processing (NLP), algorithms and human intervention to create a more dynamic, responsive and efficient process.
NLP is a branch of AI that deals with the interaction between computers and humans using natural language. The ultimate objective of NLP is to read, decipher, understand and make sense of human languages in a manner that is valuable. It is used to review unstructured documentation and to simplify and standardise it. An example I have come across is how one large bank has used NLP to review its thousands of Libor-related documents as part of its transition programme.
The company went on to show how the system would adjust its historic-based rules to dynamically adjust to new information, economic events and as human engagement patterns changed.
This is a perennial challenge for both corporates and their financial services partners. We’ve seen changes in providers with Bloomberg shutting down Entity Exchange, (a know your customer (KYC) solution supported by Citibank and adopted by multinational corporations, including Coca-Cola) due to insufficient demand. What remains clear is that treasurers need a flexible solution that accepts the realities of the global problem: no global standards, local variations everywhere and the need for complete flexibility.
SWIFT has announced that in Q4 2019, all 2,000 SWIFT-connected corporates will be able to join the KYC Registry and use it “to upload, maintain and share their KYC information with their banks”. It will be interesting to see if this does indeed deliver what corporates (and their banks) have been looking for.
Although I attended sessions focusing on improving existing payment systems, the use of distributed ledger technology (DLT) in facilitating value movements clearly remains an important topic. Wells Fargo reported it was adopting DLT to facilitate certain closed-loop payments, while JPMorgan discussed the value it expects JPM Coin to deliver to its clients. We know that the Bank of England (BoE) has no current plans to issue a central bank digital currency, though it has stated its support for innovation and for ensuring that its upgraded real-time gross settlement system will be interoperable with private payment systems that use DLT.
Many treasurers will be familiar with Libra – a new stable global cryptocurrency supported by Facebook with founder members, including Vodafone, Stripe, Uber and Spotify. (Covered in the July 2019 online edition of The Treasurer).
A number of presenters commented on the impact of the launch of Libra and how it had garnered interest from a number of regulatory and statutory bodies, including the European Central Bank and the US Federal Reserve. On 9 October, the BoE warned Facebook that Libra faces tough oversight, saying that the digital coin must be regulated as a 'systemically important' payment system. Although there were genuine concerns about Libra raised at the conference, many felt it was a necessary wake-up call to regulators, who have been suspicious of these tokenised payments. Libra may help the international community define a clearer framework.
Naresh Aggarwal is director – policy and technical at The Association of Corporate Treasurers