Sibos 2013 – Global Trends In Transaction Banking

At a bustling and very positive Sibos week in Dubai, Misys revealed the results of its annual Global Trends in Transaction Banking Survey, conducted in tandem with Finextra. In our interactions with banks at the event, the key findings of the global survey were reinforced time and time again. Financial institutions are committed to searching for ways to establish leaner operations, increase value from existing revenue streams and become more scalable to take advantage of global opportunities across trade and supply chain finance, cash management and payments.

The findings of the annual transaction banking survey were discussed by senior heads of trade finance and transaction banking at ING, Barclays, Société Générale, Citi and Misys on a panel at Sibos. Watch the panel discussion filmed at Sibos here

In this blog post the Misys team provide some further commentary on the recurring themes that came up during the 150 or so meetings Misys had on its booth at Sibos this year.

The delivery of value added services to corporates was a key trend throughout the four day conference, as well as the technology trends and innovations that are enabling banks to deliver these services. Financial institutions are looking to get closer to their customers by interfacing with their transaction flows in more direct ways, for example directly through their ERP systems, in order to provide ever more proactive services in payments and supply chain finance. And while regulation continues to underpin almost everything in the industry today, more often we saw banks approaching infrastructure investment, not just as a box ticking exercise for compliance, but as a way to go further and seek additional benefits that can stimulate longer term business growth.

Here is more from our men on the ground:

Barry Kislingbury, Global Product Manager, Misys Payments and Messaging:
"In payments there were a number of drivers that came up regularly in discussion with banks at Sibos - certainly the need to modernise payments systems and integrate them into the financial and physical supply chain was a big part of the conversation.

Also, the trend to move away from correspondent banking to more direct participation in domestic clearing came up a lot. This is being driven partly by bank's clients and partly by regulators wishing to reduce systemic risk.  The outcome is the same though, more banks stated they needed direct connections.  In a similar light the number of countries now working on new ISO 20022 based ACH has reached 65, so it's clear that the standard is here to stay and any bank or corporate with international operations or trade applications will need to support this new standard.

Regulations, particularly linked to Basel III, and the need for better reporting around capital adequacy, mean banks need to understand where their cash is being held, what's due, what's to pay, etc. All these drivers require an integrated systems approach, including payments data. More and more we are seeing a payment hub approach becoming critical to addressing these requirements - siloed solutions have not worked. Although many banks have now organised themselves into TB groups, this for many is purely organisational, it would seem that they are now realising they need to do the same from a systems point of view to drive growth and to support new regulations.

The main takeaways and opportunities I saw in the payments space were focused on enterprise liquidity management linked to payment flows, and payment orchestration leading to better cash management and the availability of information for clients, the bank and regulators. Access to new clearing destinations, cross boarder payments and remittances have also re-emerged as hot topics.

This was my 13th Sibos and by far the busiest - there was a real buzz in Dubai, we had back to back meetings, numerous walk-ons and there was real sense that banks were looking for solutions as Transaction Banking continues to take a prominent place in bank's overall strategy today."

David Hennah, Head of Trade and Supply Chain Finance, Misys
"For me personally and perhaps not surprisingly the Bank Payment Obligation (BPO) was a topic that featured in almost every conversation I had ( see my earlier blog post here). That said, many people were coming to seek advice which reflects a continued uncertainty as to its immediate market traction. Nevertheless I did come across a growing number of banks that expressed a positive interest in piloting and proof of concept exercises.

Adoption rates are likely to be slow and steady rather than revolutionary. The key barriers to overcome still are education, especially in the corporate market, and technology, where service providers such as Misys have an opportunity to make a difference

Where I sense we may be on the verge of a sea change in behaviour is amongst the big bank players in the trade finance space who traditionally have chosen to build their infrastructure rather than buy. Escalating costs, coupled with the immense challenge of keeping pace with regulatory compliance, are causing some leading banks to re-think their approach to new technology and at least consider a more flexible approach in working with strategic partners.

What is encouraging for me is that the percentage of attendees with a primary interest in trade continues to grow. For years trade languished behind with between 5% and 10% attendance. The number this year was almost 20% reflecting the resurgence of trade finance as a business that banks now want to invest in."